I've heard from some financial planners that living debt free isn't always the best way to go............I'm still wondering why.
While I don't live debt free I don't have any real credit card debt. I still owe about a grand on a car I purchased over a year ago on a credit card with 0% interest, which certainly beat a loan. And I purchased a minivan for my wife last week. We were going to pay for one in cash but decided to get something a little nicer. After searching for over three weeks for a van at a phenomonal price I found a 99 Quest with 36K on the motor for $13,000....on sale for $11,000 which I told the salesman I'd buy if he could get it to me under $10,000...........sure enough I got the van for $9,200 plus tags and title and fees which came out to be $9,997.23 (I did good). I put $4,000 down on a three year loan but will have it paid off by this time next year.
That's hardly debt free, me thinks, but when it comes to cars what else can you do?
Does anyone else forego spending to live debt free? Why?
(And does anyone else do insane things like look for a great deal on a van for three weeks before buying one?)
Comments
Working to financial freedom
Was getting more and more debt until 5 months ago when I decided to change. Now, my credit cards are paid off and I'm paying down my home loan with lump sum payments. Will be debt free in 5 years with 4 sons (2 in college, soon 3), a wife (who works full time), 3 cars (paid for). Still use my credit cards, but wisely and pay them off before due date (which I write on the credit card so I don't forget). I like the rebates and cash-back which I use to buy stuff I normally would anyway. Much happier now even when my employer cut our salaries 8% (better than loosing your job).
BTW: I had a Pinto too which was a great car for me. Even dropped in a second engine while in college. Drove it 130K miles.
Don G.
Debt and Credit Cards
First off, no offense to those of you who have posted to the contrary, but credit cards are NOT necessary to book reservations, make online purchases, etc. Go to your bank and get a debit/check card that is linked to your account. Bam. Simple as that. No door waiting to be opened for you to spend over your means. Also, the credit rating thing is somewhat of a myth. We have cut up and stopped using our credit cards for over two years now. We finally sold our house in Arkansas, at an unfortunate loss, and had to take out a personal loan from our bank to cover the difference (because a short sale was not an option, in our eyes.) Our banker told us that we had the best credit rating he had seen in a long time. This is probably because we have been making payments on our "debt snowball" (Overpaying on the smallest debt first until it's paid off, then the next smallest debt, etc.), not because we haven't been making credit card purchases. However, if you have money saved that is yours, banks will consider that when lending for a mortgage, etc. A "debt" rating is all a credit rating is. For example, Dave Ramsey (a millionare) points out the humor in that he no longer has a credit rating, because he stopped borrowing alltogether, long ago. Also, you DO get better deals on purchases, especially large ones, when flashing cash.
I just want to help my fellow LHBA-ers with reaching financial FREEDOM!
Good luck
JP
Debt Free
Sorry to bring open up an old thread, but I wanted to post that we read Dave Ramsey's book, and while I already knew most of it, it was still worthwhile just for the motivation factor. AND..........drumroll................ We just paid off our LAST debt (on paper, anyway) THIS WEEK!
We'll likely go back in debt for a land loan, but that's it, and we'll pay it off asap. Time to save up, buy land, and figure out what we're going to live in while we build.
Best of luck to everyone in the debt-free endevors!
Catherine
SAH mother of 4 under 6 - loving homeschool!
Birth doula and new midwifery student
Class of 9/2-3/2006
Congrats
Thats so cool .I sat next to you in class .Jim
Hey Jim, I'm suprised you
Hey Jim,
I'm suprised you remember me still!
I've only been on the boards off and on given we've been moving, building (adding on and remodeling the house we sold in December, finally), and having kids so I haven't kept up with anyone really --so what've you been up to? Where are you in the process? We're still dreaming and hoping and SLOWLY getting closer.
Thanks all,
Catherine
SAH mother of 4 under 6 - loving homeschool!
Birth Doula and student midwife
Class of 9/2-3/2006
Congrats!
Great job!
Out of debt
4 years ago I had over 60K in unsecured debt and two years ago I finished paying off my debt. I now for two years have been unsecured debt free and have not had a credit card since. I did not use bk and my credit score is over 699. I will say I did not pay the entire 60k but instead I came to an agreement with my individual credit card companies.
By the way, I have flown all over the world, used no credit card (only my debit card), rented cars in major and non major cities in foriegn countries without one problem. Just know that most rental companies put a $250-$500 hold on your card, and most hotels hold the amount equal to two to three days of stay or your proposed stay time.
Some hotels will book you with $100 cash deposit for incidentals.
If you have any questions for me and how I am now credit card free and enjoying life at 30 years old. Email me.
Lnxn8 at aim dot com.
Money As Debt
1. http://www.youtube.com/watch?v=vVkFb26u9g8&feature=related
2. http://www.youtube.com/watch?v=sanOXoWl0kc&feature=related
3. http://www.youtube.com/watch?v=kTv1fo6sKmo&feature=related
4. http://www.youtube.com/watch?v=3qicabStQkc&feature=related
5. http://www.youtube.com/watch?v=7kpSbkaD4tM&feature=related
Crazy for Suze
Speaking of financial advisors, I worship Suze Orman. She is my guru.
Frances
Debt free and CCs
I am almost debt free. Just a small mortgage on a condo that should be paid off this year if I don't sell it first. As for Credit Cards? I have well over $100,00 in available credit on cards. I have zero balances except for the cash rebates I'm saving to buy something foolish. I own my land and vehicles outright. I didn't give myself a chance to waste money. If I had a few extra dollars I paid it toward my mortgage principal. Every payment since the first I paid extra. I don't buy anything I couldn't pay for in cash, but love collecting the rebate credits. I've lived frugally for a very long time and am just now able to see it as well worthwhile. Freedom for us is just around one slight corner.
