OT: Financial rant

[s/v Faith]

Ok, this is the disclaimer... this is a rant.

  I believe that one of the biggest reasons people never do what they want in life has to do with the fact that the majority of people are slaves to their debt.

  So often I hear discussions of cruising budjets.... what does it cost to go?

  After exhaustive reading of these discussions on other forums.... I will tell you, it costs EXACTLY as much as you are willing to spend.

  SO many go through this life salves.  They do not realize that anything you pay for that you do not have expendable funds for enslaves you.

  What is this nut going on about?  I will tell you.  I like clear radio reception as much as the next guy, but the idea that I would pay $120 a year for the rest of my life SICKENS me....   

 I see debt like a hole in the boat.  You may decide it is worth it to make take on the debt, but know that you are GOING to have to SPEND your time bailing. 

  I do not enjoy bailing.

I want to set up my bilge pumps to deal with the ingress of water, and will limit it where ever possible.

  What does this mean?

  I have never in my life owned a new car.  I have never made a car payment.  I don't believe you have to.

  My boat is paid for... as are all the things I have put on her.  I do have some 'expenses' that I pay, like insurance (which I will minimize) and other things I evaluate as Worth the drain on my finances (de-watering ability).

  I believe that the world.... and the market want to make you believe that slavery is OK... even that you have to submit to it.

  Things like fashon, trends, socialital & family expectations, and the 'lust of the eye' (desire for all man sees) serve to keep man bound to grindstone.

  We feel grateful for 'vacation' and 'time off'... when did this become someone else's time anyway>>

 



(Corrected title spelling. )

[s/v Faith]

Continued...

  Some things that enslave....

Intrest.  Any usury paid on debt is a killer.  Debt is BAD BAD BAD.... People buy homes as investments and do not worry about paying the principal.  Might work for some folks (who sell off short term) but bounds others to slavery for the long term..... when did paying a mortgage for 1/3 of a human life span become acceptable??

  Buy what you can afford.  And do not add %7+ to the debt by paying some Realtor to do simple tasks you can learn to do yourself. 

===> Realtors and brokers are not your friends!<===

Just as boat brokers are not your friend... they add 10%+ to the transaction.

  Why are you buying a new car???  The same car will be worth much less in 3 years... and have most of it's life remaining.

  Cable television? Why pay for 170 channels when you can only watch one at at time???

  Look at your checkbook, and credit card statement
What are you paying for, and is it worth your freedom?

  What is your life worth???

[Frank]

Bravo...great rant!!  Thoreau wrote that "the TRUE cost of a purchase is the amount of 'life' you give up to get it"

[Zen]

 

brings a tear of joy to my eye, when someone gets it like that. 

it's a beautiful thing. 

[Cmdr Pete]

Grog for Craig! (no charge)

I can't understand all the ads that say "Buy now--pay nothing for a year or two"

If you can't afford it now, what makes you think you're going to get richer?

Unfortunately, I have to keep working. I need to outfit my boat with about 500 items from the West Marine catalog. They're all guaranteed to save my life.

[Frank]

PLEASE take this as intended...NOT politically !!  It appears to an 'outsider looking in' that many things seem set-up to  stir the economy in the USA....but in the process create debt. ' Disclaimer'..this is based on info at BS sessions at marinas I've been at while in Florida. I have been told that your home morgage is tax deductable...that a 'second home' or 'seasonal home' morgage is tax deductable and that a boat quilifies if it has living quarters.If this IS fact...it would sure entice people to 'BUY' and that is a good thing as it creates jobs and fuels the economy. The down side is it makes borrowing easier to swallow,legitamizes debt and in the end ya kinda have a 'house of cards' so to speak. To this simpleminded ole guy...debt is not good...banks are making money on your back.People tend to over borrow which creates stress on relationships and families.While I like a tax deduction as much as anyone...and being in the home building business for 33yrs..I certainly like the idea of an easier sell....I am not sure if the 'long run' outcome is worth it. Any 'accountant' members please feel free to verify what I've been told.

[Captain Smollett]

Frank, I think you are right to a point.  Home mortgage deductions are a bit different than some things because it encourages a specific CHOICE in spending - renting vs owning.

Where I think the real damage is done is all the spending on 'non-essentials.'  I see things other people have and wonder how in the world do they afford that stuff - I sure can't.  The answer is, of course, they can't either, but spend other people's money to get it (the bank's money, for example).

And right now we are in the middle of the "me me me" and "I want, I want, I want" season.  Well, I have an "I want," too.  I want a 'simpler' life...one less encumbered by the influence of advertisers' opinions of "should haves."

Thanks for this discussion.  And Peace to all.

[Godot]

A home mortgage is definitely a special case GOOD debt.  About the only good debt that comes to mind, and not because of the tax deductability (although that helps). 

I figure, right now in Maryland I can probably rent a reasonably decent apartment for $1000/mo.  More in some areas, less in others (but bulletproof vests cost money too  ); but you get the idea.  Every year or two that rent is going to go up a bit.  When I leave the apartment, I will retain none of that $12000 + increases a year spent.

