Not all investments are for the express purposes of generating money.
What else is an investment for then?
Hey guys,
I have been pondering this very issue.
If you were renting a house for $400 a month, and the opportunity came up to buy a house for $600 a month after the down payment, and you could afford to put 1200 a month towards paying down the mortgage....
thats a good financial move for someone with no debt etc etc etc.....right? from an off the cuff standpoint.
Works out even better if you can live there longer than you have a mortgage.
I would just make sure that $600/mo was fully inclusive and not just the mortgage payment.
Mortgage + taxes + insurance + utilities minus electric to make a good comparison.
Also, will this $600/mo house need any fixes, improvements, etc? Will you need to buy appliances? What about yard care?
Do you have the cash to pay closing? It'll run between $2500 and $5000.
Do you have the cash to pay for the move? Depending on your resources and how much stuff you have, it can be costly as well.
That $1200/mo gets whittled down real quick. Especially if you calculate any savings for future home maintenence/improvement.
That's EXACTLY how you do it! Reps inbound.When we rented, we made sure our rent payment was around half of what we thought we could afford for a mortgage. Every time we paid rent, we matched that in the savings account towards a down payment. Once it started to add up, it became more of a game to see where else we could cut our budget and put that towards the down payment. Then we took out a mortgage that was only about $180 more that what our rent was, thanks to the larger down payment. It worked for us.
I think too many people try to rent at around the same amount as what they think they can afford for a mortgage payment, then they're never able to save enough money for a decent down payment.
We've subscribed to the Dave Ramsey notion that you need to put at least 20% down on a 15 year note.
good thoughts. yeah that 600 is taxes and insurance and everything. The closing is 2900, the cost of the move is zero, since its about 1/3rd mile down the street.
We have about 20 grand to put down on it, and the cost of the house is 102,000.
My plan is, we are paying 400 a month now for rent, + saving 800 for the house to a savings account.
If we bought the house, I could pay that 1200 straight into the mortgage with no change in the lifestyle we have been living for years.
My thinking.. is that might be a good idea. Still... talking large dollars here, and renting sure is.. convenient.
for Ramsey, but IMO, what you need to do depends on what your end goals are and what the opportunity cost of doing it differently will be. Ramsey pigeon-holes everything into a financial matter and discounts the non-monetary aspects of decision-making a good portion of the time. His only standard is the anti-debt one. Sometimes there is more value in a Ramsey-poor choice than there is in getting out of debt 3 years earlier.We've subscribed to the Dave Ramsey notion that you need to put at least 20% down on a 15 year note.
for Ramsey, but IMO, what you need to do depends on what your end goals are and what the opportunity cost of doing it differently will be. Ramsey pigeon-holes everything into a financial matter and discounts the non-monetary aspects of decision-making a good portion of the time. His only standard is the anti-debt one. Sometimes there is more value in a Ramsey-poor choice than there is in getting out of debt 3 years earlier.
There's nothing wrong with any financial decision made with full information and rational and responsible decision-making.
Seems to me you could not be more wrong about DR.
The debt snowball is clearly based on the mental aspects of an debt laden person .
He is the psychologist to the indebted.
Nope, not wrong. Ramsey considers one thing and one thing only. I'd argue that such an approach can lead to a debt-free but just-as-unhappy individual as one who holds too much debt.
There is more to life than not owing anybody. And if accumulating debt is done smartly, even if it is subordinated to other factors initially, it doesn't have to becoming the crippling weight on a person's shoulders.
Debt isn't bad. Bad debt is bad. Debt is a means to an end and a tool for some people to achieve other things in their life. Ramsey's approach ranks debt as the primary (sometimes the only) factor to consider in making a decision. I disagree with this.
Ramsey's advice is ONLY sound if the primary goal is to be debt-free in the shortest amount of time. From that standpoint, he's a genius. From living a life and being happy, he doesn't necessarily make the grade.
Nope, not wrong. Ramsey considers one thing and one thing only. I'd argue that such an approach can lead to a debt-free but just-as-unhappy individual as one who holds too much debt.
There is more to life than not owing anybody. And if accumulating debt is done smartly, even if it is subordinated to other factors initially, it doesn't have to becoming the crippling weight on a person's shoulders.
Debt isn't bad. Bad debt is bad. Debt is a means to an end and a tool for some people to achieve other things in their life. Ramsey's approach ranks debt as the primary (sometimes the only) factor to consider in making a decision. I disagree with this.
Ramsey's advice is ONLY sound if the primary goal is to be debt-free in the shortest amount of time. From that standpoint, he's a genius. From living a life and being happy, he doesn't necessarily make the grade.