Save the money on books and seminars. Pay that money toward your highest rate credit card and do not use it. When that one is paid off do the same to the next most expensive. In time, one by one you'll get them paid off. Of course try to renegotiate the rate on all credit cards. Then the hardest part starts. Not using them again unless you have the cash to buy it. The cash has got to be in your pocket when you buy it, not expecting to use cash you're going to get at the end of the month.
I have a wonderful family, a beautiful 15 yo daughter and an incredible 18 yo autistic son, a beautiful wife and no debt. We have become asset rich slowly and our future appears secure. Now we need to learn to enjoy S-L-O-W. I feel for those that are struggling and almost feel guilty because we are no longer.
Keep your eye on the goal.
edkemper
Debt Free Living
I was very pleased to see that there are others on the forum who are graduates or believers in Dave Ramsey's program. I had a feeling that the types around here would be the types to have common sense! My wife and I were given his book, The Total Money Makeover, for a wedding gift 4 years ago, and it is the most valuable thing we received! Plain and simple, credit cards are bad!!! A check card does the exact same thing...except put you at the mercy of a lender! The borrower truly is slave to the lender, as Dave quotes from Proverbs 22:7.
Here it is again, for anyone new to this topic: http://www.daveramsey.com/the_truth_about/debt_3036.html.cfm
Build on!
JP
Frigid Minnesota
Attending Feb/09 class
Kansas living
Sat, 2009-01-10 07:52
For those who are more interested in independent living debt free than log homes, there are some fabulous opportunities in Eastern Kansas. A friend here in colorado just bought an fha foreclosure near a small town in eastern kansas. 2300 square feet, 4 acres, septic system for $23K and no that is not a misprint. That is less than many folks credit card balances. Tough to make a living there, but if you are homesteading/hobby farming in retirement that type of area is difficult to beat. My grandparents are from that area and also family in Missouri. Just an idea. Also availabe in 20 and 40 acre parcels is land that is difficult to farm but ok for grazing cows and goats for affordable prices.
Anyone looking for free labour??
This comment has been moved here.
real estate
In my opinion Real Estare is not an investment at all, unless you invest your money in building your own home and build it yourself.
If you want to buy a brand new conventional home with mortgage, you'll pay off principal plus almost two times more in interest.
All you'll get after thirty years paying off the MORTgage, taking care about home and reparing it, all you get is a thirty years old house frame with old utylity lines.... !
Why ? Because during this 30 years you will change at least one time the roof, siding, all appliances and fixtures, flooring, paint the house few times and so on... spending your hard earned money(what is not easy when you make mortgage payments). If you buy older house, you have to do it twice !
Now just do the math, how much is actualy to build a house frame, and how much you have to pay in 30 years for this old frame... ???
Is this realy an investment ?
In last few decades realtors, bankers and the media so brainwashed our heads that almost all people belive that "good"debt and real estate are an investments... no wonder that whole country is in so big troubles now.
G.T. investment
check the death calculator on intrest paid
this is what makes me want to stay away from 30 years
http://finance.move.com/homefinance/calculators/mortgagecomparison.asp?calculate=True&hidmoPmt_10=%241%2C388&hidtotPrin_10=%24125%2C000&hidtotInt_10=%2441%2C531&hidtotPmts_10=%24166%2C531&hidmoPmt_15=%241%2C055&hidtotPrin_15=%24125%2C000&hidtotInt_15=%2464%2C868&hidtotPmts_15=%24189%2C868&hidmoPmt_20=%24896&hidtotPrin_20=%24125%2C000&hidtotInt_20=%2489%2C929&hidtotPmts_20=%24214%2C929&hidmoPmt_25=%24805&hidtotPrin_25=%24125%2C000&hidtotInt_25=%24116%2C613&hidtotPmts_25=%24241%2C613&hidmoPmt_30=%24749&hidtotPrin_30=%24125%2C000&hidtotInt_30=%24144%2C798&hidtotPmts_30=%24269%2C798&principal=125%2C000&intRate=6&ntc-form-sub.x=42&ntc-form-sub.y=15&poe=homestore&source=a12661
now thats a link
G.T. investment
Here's one of my favorite quotes. It's by Doug Casey,
and Rick Buchanan (yep, me):
“…a house isn’t an investment, it’s a consumer good. It’s like a toothbrush, suit of clothes, or a car; it just lasts a little bit longer.”
"An investment creates new wealth through both goods, and services, while attaining a value of its own based on the revenue of the goods, the stimulation of the economy by creating jobs, and cycling money through the economy by the creation of those jobs."
Richard Chellis Buchanan, Common Sense lll
Doug Casey, Financial sense Editorials
Skip was right; Build it for cash
Build it for little cash
work hard, stash cash, and economize
-Rick
1895 8th grade test?
Not to sound like I'm an old man, but that 1895 8th grade test was bassically my grammar school curriculum ---add to that biology WITH disection, physics, chemistry, a foreign language,(and latin from my Parochial school days) and you have it.
Maybe I'm experiencing "future shock" but at what point (when) did they stop teaching how to diagram a sentence or use phonetics in public schools?
In defence of modern school children, I will say that they are faced with learning things that the older generations did not and at a more complex level---however, complexity may have trumped learning/ground in solid basics.
Can't tell you how often I find that work colleagues can't do fractions (far too many to count).
Kola, As usual, good points
Kola,
As usual, good points and great TRUE history!!! Getting back to the original thread....
