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My little piece of peace

Discussion in 'Marketplace' started by masalai, Feb 5, 2009.

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  1. Manie B
    Joined: Sep 2006
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    Location: Cape Town South Africa

    Manie B Senior Member

    fully agreed

    problem is that this is exactly what happened when he bought the house,
    young - newly married - and will do anything to please "SHE WHO MUST BE OBEYED" most of the houses that people live in today was driven by the "dream"
    you know, after all ever child MUST have its OWN bedroom and bathroom
    geez since when should a child have to share a bedroom :rolleyes:
     
  2. BPL
    Joined: Dec 2011
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    Location: Home base USA

    BPL Senior Member

    US mortgages are bad but not that bad.
    http://www.hsh.com/calc-amort.html
    Type in 300,000 and calculate, See Details Year by Year for the amortization schedule. First year interest on a 30-year is 67% of the yearly payment. 10th year is 53% interest.
     
  3. groper
    Joined: Jun 2011
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    Location: australia

    groper Senior Member

    Frosty, i said that the family can afford $2000 per month.... thus they CAN AFFORD to pay principal and interest on 1 property --OR-- they can afford to pay interest only on 2 properties with the added rental income from the second property.

    Gambling that property prices will increase is the main point of concern. My argument for that is how can it NOT increase when the gubments are printing so much money? Inflation is assured...

    Manie B, Your Point that in the early years most of the money repaid is interest only is true, and i agree, and is also the basis for my argument. What is it your missing here? Why repay money today, when its going to be worth much less in the future and so repay it later... THUS its a hedge against inflation...

    The only problem i can see here, is that once your retired or can no longer produce an income, your ability to service loans is no longer.... thus the difference of opinion we see between the old guys and the younger ones.... :p
     
  4. groper
    Joined: Jun 2011
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    Location: australia

    groper Senior Member

    To put it another way.... if i were paying principal and interest on my home loan, i could not afford to build the catamaran im building.... which i hope will be a nice asset to hold, debt free, once its finished....

    The point is, without credit, its more difficult to do ANYTHING, and that includes earning more money.... i could not count the number of highly successful businesses around here, that have used credit to buy more machinery and finance bigger premises, so that they can increase their PRODUCTIVE CAPACITY and make more money.

    So Provided the credit is used in a manner that makes money, then its a good idea... Its at complete odds to using credit to buy a new car or similar, which will quickly depreciate, its a completely different story and you cant compare what im talking about here...
     
  5. Manie B
    Joined: Sep 2006
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    Location: Cape Town South Africa

    Manie B Senior Member

    mmmmm :D
    let me help you here son ;)
    looking back and having done it just like you said it should be done
    (sorry to admit that I actually did it just as you say)
    I can tell you now if I could wind the clock back 30 years to when I was 30 I sure as hell wont do it like that again.
    When I bought my first BIG lathe ( 2 meters between centers with a 600 mm swing ) I financed it because I was making hydraulic cylinders. The joke is I should have subcontracted the work out, put a smaller markup made a smaller profit and I would have been WAY better off.
    But no, the influence was there, easy credit.
    I have lived thru 3 major recessions - 2008 was probably the pinacle
    you youngsters will live thru more recessions than I have imagination for.

    So after 35 years in small to medium enterprises I teach my children that are now mid 20's something, NEVER CREDIT and learn to HATE BANKS. Avoid financial advisors, polititians, lawyers and anybody that walks around with a bible.
    Glad to advise that we are all well, healthy and happy:D
     
  6. michael pierzga
    Joined: Dec 2008
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    Location: spain

    michael pierzga Senior Member

    In Spain the guys i know whose small business model was based on credit are ..err emm...out of business.

    The cash and carry , low debt business guys are bunkered down, but they are still in business.
     
  7. charlyIII
    Joined: Oct 2012
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    Location: st simons island ga

    charlyIII Junior Member

    The sad reality is that we are ALL in debt, whether we want to be or not. If you are forced to play the game under certain conditions, there is no choice but to use the same tactics.

    That said, I agree with all that has been said about the irresponsible USE of credit.

    OK Im done. Mas thanks for putting up with my blather.
     
  8. Manie B
    Joined: Sep 2006
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    Location: Cape Town South Africa

    Manie B Senior Member

    very true here as well

    me too thanks Mas :)
     
  9. groper
    Joined: Jun 2011
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    Location: australia

    groper Senior Member

    Manie, i like listening to older more experienced people, can learn alot from them, but you still havnt explained it very well.