I could buy a home. If I keep my standards the same as I would for an apartment (too many people way overbuy their homes, IMO), I should be able to do it for about the same $1000 including taxes and insurance (many, many variables here, of course).  Assuming a fixed mortgage, my mortgage payment should be the same every year, with only the taxes and insurance variable (which should be the smaller part of the payment, at least for a couple of decades).  In 5 years I will get some of that $12000/yr back with increased equity.  Plus, of course, there is the tax break which helps even further.  And the non-tangible factor of being able to do what I want with my property (subject, of course, to the BS of local bureaucracy ).

Then there is the question of how much of a mortgage to maintain, which I think is partially a function of interest rates and tax breaks.   For a completely random example with no real basis, but just to give you an idea, suppose you borrowed $100,000 at 6% interest, and because of the money retained because of tax deductability you effectively end up with a 5% loan (total BS numbers ... I'm sailing off the chart here).  If with reasonable investing you can MATCH that 5% (never mind beating it, which is a bonus) your financial bite would about break even, except that now you have a growing liquid fund to tap into if needed for emergencies or something. 

Of course, discipline is important to make this work to your advantage.  Taking all the money that would otherwise be equity and turning it into a big screen television (like so many do) is hardly advancing your financial well being.

Houses work partially due to the tax break; but mostly because they rarely go down in value.  The low, low interest rates help, too.  However, this is sailfar.  If you're inclined to live on a small boat long term you will spend even less.  You may make less, too; but the concept of "enough" money changes drastically.

My wife and I are living, rent free, with the inlaws right now .  Great for the savings account.  Not too great for maintaining sanity.  She claims we can't afford to move out.  BS, of course.  We can afford to move; we just can't afford to maintain the same standard of living that we have here.  Me, I'm happy to have a much, much lower level of comfort.  Heck, I would love to move to a floating home.  The wife, though, will have none of it.  The price we pay for marital bliss  .

[Frank]

I agree that a home is the ONLY 'good ' debt...providing you don't overspend. I honestly wonder how/why some people do as they do. Like most...we began home ownership with a 'starter home'...a nice little 1 1/2 story built in the late 40's.  From there as equity and income increased, we moved up slightly to a newer 1100ft home. Today..I see young couples coming in for their 1st home and getting 2car garages,2 and 1/2 baths,whirlpools,ceramic and hardwood flooring etc etc......WOW..so much for the 'starter home'. I find that odd..but maybe it is only that at this stage of my life I truly just want 'SIMPLE'...and less stress.      Here's to SIMPLE..less stress..more free time...more sailing....even if it's not tax deductable.   I had to edit this after thinking....NO debt is 'good debt'.....a home is 'exceptable' debt.

[AdriftAtSea]

A home is only acceptable debt if it is one you can afford.   I see some of the people I've worked with previously, suffering under the burden of interest only mortgages, which they've used to buy a house much larger than they either need or can afford.   The idea of an "interest-only" mortgage horrifies me... what were they thinking???  It doesn't help that housing prices in many metropolitan areas has risen far faster than incomes have, and have made it very difficult for younger families to purchase a reasonable home. 

A house about a block away from where I live was recently on the market for $750,000.  The house is a small three-bedroom, with one bathroom.  None of the bedrooms are larger than 10'x10'.  The house Gee and I owned, down in Virginia, was two times the size, with five bedrooms, and three full baths, and cost us less than $180,000.

[s/v Faith]

Zen, Cmdr  Pete, Frank,

  Thanks, I almost deleted this after I posted it last night.. thanks for the encouragement.

Frank;

 

I had to edit this after thinking....NO debt is 'good debt'.....a home is 'exceptable' debt.

Absolutely.  Just as a boat could be an acceptable debt.  Like John said, it is a 'choice' and usually a good one.  Using the money you will pay for living expenses into equity in a home (or better yet a boat) is a good idea.  There is nothing wrong with a 30 year mortgage*, the problem is in planning to take 30 years to pay it off.  If it is going to take you that long, you are either buying too much house, or living too far beyond your means.
*^{(I have had 5 of them)}

  What I see is the median home purchase is now over $250,000.00.  I believe this represents the kind of problem Frank spoke of in post #6.  People 'overbuy' for many reasons, but the fact demonstraited by the numbers is that is has become a social norm.  Maybe they are trying to buy a higher standard of living, but that big new house, needs lots of expensive furnature to fill it up... and of course then both spouses have to have 'good' jobs so that they can make all those payments.....   

  Like Dan said;

A home is only acceptable debt if it is one you can afford.

  We also know that their spending exceeds their savings, since the savings rate in the US is currently ~ -.6% _{(last month's rate)} the average person is not breaking free of their slavery, but going deeper into it. 


  Just as Kurt alluded to in the Holliday thread... we all need to assess where we are, where we want to be, and what the difference is.  Life is too short to waste time on a treadmill.
 
