Don't Fall Into Debt !!!

[–]xjoshbbpx4 points5 points6 points 11 years ago (0 children) | Copy Link

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[–]thrownaway_MGTOW5 points6 points7 points 11 years ago* (10 children) | Copy Link

But what do MGTOWs think of mortgages?

It's going to vary from one guy to another.

The reality is that the very existence of mortgages (i.e. of bank-based "credit money") -- along with the fact that RE market is competitive -- makes a mortgage (or a LOAN from someone) a virtual necessity if you want to be a "homeowner" rather than a perpetual, permanent "renter".

Because -- absent some major windfall or other lucky "lottery" style win in business (or inheritance, etc | or alternately some "home" you are allowed to live in "rent free") -- it is incredibly difficult to save up 100% (of the average "going" price of a home when you are bidding against others who are willing to "max out" their credit) while at the SAME TIME paying "rent" for your own housing.

The FIRST KEY for an MGTOW is (to my mind and in my experience*) to begin by FULLY comprehending the WAY that the standard "self-amortizing" mortgage loan is structured -- i.e. the exponential "curve" that is necessary to create a "flat payment" across the length of the loan -- means that it is heavily "front-loaded" in terms of interest vs principal (in the early years of your loan, most of your payment will go to "interest", with only a tiny fraction going to the principal/equity.) Pro-Tip: learn how to setup a SPREADSHEET showing all 360 payments & the interest/principal over them, plus the aggregate totals (SUM of all interest paid etc) at the bottom -- and then PLAY with it, do a "Hey, what happens if I pay an extra $500 against principal just for the first 3 years -- how does that affect the 'paid-off' date?" and other such things -- and KEEP playing until you REALLY comprehend the effects.

Once you FULLY understand that -- you will also understand that the MORE equity (either by downpayment, or extra/early "principal" payments) you establish upfront, the LESS the total interest you will pay over the life of the loan, and in fact (with extra/early additional payments to the principal) that you can significantly SHORTEN the length of the loan (not 30 years, but < 10 years to entire "debt-free/no-mortgage").

Thus there are a LOT of so called "tricks" around paying additional money against principal that can -- without refinancing a damned thing (provided the mortgage has NO "prepayment penalty clause") -- turn a 30 year mortgage into a 15 year, or even a 7 year or 5 year mortgage (IOW fully owned 100% debt free in those time frames).

The SECOND KEY is for people to understand that the entire industry -- from realtors (who are paid on % of sale price commission basis), to bankers (whose jobs/salaries, in one way or another, are similarly based around getting people to pile up as MUCH debt as possible, and thus paying as much INTEREST as possible) -- that the whole industry has a VESTED interest in getting you to buy AS MUCH HOUSE AS POSSIBLE, in other words to "max out" your credit/debt carrying capacity -- and that moreover you have to at ALL TIME keep in mind that FROM THEIR perspective, the sale of a $100,000 house is the EXACT SAME amount of work as the sale of a $500,000 house (same amount of paperwork processing, etc) -- but especially the Realtors (again commission % of sale price based) will make 5x as much from the latter as from the former.

Given that, they will do everything they can to encourage you to buy a BIGGER, FANCIER, and thus MORE EXPENSIVE house. If you have managed to save up say $50,000, they will try to get you to look at houses in the $250,000 to $500,000+ price range (why? because your $50k will be a 20% to 10% downpayment -- and they will always emphasize that "financially" and even "tax-wise" etc -- that you will be "better off maximizing your leverage" etc yada yada blah blah, IOW borrowing more {and never mind that in doing so they are stepping over the line and giving "financial" and/or "tax" advice, which is probably technically illegal, they ALL do it}).

What they DON'T want you to do is look at small/cheap houses -- they don't want you to buy a $75,000 or even a $150,000 house with that $50k downpayment -- I mean why would they? If you buy one of those, then their commission will be based on that LOW price (6% the typical Realtor commission -- on a $75k house is only $4,500 {of which the buyer Realtor only gets maybe half $2,250, and actually LESS because the "Realty Company" they work for takes a cut too}, whereas if they can get you to buy a $250k house or better yet max out to a $500k house, then the 6% commission will be $15,000 to $30,000 {and again the specific Realty agent gets a proportional fraction, and the company they work for MAY make it an "incentive" base that gives them a HIGHER fraction of HIGH PRICE sale}).

You HAVE TO BE AWARE OF THAT and you have to ONLY look at, and buy WAY BELOW what your "credit" (and downpayment money) will allow.

But let's be REAL here... if you're an MGTOW, what the fuck would you want with a typical "family" home -- a 3 bedroom, 2 bathroom house? Much less, why in the world would you want anything BIGGER (some 5 to 7 bedroom/bathroom monstrosity)? I mean are you planning on starting a "monastery" or some "commune" for a half-dozen of your friends to invade?

