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It seems people are going further and further into debt these days. I really don't care how much debt people get themselves into, the main thing I am concerned with is prices.

Supply and demand is greatly affected by how much someone is willing to spend. Credit might start affecting prices, if it already hasn't.

Good examples are homes. 50 year mortgages and loans where people build no equity are driving prices up to ridiculous levels. What happens to the smart consumer who wants the 30 year fixed mortgage and has a 20% downpayment? He doesn't get the house because there are 3 people willing to make a dumb move and pay 2-3 times more than the house is actually worth.

For every financially smart individual who shows restraint when it comes to what they can afford, there are 10 financially stupid people out there willing to put it on their credit card or take the car/house payment they cannot afford.


Maybe I'm young and it's just a shock to me how stupid people can be with money. I just cannot believe how much debt the average American has.

Does anyone buy anything outright anymore!?
 

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I buy my bikes outright all the time. I also bought my cars outright. I wish I had the money to buy my house outright.
 

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dennisred69 said:
I buy my bikes outright all the time. I also bought my cars outright. I wish I had the money to buy my house outright.
+1
 

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Discussion Starter #4
dennisred69 said:
I buy my bikes outright all the time. I also bought my cars outright. I wish I had the money to buy my house outright.
I'm in the same boat.
 

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SHIT!!! i wish i had the money to buy my cars outright. I do work hard for a living and i make about middle class pay. but i have never bought a new car outright maybe a decent down payment but thats about it.
 

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I also know my limits to borroing money, know what i can afford and i also know what i am going to pay in the long run, and i am ready to pay it.
 

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I bought my jeep liberty under zero percent finance. I could pay it off now but with no interest, what's the point. And yes debt is getting out of hand.
 

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dennisred69 said:
I buy my bikes outright all the time. I also bought my cars outright. I wish I had the money to buy my house outright.
thats good spending habits....however, despite the good feeling of paying for your house outright it is not always the fastest way to accumulate wealth. interest on a mortgage is tax deductable and you should benefit from this while deferring any extra money to a tax sheltered retirement account that will make a higher rate of return than the interest rate on your mortgage. most mutual funds should give you a better return than your interest rate on your mortgage. but funny thing is living in SoCal I can't even afford a home...try a 1 bedroom condo for almost $400k!!!

Back to the original post...I think a lot of people are surprised (too late) at how easy it is to get into debt....and then once you are there to get back out.
 

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I think it is,the way most people are running up credit is insane.

I tend to keep my bills at unemployment level,that way if I should loose my job I can still pay my bills.
 

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alaska cajun said:
I think it is,the way most people are running up credit is insane.

I tend to keep my bills at unemployment level,that way if I should loose my job I can still pay my bills.
I keep my bills down so I can afford my bike :) and because I'm a student... but yeah, good point.
 

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redcbrla said:
thats good spending habits....however, despite the good feeling of paying for your house outright it is not always the fastest way to accumulate wealth. interest on a mortgage is tax deductable and you should benefit from this while deferring any extra money to a tax sheltered retirement account that will make a higher rate of return than the interest rate on your mortgage. most mutual funds should give you a better return than your interest rate on your mortgage. but funny thing is living in SoCal I can't even afford a home...try a 1 bedroom condo for almost $400k!!!

Back to the original post...I think a lot of people are surprised (too late) at how easy it is to get into debt....and then once you are there to get back out.
Thats some good advice. I have a guy that has done my taxes for the past few years. I own a body shop so the taxes get out of hand and to easy to mess up so I pay him to take care of all that. I will have to see if that is how he takes care of the house or not. Sometimes I have to spend more or I owe the IRS way to much. Thats when it's time to pay for signs to advertise a new truck to pick up paint ect.
 

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I have less than $1k in payments total including gas, utilities, food, hair cut etc etc per month... and I own a house (which went up 40% in the last year)

hows that for unemployment level spending :)

(of course that doesnt include track days, tires, etc etc lol which accounts for the rest of my money! )
 

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redcbrla said:
thats good spending habits....however, despite the good feeling of paying for your house outright it is not always the fastest way to accumulate wealth. interest on a mortgage is tax deductable and you should benefit from this while deferring any extra money to a tax sheltered retirement account that will make a higher rate of return than the interest rate on your mortgage. most mutual funds should give you a better return than your interest rate on your mortgage. but funny thing is living in SoCal I can't even afford a home...try a 1 bedroom condo for almost $400k!!!
Unless the government is paying for the entire cost of interest on your home, you are better off paying off the house in full. And even then, remember that in America you never really own your house. That's why you are expected to pay rent on it, aka "property taxes", the recent Supreme Court decision basically reaffirmed what was already taken as given about home ownership in America. I say "in America" because in other countries, say Greece, where my family came from, there is no such thing as government land rent on people's homes for the majority of the people. If your property value exceeds 300K dollars then you have a very small property tax. Seizing people's homes for taxation purposes is largely unheard of. For the most part, once you have a house there it is yours, period. That's why homes in Greece have been in families for generations. And be careful about encouraging people to invest in mutual funds, with and a economy under the burden of trillions of dollars in debt, and a very weak dollar, and internationally politically unpopular warmongering government, there is no reason for anyone to assume they well get returns on any of their private investments in this country, especially since it depends on 2 billion dollars a day foreign investment just to stay in place.
 