As for me and my house....we own everything we have, paid cash for all 3 of my vehicles, we have 5 figures (dollars not cents!!! :-) in the bank (real money, not paper (ok I mean stocks, 401k, etc. - I know it's all just paper)) that I could pull out today get naked and roll around on the bed in it....ok, bad images coming to mind...sorry! But we do have a credit card that we do make purchases with just because I don't think it is good to carry around a large wad of cash now-a-days. We NEVER buy anything I can't pay off each month and am lucky to have a wife that doesn't over spend (not a shot against all wives just glad I have this one!).
We want to pay for our place with cash, grow our own food, hunt or bargain for meat (like some others mentioned in another forum), have a well, solar, etc. It is to reduce our dependence on any company run utilities or goverment overpricing that is going on now. In my opinion, things are getting worse a whole lot faster than they are getting better so I am going to do something while I am still young enough (40s).
Everyone has to do it their own way based on their own situation. I wish everyone here good luck!!!
The_Truth, It seems we are
The_Truth,
It seems we are pretty much in the same debt free situation in life. It is important that we all know how to get out of debt, and live well. If we are so dependent on the system to take care of us, what do we do when the system is down? If you can make yourself independent of the system, when the system takes a dump, you can ride out the problem. If you can provide your food, clothing, and shelter, you are ahead of the game.
Some time ago, I read that 8th grade test. Wow! It is an eye opener.
Tom
nobleknight
class 01-15-05
to each his own..ahh yes
The Truth quoted: "Everyone has to do it their own way based on their own situation."
==================================================================
Exactly! A person cannot change another person. (that too would be a invasion of individual freedoms). But a person can lead by example and hopefully that will ignite some sparks thus inspiring other folks to do something similar.
Speaking for myself, I refuse to live in fear. Things could get very very bad and maybe they will straighten out (although I see no logical solution from our government to get back on track). In fact IMO, they directly or indirectly created this mess. But to eliminate all the fears, the worries and the nailbiting (of NWO, SHTF, Armegeddon, Martial Law etc etc) I want to be prepared...for the worse...just in case.
And even if nothing happens, all my preparations and hard work will not be wasted as I will still be utilizing all the self sufficient skills I created.
I too, wish everyone the best of luck in these coming years. We must all do what we feel is best and respect everyones personal decisions.
btw, The "Dumbing Down of America" is a great avenue to explore. There are many good books on the topic. I also enjoyed the book (and movie)entitled "Equilibrium". Its a cool read about a future-istic society in which big gov sedates and suppresses the emotions of the common people. (hmm, sound familar?). Big Gov makes it illegal to own books, paintings, flowers, kiss, hug etc. Surveilance cameras are everywhere and (TV screens too) which broadcast controlling repetitious messages about safety and fear. Of course there are underground resistors and the story is all quite believable and interesting. I won't say much more in case someone wants to rent the movie or buy the book. btw, the book is much better.
Kola
Debt
Thu, 2008-06-19 09:44
New to this, been reading forums, planning to take course as soon as I can.
Read this forum carefully. I only wish it had been available to me 25 years ago. We are a country of debt. We exist on debt. Anyone who may have had questions about debt, even for a home, need look only at current events to know that there is no such thing as good debt. Money borrowed at 6% is wonderful if it is earning 12%. And nothing bad happens. If something bad happens, You lose. Everything, in most cases. Mr. Banker and Mr. Lawyer and Mr. Politican care little for you or your family. Pay for it. In cash. Period. Then it is yours to do with as you please. That includes a home. Borrowing to avoid taxes is a mathmatical fantasy for most of us, except in certain limited cases. And then not advisable from a risk standpoint. I learned. The hard way. Wish I could drive that point home and save some soul from what the bankers and lawyers have in mind.
Well said.
cntrydan,
I couldn't agree more. Turn on the news, and you here the 6:00 bimbo tell you, with a painted smile, 'we are the richest nation in the world'. Well I don't know about you, but current affairs tell me we are the world's biggest debtor nation. We have things, but we do not have wealth. For years, I have worked to get out of debt. I only have one vehicle payment left. I own 99% of my 'stuff'. Everyone should work at this. It would be better to own a cottage, than be in debt for 30 or more years.
Tom
nobleknight
class 01-15-05
gold
I would advise against putting too much of your wealth into gold. Like any commodity the price is controlled by industry insiders who control the mines. If they want to lower the price, they increase production. If they want to raise the price, they decrease production.
Buying a pile of gold and thinking it's a way to protect your capital from the fluctuating dollar and US inflation is no less dangerous than investing in the stock market or realestate.
Gold, Real Estate, Stock Market and EOTWAWKI
Buying a pile of gold and thinking it's a way to protect your capital from the fluctuating dollar and US inflation is no less dangerous than investing in the stock market or realestate.
It really depends on what you forsee happenning in the future. I would definitely draw a HUGE difference between the stock market and either gold or real estate. Stock in a company can lose ALL its value if that company ceases to exist. If you own gold or land, those things do not ever cease to exist. And presumably, while their percieved value may change, they will never completely lose their value.
If you envision a future where the US Currency will collapse entirely, as long as the government still exists, there would be some re-issuance of currency, so everyone would get some kind of exchange of their FRNs (Federal Reserve Notes - aka Dollars) for whatever the new currency would be.
If the government were to collapse, Land and Gold will both still have value. I would say in that circumstance, land will only have value if you are actually occupying it and defending it with force. Gold, on the other hand, is transportable, and will likely be usable as currency. (I am working on the notion that your gold investments are in the form of actual gold coinage in your possession, and not gold-based securities, which would be worth diddly in a real EOTWAWKI - end of the world as we know it - scenario.)
Klapton, You are correct.
Klapton,
You are correct. Physical possession of gold is the best. For the time being, silver's ratio to gold is out of wack, and it may be the better value over gold. Remember wealth is counted in things owned. Therefore, if you owe on your things, you do not own them. Gold rose 34% last year, my securities have never fully recuperated since 911. What is more risky, the phony fiat market, or physical gold possession?