Fuck that. You're an MGTOW -- and a committed one -- you're not planning on kids, so who needs multiple "kids" bedrooms? At most you need/want a SMALL house with a single bedroom (maybe you want some 2nd "guest bedroom" that can double as an office or whatever). Plus, you're NOT planning on having some "wife" (or even live-in girlfriend), so a compact one-person "galley-style" kitchen is fine, you don't need (or want to pay for) some massively monstrous "commercial kitchen" with a breakfast nook and other nonsense. (Think "sailboat", not fucking "Downton Abbey".) And then likewise, you probably DON'T need a formal "dining room", or separate "living room" and "family room" and "gaming/rec room" etc -- you're ONE person, who are you going to need to get away from? You can easily have a house with a small "eating area" and maybe ONE big "multipurpose" room for the TV (or projector/home theater), and it can also contain your game consoles, sofa, recliner, computer-desk area, etc. That'll likely be more than big enough for the (rare) occasion when you have "guests" over for dinner -- and if you want a bigger party in some summer ... well that's what the frigging "deck" and outdoor grill area is for.

And then if you made sure the house wasn't on some postage-stamp-sized lot, but instead is the better part of an acre (or more) -- depending on your interests & hobbies, etc -- go build a bigger garage/workshop thing (they're cheap) as a detached building(s) {i.e. the stuff that married men DROOL over, DREAM about... and have to BEG permission to build -- invariably getting even DOUBLY DEEPER into debt because they have to "trade/compromise" with the wifey and spend an equal amount to renovate the kitchen, add on to the house etc -- all as part of the agreement to get the "man cave"}.

By doing that -- picking a NON-status small home (we're talking you'll still have 1,000 to 1,500+ sq ft all to yourself) -- you'll not only minimize the purchase price, but very likely reduce the maintenance costs/work, lower your utility bills, and lessen your potential "property tax" exposure as well.

Where do you find such homes? Well, generally speaking you move to the "exurbs" -- find some area where people have already put up SMALL "vacation" and/or "cottage" houses. Ideally you find some good location where there are also people who are "upscaling", buying & tearing down some of those cottages and putting up BIG McMansions. WHY do you want to be there? In the small cottage near the Mansion-sized vacation homes of upper-middle class folks? Well, because a) they'll be paying 5x to 10x the property taxes you will, and at the same time... b) they won't live there, and so won't be sending their kids to your local schools; plus c) since they are NOT around more than a fraction of the time their use/demand for other "services" will be minimized as well -- the combination of those things DRAMATICALLY drops your "government rent" (aka property tax). And the final kicker is that if you DO decide to sell & move 10 or 20 years from now... someone will probably have been eying up your little "cottage" as a potential "mansion" site of their own (there is no guarantee of that, but in it's stead, keep in mind that as the OLDER population increases, and as more people are single, etc -- not to mention if utility & property taxes rise -- the demand for SMALLER homes is likely to increase in the coming decades, meaning it could/should be an "easy sale" in the future).

*I bought a home (pre bubble) in late 2000, with 25% downpayment, and with a standard 30 year mortgage (which had a ridiculously LOW flat payment, even though the interest rate was an absurd 8%)... and then I proceeded to pay it off (on a relatively moderate salary mind you) via making double & triple principle payments... within just ~8 years (could have done it in 6, but by that point the interest was minimal, and I built/renovated & finished the garage/workshop, bought a lot of machinery, etc, and started a side-business. Now my only "housing" costs are minimal (compared to neighbors & friends) property taxes (< $175 mon) and minimal utilities (~$100 a month), plus a bit of maintenance, most of which I DIY at cost of material + my time (i.e. untaxed labor).

[–]cagethepepper 1 point2 points3 points 11 years ago (0 children) | Copy Link

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[–]smokingmonkey420 1 point2 points3 points 11 years ago (3 children) | Copy Link

[–]thrownaway_MGTOW1 point2 points3 points 11 years ago* (2 children) | Copy Link

Ummm... well, as far as the realty/realtor side goes, lotsa books, articles, blogs, etc -- plus I know a couple of people who got into/out of the realty biz -- and of course years looking for a house, buying one {15 years ago, still living here and loving it}, and then helping several others (friends, family) look for and buy (or in one case build) them, etc.

On the banking side... well I worked in banking waaaaay back in the early 1980's (double digit inflation era -- probably before most Redditors were born), and so I learned all of the ins & outs of doing the loan calcs (and keep in mind that was when the original spreadsheets {Visicalc & Lotus 123} first came out and PC's were just becoming affordable -- banking loved the idea as previously they had to do all those calcs either by hand {generally looking things up in "amortization tables" in book form} or on some calculator with function keys -- and as a "young punk" I was naturally tasked with figuring the stuff out to teach the "old guys", who in exchange taught me a shit-ton about banking {so much that quite frankly it didn't "sit right" in my gut, and I decided I didn't want to be part of that industry -- profitable as it might be, I also found it to be "sleazy", and once I really, fully understood how banks/credit works, that the entire industry is nothing but a vast blood-sucking parasite}).

Basically it's a result of something called "life experience"* -- and paying attention and doing your own reading/research (helluva lot easier now with the interwebs!)

