My sig explained (finally..and it's a fricken' novel)

**R32 JUhl** · 03-10-2005, 05:21 PM

Originally Posted by wizardPC

The thing about living in a situation like that is that you have to VERY carefully screen your tenants--because you live right next to them. You wouldn't want someone who blasts music 24/7, nor would you want someone who is going to complain about every little thing--because you live right next door to them. Then there is the question of whether or not the tenant actually pays.....

These are the things I hear all the time being a landlord. WHATEVER!!!

You can make excuses for every inaction for the rest of your life. I've been doing this for ten years now and I'll spend someone else's money while those who make excuses can work for a living until they're too old to enjoy the fruits of their labor.

Originally Posted by wizardPC

What the heck would I need credit for, eh? If I dont want to borrow money, why would I care what Equifax and TransUnion think of my "credit."

Is this what Ramsey preaches? If it is, that's idiotic!!! A credit score of 550 versus a score of 600 can mean TENS OF THOUSANDS of dollars saved on a mortgage. And 600 ain't a great score!

Originally Posted by wizardPC

he can go **** himself and I'll go somewhere else. I guarantee you there are more than a few mortgage lenders who would jump at a customer who owes no one else money--that means I can afford to pay THEM.

Yep, and YOU'RE GOING TO pay them! People who declared bankruptcy last week can get mortgages, so you can too! But they won't pay the 2 - 4 % I'm getting with a 710 credit score. They'll pay double digits. You can FIX your score - there are volumes of books written on it. But you gotta lose the "I don't need you" attitude - THAT will cost you more money. You don't have to owe anyone money to have credit cards, by the way! Credit is not debt!

I have excellent credit with countless institutions and have debt with four. Did I mention my debt is over $500k? Of course, it's all secured in real estate worth well over that. But that's what GOOD debt is! BAD debt is that credit card stuff you're working down. FYI, I used real estate and OTHER PEOPLE'S MONEY to eliminate my CC/bad debt. And I never went on the Top Ramen or Mac & Cheese diet, either.

You can exploit good credit to make you filthy rich, so don't thumb your nose at it!

**wizardPC** · 03-10-2005, 05:35 PM

I think you and I are going to have to agree to disagree on these points. I'd rather have no debt and possibly pay a bit more on a 15-year mortgage than take the risk of having a half million in debt, get in a car accident, and lose any means of paying the minimums on all my real estate.

I know you think that it's idiotic for not wanting to need a credit score, and I think it's idiotic for taking out all kinds of loans on real estate (Dave Ramsey did this, by the way, and he lost everything in a 3 month period).

It's a difference of opinion on what the "best" thing to do here is. And it's like the argument for personal accounts in addition to Social Security--we already have our minds made up and facts in hand, but no one is going to convince anyone to change their minds

**R32 JUhl** · 03-10-2005, 06:50 PM

Originally Posted by wizardPC

I think you and I are going to have to agree to disagree on these points. I'd rather have no debt and possibly pay a bit more on a 15-year mortgage than take the risk of having a half million in debt, get in a car accident, and lose any means of paying the minimums on all my real estate.

Possibly? No, definitely. Ask any loan officer.

But please don't miss the biggest point of what I'm trying to convey. Don't pay your own debt. If you take nothing more away from this discussion than one point it's "find someone else to pay your debt." I certainly don't want to get in a car accident. But I'm not worried the least bit about losing anything if I do, because I have other people making my debt payments. I'm preparing myself to stop working for a living. I've got a wedding to finance and some more senseless splurging to take care of, but I'm hoping to "retire" within a year - I'm 35, now.

Using any undervalued asset (cars, real estate) to purchase the items you want is how you get other people to pay your way. Applying your/Ramsey's method WILL lead to disaster if you get in a car accident, fired, lose your health, etc. because you are depending on YOU and an employer (tranlated: slave master) to pay your 15 year (slightly higher interest rate) mortgage. Finding other people to pay your bills is easy! Even if you don't have the health to find them, there are businesses that do it for you.

By the way, the assets I own are worth far more than what I owe which translates into net worth. So if I HAD TO, I could sell them for more than what I owe and own a modest house free and clear. Right now, I don't want a modest house.

Originally Posted by wizardPC

I know you think that it's idiotic for not wanting to need a credit score, and I think it's idiotic for taking out all kinds of loans on real estate (Dave Ramsey did this, by the way, and he lost everything in a 3 month period).

And LOTS of people have lost their asses in the exact same way. The money that starts coming in is staggering!!! You can get drunk on the euphoric feeling of that instant wealth - and Ramsey did - most people do! Just learn from their mistakes.

Originally Posted by wizardPC

It's a difference of opinion on what the "best" thing to do here is. And it's like the argument for personal accounts in addition to Social Security--we already have our minds made up and facts in hand, but no one is going to convince anyone to change their minds

Agreed! But regardless of "best" practices, the facts are that lenders ARE basing their decision on a score and you WILL save money with a lower score. There's no opinion in that statement whatsoever.

We can certainly agree to disagree on approaches.