The reason I believe the market will tank is the food situation. From my own perspective, I purchase wheat for my business. Since there are multiple wheat crop failures (5 gloabal failures) around the world the price has risen from a low of $10.49/50lb to $49.56/50lb. I don't buy rice, but the same crop failure rates are booming. Australia lost 98% of its rice crop. All this could lead to starvation and hyperinflation. It seems remote we could face this situation, because the store shelves are full. Remember, in times of storms, disaster, etc., store shelves empty rapidly. Stockpile food supplies. Build a huge pantry, or a fruit cellar, plant a garden with your cabin plans. I think we may need the supplies.
Tom
nobleknight
class 01-15-05
starvation
When people are starving they dont buy gold. Gold is just another form of currency, and it's value is control by industry insiders.
I'm glad you made 35% last year on your gold but I wouldnt count on that to continue.
Gold is a luxury item. If things get so bad that luxury items vanish, you've got a big hunk of yellow metal that's not used for anything practical (at least almost nothing).
It reminds of that tribe in Africa that uses these big rock disks as currency. People stack them up outside their houses to show their wealth to their neighbors. The community all agrees that these big rock disks are worth something. So if you have a big rock disk you can trade it for a couple cows, or a bigger house, etc.
Gold is just a version of the big rock disk. It has no natural value to humans the way food water and shelter do.
I'm not saying you shouldnt invest at all in gold. Gold is generally a stable long term investment with minimal volitility. What I said was "I would advise against putting to much of your inventment into gold". If you were a member of that African tribe I would advise you not to put too much into those big rock disks either.
history seems to repeat itself
My Grandmother told me how many people said "it could never happen"
And then it hit hard : The Great Depression.
If you care to find out the truth, a person can find out how the "Great Depression" took place. It wasn't by accident. (and not to mention how our beloved "leaders" demanded that everyone turn in their gold.
Kola
depression
The great depression is nothing compared to a collapse of the US goverment. Saying "we had a great depression almost 100 years ago so the US goverment could collapse at any time" is a massive leap of logic.
Did you know that during the great depression unemployment got as high as 30%?
That's actually quite low. In fact Iraq, since the US invasion, has been experiencing over 50% unemployment. Those who DO have jobs are being paid by the US goverment for "police work".
Plenty of people were making TONS of money during the great depression... just not poor people.
So I assume from your post Kola that you feel that if we slip into another "great depression" that those of us with gold hoards will be ok, because we'll just trade our gold for the food, medicine, water, and shelter we need to survive?
It's funny that you bring up the great depression though. Since that was the cause for many of FDR's great social programs like social security and labor unions. Of course I'm willing to bet most people on these forums would say those things are bad because they are "socialization". Either way, the great depression is what we were trying to avoid when we decided to start paying for healthcare for the elderly and allowing collective bargaining, etc.
Remove social programs and you bring us back to the great depression that much faster.
But just remember, it's only working class and poor people who suffer during a "great depression".
While we argue about stupid things like flag burning and gay marriage, our goverment and the ultra rich who control it steal all the value from the working class.
Geez, I REALLY need to move to Canada, eh? :)
pile of gold next to my emergency water supply?
No offense but I think you're being naive here.
If you really want to talk about catastropic collapse your gold wont be worth anything at all. In that situation the only thing you'll have worth anything is food, water, and ammunition. You really think someone's going to sell you food out of their emergency supply for gold in the event of a collapse of our goverment? I know I sure wouldnt... you can go ahead and keep your gold, what the heck would I do with it anyway? Gold is just another form of currency and all currency requires a government to operate.
What's going on here is actually 2 different conversations. One is "what can I do to protect myself from a complete collapse of the US governemnt". And to that I'd say a stockpile of food, water, and amunition is about all you've got going for you. Perhaps a diesel stockpile as well. Anything else is worthless.
Personally I very much doubt the US goverment is going to collapse. That's the kind of thinking that kool-aid drinking fatalsits engage in. People have been predicting the end of the world since the beginning of recorded history and so far none of them have been correct. Spending your time worrying about what's going to happen when suddenly the entire US economy collapses is an academic excercise. It's a waste of time in my opinion. The US government, and those that control it, is on a fast track to controlling the entire world. A collapse of the US government is exactly the opposite of what's happening.
The other conversation, the one I was engaging in, is more like "what can I do to protect the money I've managed to save". And again, it's my opinion that gold is just as dangerous as the stock market and real estate as a form of wealth protection. In fact I'd argue that real estate investment is much safer place to put your money than gold.
I'm sorry I know some people engage in the chicken-little style thinking and believe that we're perpetually on the brink of complete disaster but I'm not one of them. I dont believe the end of the world, nor the end of the US goverment, is at hand. In fact quite the opposite. This is the "New World Order" we're seeing take shape. One nation on Earth, one currency, one global community. Like it or not, the future is 1984 not Mad Maxx.
Pass the kool-aid.
Yuhjn,
Wow! I do not know where to begin. First of all, gold and silver will always have value. Before government, people bought sold and traded, married, owned property, and were self sufficient (for the most part). After government, people will continue to buy, sell, trade, etc. Government limits its people. We had no or little inflation, until the gold standard was abolished.
Your list of stockpiled items should also include heirloom seeds. You're pretty much in line there.
The US is like the Titanic. Once thought to be unsinkable, it has a huge hole ripped in the side. It is going down. The new world order is trying to collapse America from within. If right minded individuals have/had not fought this process, FDR's dreams would be true today, you could possibly be speaking German or Japanese, your head could be in Pol Pots collection, or you could be a royal subject to the queen of England. I think to say: saving America is an academic exercise and a waste of time is wrong. Right minded folks have fought the good fight for a long time.
