A horrible calculation, that I just did and potential decisions

[ERD50]

My main point is to retire you must have zero debt. ....

I'll just be blunt. That is simply and factually untrue. It is a ridiculous thing to say. Absurd!

It is a FACT that many of us here have successful retired while holding debt (while others successful retired with zero debt). So now the question is, why should I seriously consider another word from you, when you start out with an untruth, delivered in absolute terms?

... I know I get flamed for my ideas about economics but it has worked for us. ...

I don't doubt it has worked for you, no flames for that. But yes, I will "flame you" (if that is what I did?) for saying everyone must do it your way. May I suggest you approach life with a more open mind towards things and what other people do, you might enjoy it more.

BTW, I found eating out in Hungary to be very inexpensive, gourmet dinners at casual-chain-boring US restaurant prices.

-ERD50

 

[SpinDoctorTX]

have you ever lived in houston?

We do now (in Spring that is)- and we just use the community pool or go to my brother's mcmansion resort in Richmond TX from time to time. Otherwise you have to take care of the pool or pay someone else to do it.

We don't swim much as we're both very fair. I'm super fair, and have to wear sunscreen + SPF clothes + big hat + long sleeves as I've already had to have a few "maturity spots" frozen or lasered off my arm & legs. So we leave here for at least a couple of weeks in the summer and run from A/C place to other AC places. We also pay for most outside work unless we can do it fall- spring. It is miserable again now after two pretty wonderful days. We just got back from Seattle/ Vancouver where it was at least much cooler (but quite rainy in WA just like in the movies).

 

[corn18]

We just moved to Dallas and wanted a pool. When looking at houses, the pool added zero value for resale. We ended up buying a spec home without a pool and got a quote to put one in. $100k for nothing fancy. We decided not to do it as it's just us two and didn't want to throw away $100k right now. Would have done it in a heartbeat if we could roll it into the mortgage. Couldn't find a way to do that.

 

[Old Microbiologist]

ERD50, It is a personal mantra and may not work for those indoctrinated into the American consumer debt mentality. Sorry if I sound imperative about it. The mind set for my fellow Americans is very difficult to break through so I tend to not soften my opinion about things. I have convinced several friends who adopted this mantra and are also retired well with zero debt. I do not claim to be the originator of it.

Debt is always going to be a burden and something you are paying someone else money to maintain and IMHO unnecessarily. You can never break even on taxes with a high debt load. There is a reason banks push loans because it is highly profitable. In my opinion anything a bank wants me to do is going to be good for them and not for me. I do not trust banks and never will. But, they are a necessary evil in the world. However, if I can avoid paying a bank 1 cent I will do it. The same for taxes. We have zero debt and a lot of extra cash so it works for us. We planned to need a large cash reserve for emergencies in retirement but it hasn't turned out that way for us after 10 years of experience. The medical expenses being the second largest sink hole for personal budget in the US with mortgage being the first and college debt the third. Medical here for us runs roughly $3,000 a year total including major hospitalizations and that is paying 100% cash no insurance necessary. Is it the same here in Hungary as in the US? Perhaps not but it is enough for excellent and cost effective treatment. I can't complain and we have had excellent care and several major medical emergencies none of which came to over $3,000. Medications (I take zero but my wife takes a bunch for her heart condition) are roughly 5% of the costs for the exact same medications in the US. We are in a sense self-insured with he large cash reserve for when that might become necessary. So far, it has't to the tune that our annual expenses are similar or lower than the mandatory Part B premiums I must pay to retain my military Tricare for Life. We abandoned that as Medicare is useless here and Tricare Overseas is hopelessly broken. My promised free health care for life for serving my country is not cheap and not particularly good and so far for us, useless. We have no mortgage, no property taxes in Hungary, and insurance costs are very low. One other thing, you file a claim for anything here and your premiums don't change and they don't cancel you. They also pay cash the day they come to assess damages. That blew my mind the first time I dealt with them having had more than a few horror stories from US insurance companies.

