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Re: Luxury Retirement Lifestyle
Old 09-10-2006, 11:22 AM   #61
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Re: Luxury Retirement Lifestyle

Quote:
Originally Posted by HaHa
I am not really disputing anything with you. I appreciate your pointing out this article. All I am saying is that it is very hard to figure out what it means.

The only way I can think of to figure out if you have a real gain or loss on a house is the cash flow method.

Make a spreadsheet, then enter the CPI adjusted cash flows for every year you own the place, including the year you prepare for sale. I would enter all flows (mortgage payments, taxes, repairs, assessments etc) as negative, and offset them by what it would have cost you to rent the house in each year, a positive number.

Upon sale, take all cash you clear at closing, and enter that as a positive flow.

Use your IRR function to see how you did in real dollars! It may often indeed be a negative number, but it is probably often positive also.

Ha
Hey Ha: It's been a while since I checked in. (Been a very busy summer).
I noticed your post and the subject and decided to comment re: formula for comparing buying and renting. (We covered this subject on another thread some time ago, however....

Certainly agree with Sgeeeeeeee that numbers seem out of line.

I recently went over this with my wife a few weeks back.

If you figure cash on cash, it will simplify comparisons.

Ie: Built home 20 years ago, and paid cash.

My cost for the 20 years for Taxes, and Maintenance have been $l05,000. Built the home for $200,000.00.

Equivilent rent would have been $360,000 during that period of time. (Being fair on the rent side, as it would have been in a "development" somewhere, and not a custom home located where it's at.

It's not for sale, but if it were, $500,000 of the gain would be tax-free.

Since buying our first home in the early 60's, the experience has been much the same.

For me personally, it's hard to see the advantage (in the long haul), for young people to rent rather than buy.

Will agree that owning a home can be a PIA from time to time, but Money-Pit (In the long haul), isn't accurate in my experience. (Keeping
deferred maintenance from becoming overwhelming takes a bit of work though)
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Re: Luxury Retirement Lifestyle
Old 09-10-2006, 11:45 AM   #62
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Re: Luxury Retirement Lifestyle

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Originally Posted by Billy
I do have a question though* Does anyone else feel pressure by owning so much?
Sitting down to pay the bills must take a good few hours every week - and how do you decide what to wear to the next social event?
It seems like such a dream lifestyle. I wonder if I am 'weird' by feeling the pressure of taking up so much room, using so many resources on a daily basis, etc. Are the servants just like 'members of the family?'
I'm not being facetious here.. but maybe I am simply 'small fry.' I am comfortable with my needs being modest. I feel more self determined and less likely to be bought off somehow.. Am I off the mark?
No, you're not off the mark, you're just not ready to join the luxury retirement lifestyle!* Maybe you need another 15 years of practice.* I don't think I'll ever be mature or responsible enough to handle taking care of all those things and their people.

Like UM says, the stuff owns you.* You can turn your checkbook over to a personal assistant and put much of the billing on automatic deduction, but I'm sure that every luxury lifestyle has at least a 5% "leakage" (theft) rate as the staff works out the kickback heirarchy.* There's no incentive to shop for bargains-- only to "buy from the best!"* It's rumored that Barbra Streisand's farewell concert tour was motivated by her accountant's "discovery" that she was spending over $25K/month caring for "just" the yards of all of her residences.* It was adding up to some serious SWR cashflow problems.* Elton John has done the same with flowers & CDs, Michael Jackson with... well... whatever he's doing with it.

It also messes up your life.* Perhaps it's a good thing to have to pick up all the clutter on the night before the housecleaners come, but if you're reluctant to be around the house while they're cleaning then it's affecting your lifestyle.* Not only that, but you're paying for the home invasion.* At some point it must feel more like living in a museum (or a zoo) than in a home.

I've spent some time with professional butlers* who say they've been made to feel like members of the family but who also caution their peers about being sucked into the soap opera.* They feel it's unprofessional to be "family members", especially considering the old quote "No man is a hero to his valet".* No one wants to work for a jerk and good butlers don't have to, but they're also uncomfortable when the lines of familiarity are crossed.

* You might know a couple of these guys, Akaisha.* Two of them were retired from "service" but working at the Queen's Park Hotel a couple years ago as staff trainers.* It's a little odd to go into a Bangkok hotel lobby and be welcomed by two obviously British butlers in frock coats who later join you at the pool for frosty beverages...

Quote:
Originally Posted by Jarhead*
For me personally, it's hard to see the advantage (in the long haul), for young people to rent rather than buy.*
Welcome back, Jarhead!* Been a few changes while you were out...* and please check your PMs!