I think real estate used to be a good investment. Just ask the 8000 people per day going into foreclosure since August '07. The market has been so manipulated and changed you cannot ride out the fluctuations. We have become a debtor nation.
The US government is a dead duck. When the leaders constantly refer to our republic as a democracy, you know you are toast. Leaders enact laws that are unconstitutional just to get bring home the pork and get re-elected. We have undermined the very reasons we broke away from England. Taxes, oppression, and no represention.
More than likely, if the government says they can fix something, don't count on it. If the majority believes in a leader, stay away. As a religious leader, lots of people looked up to and respected Jim Jones. He served up a mean cup of kool-aid.
Tom
nobleknight
class 01-15-05
Spreken sie Deutch? (sp)
The 8000 people in forclosre each day are NOT real estate investors! Taking a 30 year mortgage is NOT investing! It's the opposite of investing! If you "invest" in realestate you dont take a loan, you spend money you already have to buy property. Anyone who takes out a mortgage is NOT investing! Not sure where you got the idea that borrowing hundreds of thousands of dollars from a bank was an "investment" but it's not. Investing is for people who already have money. Mortgages are for people who dont want to ever have money.
We agree that the US goverment has removed representation and is now operating as a tyranical oppressor. Not sure how that makes it a "dead duck" though.
nobleknight, no offense but you seem to be somewhat pessimestic. The goverment is a dead duck, we're the Titanic, leaders that people believe in are all corrupt, FDR was trying to "destroy the country from within" and so on. Is there anything you're optimistic about? Is there any good in the world or is humanity simply doomed? :)
Are there any "good" countries in the world that are not oppressing their people?
If you really think the US goverment is going to fail and that hoarding gold will help you deal with it when it does, by all means do so. I just dont agree :) I dont think the goverment is going to fail, but even if it does, gold will do nothing for you.
One final thing I want to take exception to is the idea that we'd be speaking another language if people hadnt fought against FDR. FDR is one of the main reasons we won that war.
No offense taken.
Yuhjn,
I'm sorry If I sound pessimistic, but your post is dripping wet with pessimism. Re-read your post.
Tom
nobleknight
class 01-15-05
pessimism
Hrm, yeah I'm not really seeing it. I suppose you could say I'm pessimistic about the idea of putting all your money into gold.
Here are some things I'm very happy and optimistic about:
Gas is $4/gallon and I love it. I hope it climbs to $20/gallon! Nothing will teach people to conserve faster than a shortage. It also brings us over to green forms of energy that much faster. Unfortunatley the price of coal isnt going up fast enough. I'm somewhat pessimistic that it's price (coal) will increase fast enough to help curb world pollution, especially since the two worst polluters in the world, the US and China, have MASSIVE coal reserves.
I'm with Kola on the idea that a collapse of the US goverment would be awesome. I dont think it's going to happen.... so perhaps that's how I'm being pessimistic? I'm pessimistic because I dont think our goverment will fail, allowing us to free ourselves from the consumer-based culture we're a part of now.... no more industrial farming and no more wal-mart... I guess you're right... I'm pretty pessimistic that that is gong to happen.
Finally I dont think the idea of only educating people to the 8th grade is a good thing. You just removed all of science from human knowledge! I suppose if what you want are a bunch of people following 3000 year old bible stories, keeping them uneducated will help. Personally I'd rather people have access to advanced education. I think things like Astronomy, Physics, and Chemestry are fantastic fields of study that more people should learn about. I'm also a big fan of history. Also a big fan of questioning authorithy, including religion... especially religion.
I LOVE science and technology. I dont think there is anything wrong with microprocessors or space exploration. I think these are noble goals our civilization should be striving to explore.
A planet full of Amish people isnt my idea of a great human future. Nothing against the Amish, but I'd like to be colonizing space and I dont think the Amish are going to help out with that. A barn raising on Mars? Maybe but I doubt it.
I have a great deal of respect for the dedication, craftmanship, and devotion to ideals that the Amish have... On the other hand living without electricy, to me, is just silly. Ok maybe you shouldnt build a coal-fired power plant to get your electricy, but putting up a few PV panels and running your house for 20 years on them to me is just smart.
Technological advancment and education are not things to be shunned or feared. They are things to be embraced.
What is funny to me is that
What is funny to me is that people think that the old fashioned 8th grade education meant they were dumb. I saw a copy of one of the exit tests from 1895 (do a search "1895 8th grade test") and I seriously doubt that anyone with a bachelor's degree from a college today could answer most of the questions. Eighth grade back then meant something totally different than today's "standards". It is the government involvement in education that has continuously "dumbed down" people. That is a subject too long to cover here.
I also somewhat admire the Amish people that they have been able to sustain their life this long. They usually have strong families (while most others outside them are erroding) and as Kola said they take care of their own. They are exactly what this thread is about....Debt Free living and Self-Sufficiency.
As far as religion, that too is too much to cover here. Everyone has their right to their own opinion....THANK GOD!!!
The Truth
Chiming in on debt and investment
Taking a mortgage can be an investment. Of course you have to be a smart, prudent shopper of real estate to see what properties will bring the most return. If you are going to spend, like you say, hundreds of thousands of dollars on a home mortgage, then you should expect over a certain period of time, (which is what investment is) to earn a profit on the sale of that home. I spent 86,000 on my house 12 years ago. I can sell it for over 200,000 for sure but how much more over depends on how the market is doing. I put sweat equity into the house which added alot of value. Try to make that kind of profit any other way.