As for the pool costs, I do agree if you don't use it then it is a huge money sink. I swim at least 1 hour a day all told with one major workout and several dips throughout the day. It can be ameliorated but there is always maintenance and chemicals. I have a pool robot that cleans it daily and has been a wonderful aid. It takes 2 hours and cleans it very will. I use slowly dissolving tablets for the chlorine and we add acid as necessary. The chemical costs run about $100 a month. Electricity is close to the same. We installed a polycarbonate sliding dome pool cover which slides easily and locks in place. This provides security should any small children find their way into our property (very difficult as it has a 15 foot high airtight cypress hedge running completely around the property for privacy and security which is behind a wall with spikes) and also maintains the temperature at night. It converts it into an indoor pool for those days it is too inclement to go swimming. I have a roll up solar heater I use in early Spring and can get the pool to 24 degrees by mid-March. I close it down on Oct 31st, drain it down by 1/3, put in floating ice expansion blocks and treat it with a winter chemical mix that prevents algae. I also cover the water layer with a large sheet of black sheeting which blocks sunlight and further prevents algae growth. That all comes off in March, I refill the pool, re-treat with chemicals and shock it, then I put in the solar heater which runs off a very small immersion pump. Once it reaches 22 degrees I re-start the pump/filter system and we are off an running. I can swim at 22 degrees myself but my wife is resistant until it gets to 24. We have a sauna so a dip in the pool is nice between sessions.

I am building my own automatic pool system from scratch which will maintain the chlorine and acid levels, control the pumps, automatically do the backwash when the filter pressure goes up, add water as necessary, and control the pump timing. That is costing me something around $250 to build using stuff ordered from Aliexpress. There are commercial systems out there but they run roughly $10k. I am a computer hobbyist and I built a similar control system for my semi-automated animal aerosol exposure system so this is not too hard a thing to do for me. It should make my life easier and is a fun project to put together. I already did this for our massive sprinkler system so it is not crazy. That system has 3 controllers all tied together to a central program which monitors both ground water and weather, managing 18 valves. Because of water pressure I have 2 pumps running from 1 well and a booster pump for the part of the property furthest away from the well. It is a hybrid system running drips and sprayers and normal rotating pop-up sprinklers for the grassy areas.

IMHO a swimming pool is, as mentioned here, not a wise investment for resale and it certainly costs money to build and maintain. Personally, I would have preferred to build a large pond and let nature do all the work but my SWMBO felt differently. I do enjoy it myself and she swims at least 4 times a day. Of course, she does nothing in regards to maintenance but that is the way of life. Her relatives enjoy it immensely and spend all day there playing in the pool. They are nouveau riche and have never lifted a finger in labor their entire lives so have no clue about maintenance but do pay their 50% of shared costs willingly. That is also part of my life. I did install an internet music system there and have a high capacity router at the gazebo so the younger ones still have full internet access. So, it is a cost we feel is justified and everyone is happy. I will add that the relatives have several other vacation houses around the world all with pools and our costs are way less than the other places. They hire people to do what I do myself here. I am not alone in it though as we do have a full time property manager we hired 10 years ago and he and I split the work. He is also retired military (Soviet Warrant Officer) and also a rotary pilot so we have a camaraderie. We have a good balance of skill sets and we are good friends. In a sense we both work for my wife who is the real brains behind our operations here. I don't care about resale of the house as we plan to die in this house. My hopes are that it continues as is. Perhaps her family will simply buy out my kids who I am certain don't want to deal with a foreign property. But, that is another entire discussion thread of asset planning for eventual demise.

 

[daylatedollarshort]

ERD50, It is a personal mantra and may not work for those indoctrinated into the American consumer debt mentality. Sorry if I sound imperative about it. The mind set for my fellow Americans is very difficult to break through so I tend to not soften my opinion about things. I have convinced several friends who adopted this mantra and are also retired well with zero debt. I do not claim to be the originator of it.

Debt is always going to be a burden and something you are paying someone else money to maintain and IMHO unnecessarily.

If someone offered to lend you $1B at 0% interest with a 30 year repayment plan, would you take the loan? The money can be used however you want, including investing in Treasury ladders.

 

[Old Microbiologist]

I am not a member of the 0.1% so that is a nutty comparison. No one in my life has offered me zero interest ever. I do recall having an ARM in the 80's that went up to 18%
in a market you couldn't give away houses in. That was the school of hard knocks and my first baptism to the ways banks can screw you. However, the very wealthy get this kind of deal all the time. I am assuming this forum is for regular plebeians like me.

