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Old 02-02-2015, 07:19 PM   #61
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I work around a group of guys who make very serious money year after year.Hourly workers they gross 125,000 - 200,000 every year.While talking to our lady in payroll she informed me that no less than once a month, one of them comes in for a cash advance on their pay. House payments, truck payments, Harley payments etc. etc. So sad
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Old 02-02-2015, 09:00 PM   #62
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I agree unless you have children applying for, or in college. If you are sitting on cash the funds are as good as gone. The federal aid forms say that that cash is available for education.
Maybe it's the case that any system will be flawed, but some of this creates strange incentives. A parent on the cusp of financial aid may be better served to avoid saving. Likewise making a tax inefficient choice between Roth and Traditional IRA and 401k may effectively move more money into "retirement" accounts that don't count towards education contributions vs saving the same money in a longer term more tax efficient way that exposes more of it in non-"retirement" accounts. And not surprisingly many people respond to this by gaming the system. I've heard this as justification for folks who spend as much as they can and avoid savings as well.
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Old 02-02-2015, 10:02 PM   #63
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House payments, truck payments, Harley payments etc. etc. So sad
Hey! How do you think I got the money to retire early? Don't mess with my payments.

In my case I have my mortgage because 1) Home is worth in excess of $1M, and that's a lot to have tied up in a illiquid asset. 2) My rate is so low that with the tax break I can actually make money even invested in bonds. Since it's been invested mostly in equities I've actually made a nice profit on the arb. Too bad the value of my house (built in 2008) is pretty much negating that. Oh well, you win some, you lose some.
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Old 02-03-2015, 02:49 AM   #64
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I used to work for a Financial Services company. And, even though, everyone should know better, there was still a group that were always in debt, paying 18% interest.
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Old 02-03-2015, 11:06 AM   #65
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$600K in interest sounds a little high for an average American, but not high at all for an average SF Bay Area resident. Mortgages in the $400K to $600K range are extremely common and would yield over $750K in interest over the life of the loan.


My 23 year old daughter purchased her first 1 bedroom condo last March for $327K with a $255K mortgage. As she moves up the ranks, it will only go up from there.
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Old 02-03-2015, 11:35 AM   #66
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$600K in interest sounds a little high for an average American, but not high at all for an average SF Bay Area resident. Mortgages in the $400K to $600K range are extremely common and would yield over $750K in interest over the life of the loan.

My 23 year old daughter purchased her first 1 bedroom condo last March for $327K with a $255K mortgage. As she moves up the ranks, it will only go up from there.
Back in 1986 I bought my first condo (840 sqft 1Bed/1Bath) for $95K in San Jose (20% downpayment). Zillow reports the same unit is valued at $420K today. Last sold in 2007 for $403K, so the "zestimate" may or may not be too far off...

Using the US inflation rate makes that $95K equivalent to $205K in current dollars. One of many reasons I now live in a lower cost of living area.
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Old 02-03-2015, 11:55 AM   #67
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$600K in interest sounds a little high for an average American, but not high at all for an average SF Bay Area resident.
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One of many reasons I now live in a lower cost of living area.
It sure helps with housing in retirement.

Back in 2002, I bought my home for $160K, about the median price for my area at that time. I had already saved up almost half of it via LBYM, and by doing some even more serious LBYM I managed to get it paid off in 2006. It would have been 2005, but 2005's hurricanes including Katrina messed up that plan a little bit.

Anyway, the total interest paid on this house added up to $17,401. Whether or not that was a good financial decision is debatable, but be that as it may, I cackle in glee when I think of how I gypped Chase Mortgage out of all the additional interest they thought they would get from me.

I haven't paid any other interest since 1998. I hate paying interest. People with my mindset probably skew the statistics a bit.
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Old 02-03-2015, 02:58 PM   #68
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Anyway, the total interest paid on this house added up to $17,401.
When we (the ex and I) bought a house in 1979 included in the paperwork on the 30-year mortgage was an amortization schedule. That was the first time I'd ever seen one and was shocked to learn that at the 11 7/8% interest rate if we let the loan run 30 years we'd pay more in interest than we did for the house itself! I already knew cc interest was a bad deal but I'd never thought of mortgage interest that way.

After the divorce when I bought a house by myself it started out with a 30-year loan just to get in the door but it was paid off in 14 years.
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Old 02-03-2015, 03:02 PM   #69
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When we (the ex and I) bought a house in 1979 included in the paperwork on the 30-year mortgage was an amortization schedule. That was the first time I'd ever seen one and was shocked to learn that at the 11 7/8% interest rate if we let the loan run 30 years we'd pay more in interest than we did for the house itself! I already knew cc interest was a bad deal but I'd never thought of mortgage interest that way.

.
Reminds me of :
"The percentage you're paying is too high a price
while you're living beyond all your means
And the man in the suit has just bought a new car
from the profit he's made on your dreams"

(Low Spark of High Heeled Boys--Traffic)
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Old 02-03-2015, 03:11 PM   #70
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Reminds me of :
"The percentage you're paying is too high a price
while you're living beyond all your means
And the man in the suit has just bought a new car
from the profit he's made on your dreams"

(Low Spark of High Heeled Boys--Traffic)
Well, it was a point on my financial education. At the time I was 29 and "everyone had a mortgage" so I didn't know there was another way to do it. I'd heard of the occasional outlier who paid cash for a house but no one I knew had that kind of resources available.

It was also in a high COL area, not far behind Boston or NYC.
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Old 02-03-2015, 03:14 PM   #71
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Well, it was a point on my financial education. At the time I was 29 and "everyone had a mortgage" so I didn't know there was another way to do it. I'd heard of the occasional outlier who paid cash for a house but no one I knew had that kind of resources available.
Sorry, I wasn't being critical. You're right "everybody had a mortgage" and a car payment!!

But I always think to those lyrics...should be the theme song of this site!
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Old 02-03-2015, 03:17 PM   #72
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Actually I suspect those lyrics are about money - and lifespan - spent on drugs, but your point is taken.

A.

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Reminds me of :
"The percentage you're paying is too high a price
while you're living beyond all your means
And the man in the suit has just bought a new car
from the profit he's made on your dreams"

(Low Spark of High Heeled Boys--Traffic)
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Old 02-04-2015, 12:55 AM   #73
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Actually I suspect those lyrics are about money - and lifespan - spent on drugs, but your point is taken.

A.
I don't think so. I am pretty sure it's about Steve Winwood fighting with his record company and how they try to control the artists and take the money. Pretty much every successful band has one of these songs somewhere in their catalog. Welcome to the Machine (Pink Floyd) and Zanz Kant Danz (John Fogarty) jump to mind.

But since only Winwood knows for sure, everybody will just have to have their own interpretation.
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