The way a mortgage is not an investment is when you buy too expensive a house with too expensive a mortgage. Remember that commercial..."I'M NOT GONNA PAY ALOT FOR THIS MUFFLER!!" Well, the same is true for any other investment. Buy low, sell high. I bought a big property, 23.5 acres for a low price. Used my home equity to pay for it and because I had so much equity, I own my property outright and will still make a profit when I sell the house. Not freakin' bad.
I'm suprised that this is the first time I've seen TEOTWAWKI mentioned here "(The End of the World as we Know It, acronym coined by Mike Medintz) (Spoken “Tee-ought-walk-ee”)": [as quoted from Survival Blog.] Unfortunately, when we talk about either the collapse of the US federal government or its attempts at total domination, I think we're really off the mark. The world is coming under control of multinational corporations and governments are there for them to control. Governments control us, multinationals control them. Our borders and our constitutions are under slow subversive attack so markets and economic regions can be created. Multinational corporations want to create land and oceanic routes without obstacles like tariffs and puny state commerce laws to move their products to their commericial destinations. Breaking down state laws and federal laws in this country would make it easier for a uniting of Mexico, Canada and the U.S into one economic based Union. That's the way multinationals look at areas...as economic based relationships. They see traditional borders as quaint and useless and as a barrier to making more money and power. Look at Europe. Did you see in the news just a day or so ago, Ireland, by voting NO, refused to join the European Union again? The rest of the "members" are angry and criticizing Ireland hard. But Ireland sees it as a huge victory for their independance.
You think the Americans won't vote away their independance?? I bet you just have to get them hungry enough and I think they will. If we, as a majority of people, DO decide we want to keep our independance and enforce our borders and maintain our constitution, let's hope we can keep our elections system honest. Privatizing (Diebold) our elections systems is giving the key to the door to the thief. Also, look at the way so many people today are attacking the Supreme Court for making decisions that ensure human rights are granted according to the Constitution. It is not impossible for the mob to bring down the Constitution and our system of checks and balances because of passions stirred by phony government conflicts (that are actually based on the future financial gain of multinationals). So-called patriotism will destroy the Bill of Rights . And we'll miss THAT when THAT'S gone!! I can see Americans giving the "Executive" full power. Electing a dictator with a phony down-home accent.
TEOTWAWKI doesn't refer to some fairy tale biblical end of the world. To put it into today's jargon, it's the end of the 'American' way of life, the end of seeing the world in a Chevrolet, of keeping the lights on for ya, of being in good hands. It refers to what's gonna happen when the grid shuts down, when the water shuts off and when the food store shelves go empty. The world won't end. You'll still be alive. But you'll probably be living a life you never envisioned yourself living.
investments
I hate to be the bearer of bad news but you lost money on this "investment".
First let's adjust for 12 years of inflation at a rate of 5% a year. So your $200,000 sale price is actually worth $108,072 in money from 12 years ago.
Next we have to realize that you didnt pay 87,000, you paid that plus a bunch of interest. I dont know what your interst rate was but I'm pretty sure it was more than 5%. So figure how many payments you actually made and how much each payment's amount was, add all that up, and see if it comes out to be less than 108,072, which it almost certainly wont unless you paid the mortgage off very quickly.
If you do all the math you'll find that you've lost money on this "investment".
And you're only talking about a 12 year turn around. Try doing the inflation and interest calcualations on a 30 year mortgage.
Mortgages are not investments.
Oh well, how have you done?
Wrong. I have a big old chunk of land that I own and I'll have a nice pile of cash in my pocket when I walk away. Not bad for paying the rent on a place with no down payment.
But I can see why you don't think so. A lot of people swear by the stock market too. Good luck with that.
invest
I never suggested you should invest in the stock market. And if you're buying land through a mortgage with "no down payment" you cant invest in the stock market. In fact you cant "invest" in anything. All you can do is borrow money from a bank and let the bank invest in you.
I'm not saying you made a mistake. I'm not saying you got ripped of or that you should have put your money into a savings account, or a mutual fund, or a hole in the ground.
I'm saying what you did was not "invest". What you did was borrow money from a bank and end up losing a little bit of money on the deal.
Heck, even if you had 87k 12 years ago, one of the best things you could do is to buy that land and sell for 200k today. In that event, you would have made just a little bit of profit. 30k or so. Not bad for 12 years of letting your money sit somewhere. Much better than putting that cash under your bed, where it would have depreciated (due to inflation) to almost nothing. 87k 12 years ago is a lot of money... today, not so much, basically half the purchasing power it had then... around 40k in 12 years ago money.
Since you didnt have 87k and you bought with no down payment, and it sounds like a land loan, it's not a 30/year. It's actually quite different and the math works quite differently. You still didnt make a "profit", although technically according the federal government you did, and will have to pay a bunch of taxes on that "profit". But in reality your purchasing power on the money you sunk into the place for the last 12 years didnt go up, it actually went down a bit.
Again I'm not saying you made a mistake, I'm just trying to debuk the idea that what you did was invest. This whole thread is about living debt free and I think your example is a great example of the overall topic.
Again please dont take my statements as an attack. You obviously had a cash surplus over the last 12 years. YOu have to do something with it, and "investing" in land is better than most things. In fact I would argue that what you did is smarter than investing in either the stock market OR gold. I'm just trying to point out how interest and inflation work to undermind all attempts by working people to aquire wealth.
Investing is something rich people do. Borrowing is something working people do.
Rich people?
Rich people also borrow money and invest it. You can borrow money and put it into the stock market if you want. It's done all the time. Say you don't want to touch your assets (if you have them) and you see something that you'd like to invest in. You can borrow money from a brokerage to buy those stocks or funds or whatever it is that you think will bring you income. The only difference is whether you do it and you can weather the risks.