;-)

*EDIT: Young guys (remember I was one once upon a time) really don't comprehend the vast amount of experience that someone older can accumulate (not ALL of them do mind you, but some).

A 40 year old guy does NOT have just "twice" the life experience of a 20 year old.

Keep in mind that the first 5 years of your life you were just busy learning how to operate the most basic stuff about "body" you live in (how to see, hear, talk, then walk, then crap & wipe your own ass, etc). The next approximately 10 years (5 to ~15) are spent trying to explore and get some idea of the wider word around you (and alas, more's the pity, being spoon-fed a mixture of dry data and outright bullshit in the child-penitentiary that is known as "school"); and then the next 5 years are largely spent in a hormonal "fog" of one type or another (trying to figure out the REST of your body... and that of others, and how to achieve that Tab A into Slot B thing).

Which means that by age 20... well most young guys really don't (yet) know much of anything; at least not in terms of "proven, tested via life experience" -- MAYBE they have some knowledge of new/recent tech gadgets (in part because not having become familiar with or dependent upon any prior tech, they don't have any "investment" in it, so it's easy to adopt/figure out the new stuff); and yeah, if they are smart & observant they might have a few years of some "experience"...

But it isn't a fraction of what they will learn in their 20's... or what (if they are smart) they will figure out in their 30's... and 40's...

So by the time they reach past 40, into 50's and even into 60's -- well, "old guys" (at least the smart ones) are often a HUGE (seldom tapped) encyclopedia of knowledge... and not just trivia and "past" crap-shit (though of course that is there too), but a whole array of highly useful stuff, as well as varying amounts and degrees of skills -- things that most young guys haven't even become aware that they themselves might need to learn/use someday.

[–]smokingmonkey420 0 points1 point2 points 11 years ago (1 child) | Copy Link

[–]thrownaway_MGTOW0 points1 point2 points 11 years ago (0 children) | Copy Link

Yes, you were likely in banking before I had even been born.

Sorry, but I think understanding the context (era) really is/was critically important to a couple of specific points:

The fact that it was in an era of double digit inflation (and the earning of +10% APR interest on savings, and charging of ~15% even 20% APR on loans & mortgages).

I think that ONLY people who have actually lived through that, the 10% to > 20% inflation (lots of non-US people, but only older US people*) can really comprehend how a comprehension of the effects has to be kept constantly in mind and how it completely FUCKS with everything: wages, prices, investing, etc (not the least of which is how the perception of that "high interest" on savings was actually incredibly deceptive, nominal values were increasing, but real values were still losing to inflation).

*And even then, the effect was not "uniform" across the generations, those who were older (i.e. 30+ in circa 1980) & already "homeowners" with mortgages at locked in at the 1960's or 1970's low rates, got a huge windfall; young people like myself saw housing prices doubling every 4 to 5 years (much like during the 2000's bubble-era) BUT with at the same time interest on loans @ insane XX% rates -- so comprehending the effects of that was critical to planning.
That -- since it was the early days of personal computers (and remember NO internet, generally not even a LAN) -- it was simultaneously what I think of as the era of "spreadsheet PLAY around with the numbers." One of the very FEW practical things you could do with a PC was spreadsheets.

And you have to understand that PRIOR to spreadsheets, working out the full month-by-month balances of a mortgage was a royal pain in the arse -- it mean loads of either manual or semi-manual (with a calculator) computations, OR using some standard formula or standard pre-printed amortization table -- *you simply DIDN'T think** of asking/computing oddball inconsistent payment things like "What happens if I pay an extra $500 in year one, $1,000 in years two & three, and then revert to the normal payment thereafter... how many years does it cut off the end of the mortgage, and how much total interest does it save me." -- but once spreadsheets existed, you now COULD do that, you could EASILY engage in comparing a dozen (or two or three dozen or more) different, even obscure/oddball downpayment/payment and/or interest rate combinations... and that is what led to a TRUE comprehension of the impact (i.e. being able to see in a visible "waterfall" the effect of just a slightly lower {or higher} initial price/principal, or how EXTRA payments can have a HUGE impact on the total cost & total time-to-pay-off when they are made in the EARLY years of a mortgage or loan, but also how they are almost useless in the later years).
At the same time -- or more correctly in the decades since -- because computers have become functional/useful in a lot of OTHER ways (desktop publishing, then games, internet, videos and so on)... members of subsequent generations get "distracted" by other activities, and (in general) simply DON'T ever see or learn how to truly use spreadsheets to inform their understanding of this stuff. (Though I also understand how -- with the current low-interest rates -- the appearance of the effect in nominal terms appears a lot less dramatic, even though the REAL value effect remains largely the same, since wages are also stagnant.)

Anyway, that's more or less my point; that there was a sort of "window in time" where many young people (or at least some like myself) -- due to a "perfect storm" of external circumstances -- came to have probably a GREATER understanding of this aspect than any generation prior (which just didn't have the tools to do the array of computation), nor any generation since (which while it has the tools, invariably gets preoccupied/distracted with using them for other, generally more "visually exciting & fun" things -- I mean when is the last time you or one of your mates got "excited" about playing with mortgage/loan balance numbers on a spreadsheet... the very idea probably seems incredibly "daft" or "looney").

