About Us

Wayne.B

On Thu, 29 May 2014 21:43:02 -0400, wrote:

I think the decline actually started when all of those counter culture
60s guys finally graduated from college and came up with the
ridiculous strategy that it was better to go in debt and pay it back
with inflated money later.

===

There's nothing ridiculous about the strategy of repaying loans with
inflated dollars. It's a sure fire money maker when you sell the
house.

Wayne.B

On Fri, 30 May 2014 11:38:45 -0400, wrote:

On Thu, 29 May 2014 22:06:38 -0400, Wayne.B
wrote:

On Thu, 29 May 2014 21:43:02 -0400, wrote:

I think the decline actually started when all of those counter culture
60s guys finally graduated from college and came up with the
ridiculous strategy that it was better to go in debt and pay it back
with inflated money later.

===

There's nothing ridiculous about the strategy of repaying loans with
inflated dollars. It's a sure fire money maker when you sell the
house.

That is great as long as you have an asset that appreciates faster
than the inflation but there are still plenty of people who are upside
down on their house.

The part you are leaving out is the "interest tax" that easily doubles
the price of anything you buy on credit. Inflation never covers that,
particularly in the last 20 years when the fed has had their thumb on
the scale.

A strategy like this might make sense for a person who has the money
to pay cash and the discipline to have it invested in something that
pays a greater return than the interest on the loan but that is not
how you can describe 99% of the people who borrow money.

The flip side of this is when an opportunity popped up for me to
retire at 49, I could take it, simply because I did not owe anyone any
money and I already owned all of the big ticket items I needed. My
obligations were very low.

===

You make some valid points but you overlook some also. First and
foremost is the mortgage interest income tax deduction. For people
who work and make a decent buck it is one of the last great tax
shelters. When I was living and working in the hgh tax north east
with both state and federal income taxes, the government was
subsidizing almost half of my mortgage interest. The second tax
related item is the forgiveness of capital gains taxes (up to a
$500,000 gain, filing jointly) on a house that you have lived in for
the last two years. That is a huge benefit.

You are correct that some amount of price appreciation is necessary
but over a period of 10 plus years that has never been an issue in my
lifetime. It is also important to remember that mortgage payments
are a form of forced savings and long term wealth accumulation. For
many people the equity in their home becomes a major portion of their
net worth. It has been my experience that you are better off to buy
the house you really want up front rather than wait the many years it
would take to save that much.

Thread Tools	Search this Thread
Show Printable Version	Search this Thread: Advanced Search
Display Modes
Switch to Linear Mode Hybrid Mode Switch to Threaded Mode

Similar Threads
Thread	Thread Starter	Forum	Replies	Last Post
How to Prevent Getting Hacked	jemsbowen	General	1	July 14th 10 06:54 AM
steering lockup; how to prevent	RB	General	1	July 11th 06 02:07 PM
Using gyroscope on cruising cat to prevent capsize !	[email protected]	Cruising	7	January 25th 06 09:18 PM
How to prevent scurvy during paddling ???	Winnie Oakbob	Touring	8	June 12th 05 01:18 AM
Will Sponsons prevent the dreaded BSOD?	Wandering Hiker	General	11	February 29th 04 03:51 PM

Menu

About Us