I also do not do complicated investing either. I couldn't begin to understand what a Treasury ladder is. I do know that you can easily buy stocks on line at one price (hopefully low) and sell it again (hopefully high). We do nothing else. No shorts, no leveraging, no futures, no currency exchanges nothing other than buy low sell high. I do not have the patience for it but my wife does and she does well. In general she earns between $600 and $700 a day and calls it quits. She doesn't play if the market is screwy. Her cost is a simple $7 transaction fee the rest is profit. Sometimes she gets pinched and sells for lower than she paid and writes it off to bad decision. She has learned to take the loss early and make it back somewhere else. She generally only plays a single stock at a time and then only using 50% or less of our brokerage account. Under Trump things are screwy so we are even more cautious. What we have realized is we can't really spend all we earn so have backed off playing the market. We have increased our travels and are trying to enjoy our money as much as possible before we get too old.That seems ironic to me after having spent so much time and effort into retirement planning. For us those calculations were way too pessimistic in the end. Of course, this is all based on the fact that the US economy won't collapse. I don't believe it will but I am sure the Russians didn't think that way either prior to the collapse so anything is possible.

For me retirement planning it is a simple exercise in budget control and something I wish our politicians would practice rather than give it lip service. Don't spend more than you earn. To retire comfortably you need to have a source of income and assets (think house and car) plus a reserve calculated for worst case. How you arrive at that can be through many pathways. The lifestyle you choose depends on how much you have available for the relative budget. We chose the simplest path. That was to pay off all debt, find a place where our income can give us the same or better lifestyle, that has western values, is relatively crime free, does not participate in useless wars, has a stable government, a low inflation, no property tax, good medical, and no inheritance tax. There are plenty of candidates but we chose Hungary as it is very beautiful and fits into our lifestyle plus being the geographical center of Europe. We could have also gone to Slovakia, Romania, Bulgaria, Slovenia, Montenegro, Bosnia, or Croatia. There are others as well but somewhat less stable like Serbia and Ukraine. Even Russia is a workable opportunity. That is, in fact, our backstop should the world blow itself up. You can live well in any of these countries on an income of $2000 a month. More is better. I have a number of expat Brit friends here who live on less and are fine. The key is to control expenses which is as simple as don't buy anything you can't afford. If your house etc. is eating into your savings then it is time to either increase income or reduce expenses buy moving to a smaller place. I really think it is that simple. It certainly has worked for us. I am just trying to share this experience. If you don't agree then fine but this is what works for us. I believe many Americans can do the same thing. Europeans have less of a problem as they carry relatively low to zero debt.

 

[Old Microbiologist]

ERD50 Re-reading your comment about an untrue statement of mine. What I meant to say is that IMHO to retire with complete freedom you must have zero debt. Having any debt makes you incumbent on someone else unless you have the means to eradicate it quickly. I know people that prefer to take debt rather than pay cash. To me it is bizarre but this is the way many people are led to think in the US. I have relatives that are 1 paycheck from bankruptcy who refuse to listen to anything I am saying. Some call me treasonous and anti-American. They all live in California which might explain it. Funny, having served the US government for 40 years to be anti-American. I will add that the concept of "freedom" in this regards means freedom of encumberment.

There are, of course, other limitations to freedom such as passports and visas so one is never really completely free. Even moving money around is subject to the whims of governments and cannot be taken for granted. Those of us who have chosen to live outside the US are now burdened by draconian reporting requirements which have equally draconian consequences for minor infractions such as forgetting to check the box that you have a foreign bank account on your 1040. Of course they already know about it as it is a requirement for every foreign bank to report in finite detail all account activity of US citizens. This encumbers the bank with reporting requirements that are labor intensive and expensive. They can seize 50% of all your assets and cancel your passport for a minor infraction should they choose to do so. You also now must receive permission from the FINCEN at the FBI for large transfers of money which they can deny without explanation. There is also a requirement to report to the FINCEN whenever your aggregate overseas assets exceed $10k. There is a separate form required to list each and every time you exceed $10k and also what your aggregate balance was on 31 December. All of these are mandatory and regarded as serious violations should you become a person of interest. Many foreign born Americans are finding this out the hard way as they never understood they are Americans having never been there nor having a US passport. Yet, the IRS is reaching out to them for failure to file income taxes for their entire lifetimes.