[–]Falazure10 points1 point2 points 11 years ago (1 child) | Copy Link

[–]thrownaway_MGTOW1 point2 points3 points 11 years ago (0 children) | Copy Link

what if you have guests (such as family) visit?

My response to that... sincerely... is that is why hotels & motels (and B&B's) exist.

I DO in fact have a "guest" bedroom with a small twin bed in it... and I have had "housemate/roommates" who have stayed here (normally guys who would otherwise have been homeless, etc) for weeks, or months, or in one case even for a couple of years.

And in addition, there is even a futon/sofa upstairs (in a loft/entertainment room) that can fold out and comfortably accommodate one or two people (and which I HAVE had used that way on a few {albeit rare} occasions), plus of course it is always "possible" for people (especially kids) to "camp out" on some air-mattress and/or sleeping bag on the floor (when I was a kid that was what we frequently did do when we visited/stayed with "family" for few days -- there was no expectation that we would each get our own "bedroom").

But the plain truth of the matter is that such "events" are really relatively RARE, and then "short term" (a matter of a night or two). I mean does it REALLY make any sense whatsoever to own (and pay for/maintain for years & decades) the equivalent of some "manor house" (with several empty bedrooms) for the few RARE instances when family might visit, then then might (possibly) need to stay? I think it would actually be cheaper to pay for a hotel/motel room FOR them (not that it is really my responsibility to do so).

I mean I'm not running some "Downton Abbey" country estate where I expect to have people come to "visit" and stay for X months.

And I really DON'T buy into the line from the realtors that the "3+ bedroom home" is what sells best/maintains the most value.

That MAY have been true in the past... but looking into a future where more and more people are living as singles (young, middle-aged, and older people who downsize) -- I don't think that is going to be true anymore (at least not for the next decade or two, possibly even 3 decades+).

Instead, I think the market is going to be flooded with an oversupply of 3 BR homes and even larger "McMansions" -- at a time when the overwhelming majority of the demand/buyers are going to be looking for smaller homes.

Keep in mind that in the supply-vs-demand equations, it doesn't require much of a disparity to either send prices "skyrocketing" OR alternately to send them "crashing" -- especially if/when they INVERT (which is what IS demographically starting to happen, and is IMO "baked in the cake" for the coming decades). When there are 12 buyers seeking house style X for every 8 available, then they bid against each other and bid the price ever UPWARDS; but it is just as true than when their are only 8 buyers for every 12 style X homes, there is no incentive to bid high, but rather every incentive to delay and bid LOW, knowing that eventually some of the sellers will be forced to compromise/accept the low bid.

[–]Watchful1ntervention 0 points1 point2 points 11 years ago (1 child) | Copy Link

Because -- absent some major windfall or other lucky "lottery" style win in business (or inheritance, etc | or alternately some "home" you are allowed to live in "rent free") -- it is incredibly difficult to save up 100% (of the average "going" price of a home when you are bidding against others who are willing to "max out" their credit) while at the SAME TIME paying "rent" for your own housing.

Yep, you still have to pay rent while saving up 100% of the price of a house. Unless you're living at home with your parents.

Assuming the cash to buy a house outright was a significant portion of my assets, I wouldn't want to sink that much of my net worth in an asset that is illiquid and lacking in diversity. Don't put all your eggs in one basket.

Don't buy more house than you need, even if you can afford more. A house is an asset in the sense that it can be sold later, but viewing it as an investment can bring a lot of pain.

[–]thrownaway_MGTOW2 points3 points4 points 11 years ago (0 children) | Copy Link

Assuming the cash to buy a house outright was a significant portion of my assets, I wouldn't want to sink that much of my net worth in an asset that is illiquid and lacking in diversity. Don't put all your eggs in one basket.

I suppose I should clarify that -- even during the 8 years that I was (rapidly) paying off the mortgage -- I was also actively socking money away into a variety of other investments; and less than half of my total "net worth" is in the property's equity -- I'm probably more "diversified" than most people.

Nor is the home equity necessarily as "illiquid" as you have characterized -- it is in fact a very SOLID (and at present entirely unencumbered) financial asset that can be "tapped" as collateral against a loan anytime I might want, probably more readily than just about any other form of asset can be -- so it isn't absolutely necessary to sell the thing to make some or even most of that equity "liquid" again... assuming I would ever CHOOSE to engage in that level of risk (which granted, I very likely would NOT want to do, except in some extreme or dire circumstance -- but I know that it IS there as an option should I need it to be).

Don't buy more house than you need, even if you can afford more.

BINGO.

The industry puts LOTS of pressure onto people -- and in a whole HOST of ways -- including the standard line to the tune of: "but most buyers want a 3 BR home, so that will be your BEST resale probability".