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I have a shit load of debt i have been trying to pay off for a couple years now.....my plans didnt go as smoothly as i thought. I figure rack up a card while in college cause ill be making money when i get out.....yea....little did i know how fucking hard it was going to be to find a good paying job even with a degree. I finally found one and should be debt free in maybe a year, but damn....i learned my lesson. No more racking bills up again. From now on im paying for everything with cash.

But, i don't think im the type of person causing problems. I have always made my payments on time. I can afford all my bills to. It's just i have alot of them. My credit is fine and will be great once i pay everything off. I never take a bill if i know i can't afford it. It's just going to take me some time to get everything paid off.
 

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It all comes down to responsibility. And we live in a time where, arguably, people are as irresponsible as ever-- and not just with respect to finances either.
 

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dennisred69 said:
Thats some good advice. I have a guy that has done my taxes for the past few years. I own a body shop so the taxes get out of hand and to easy to mess up so I pay him to take care of all that. I will have to see if that is how he takes care of the house or not. Sometimes I have to spend more or I owe the IRS way to much. Thats when it's time to pay for signs to advertise a new truck to pick up paint ect.
Heck even if you don't qualify for more tax deductions due to the interest on your mortgage (which I am sure you do and that your accountant is already including in your taxes) it is pretty easy to beat the 5-6% interest rate that most people can refinance their home for. In the end it is about leveraging your money. The other route instead of the stock market it to use that extra money to purchase a rental property...just make sure you crunch the numbers so you don't over extend yourself. If you are intersted in learning more yourself "Personal Finance for Dummies" by Eric Tyson is a great book that is also relatively entertaining to read.
 

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bugeyed said:
Unless the government is paying for the entire cost of interest on your home, you are better off paying off the house in full. And even then, remember that in America you never really own your house. That's why you are expected to pay rent on it, aka "property taxes", the recent Supreme Court decision basically reaffirmed what was already taken as given about home ownership in America. I say "in America" because in other countries, say Greece, where my family came from, there is no such thing as government land rent on people's homes for the majority of the people. If your property value exceeds 300K dollars then you have a very small property tax. Seizing people's homes for taxation purposes is largely unheard of. For the most part, once you have a house there it is yours, period. That's why homes in Greece have been in families for generations. And be careful about encouraging people to invest in mutual funds, with and a economy under the burden of trillions of dollars in debt, and a very weak dollar, and internationally politically unpopular warmongering government, there is no reason for anyone to assume they well get returns on any of their private investments in this country, especially since it depends on 2 billion dollars a day foreign investment just to stay in place.
No offense, but aren't you the same guy that seems to buy into the World Trade Center collapsed due to controlled demolition conspiracy? The US economy is not ALL doom and gloom and our whole entire government is not corrupt. As far a property taxes are concerned...how in the hell else do you expect to pay for schools? And nothing against Greece or anyone from that country, but Greece is not exactly an economic powerhouse so their home tax policies might not translate to the US.

In the end MANY MANY MANY financial advisors recommend the same thing I just did. It is called leveraging your money and if you aren't comfortable doing it in the stock market you can do it by purchasing rental property.
 

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redcbrla said:
No offense, but aren't you the same guy that seems to buy into the World Trade Center collapsed due to controlled demolition conspiracy? The US economy is not ALL doom and gloom and our whole entire government is not corrupt. As far a property taxes are concerned...how in the hell else do you expect to pay for schools? And nothing against Greece or anyone from that country, but Greece is not exactly an economic powerhouse so their home tax policies might not translate to the US.

In the end MANY MANY MANY financial advisors recommend the same thing I just did. It is called leveraging your money and if you aren't comfortable doing it in the stock market you can do it by purchasing rental property.
Yeah I'm the same guy. So what? Maybe you can explain why Greek people get FREE primary AND college education, AND health care all while not having property taxes and still own their homes outright with NO chance the government is going to take it away from them? And that many financial advisors recommend something is a quick and easy way to lose your shirt. The more that recommend an investment the greater the contrary indicator that that investment better be avoided. They were all screaming to buy into the tech stock bubble before it collapsed, just like they are all screaming now to get into house bubble. Screw these financial advisors.
 
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