But I can offer as an excuse that it is difficult to write posts in a tiny window so I tend to miss the nuances of what I am saying. It seems clear to me until someone points it out otherwise. For that I apologize.

 

[DeborahB]

I have a mortgage and am retired and it’s okay. Any other debt is charge cards I pay off monthly. I can deduct the interest on my mortgage and it isn’t a good idea to sell a lot of investments and pay off the house. I moved and split up with my S.O. two years ago, and I do miss having no mortgage. It’s not the end of the world though. I could pay off the house if I had to, but drop my income in the process. It’s okay to have debt, it’s your comfort level that matters.

 

[rothlev]

Let’s see if this works. It’s my test

WOW - beautiful home and pool

 

[Andre1969]

I have a mortgage and am retired and it’s okay. Any other debt is charge cards I pay off monthly. I can deduct the interest on my mortgage and it isn’t a good idea to sell a lot of investments and pay off the house. I moved and split up with my S.O. two years ago, and I do miss having no mortgage. It’s not the end of the world though. I could pay off the house if I had to, but drop my income in the process. It’s okay to have debt, it’s your comfort level that matters.

I'm still w*rking, but I plan on retiring with a mortgage, and a pretty hefty one at that. I could pay it off, but at 3.875% fixed, I figure I'm better off letting that money ride on the stock market.

 

[DeborahB]

I'm still w*rking, but I plan on retiring with a mortgage, and a pretty hefty one at that. I could pay it off, but at 3.875% fixed, I figure I'm better off letting that money ride on the stock market.

I’m slightly jealous at 4.125% fixed 30 year . I’m doing the same, it’s invested and earning more than 4%.

 

[joeea]

My main point is to retire you must have zero debt.

We must? Your main point is clearly nonsense.

That is our personal mantra.

It might be your mantra. That doesn't make it any less silly.

 

[joeea]

You can never break even on taxes with a high debt load.

What in the world does "break even on taxes" mean?

 

[Gumby]

Money and debt are inanimate, morally neutral objects. We can either have a good relationship with money and debt or a bad relationship with them. If we have a bad relationship with those things, we are the problem, not the inanimate objects.

 

[Andre1969]

I’m slightly jealous at 4.125% fixed 30 year . I’m doing the same, it’s invested and earning more than 4%.

I just refinanced in late April. I ended up going to settlement in September 2018, when rates were higher, and the best I could do was 4.75%. But, around late March/early April, the lender hit me up, said rates dropped by a good bit, so it might benefit me to refinance. I said if he could get me below 4%, and closing costs were low enough, I'd be tempted. So, we did it for 3.875%. I told him to hit me up again if rates get below 3%. Probably wishful thinking, unless I want to go with a 15-year.

A 15-year would put my monthly payment a bit on the high side though, to the point I'd probably push back my retirement goal.

 

[Anthonyin2022]

I was into the credit arbitrage thing many years ago - making a balance transfer into a 0% card and earning the float for a year. In fact, I learned how to do it from this forum. At one time, I had over $75,000 in credit card debt going. However, the banks finally wised up and starting charging 3% per balance transfer, so it would be like refinancing to 3% APR from the 5.25% OP is currently paying. There is some financial benefit, but, as others have pointed out, there is also some danger in that approach; miss a payment by a day and your rate goes to the normal 18% or so.

LOL...The good old days of 0%, no fee balance transfers. CC companies were more than happy to loan you money for free. At one point, I had nearly $900,000 in BT outstanding with most of it sitting in online savings accounts. This is when those accounts easily had 3% interest rates. That lasted about two years and now it is tough to get any safe returns and even tougher to get no fee BTs of any significant value, IMO.

 

[RunningBum]

I know I get flamed for my ideas about economics but it has worked for us.

Maybe you should reconsider giving your personal mantra as an absolute for others to follow.

Rambling on about other only slightly related topics in your posts isn't helping you either.