The problem with that view is that it is really just imposing the "Realtor's" own view of homes as "commodities" to be traded/resold frequently -- since they are commission based (they care about SELLING houses, not LIVING in them) they would like nothing more than for everyone to trade-houses ever 2 to 3 years -- which is financially INSANE for the homebuyers, and (bar some lucky "bubble") the path to financial ruin. (IMO you should NEVER buy unless you are expecting to live in a place for at least, and preferably far longer than 5 years; ideally it should be at least 10 if not 15, 20+ years).

And moreover every house has a certain "niche" appeal, the standard "nuclear family home" may (in the past) have statistically been the "lion's share" of the market, but the value of anything is entirely one of supply vs demand -- and that will not necessarily be true in the future; in fact, I would posit that it is likely to invert in the future.

Because that future looks like it will be rife with LOTS more young & middle aged, unmarried, single people, and LOTS of old people (couples AND singles) looking to downsize. Chances are the market will be flooded with a supply of 3 (or even 4, 5, 6 BR) homes -- at a time when the demand for those homes will be less, and ironicaly the demand for smaller homes will probably be higher. (And of course even then it will all be location/economy dependent -- and THAT varies all over the map, and from one year or decade to another -- so it's not really predictable.)

A house is an asset in the sense that it can be sold later, but viewing it as an investment can bring a lot of pain.

I agree -- a house should NOT really be viewed as an "investment"; certainly one should be aware that the line Realtors push (the "bubble mentality" that a house is some "performing" asset that you can expect to appreciate in value) is pure bullshit... in general, you can (at best) expect that a house will essentially "hold its value" relative to normative monetary inflation (i.e. as an inflation "hedge"), but even then there WILL be expenses (maintenance, repair, etc -- if you TRACK all of that though, you can deduct it from a later sale price versus taxation of gains -- though personally I don't think people should buy a house with frequent "reselling" it in mind, that's just financially foolish) -- and those expenses can frequently turn it (even if fully paid for) into as much a "liability" as an "asset"...

OTOH the people who view a home with the expectation that it SHOULD be some kind of "performing asset" -- also fail to take into account that you need housing in SOME form, and so any "loss" in value over time has to be balanced against what you would have paid in rent for the same period (IOW, if you lived in a home for 10 years, and you would otherwise have paid say $1,000 a month in rent {inflation adjusted, etc} -- then over that 10 year period you would have paid a total of $120,000 in rent -- why should you expect any house to have "zero cost/loss" during that 10 years strikes me as entirely disingenuous, and financially dishonest; if the house sold for essentially the same price {inflation adjusted} that you had paid for it 10 years prior, and in the meantime you had spent say a total of $60,000 in property taxes + maintenance & repairs, then you would have had a "cost" that would be the equivalent of $500 a month in rent, which is a bargain).

BUT... EVERY form of "investment" (business, stocks, etc) carries significant risk of at least partial loss (either actual book value loss, or loss to inflation), and most of them carry some risk of total loss (which is seldom true with RE).

There are indeed a LOT of "horror" stories around these days people who bought houses in the middle (or worse the PEAK) of the bubble years -- and who are therefore running around telling everyone that "buying a house is STUPID, STUPID, STUPID", etc...

But in my experience (and I've heard & seen a LOT of these) invariably these people are NOT telling anything LIKE the full story. They are NOT actually revealing the FOOLISH manner & circumstances in which they purchased their home (i.e. they maxed out their credit based on dual-high-income jobs, they put little or no money down, the paid literally INSANE "bubblicious" prices for properties that just a few years prior had sold for 1/4 {or less} of the price they paid; and they often were "delusional" in thinking that buying a house {with the expectation of "flipping" it a year or two on} was some path to "easy wealth"). In short, they didn't really do any "due diligence", they bought into a SPECULATIVE thing, and then they got all "butthurt" when the whole thing went sour (something that was OBVIOUS to other people like myself).

These same people are now out and about giving "financial advice" -- telling people they will be better off renting, etc.

Well, the question OUGHT to be: if they were so BAD at making financial decisions in the past, are they REALLY the people you ought to be listening to now? Or should you maybe instead look to people who -- despite the "frenzy" -- managed to keep a clear head and make SOUND financial decisions... ones that HAVE worked out well in the long run.

[–]BleauGumms3 points4 points5 points 11 years ago (1 child) | Copy Link

[–]thrownaway_MGTOW0 points1 point2 points 11 years ago (0 children) | Copy Link

Oh yes... sorry I didn't mention that one.

You DEFINITELY (IMO there is NO question about this) want > 20% downpayment (on the initial price, which may/may not be 20% equity in the home at it's current valuation) -- because that often allows you to do several things.