  House, car, boat, new GPS, pack of cigarettes, night in a marina....   How long are you willing to bail to pay for them?  Is it worth it?  What do they really cost? 

[CapnK]

Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence, by Joe Dominguez, Vicki Robin.



Good book. I'm with y'all.

I've owned 1 brand new car, & I'll never do that again. My last few have cost less and less, and I actually made money when I sold my last car, after owning it for 3-4 years - har!

I've always been too much of a nomad to actually purchase a domicile, current situation excepting...

[s/v Faith]

  So often I hear discussions of cruising budjets.... what does it cost to go?

  I have not forgotten that I said I would total the costs for our trip, but I wanted to 'bump' this rant thread.

  Without going into the obviously political implications I will just say that there are many who are finding that their lending / spending is coming home to roost right now.... and I am very sorry to see it.

  I hope everyone is living the lives they want to, and not allowing the pull of all the 'stuff' society says we need to be happy get in the way.

[ronc98]

Now I know why I am so drawn to this forum.  Finally other people that see things the way I see it. 

Six years ago I went through an ugly divorce.  Predivorce we played the little game of keeping up with the neighbors had the huge 300K home new cars and LOTS of debt.  Divorce and the lawyers basically broke me. They broke me because they tried to take my kids away from me, I spent everything I had to keep equal custody.  During that time I figured out that I was much happier living the simple life.  Next to my two kids Divorce was the best thing that ever happen to me.   

Today six years afterwards, I have house that is perfect in size, no-one feels cramped, it will be paid off in less then seven years(4% APR) , it has the best schools in the area and I owe nothing else.  When it is time for the kids to go to college I will sell the house, give them the proceeds to the kids and then live on my boat. 

We do live in a society where your material possessions own you.  I am glad that life is past me.   

Now with this oil prices, I think you will see all of these huge houses a thing of the past.  It costs alot to heat,cool and maintain them. 

The only thing that is killing me is my truck which gets terrible gas mileage but I have to have it to trailer my boat.  To offset that I ride my bike most places when I do not have my kids.  I might find a nice small beater car.


Great Rant.

[AdriftAtSea]

Today six years afterwards, I have house that is perfect in size, no-one feels cramped, it will be paid off in less then seven years(4% APR) , it has the best schools in the area and I owe nothing else.  When it is time for the kids to go to college I will sell the house, give them the proceeds to the kids and then live on my boat.

We do live in a society where your material possessions own you.  I am glad that life is past me.   

Now with this oil prices, I think you will see all of these huge houses a thing of the past.  It costs alot to heat,cool and maintain them.

The only thing that is killing me is my truck which gets terrible gas mileage but I have to have it to trailer my boat.  To offset that I ride my bike most places when I do not have my kids.  I might find a nice small beater car.

Well said Ronc...grog to ya for it.

[Frank]

Cheers ronc....grog to ya

[okawbow]

This is my kind'a rant!

I haven't taken out a loan since 1995. I sleep much better because of it. But true freedom requires more than just lack of debt. I was once tied to a management job. I worked long, hard hours, and spent my little free time in recovery. My wife and I made the decision a few years ago, to live simply, and as free from stress as possible. We started a small business that allows us to set our own work schedules. I was able to take 5 weeks off this spring to do a sailing trip that I have dreamed about for years. We make far less money than when I worked for a large company. But, you know what? We don't seem to miss the money at all. We get by just fine on less. Our taxes are lower. eating out is "special" again. we drive plain, workday , older vehicles that do the job for 1/5th of a new one.

Don't be a slave to money and possesions. Don't waste your life waiting for retirement. Don't think a new boat is needed for happiness. I paid 1800.00 for my 24 footer and honestly enjoy it as much or more that my neighbor enjoys his 50,000 boat. Do the things you feel you should do. You won't regret it.

Chuck

[s/v Faith]

They say the best things in life are free....

  Kinda like grog! 

Enjoy!

[newt]

When I tell my wife that people are living out there simply, cheaply on their own boat she just shakes her head. But this is my type of lifestyle. I'll even put out my shingle for fellow liveaboards- but you'll have to find me first! We could live in a barter community- no money except to deal with those outsiders.

[CharlieJ]

and my wife just goes sailing by herself if I don't have time to go-We've gotten ourselves debt free- now she's working stowing money into an account she opened labeled "cruising fund".

I think this time next year we'll be out there

Oh- and that debt free includes the house. We built it ourselves, and I don't mean HAD it built- WE built it. Every screw, nail wire, piece of sheet rock. All paid for when it came home to be added to the house. We lived in a 24 foot travel trailer ( three of us) until we got the house to where we could move in. With the exception of the dining table which had belonged to Laura's grandmother, we didn't have furniture- just mattresses on the floor- but we moved in.

We did take out an equity loan on the house to pay off some other bills, but that's done. The house is now free and clear. Small by some standards- only 2 bedroom- just under 1000 square feet- but we like it. It's also really low maintenance- no paint on the exterior at all- either rough cedar or pressure treated wood, or roof.