My sig explained (finally..and it's a fricken' novel) - Page 5

IntellaWorks · 03-10-2005, 02:53 PM

can't live with it can't live w/o it... Believe it or not someitmes there is a benefit to being in debt.. for example TAXES if you payed off your 30k debt now all of a sudden the gov't is going to tax you (depending on your salery) I live in NH and property tax is outragiously high... I'm looking to buy a home (180,000 - 215,000) and my property tax will be about 4,500 a year !!!! Wonderful thing is that I can claim some of that and get some money back.. almost enough to pay state taxes... If I had paid the house cash... granted I wouldnt have monthly payments but i'd still have to pay about 333 a mo. just to pay state taxes !!!!

My idea in this crazy circle is to buy a multi fam. home so that the rent from tennants will help pay off the mortgage... and because I can get a few tax breaks hopefully pay some of the state property taxes...hopefully.. I can sell the multi in a few years and make a good down payment for a real home (lets hope for inflation here on property values !!!)

The bad thing about having no debt is that credit companies sometimes think thats a bad thing.. and you may not be able to get loans.. CC bills really dont make a difference but houses and cars sure do !!

R32 JUhl · 03-10-2005, 03:11 PM

Quote: Originally Posted by IntellaWorks

My idea in this crazy circle is to buy a multi fam. home so that the rent from tennants will help pay off the mortgage... and because I can get a few tax breaks hopefully pay some of the state property taxes...hopefully.. I can sell the multi in a few years and make a good down payment for a real home (lets hope for inflation here on property values !!!)

Eureka!

wizardPC · 03-10-2005, 03:32 PM

Quote: Originally Posted by IntellaWorks

...My idea in this crazy circle is to buy a multi fam. home so that the rent from tennants will help pay off the mortgage... and because I can get a few tax breaks hopefully pay some of the state property taxes...hopefully.. I can sell the multi in a few years and make a good down payment for a real home (lets hope for inflation here on property values !!!)

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.....

Quote: Originally Posted by IntellaWorks

The bad thing about having no debt is that credit companies sometimes think thats a bad thing.. and you may not be able to get loans.. CC bills really dont make a difference but houses and cars sure do !!

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." I realize that most people would argue that you need a 9,863 credit score to get a good interest rate on a house, but buying a house is a super big deal and if a lender doesnt like the fact that I don't owe everyone in town money, 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.

Oh, and saying that credit companies think not having credit is a bad thing is a lot like saying drug dealers think that not having a cocaine addiction is a bad thing. Credit is what those people sell--OF COURSE they want you to have as much debt as possible!

IntellaWorks · 03-10-2005, 03:47 PM

You have your masters in IT and you only make 24k a year ???

shakes · 03-10-2005, 03:50 PM

Quote: Originally Posted by IntellaWorks

You have your masters in IT and you only make 24k a year ???

we've already been down that path

shakes · 03-10-2005, 03:53 PM

Quote: 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." I realize that most people would argue that you need a 9,863 credit score to get a good interest rate on a house, but buying a house is a super big deal and if a lender doesnt like the fact that I don't owe everyone in town money, 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.

Oh, and saying that credit companies think not having credit is a bad thing is a lot like saying drug dealers think that not having a cocaine addiction is a bad thing. Credit is what those people sell--OF COURSE they want you to have as much debt as possible!

All that sounds good in theory ... but I guarantee getting a mortgage is 100x harder without a good credit score. Compare the deal I got (and how easy it was) to that guy I told you about who has all the debt (he bought a house about the same time I did). He had a much worse time and got royally screwed in his deal.

Having good credit doesn't mean you owe money all over town ... good credit means you have a strong credit history (i.e. you pay off your debts) and a low debt to income ratio.

I have very good credit but very little debt (if you don't count the house).

Jake

shakes · 03-10-2005, 03:58 PM

P.S. what does "(attack on hold)" in your sig mean?

wizardPC · 03-10-2005, 04:04 PM

Quote: Originally Posted by IntellaWorks

You have your masters in IT and you only make 24k a year ???

My take home pay is $24k. Before taxes and insurance (which is taken out of my check) I make $33k. But that is neither here nor there because I won't be here much longer---because $33K totally sucks.

@shakes, My credit score is continually falling now because I am paying off cards and cancelling them. My credit history is perfect, because I have never been late on a payment for anything in my life. As far as the debt to income ratio, if debt = zero.........

wizardPC · 03-10-2005, 04:04 PM

Quote: Originally Posted by shakes

P.S. what does "(attack on hold)" in your sig mean?

moving soon to make more than $33k. Need cash for moving expenses, this is Ramsey approved

IntellaWorks · 03-10-2005, 05:54 PM

AHh ok that salary makes more sense, Hope that when you move you find a better place to work for or a place that is willing to pay you a bit more !

R32 JUhl · 03-10-2005, 06:21 PM

Quote: 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.

Quote: 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!

Quote: 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, 06:35 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, 07:50 PM

Quote: 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.

Quote: 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.

Quote: 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, 09:53 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, 10:26 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.

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