Posted on 08/02/2013 7:37:04 AM PDT by SeekAndFind
>>No, it isn’t cruel. That fully-grown fledgling should be kicked from the nest and told to fly. In fact, you would be doing him a real favor to make him grow up and be responsible for his own life the way a man should be. Call it tough love.<<
Bless you. Same page.
This is the root cause of many an argument between my spouse and I.
I have heard of Dave Ramsey and would be curious to know his core principles. Any advice at this point as I am trying my best to save up for a house. Pretty frustrating.
Basically - make about twice what you spend. If you don’t make enough cut spending. If you’ve cut spending and still aren’t making twice what you spend, then you need to start looking for more/better work.
Start from the very basics. What’s your current baseline rent + minimum for food. This should be no more than 25 percent of what you make. If it’s not - is it because you’re paying too much in rent? If so - relocate. Do you have a mortgage where this isn’t possible? Then add this to the basics. You’ll have to cut back in other places.
Don’t buy a house until you’ve got a full time position and have held the job (at fulltime) for a year. Otherwise rent. Rent + food should be no more than half what you make.
When you buy a house go no more than 3x your annual salary, even if you qualify for more. Get a mortgage that lets you pay it down as quickly as possible. Your first year, every single dollar you can spare, dump it into the mortgage. Every dime. Don’t take a vacation, don’t go anywhere, don’t do anything. If you’ve followed his advice, and not gotten more than 3x your income, you’ll have paid off all the interest over the term and will be able to start hammering away at the principle in year 2.
Don’t buy a house till you’ve paid off your other debts (student loans, car, credit cards, etc). He recommends paying off the debt of the smallest amount first, since he finds people are more motivated when they feel they are actually making progress. Don’t save for retirement until you’ve paid through the first two years of your mortgage.
‘In an economy that is managed properly, homes would not be too high priced”
Here’s what *you* don’t understand. Business cycles are natural. Commodities should rise and fall with demand, and yes, this includes houses too. Fewer young people means that demand drops and thus, the price of the oversupply of houses should drop. This administration is printing money to ensure this doesn’t happen - taking on increasing debt. Essentially - all the young people, your children and grandchildren are paying money so that your home doesn’t drop in price.
The drop in housing prices is a sign of a healthy economy, because it indicates the operation of true price discovery.
“I don’t think house prices are evil”
That’s because it’s your largest asset. You want the government spending other peoples money in order so that you can keep yours.
“Why are home prices under downward pressure?”
Demographics. There are fewer young people than boomers. Hence less demand for housing.
“You see, fixing home prices downwards”
It’s not about ‘fixing home prices’, its about allowing the market to actually function by permitting true price discovery. Intervention is having the effect we would expect in driving demand even further down.
“I don’t advocate the decline of property values”
You don’t believe in free markets.
“steady gainfully employed people stuck their neck out and deserve to lose their shirts”
So what you favor is pricing out gainfully employed young people from purchasing a home for their family to live, so that boomers can live in them for a few more years and sell at a profit (to whom, I might ask)?
“You think market manipulation, and immediately see housing as the big problem.”
Housing is the single largest expense for the federal government in terms of economic intervention. So yes, I’m going to criticize the policy of the government that insists that housing prices MUST.NOT.FALL.
“I am looking at the root cause of the problem and you’re focused on a symptom.”
Which is why you’ve completely ignored my point about demographics?
“Meanwhile the population kept expanding”
Again, you are ignorant of demographics. The population of boomers is greater than the population of younger folks. This means that policies which protect boomer assets will be pursued for quite some time at the expense of the (smaller), actually working-age population. Hence why houses must be protected.
“baby boomers you want to blame”
I blame their bad economic policies for exacerbating present economic difficulties. Houses are a commodity. Houses need to fall.
“And guess what, the full employment stream of tax income”
See, this is what you don’t get. You’re a socialist. You believe that the government should guarantee full employment.
“I have actually seen folks on the forum talk about doing away with Social Security, just cut it off, who cares that upwards of 40 million citizens would be homeless and starve to death in short order.”
Right now, what social security does is steal money from poorer people and gives it to people with high assets. Eliminating social security would reverse this, so that poorer young people would be able to keep their earnings.
“Now you trot in to say they investment they spent 40 years developing”
Investment, my ass. If it were an investment, then you could cancel social security instantly and boomers would recieve what they paid in.
It was never an investment. It was a ponzi scheme.
“Baby boomers didn’t cause this problem.”
Then Baby boomers have a decision to make. They can choose to perpetuate the problem or they can choose to be the solution.
“It’s not their fault that the American public was betrayed by their leaders in Washington, D. C.”
Boomers have been running the show in DC since 1992, 21 years now. When is it going to be the boomers fault for their epic economic mismanagement?