You can/should entirely AVOID the whole PMI scheme/scam (which is "insurance" for the benefit of the bank, but paid for by the homeowner) -- and viewed from that perspective is a complete WASTE. (Worse there are people who pay PMI for the entire 30+ year length of their mortgage... because they are unaware that once they have 20% equity they are no longer contractually required to do that, and so they foolishly do not take steps to END the PMI.)
You CAN (and should) also avoid the property tax "escrow" situations (the lender charging you per month to "save" for the property tax payment at the start of the following year -- lenders fuck around with this and generally OVERcharge) -- of course the consequence is that you need to learn to budget/save for it on your own.
Likewise with homeowner's insurance; typically people get "locked into" some specific policy because (not having sufficient equity to be "in control") they have to get permission from the mortgage holder to change policies... and likewise this is typically paid THROUGH the "escrow" provision of the monthly mortgage payment. The worst situations are where the bank has setup it's OWN (ridiculously overpriced, often 2x or 3x what an identical policy would cost) homeowner's insurance policy with it's own "insurance division/subsidiary/subcontractor"... which just rips off the homeowner in yet another fashion they are unaware of.
And for those in situations with "homeowner's associations" -- there are often provisions that require the payment of THAT in an "escrow" type situation as well.
What most people DON'T REALIZE -- is that banks can (and frequently DO) impose a "processing surcharge" on each of those items --and they are increasingly doing so in rather DEVIOUS fashion, not only are they charging a "processing fee" for cutting the check/making the payments (property tax, insurance, HOA fees); but many are now charging a "monthly processing fee" on each item on the FRONT end as well (i.e. for the "accounting" aspect of calculating/recording the amounts for each monthly payment).

Basically the ONLY thing you want to be paying to the mortgage servicing company is principal + interest -- that's it: everything else you WANT to be in control of paying yourself.

Again that does place the "burden" of properly budgeting & saving-up during the year, and of course making the actual payments -- solely onto YOU -- but seriously, this is like a "grow up & learn how to wipe your own arse already" kind of thing.

[–]oldredder0 points1 point2 points 11 years ago (8 children) | Copy Link

[–]thrownaway_MGTOW0 points1 point2 points 11 years ago* (7 children) | Copy Link

As long as there's property tax to pay forever I can't ever own the house.

*Sigh*

And as long as you are "renting", you are STILL paying that property tax (in fact generally at a significantly higher level on a per sq ft basis; because rental properties are consider "commercial property" and are generally assessed/billed at higher rates*) -- but it's hidden from you and you are unaware of it and oblivious to it -- because it's part of your monthly rent.

*Plus of course, since rental properties tend to be in URBAN areas -- where families with children live in higher numbers and thus HIGHER school costs (not to mention people in general have a higher expectation of "services" from the community; also largely funded via local property taxes) -- you are unwittingly paying significantly more (and for "services" you yourself as an MGTOW will never use or benefit from). Ironic that by trying to run from what you perceive as a trap, you actually run right into an even bigger trap.*

Until then going my own way requires the freedom not to be robbed which means keeping my property secure, portable and living either in a mobile home or rental I can vacate with no sunk (irretrievable) costs.

Everyone gets this already. You were either "burned" in the bubble house-flipping era, or you got scared shitless by watching what happened to others who did.

But seriously, while property taxes ARE a factor -- there is no need to be as inherently paranoid of them as you seem to be -- in part because even though you THINK you are able to "run" from them, you really are NOT avoiding them at all.

* On a $ tax per sq ft basis, urban "rental" properties (especially in bigger metropolitan areas) are generally MULTIPLES higher than they are on rural residential homes, to wit:

In the Village, rental property owners shelled out $3.82 per square foot on average in property taxes in the 2012 tax year. However, taxes reached up to $13.41 per square foot for some properties. A total of 13 buildings in this neighborhood were surveyed.

On the Upper East Side, the average tax for a rental property ticked in at $10.23 per square foot and spanned a range from $6.46 to $14.31 per square foot. On the Upper West Side, the average was $6.22 per square foot, with a range of $3.61 to $13.64 per square foot.

In addition, multi-family property tax collections showed little relation to the buildings’ ages, location, value or size, the report says.

Now granted that is NYC* -- albeit that is precisely part of the point (i.e. the vast majority of "renters" by definition WILL normally, and throughout their lives, be renting in high-tax urban areas) -- if you think that the lion's share (if not the entirety, plus a premium) of that isn't being passed along to the renters; AND you cannot "do the math" on the effect of that long term (year after year, decade after decade), then... well, then you are truly naive/uninformed.

By contrast, the nominal annual per sq ft tax rate on my home is just barely over $1 per sq ft ($1.08 on the bill I just paid) -- and that is BEFORE the "homestead" tax credit I get refunded each year due to owning over an acre of land, which reduces my EFFECTIVE annual tax to around $0.50 per sq ft. Even if that number were to double or treble, and the "homestead" tax credit were to entirely disappear, I would STILL be paying less per sq ft than the LOWEST tier of urban renter (and of course IF that happened -- if property taxes suddenly skyrocketed like that -- the tax on the urban renters would increase in a similar fashion) -- ergo that is a scenario that I have ZERO fear of happening.

* On NYC rent & tax costs, see also this article. Similar things apply to other "hotspot" high demand rental urban areas (like the SF Bay, etc).