Especially when they're married, I think the buyer's first home decision is rarely a financial one.* It's driven by job stability, relocation possibilities, and family.* It might even be driven by a sense of "keeping up with the Jones" entitlement, but spreadsheets are probably used for rationalization rather than for analysis.

Otherwise everyone would be saving their cash for a 20% down payment and a fixed-rate low-interest 30-year mortgage, right?
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Re: Luxury Retirement Lifestyle
Old 09-10-2006, 11:53 AM   #63
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Re: Luxury Retirement Lifestyle

Unclemick:
Quote:
At what point does the ownership of 'stuff' reverse and the 'stuff owns you'.
Exactly. I like not worrying about the 'stuff.' * 8) *I mean, I am emotionally invested in some of it, and it would be a bit of a hassel should a tornado hit it and blow it away, but I could virtually pick up and buy new stuff without too much trauma.. I like that idea.

I'm emotionally invested in my art supplies,... but I could buy more somewhere else easily enough. I like being unencumbered.

Eagle43
Quote:
Well, George Carlin pontificated about this years ago.
Love it love it love it! Perfect!

Jarhead
Quote:
Will agree that owning a home can be a PIA from time to time, but Money-Pit (In the long haul), isn't accurate in my experience. (Keeping
deferred maintenance from becoming overwhelming takes a bit of work though)
Yes, and everyone is different. That's what makes the world go round. *

It's that feeling of overwhelm that is hard for me to handle. If I start feeling responsible for too many things I start to short out - don't get the sleep I need! * (I'm serious!)

Learning to lighten up -- in all the ways it can be - has been an en-lightening experience for me. Great benefits!
Nords:
Quote:
You can turn your checkbook over to a personal assistant and put much of the billing on automatic deduction, but I'm sure that every luxury lifestyle has at least a 5% "leakage" (theft) rate as the staff works out the kickback heirarchy. There's no incentive to shop for bargains-- only to "buy from the best!"
Now see… that ‘leakage’ would* bother me. Call me anal retentive or something.. (I would rather call it efficient or zen-like* * ) But that is why I was good at running a business. And I like to shop for bargains..* I don’t mind having good quality, but I don’t need a $15,000 purse or* a diamond choker for my dog…

I dunno... I enjoy leaving a soft footprint.

Akaisha
Author, The Adventurer's Guide to Early Retirement
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Re: Luxury Retirement Lifestyle
Old 09-10-2006, 12:39 PM   #64
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Re: Luxury Retirement Lifestyle

Quote:
Originally Posted by Nords

Welcome back, Jarhead!
I'll second that. But it does seem odd that you've been absent for months and suddenly show up again the morning after a certain highly rated college football team is defeated in an overhyped prime time TV matchup.

Just a coincidence I'm sure...

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Re: Luxury Retirement Lifestyle
Old 09-10-2006, 01:48 PM   #65
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Re: Luxury Retirement Lifestyle

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Originally Posted by REWahoo!
I'll second that.* But it does seem odd that you've been absent for months and suddenly show up again the morning after a certain highly rated college football team is defeated in an overhyped prime time TV matchup.*

Just a coincidence I'm sure...

ReWahoo: Depressing as it is, I guess I'll just have to file it under "opportunities lost".

"ReWahoo, who agrees with Jarhead, that Texas is not the best collge football team in the country." Damn, that would have looked great in Neon Lights.

Be that as it may, Fall is my absolutely favorite season. (Fly-fishing is great, Golf is cooler, Major League Baseball is trying to filter out who's going to the playoffs, and the NFL kicks off today.

Lord, if you're going to take me, make it in February.

Talk to you later, "Lucky".
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Re: Luxury Retirement Lifestyle
Old 09-10-2006, 02:04 PM   #66
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Re: Luxury Retirement Lifestyle

Quote:
Originally Posted by REWahoo!
I'll second that.* But it does seem odd that you've been absent for months and suddenly show up again the morning after a certain highly rated college football team is defeated in an overhyped prime time TV matchup.*

Just a coincidence I'm sure...

Darn! Darn! Darn!* I was gonna mention that.* But, I took my nap, first.* Yep, the Horns got branded last nite.* It took more than 8 seconds, but branded, they were.* *
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Re: Luxury Retirement Lifestyle
Old 09-10-2006, 02:13 PM   #67
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Re: Luxury Retirement Lifestyle

Hi Jarhead. Welcome back from me also. I hope you will have time to post, even given the allure of autumn in your neck of the woods.

Also, thanks for the rundown on your experience as a homeowner.

Ha
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