    I can understand your business analogy, but why not the real property scenario?

    Provided the interest rate your paying on an asset, is lower than the rate of inflation on the same asset, then you come out in front no?

    Then if you agree that the gubments are printing lots of money, and we have very low interest rates, then why would you not beleive the difference in interest rates VS inflation will be favourable to own as much property as possible?

    - i understand that rising interest rates is the killer here, but you can fix interest rates at the low rate now, or keep a variable rate and be prepared to sell off the property once interest rates start to make this approach unfavourable.... what am i missing here?
     
  10. pdwiley
    Joined: Jun 2008
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    Location: Hobart

    pdwiley Senior Member

    Hahahaha. Sorry, using 'boat' and 'nice asset' in the same sentence is an oxymoron.

    I can afford the boat I'm building because I pay CASH for everything and I have no debt.

    Classic 'leverage' philosophy and I agree, it works - to a point. That point being when some external event causes you to have cash flow problems, at which point you get to see close up & personal just how leverage works in reverse, too.

    I owe no money, I have working capital sufficient to tackle any project of up to 2 years length without other income and I live a quiet life. If interest rates go up, I don't care WRT their personal impact. I wouldn't swap for a highly leveraged setup for anything.

    I don't even have a credit card these days.

    PDW
     
  11. groper
    Joined: Jun 2011
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    groper Senior Member

    PDW, ok i agree... the first cashflow problem i have already experienced - i lost my high paying mining job about 3 months ago... but ive picked up my tools and can still keep the money coming in doing other things as im young, fit and able... heaven forbid an external event that takes away my health, then im really screwed....

    The point i was trying to make is that if was paying principal and interest, i could not afford to build the boat with the excess disposable i have at hand. Paying the principal down would consume every spare cent of the family budget - instead im using the cash to make more money in the form of a boat - which is a salable item once finished and will surely be worth alot more than it cost me in materials, when i get paid for my labour...

    But i have no doubt, that the next inflation bubble will see the prices of new boats skyrocket aswell... materials arnt going to get cheaper, and neither is labour, so the cost of a new boat is going skywards... ive never lost money (besides running costs) on any of the 4 boats ive owned thus far... noone ive met who builds their own boat (and doesnt subcontract the work out) has sold it for less than what it cost them to build, save the time spent.

    My father bought a 2nd hand, home built, rudy choy designed sailing catamaran built from ply, spruce and glass back in 1984... he sold it in 1995 for double what he paid for it... thats inflation on boats for ya...
    [​IMG]
     
  12. masalai
    Joined: Oct 2007
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    Location: cruising, Australia

    masalai masalai

    Live and let learn, The markets are quite volatile and housing has about 30% to fall in many areas and is near bottom in some parts of Australia... There is little consistency elsewhere in the world... Patches remain strong (overpriced) and other areas may have reached their bottom and elsewhere is somewhere in between...

    CAVEAT EMPTOR is a useful phrase to remember, if you feel something you purchase is of good value then retain that perception and don't brag as you may be wrong, as I have found in experience and life... There is a potential for a bust in the Australian housing bubble - my guess/feeling is that it will pop in small patches as the auto-mobile and other manufacturers and mining operations close or severely reduce labour as markets contract... The world is not out of the major contraction yet...
     
  13. masalai
    Joined: Oct 2007
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    Location: cruising, Australia

    masalai masalai

    Hi groper,
    There is a BIG correction and values are running fast in the opposite direction - and those who bought on "Credit" are well underwater...
     
  14. WestVanHan
    Joined: Aug 2009
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    Location: Vancouver

    WestVanHan Not a Senior Member

    Used correctly,borrowing money is the best thing you can do.
     

  15. masalai
    Joined: Oct 2007
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    Location: cruising, Australia

    masalai masalai

    http://www.youtube.com/watch?v=vKx4NJjsC4w&list=UU8eFERtcxPZ-M3Cxkh7zhtQ&index=2&feature=plcp Good information from James Turk of GATA

    and for a different view (canadian comunists?) as USA may perceive them? http://www.globalresearch.ca/its-the-interest-stupid-why-bankers-rule-the-world/5311030

    and Ed Steer tells the truth as he sees it http://www.caseyresearch.com/gsd/edition/china-overtake-india-overall-gold-demand-gfms

    A Whoops or "falling on his sword"? CIA's Petraeus, DNI Clapper to testify on Benghazi next week
    http://news.yahoo.com/blogs/ticket/...y-benghazi-next-week-171155262--election.html
     
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