“What happens if we suddenly devalue homes by 50%? Who eats that loss?”
Homeowners won’t eat a loss. Home sellers will.
“Who supports the individual homeowner, particularly ones who are ready to retire?”
Obviously it is the proper duty of the government to protect the homeowner in his sacred ‘investment’.
“As we watch the baby boomer genration die off in short order so you can own a home, will that ease your pain?”
Right because the market economy will kill boomers.
“How about joining some of us”
I’m not a socialist who believes that the government has a duty to protect the sacred investment of a house.
“If you think housing is the key part of our economy that isn’t running according to a healthy capitalist plan, boy do you have some things to learn.”
Housing is a commodity and ought to rise and fall with supply and demand. Artificially propping up the price will ensure that homeowners are devastated once the props fall.
There is that but as you say, those are hidden and forbidden facts to the der Fuehrer and his administration.
That fact should be broadcast far and wide and it should be the initiator of mass unrest. The worthless bastards on both sides should be terrified.
Don’t go into hock. Don’t obtain a mortgage. Don’t look for a house that is THREE TIMES your yearly income. Look for one that you can buy for cash, that has low property taxes, isn’t in a bad area.
If your job isn’t making you comfortable money, you don’t need that particular job. Relocate to an area with cheaper homes.
Go to a tax sale, sheriff’s sale, foreclosure sale. Check out the for-sale-by-owner houses too.
Tax sales in my area offer good solid houses for under $5000. I personally know two people selling their homes for $15k and $25k, and they are lovely old homes. Mine was way less and over 2500sf, 3 baths, 6 bedrooms, and a 2-car garage. My income is under $10k. Property tax $350. Income tax $0.
You don’t need more debt, and a house is not necessarily a good investment, and even if it is, should you go into debt to make an investment?
Just go hunting for sensibly priced real estate. Try realtor.com, research the communities you find affordable, and look up their tax sale listings.
I am just curious, what part of the country do you live in? The prices you quote on “lovely old homes” at 15K & 25k (w/ $350 for your own property tax) seem incredibly low. Are we talking row houses in a depressed area?
Sheriff sales are good sources of low (for the neighborhood) prices but are NOT bargain basement “just pay the back taxes and it’s yours!” Usually their is a mortgage holder involved and the bargain comes in at a “short sale” which the mort holder must accept (or not).
Homes that have sat vacant w/o utilities for even a year are money pits. Rodents, mold, mildew, insects...and add in vandalism (copper pipes stripped; fixtures). “Fixing” to habitable (not enjoyable) living can be expensive.
My point in all of this is financial prudence. An affordable mtg on a SAFE, livable property, in an area where jobs are, is more reasonable than a cheap cash only buy, headache. Mortgages are not bad if the buyer lives within a well planned budget.
I live in Pennsylvania. Our area is currently getting an influx of people I recognize as refugees from urban areas of the East Coast which shall be nameless. Nevertheless it’s still over 95% what it was: people of white European ancestry, middle class, and most of them descended from immigrants who worked in coal mines and silk mills and such places.
There are no uptowns and downtowns here, no better and worse areas that I could label, certainly no “distressed” areas. There are row houses and multi-family houses that used to be single-family. There are plenty of single-family dwellings, plenty more than there are row houses. The houses I referred to ($15k and $25k) are single-family detached with good-sized yards. I know it’s incredible. The only people inclined to believe it these days are people in the cities, desperate to get out of there, nothing to lose.
As for sheriff’s sales, I’ve been to so many. You do your homework and you’re fine. Searching title isn’t difficult. And if you get title insurance, you don’t have to pay the back taxes. Also, if you have a little sitdown with the tax bureau you are likely to come away with tax forgiveness no matter what. They don’t want these properties on the books. Same thing with the mortgage. You don’t have to pay anyone’s mortgage debt at a tax sale, not one I’ve ever been to.
I don’t care to identify the area specifically and you can find it or similar just by researching a little at realtor.com or the mls.
It’s understandable that people who’ve lived a long time in one area, don’t readily believe that homes are a tenth of the accustomed price, in some other area.
The two places I mentioned would be easily over $100k in Doylestown or Wilkes-Barre or Stroudsburg. In the NY-NJ metropolitan region they’d be over $200k and come with crime stats in the stratosphere, and you wouldn’t be allowed to own guns either.
Trouble is, people seldom look beyond the immediate and familiar.
You say, “Mortgages are not bad if the buyer lives within a well planned budget.” I say they are immense debt and ponderous anchors that fix people in places they’re not happy or even safe.
Normal for most of human history.
We live in a consumerist society that atomizes groups and families into individuals in order to extract money from them. In a “service economy extracting monies for “homes for the elderly” is one way of moving monies from private hands to the healthcare-industrial complex. Beware and shield your assets.
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