Real estate is an investment. Why else would so many people be carrying multiple mortagages on properties and counting on those property sales to fund their retirements? I know a number of people who do that. If I bought outright my neighboring lot for 45,000 (or even mortgaged it), subdivided the front quarter and built 2 Skip style log cabins, I could be almost a millionaire. I could immediately pay off the mortgage and reinvest some of the profit in the lot next to that one.
Haven't you ever met a rich plumber? Try to imagine how a plumber can get rich on a plumbing business. Undoubtedly he borrowed money somewhere along the line. Did you pay for your education after years of saving for tuition or did you take out student loans? Isn't education an investment? I didn't consider your criticism of my post an "attack" but I did intend to dismiss it because sometimes I'm just too lazy to engage people. I'm a problem solver, troubleshooter and that requires being able to see the big picture as well as interpreting small clues. So it seems counterproductive to me to have such a narrow view of possibilities. No offense meant. Really, honest....
I'm a database guy
I'm a database guy. The company I work for does vital records applications for state governments. (Electronic filing of birth and death certificates, etc.) I taught Oracle db classes mostly when I was teaching, and some VB6, and assorted MS Office apps.
I'm also an avid gamer (or was, anyway... I think I'm finally sick of it). I'm actually one of the most famous Bards ever to play EverQuest, hehe. (Behind Fansy the Famous Bard, Kocho Diva of eqdiva.com fame, and maybe a couple others.)
If I hit the lotto, I have a design idea for the kewlest MMORPG EVER. It's basically a synthesis of EverQuest, Civ, and SimCity. I'll let you know when I win, and you can help me make it, lol.
Regarding rich people borrowing money to invest...
Spiralsands is right. My oldest brother was a squillionaire. (He is GOOD at math, lol). He was one of the pioneers in creating mortgage-backed securities in the 80s. He will be publishing a book very soon; an insider view of the whole mortgage meltdown. Well... I asked him once what it meant to be "rich" (since he insisted he wasn't). He said this:
"Ask yourself, 'What would happen if I quit working tomorrow?' If the answer is 'Nothing,' THEN you are rich. Otherwise you are just a wage-debt slave like everyone else who is just accustomed to nicer things."
The fact is, our entire economy is based on debt. VERY rich banks and corporations loaning each other money, with the Fed and the Treasury being the source of it all. Now... smart, wealthy INDIVIDUALS often live debt-free, because they can afford to fund their own investments. But the act of "investing" itself is essential loaning money. So there's plenty of money flowing around that is owed to everyone and their brother. It's actually the leverage of all this debt that cascaded from the sub-prime mortgage backed securities that cause the entire liquidity / credit crisis that led the Fed to step in when Bear Stearns bit the dust. If Bear Stearns had gone bankrupt, and didn't pay its debts, this would have thrown a HUGE wrench into the entire debt structure of the economy, causing a catastrophic failure where nearly everyone who owed anyone for anything would have been HOSED.
So, in light of the fragile nature of this house of cards, owning your own piece of dirt outright is probably the best thing anyone could do for their future -- whether it's Big Brother OR Mad Max, hehe. (I think the Postman would be a better picture of an American anarchy future than Mad Max, but that's a side issue, lol.)
rich
"Ask yourself, 'What would happen if I quit working tomorrow?' If the answer is 'Nothing,' THEN you are rich. Otherwise you are just a wage-debt slave like everyone else who is just accustomed to nicer things."
owning your own piece of dirt outright is probably the best thing anyone could do for their future
I beta tested UO but never really liked EQ that much. Currently playing DDO a little bit, but too busy to play much.
I used to work in video games but got out of that industry because there are a million college grads who cant wait to work 80 hour weeks for 30k/year to make video games. I dont want to compete with that, too much work for not nearly enough money. Currently I make video slot machines.
I like your brother's definition of rich. :)
I agree about owning your own dirt outright. And even if you borrow to buy it, it's probably the best thing you can do with surplus cash going forward.
Of course I still disagree that it is an "investment". Technically if you take out a loan and then buy an asset with it, it's an investment. But that's a misleading way to talk about it. It's rare for borrowed money to do anything other than cover inflation and interest and that's something most people miss. It's similar to the way some people will put their money into a 3% savings account and think they are gaining money. Well in terms of actual dollar count they are, but their purchasing power is not going up. At best it's staying the same because of inflation.
Paying off mortgage
I forget the statistic, but if I remember correctly, over the past 50 years the average person that paid off their home at the end of a 30 year mortgage generally did little better than principle preservation of their original investment. I guess if one wants to "break even" after 30 years, that's one's own business.
Of course there is the small percentage that gets a windfall when selling. But, lets be realistic, how many of us will really enjoy a 500% return on a home when were 80?
I'll be happy if I can still walk.
-A
mortgage
Yes! That's exactly what I'm trying to get at. Thank you for saying in 2 sentences what I was obviously unable to do in 60 :)
Rent alternative
To my mind, a mortgage can be used as a financial alternative to rent over the short term, but only if equity is increased in the property during the tenure of "ownership." (You want to up the actual value (improvements) of the proprety not just bank on the rise in the market price--the only way to actually get ahead in the investment and not be a willing victim of inflation that passes for a "gain"). Some people do leap frog from mortgage to mortgage to full property ownership but this takes knowledge of your housing market. For most of us that is either too stressful, to much work or both. You also have to be willing to never "buy up" in cost. Simply because you can sell one house at a gain does not mean that a more expensive house will be as profitable the next time. Most likely, it won't.
Buy low, sell high --but with a high amount of risk over the long haul.
-A
Financial planning..
