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Re: Debt and Fire
Old 07-19-2005, 02:44 PM   #21
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Re: Debt and Fire

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Originally Posted by azanon
If it takes you time to do that, its not free.* *How much did you used to be worth an hr JG?* Around here, we value our time more than anything.
That's the beauty part. Takes almost no time, at least for me.

JG
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Re: Debt and Fire
Old 07-19-2005, 02:46 PM   #22
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Re: Debt and Fire

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Originally Posted by maddythebeagle
I heard another person call in to Dave and explain that she used credit card balance transfers (none more than 2%) to pay off a house mortgage and then pay down the credit card debt over time. It obviously is a little more risky to do this since the cc's can up the rate based on missing a payment on another card, etc., but if she wanted to take the risk and understood the game and she didnt lose any sleep on it.....

That said, I am not sure that I would try this. I like the idea of putting in a higher yield short term account in case it has to be paid back.



Another reason this woman was smart was she exchanged secured debt for
unsecured. Almost always a good thing from the debtor's perspective.

JG
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Re: Debt and Fire
Old 07-19-2005, 04:04 PM   #23
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Re: Debt and Fire

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Originally Posted by FlowGirl
Sure, its just another way of saying that things bought on credit cost more.* The thing that most anti-debt people like Ramsey leave out is that you do get something in return for that extra cost - you get the money right now.* If I want to buy something for $1000, but I don't have a pile that big right now, one option is that I can save $100/month and buy it in about 10 months.* However, I have another option - I can get the money and my item today, but pay more for it via interest.* I look at the interest rate I'm being charged as the "cost of having the money now."* *As long as you know that that cost is, and can figure out if its worth it, then I don't see a problem.*

BTW, I'm not a fan of debt at all, but I* have a problem with Ramsey's all-or-nothing "debt is evil" mentality.* * * Debt in and of itself isn't good, bad, ugly or anything else - its just another tool.
I agree with your example.* This is how I think about it also.* *I guess you could argue that by servicing debt it keeps some from spending on other stuff.

I find that I go through different swings on the debt issue with an overall bias of getting rid of all debt.* We are aggressively paying down the mortgage on the primary residence and may start working on the investment property mortgages once that is done.* It is very feasable the house and one property could be paid off before I leave the AF in 5 yrs.

However, we now have an option to buy another rental property that will positive cash flow with a 2-3 yr renter.* Not sure if I want 3 rentals in the same area plus a primary residence.* One one hand I know we will make $$$ over the long term, but on the other hand I really would like to not take on the additional risk and just pay everything off, have the cash flow and lower the required amount of cash each month.

For us there is a lot of uncertainty in the next 4 months with a deployment, potential PCS, and/or a short 10 month school.* I find that when I am undecided I just wait.* I guess I have strategic paralysis.

JDW

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Re: Debt and Fire
Old 07-21-2005, 07:17 AM   #24
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Re: Debt and Fire

My feeling is that: some well thought debt (e.g. mortgage on NNN prop) is a requirement to engineer equity growth, too much leverage with little management (e.g. trading on margin or large & leveraged positions on futures) is an effective way to go bust (quickly) and debt to purchase new useless items is nonsense. Sometimes people go bust on real estate as they leverage too much and do not think mortgage(s) as debt instruments nor as leveraged positions. Depending on the type of mortgage (e.g. variable rates going up) and RE market downturning would leave them with virtually no equity and debt ! Some go bust this way too.
I carry on a mortgage only if I make more than the cost of it (typically on NNN props), one at a time, and consider paying it back a minimal objective until I can move to the next investment. Leveraging on margin is a business in itself.
Not using debt instruments & mortgages I would have not succeded building a portfolio of NNN props which I make a living on and enable me to keep saving, investing and trading with the surpluses.
I would deter people from holding too many residential rental estate as it is more difficult to remove families (in all ways including moral) than companies stopping paying the rents. It also ensure diversification.
My two (euro / Ben) cents.
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Re: Debt and Fire
Old 07-21-2005, 08:35 AM   #25
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Re: Debt and Fire

I've heard Brother Ramsey a couple of times, and most of what he preaches is good. I believe it is aimed at the average American who is in debt up to his/her ears. I know people like that and they live in fear of the collector. And, as I grew up poor, I believe that debt is a killer. LBYM. Save for that proverbial rainy day.

Debt can be good, if used for business purposes; to make money, as you say, use it as a tool. In most cases it's vital for home ownership. But, other consumer items should be paid for in cash, and on-sale, preferably. I use a credit card for airline miles, and pay off monthly. To my knowledge, have not paid a dime of interest on the card.

Oh, and I didn't know he (Ramsey) lets you charge stuff on his site. Now that takes large ones, don't ya think? Talk about hypocrisy!
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Re: Debt and Fire
Old 07-21-2005, 08:45 AM   #26
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Re: Debt and Fire

Quote:
I believe it is aimed at the average American who is in debt up to his/her ears. I know people like that and they live in fear of the collector. And, as I grew up poor, I believe that debt is a killer.
I agree. My new wife's kids (grown with families) live paycheck to paycheck and are up to their asses in debt. One has already filed Chapter 13 but is building a new house that is over their heads. They are doing a lot of the work themselves to save some money but they have not planned ahead and are running out of money to finish the house. It hurts to see them stuggle but they won't listen to anybody about saving instead of spending and the other one has not saved a dime for their retirement or kid's education. Live for today and hope for tomorrow seem to be their mantra right now. My wife used to live that way too but she now sees the light and it trying to get her kids to stop spending what they don't have. Debt is fine for leverage of RE and some other investments but using a CC at 20% int. to buy stuff you really don't need is way beyond dumb.

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Re: Debt and Fire
Old 07-22-2005, 12:21 AM   #27
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Re: Debt and Fire

We use plastic for almost everything, but always pay it off when due. The statements make it easy to track expenses. We have really cut down on the use of cash, cash was harder to account for. It just sort of dribbled away.

I view debt as bad. Only debt ever was the mortgage on the first house. And as time went on, we added extra principal to the monthly payments and paid it off early. Maybe I'm weird. But then, I ER'd <50, and no one else I know has* 8)
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Re: Debt and Fire
Old 07-22-2005, 01:10 PM   #28
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Re: Debt and Fire

I listen to Dave Ramsey occasionally and all-in-all I think his message is appropriate for a large portion of the population.

and FYI: His site does not accept credit cards.



Quote:
Originally Posted by Eagle43
Oh, and I didn't know he (Ramsey)* lets you charge stuff on his site.* Now that takes large ones, don't ya think?* Talk about hypocrisy!
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Re: Debt and Fire
Old 07-22-2005, 06:26 PM   #29
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Re: Debt and Fire

sure dave does, I signed up for his premium services so that I could download his show and used a credit card. Somebody else on another board said that you can but he says that his system cant tell the difference between a cc and debt card. I dont own a debt card.
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Re: Debt and Fire
Old 07-22-2005, 07:03 PM   #30
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Re: Debt and Fire

Quote:
Originally Posted by SteveR
My wife used to live that way too but she now sees the light* and it trying to get her kids to stop spending what they don't have.*
If she figures out a way to do this, would you please pass it on to me?

Ha
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