EDIT: BTW, the thing is that it is entirely understandable that renters are largely "unaware/oblivious" to this aspect of their rent -- in no small part because they don't have the data -- to comprehend what they ARE (invariably) paying in terms of property tax (per sq ft), they would need to actually have not only the landlord's property tax bill for their specific property, but also the total sq ft of space being rented (sans common areas, hallways, etc) at the building in question, and then engage in (a relatively complex) calculation of imputing that down onto their own apartment & comparative rent versus the other units in the same building. So even if they DID have all that data (and probably not 1 in 100,000 renters do), unless their landlord computes it for them, they will be oblivious to it. (Hence the unawareness of renters that -- rather than avoiding some future-imaginary paranoid "loss" of a home due to some imaginary out of control property tax run amok {which would also of course impact all renters} -- they are instead paying multiple times that same loss across their entire lifespan.)

EDIT2: For those who are interested in understanding this stuff, here's an excellent little objective pro/con "debunking" of the many myths present in most of the recent -- post-housing-bubble-bursting era -- "Renting is better than Buying" articles one sees these days. (Alas the comments under the article are filled with people who still didn't "get it" -- and in a fashion akin to feminist/blue-pill types, fail to see the proverbial forest for the trees of an OBJECTIVE assessment of the pros & cons, but who instead see everything as a "personal attack" on themselves as "renters". Which is sort of a Q.E.D. of their failure to think on a rational level, and instead being entirely "emotion" based.)

[–]oldredder-1 points0 points1 point 11 years ago (6 children) | Copy Link

[–]thrownaway_MGTOW0 points 11 years ago* [recovered] (5 children) | Copy Link

[–]oldredder0 points1 point2 points 11 years ago (4 children) | Copy Link

[–]thrownaway_MGTOW0 points 11 years ago* [recovered] (3 children) | Copy Link

[–]oldredder-1 points0 points1 point 11 years ago (2 children) | Copy Link

I have everything to show: instead of sunk costs I have actual money on me right now. Instead of having debt, I have no debts.

That's gigantic. Most people will work their entire lives to have the same financial freedom I have of having both assets and no debt. And many will fail to get there.

The "whims" of the landlord are no different than the whims of the municipality deciding this or that item on a property is not to their liking, setting a fine, adding it (if unpaid) to the tax bill and taking the entire house for not paying it.

I know, my mother was hit for that on a fence a prior neighbor pulled until it leaned. She has no money to fix it, she has been cited by the city and they are adding the fine to her tax bill. She has no money to pay the fine so when taxes are due she's in for a lot of shit.

Every house is a motel room - just very expensive.

Every "owned" home is a rental.

You will be in debt until you're 60 or later, you'll have sunk decades of wages of lost-cost into a house you "own" and you could lose it all.

I stand no such risk.

[–]thrownaway_MGTOW0 points1 point2 points 11 years ago* (1 child) | Copy Link

You will be in debt until you're 60 or later, you'll have sunk decades of wages of lost-cost into a house you "own" and you could lose it all.

Bzzzt. Wrong again junior (and yes you ARE "junior" to me, by well over a decade).

I paid off my mortgage 7 years ago (a scant 8 years after buying the house & property and while I was in my mid 40's {and keep in mind that I bought at age 36 in 2000}); and was already debt free in every other regard prior to that (always buy vehicles cash, and never had any credit card debt).

And I also managed to save and invest sufficiently that I was able to quit working as a corporate slave, and back off to just some occasional consulting, and various little side-business stuff (most of which is essentially "fun", but also pulls in some cash).

Is there a property tax? Yup... comes to < $200 a month (you probably pay more than that just renting the furnishings in your ~~apartment~~ or is it a motel room) -- and I have sufficient OTHER savings, assets & investments to pay that property tax (and my other minimal living expenses) for a couple of decades... even if I weren't to ever make another penny in income.

You see, junior... on THIS issue, well... you really don't know jack squat.

You didn't READ (much less comprehend) anything that I wrote -- instead, you have "triggered" like a bull to a red flag, and reacted (overreacted, yet again, you seem to have a "blind rage" issue when it comes to houses which repeatedly and instantaneously sends you off the deep end) against the mere mention of "buying" a house. Maybe it has to do with you being in Canada, where the bubble is still going on, or because you got "burned" with an underwater house, or in divorce or well... whatever. But your RAGE and bias is misplaced.

I have everything to show: instead of sunk costs I have actual money on me right now. Instead of having debt, I have no debts.

That's gigantic. Most people will work their entire lives to have the same financial freedom I have of having both assets and no debt. And many will fail to get there.

Debt free is good. But having "actual money on you right now" is not necessarily GIGANTIC. In fact if it's more than a few hundred bucks held as "cash" it would be rather foolish.

Nor is a relatively small amount of cash (especially when you are renting everything) really of much account in terms of "assets".

The "whims" of the landlord are no different than the whims of the municipality deciding this or that item on a property is not to their liking, setting a fine, adding it (if unpaid) to the tax bill and taking the entire house for not paying it.

Well maybe it works that way in socialist Canada... but not around here.