I believe, there is nothing more important than knowing what to do with your money for your family's sake, for your own eventual survival. When I bought this house for no down, 5.14%, I didn't need to put all my money into it. I may have been paying interest to the bank, but another bank was paying me a hefty interest rate for the money I was lending it for investment. I've been pouring a huge percent of my income into my secure retirement fund and recently was very pleased to see that my balance was more than I could ever have dreamed. You don't need high risk accounts to make money over the long run. Risk is easier only if you are starting pretty young. The older you get started the less risk you want. Rather than rely on prejudices and hearsay, I'm proactive in researching how to keep as much of that money as possible when I retire (youngish) and how to pay as little tax as possible. I recently found out some interesting things about survivor annuities and life insurance and the tax laws that keep your hard earned money in your family after your death rather than going to the IRS Arm-Twisters when your survivors become your beneficiaries and the IRS tries to collect.
By the way, Skip Ellsworth didn't teach me about finance or philosophy or politics. His traditional log home building practices and his craftsmanship and his son and son-in-law taught me about building a house frugally and simply. This fit my already matured personal points of view like a glove. I never pretend that Skip or Ellsworth or Steve taught me anything else.
teachings of the master
Hrm.
I guess Skip has something different to teach each of us. For many, Skip teaches freedom.
I think technically it's his son and his brother-in-law. :)
Ooops!
I guess Skip has something different to teach each of us. For many, Skip teaches freedom.
I think technically it's his son and his brother-in-law. :)
Yeah, that's what I meant...brother-in-law...I knew that...well, it was a late night watching all those Carlin reruns...bad, bad me....
BTW, that's a very romantic notion about having a "master" teach you freedom. It seems almost religious, spiritual. I'm not knocking it, I just don't have that perspective. But I only speak for myself, not for many. What was 'enlightening' to me was when Sara Street told me that raising the logs on her home was the easiest part of the build so far. That was the part I was imagining to be the hardest as I visualized myself building a big log box. Do you think that Skip can teach me freedom from acrophobia??? I sure could use a lesson on THAT!! Maybe I could do a little Ridge Pole straddling Yoga exercise, balancing a demo hammer on my head while squeaking OM in my bravest high-anxiety voice. Ummm, no, I guess I'm gonna have to put out the "Help Wanted, Hobos Welcome" sign out by the road.
spirituality
Yeah I think it's accurate to say that for many, Skip's class is a spiritual experience. If you read this page of testimonials you might note how many people talk about everything they learned that goes way beyond log homes. http://www.loghomebuilders.org/log-home-building-class-student-feedback-and-testimonials.
I didnt mean to "speak for many". I was really just agreeing with what so many people already say. That testimonial page should make it clear I'm not the only one who sees a lot more in Skip's lessons than log home construction details. In fact if you search that page for the word "freedom" you'll notice it appears a whopping 82 times! Religious, not really... but spiritual, yes absolutely!
I've been digging around for a quote from Skip I remembered reading, but was unable to find it. I'll have to recite it from memory so forgive me if I dont get it quite right:
"My class is really about freedom. I teach people to build their own log homes because owning your own home without a mortgage is the first step to socio-economic freedom" --- Skip Ellsworth
If anyone has a link to the exact quote, I'd love to re-read it. I'm sure Skip said it better in the actual quote.
I guess it's kind of like the 3 blind men and the elephant, where everyone has a very different observation about the same thing. For me there is very much a spiritual element to the LHBA and Skip's socio-political phillosophy. I dont agree with 100% of it, but that's good. It means I'm thinking for myself. I do agree with most of it though.
Personally I'm so in awe of what Skip has been doing for 40 years by teaching so many people about freedom that I'm currently trying to figure out a way to take a vacation at his resort so I can meet him and thank him in person.
... as far as your fear of heights, I'm not sure Skip can do much about that. I believe Ellsworth has developed the same problem ;)
Whew! Quite an involved and
Whew! Quite an involved and interesting discussion going on here guys! I'm loving it, though I have a few points I disagree, many I am in complete agreement on! Forgive me though for not reading every post, I only have time to scan through at the moment.
Regarding the discussion of 'investing in RE' and mortgages- in my opinion, if you borrow money for 'investing', it is speculating, not investing. Investing is when you have the money to pay for it outright, and wish to make a gain on it. I'm not being critical on borrowing money for having a place to live- I've done it for buying land to build a home(though before the class). IIRC, one of the causes of the of the great depression was people borrowing money to 'invest' [speculate] in the stock market. A similar thing comes to mind- people referring to the purchase of a new car as an investment. Rarely is a car purchase an investment, most cars are liabilities and lose significant value over time.
Regarding homeschooling and gov't schools, my wife and I plan to home school, and she is a gov't school teacher, if that tells you anything.
Greenthumb, well said!
If you have no way of knowing what you're losing you can't possibly miss it. Right?
I believe, and authors that I've neglected to quote and footnote below have postulated that there really are only two ways to create wealth.
Either add to the property you control (owing an amount on a property does not make for control---you may have some "legal" control, and feel good about the "investment" you made, but believe me, the very fact of "owing" means you've relinquished your claim to control).
Or
Create property that has not existed before (creating "intellectual property" that you fully do not control is not "creating property" --although recently, American tech workers have lulled themselves into believing this is so).
Most of us work at a function/job that does neither. And most of us "invest" in things that accomplish neither.
A very very very small minority of people in this world manage to do one of the two. A smaller amount still, both. Not because they are "previledged," but simply because they "looked behind the curtain;" whereas most of us never do.
I think if you follow the LHBA's guidelines, you are well on your way to doing the second of the two, right out of the box!
The first of the two can be a natural consequent of the second if you prevent yourself from falling into THE TRAP.
-A