I know my approach is high-risk! But I also know low credit scores cost more money and that's where I took exception to your statements.

**meddler** · 03-10-2005, 08:53 PM

Property is not the only investment that can make you money. I don't know what the tax laws are in the states, but in Australia you can also borrow for shares and use that as a tax deduction. The good thing about this is that you can start with a very small amount and the relative returns are as good as property.
It is always a good idea to have a loan of some sort. Even if it is a credit card with a $500 limit (just make sure it's locked up so you can't use it!). I heard of people that have had trouble getting a loan when they needed it (buying a house) because previously they had paid cash for everything and didn't have a credit rating.

**shakes** · 03-11-2005, 09:26 AM

i thnk the other point not to be missed is credit != debt.

Just because you have good credit (read high credit score) it does *not* mean you have to owe lots of money.

**R32 JUhl** · 03-11-2005, 09:48 AM

Originally Posted by meddler

Property is not the only investment that can make you money. I don't know what the tax laws are in the states, but in Australia you can also borrow for shares and use that as a tax deduction. The good thing about this is that you can start with a very small amount and the relative returns are as good as property.

I agree you can make money in the stock market. But I have NEVER lost $10,000 in one day in real estate like I have in the market. Yes, I owned Worldcom stock!!!

Secondly, if I spend $1,000 buying shares, I own $1,000 worth of shares. If I want them to increase in value, I can only HOPE they do. By comparison, I can buy a house without spending a dime. I can own $5k to $50k OR MORE in equity without spending a dime of my own money. If I want to increase the value of that real estate, I can spend a few hours doing yard work and increase its value. I can clean the carpets, scrub the floors, etc - all for free and the value of my investmetn. You can't do that in the market.

In addition, if I make $500 on a $1000 stock purchase, my ROI is 50%. If I make $500 on a house that cost me no money to buy, my ROI is infinite.

**R32 JUhl** · 03-11-2005, 09:50 AM

Originally Posted by shakes

i thnk the other point not to be missed is credit != debt.

Good point - credit ≠ debt

**meddler** · 03-11-2005, 08:17 PM

true but you have to initally invest a lot more money in a house. I was talking more about the relative percentage return. $1000 on a $300000 dollar house is quite a small increase percentage wise, but a $10 increase on $1000 worth or shares is a better percentage increase.
Also you have to remeber that when you do work around your house, it does cost money. Fuel for the mower, the garden shears that you used to trim a shrub. Don't forget to calculate your time etc. How much would it cost if you got someone else to fix things around your house? I know this is gettting a little bit anal but you still have to think about things like this too.
The housing market in Sydney has dropped lately. I have lost about $80000 on my house in the last 6-12 months. But I have only lost money when I sell, so I really haven't lost anything. It is still worth more than what I bought it for tho. Same with shares, unless the company goes under, you only lose money when you sell the shares.

@shakes. That's why I said have a $500 credit card that you don't use. just because you have a credit card, that doesn't mean that you use it, even to the point that you cut it up when you get it. It is there just to keep the bank happy if you want to borrow some money for a house etc. Also not all debt is bad, as someone else has mentioned. get someone to pay it off for you. It's even better if it's the government

**R32 JUhl** · 03-11-2005, 08:31 PM

Originally Posted by meddler

true but you have to initally invest a lot more money in a house. .

That's what the banks have conditioned you to believe, but that's not true. I just bought a $200,000 house for $155k with no money out of pocket.

Originally Posted by meddler

I was talking more about the relative percentage return. $1000 on a $300000 dollar house is quite a small increase percentage wise.

LOL! No - that's a waste of time.

Originally Posted by meddler

but a $10 increase on $1000 worth or shares is a better percentage increase.

Only if you spent money to buy the house in the first place. If you don't spend any money on the house, the return is infinite.

Originally Posted by meddler

Also you have to remeber that when you do work around your house, it does cost money. Fuel for the mower, the garden shears that you used to trim a shrub. Don't forget to calculate your time etc. How much would it cost if you got someone else to fix things around your house? I know this is gettting a little bit anal but you still have to think about things like this too.

You're absolutely right! But the point is, I CAN affect the return on my real estate investment. There is NOTHING you can do to improve your return on a stock once it's purchased. I can buy commercial real estate for a fraction of what it's worth simply because it does not have full occupancy. I can then "install" tenants and turn around and sell the building for it's REAL value. The only difference is that I'm substantially motivated and skilled enough to find tenants and savvy enough to play the game...

Originally Posted by meddler

The housing market in Sydney has dropped lately. I have lost about $80000 on my house in the last 6-12 months. But I have only lost money when I sell, so I really haven't lost anything.

Now's the time to buy in Sydney, everyone!

Originally Posted by meddler

Same with shares, unless the company goes under, you only lose money when you sell the shares.

Like my Worldcom stocks.

I like this analogy... Go back to the neighborhood you grew up in. Most likely, the real estate still exists and is worth MANY time what it was when you lived there. Now... take a look at the businesses and see how many of them are still in existence.

Excellent counterpoints!