To begin with my home isn't even in a "municipality", but rather is in a rural area governed only by county and township ordinances, which are both minimal and more importantly cannot impose new (whim) requirements onto already existing residences (existing structures are by definition "grandfathered" so long as they are maintained "within reason as sound structures" {which basically means "not abandoned"}).

I know, my mother was hit for that on a fence a prior neighbor pulled until it leaned. She has no money to fix it, she has been cited by the city and they are adding the fine to her tax bill. She has no money to pay the fine so when taxes are due she's in for a lot of shit.

Well, sounds to me like your mother is not in very good financial condition -- and if you (as her son) cannot help her fix a fence... well then you're probably not doing so great either.

I stand no such risk.

Of course you do. If your primary "asset" is cash-currency of your country, and your residence is rented -- then you are HIGHLY exposed to fluctuations in that currency, and since there is currently a "currency war" going on worldwide... well inflation will come home to roost (and then your rent will almost certainly rise -- far higher and faster than any mere property tax {which again, is integrated/hidden into that rent you pay}).

But hey... if you want to rent for the next 40+ years, but oh wait... you were planning to live past 100, right?

So that would be another 60+ years of rent... with, what's Canada's average inflation rate... probably somewhere around 4% (if you accept the {probably underestimated} official CPI figures) -- which means your rent will be doubling on average at least every 18 years or so -- and across 60 years that would be about 3 doublings (2x, 4x, 8x) during the rest of your life...

But hey, I mean if you don't like the rent the landlord will be charging you at age 50, or again at age 60, or heck even at age 75... you can just pick up your suitcase & wallet... and move again (and again and again).

Yeah... well, Good Luck with that.

[–]oldredder0 points1 point2 points 11 years ago (0 children) | Copy Link

Very well then, pops.

I pay 775 for a space larger than I can use except to store more stuff. Internet, power/heat/etc all included and furniture too. As it happens almost everywhere I looked cost more for 1/3rd of the space and no furniture, 70% of those also not inclusive for Internet and power.

So actually, it's a pretty good deal. Large enough I could have 1 or 2 people live with me but I want no one living with me so no one will be.

I'm happy with moving again and again if I must - it's what I'm used to. What I don't use every day is never unpacked. Hasn't been for 20 years. I rummage through those things on rare occasion when I have a need to, otherwise I carry with me on the move or dispose of if things prove just to be dead weight.

(as her son) cannot help her fix a fence... well then you're probably not doing so great either.

Simply not my place. My mother like many women is able to ramp up damages & expenses beyond belief because prevention requires prediction & logic and women can't do that. I can't devote my life to doing that for her. No one can. In this capacity for debt & exponentially growing damage ... she has a talent that no sane man should devote his life to fixing.

There are many more expenses I didn't mention and they are absurd in their cost and ease of avoidance. It's her nature: she won't avoid them. So I must chose to avoid exposure to them.

Of course you do. If your primary "asset" is cash-currency of your country

It isn't. I don't blame you for being too busy to check on my comment history but I'm a Zerohedger red-pill kind of man. My primary asset is precious metals and food that requires no refrigeration.

I'm banking on at least 8% inflation in food and at least 6% inflation in rent, for all that goes into rent in various locales for various market conditions like including Internet, electricity, etc.

I'm banking on property taxes on 8% and system-wide corruption rising so paperwork may not be in order - yet homes will be seized. Since I don't own a home nothing will be seized from me.

Maybe it has to do with you being in Canada, where the bubble is still going on, or because you got "burned" with an underwater house, or in divorce or well... whatever.

Not me. Just seen enough with others to know. It's because I know that I won't get burned. I see when others get false rape accusations, robbed, lose a home, get destroyed by the economy, divorced, sperm-jacked, etc., and I learn ahead of time so I'm not the next victim. I spot the pattern, assess risks & avoid the stupid risks.

There's no rage in me. It's cold, hard calculation.

[–]spaceballs-1 2 points3 points4 points 11 years ago (4 children) | Copy Link

[–]daf1212[S] 0 points1 point2 points 11 years ago (3 children) | Copy Link

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[–]daf1212[S] 0 points1 point2 points 11 years ago (3 children) | Copy Link

[–]oldredder1 point2 points3 points 11 years ago (2 children) | Copy Link

[–]daf1212[S] 0 points1 point2 points 11 years ago (1 child) | Copy Link

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[–]BleauGumms1 point2 points3 points 11 years ago (0 children) | Copy Link

[–]drkstrs2 points 11 years ago [recovered] | Copy Link

Title	Don't Fall Into Debt !!!
Author	daf1212
Upvotes	4
Comments	43
Date	February 11, 2015 11:12 AM UTC (11 years ago)
Subreddit	Posted in /r/MGTOW
Original Link	https://old.reddit.com/r/MGTOW/comments/2vixny/dont_fall_into_debt/
Archive Link	https://theredarchive.com/r/MGTOW/dont-fall-into-debt.629764 https://theredarchive.com/post/629764

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