From another post of yours:

I also do not do complicated investing either. I couldn't begin to understand what a Treasury ladder is. I do know that you can easily buy stocks on line at one price (hopefully low) and sell it again (hopefully high). We do nothing else. No shorts, no leveraging, no futures, no currency exchanges nothing other than buy low sell high. I do not have the patience for it but my wife does and she does well. In general she earns between $600 and $700 a day and calls it quits. She doesn't play if the market is screwy. Her cost is a simple $7 transaction fee the rest is profit. Sometimes she gets pinched and sells for lower than she paid and writes it off to bad decision. She has learned to take the loss early and make it back somewhere else. She generally only plays a single stock at a time and then only using 50% or less of our brokerage account.

Am I reading this right? Your wife day trades, or at least short-term trades, with up to half of your portfolio?? Wow. Just wow. No thanks. I wonder what other gems I'm missing by only briefly scanning your diatribes.

 

[The Cosmic Avenger]

Can we please stick to debating the approaches and drop the personal attacks?

 

[NW-Bound]

... I Houston, we have Beaumont clay and digging is easy. What's not easy is keeping the pool from floating up out of the clay.

we got lucky - ours was put in around 1975 and may have moved a half inch - of course we lived in an area that had lots of pine trees so the soil is sandier than say, bellaire or alief

coworker put in a pool about 20 years ago in bellaire - i went swimming there shortly after they put it in - it had already moved 3 inches

YIKES! What a nightmare!

I have heard of pools popping out from the ground. Hence, when I need to empty the pool, I make sure to do it only when it has not rained for a while. And it rains about 3 or 4 times a year here. And I never have standing water after even a hard rain. That's how gravelly my lot is, being in the foothills.

But, but, but pools floating up when there's water in them to weigh them down? Good grief.

What keeps the houses from sliding around? Maybe they do too. Why hasn't ReWahoo included this hazard in his long lists of reasons not to move to Texas?

 

[JustCurious]

Im putting in a pool in September. Cost will be around $48,000. Nothing special, 12 x 24, salt, solar heater, cage. My house is worth probably.....$250,000 without the pool. Will be worth every single penny, I plan on being in it every day (Im in Florida, where else).

I live in Florida and I have had a pool for over 20 years and I can't remember the last time I used it.

 

[NW-Bound]

The purpose of a pool is to keep you from having to mow a lawn.

 

[Caskem]

So true!

Also consider, if you open up a few new credit cards and use most or all of the credit lines on them, your credit score will take a hit. You probably won't need to apply for a mortgage, but what about a car loan? If so, you might wind up paying a much higher rate.

We did one of those 0% offers for a home improvement and dealing with them made us so nervous thinking about how they might "misplace" a payment that we paid it off with a home equity line of credit. And don't regret that.

And yes, our credit score took a 20-point hit.

 

[Big_Hitter]

What keeps the houses from sliding around? Maybe they do too. Why hasn't ReWahoo included this hazard in his long lists of reasons not to move to Texas?

nothing, except maybe a pier and beam foundation

most houses in houston have concrete slabs that are cracked

hill country is different - it's just hot as heck and every bug that bites lives there

 

[Retired Expat]

All structures should have some kind of drainage around them. Keep moisture from building up under the slab, or trying to enter the basement, keep things from popping up and worst is liquefaction should your area get any kind of earthquakes even minor ones

 

[Oakster]

Greetings all.
This week I decided to do my DTI (debt to Income) calculation, which is 16%, then I did my back end calculation, which includes all expenses, minus entertainment comes to 21%. Both of these made me very happy, as it shows we are doing well (which we are now, after some setbacks).

However, I then decided to see how much interest I was paying versus my 16% of fixed bills. Our only debt is a house payment and pool payment. Needless to say, of that $, 40% is Interest.

To put it into context:
Income 15400 after taxes (this is the number I used)
Debt: House (3.5%) and Pool (5.25%): This includes all escrow: $2561
Bills: minus food, gas, entertainment: $3300

Interest is $1300 ish of the $2561. The truth of borrowing to buy a house!

So we are putting $5K per month towards the Pool payment and will pay it off over the next 12 - 18 months.

Things we are tempted to do: We owe $72500 ish on the Pool, and I’m tempted to take out enough 0% credit cards and put it on it. I think this would save us some money!

Has anyone done anything like that?

Would it really save enough money to be worth the hastle? If you are paying it off in 12 months, I would just go with it.