Author Topic: Working on finances  (Read 2133 times)

Offline punatic

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Re: Working on finances
« Reply #15 on: August 02, 2011, 02:39:44 AM »

What are the universal downsides, independent from local politics or current financial troubles?


Local... really?
« Last Edit: August 02, 2011, 02:42:53 AM by punatic »
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Offline phillamb168

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Re: Working on finances
« Reply #16 on: August 02, 2011, 03:42:45 AM »

What are the universal downsides, independent from local politics or current financial troubles?


Local... really?

Yes, local. Not all of us live in the US.
Look, if you want to get the topic locked by talking about politics, that's your prerogative. I'm just looking for thoughts (per the title of the topic/thread) the finances of owning a home.
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Offline tygo

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Re: Working on finances
« Reply #17 on: August 02, 2011, 05:14:12 AM »
Unexpected major maintenance items are the biggest pain in butt of owning a house.  Periodically big things will break.  Like heat pumps, water mains, roofs, etc.  You just need to expect that these types of things will happen and keep some cash set aside for the unexpected.
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Offline uthristy

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Re: Working on finances
« Reply #18 on: August 02, 2011, 05:15:00 AM »
Besides, a commute through the city at 30mph on a motorcycle isn't dangerous; falling off at that speed would be fun at best, annoying at worst, a hospital trip for a broken arm if you're spectacularly bad at this.  Wear your helmet, leathers/mesh, boots, and gloves.


Would you stop talking out your @ss about motorcycles.
I along with the world watched a racer die on live tv when he crashed and was hit by the bike ( Assen,NL), care to guess how fast he was going? less than 30mph.

Its not the speed but how fast your body/brain stops that matters:

The 3 impacts of every crash:
Vehicle impact >> body impact >> organ impact


example> falling at 115mph but sliding/rolling for a 100ft before stopping vs 30mph and stopping within a few ft, the later will always suffer more injuries.

Offline uthristy

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Re: Working on finances
« Reply #19 on: August 02, 2011, 05:17:29 AM »
There is a saying, "Land, they don't make it anymore."  Not true here where I live.  Pele is working hard to make new land here all of the time.

I knew you were going to say that ;D


Offline phillamb168

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Re: Working on finances
« Reply #20 on: August 02, 2011, 05:29:08 AM »
Unexpected major maintenance items are the biggest pain in butt of owning a house.  Periodically big things will break.  Like heat pumps, water mains, roofs, etc.  You just need to expect that these types of things will happen and keep some cash set aside for the unexpected.

How much would you say is a good average to set aside? Or should it be lumped in with the general savings? I had thought homeowners' insurance would cover some things like this.

Also, part of the reason I want to get a decent chunk of land is so I can grow enough food for us to be at least partially self-sustaining. This is perhaps a thread on its own, but has anybody tried to do this? I've heard anything from a 10x100' plot up to a 1/4 acre, but that seems like a pretty darned big range. I can easily grow tomatoes, corn, zucchini, beans, eggplant, cucumbers, carrots, peppers and pumpkins. Or at least, that's the stuff that grows here without me really needing to do too much. I suppose a potato patch would be a good idea...

Has anybody significantly reduced their dependence on the market for food? How'd it work? How much work was it?
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Offline hopfenundmalz

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Re: Working on finances
« Reply #21 on: August 02, 2011, 05:30:46 AM »
Fuel is about the third highest expense for a car, depending on the age, and miles driven per year.

Depreciation is #1.  Insurance is #2.

If you drive an older car that has depreciated, and is not too much to insure, then fuel will move higher on the list.

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Offline MDixon

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Re: Working on finances
« Reply #22 on: August 02, 2011, 06:06:18 AM »
Phil - it depends. If your home is new then there is no need to put aside large chunks of change for repair, however if the home has age, then things are bound to need maintenance and repair.

First let's talk insurance, in the US insurance attached to homes seems to come in two forms, first is PMI which is mortgage insurance and is USELESS for anyone other than the lender, it does NOTHING for the purchaser, the other is homeowner's insurance which really only covers the structure and contents from major damage. There is a home warranty which I guess is an insurance of sorts which can be purchased, often it is not worth the money spent.

As far as what to set aside, again, it depends on the age of the home. I'm tapping on 13 years old and had a roof vent leak and two other leaks so my repair costs were about $400 which is really not an amount I need to set aside. My AC units just let me know they were old and the repaid costs were $210 which amounted to refilling with refrigerant, but I now know they are both in need of replacement. To go a fairly energy efficient route will cost me $8K or so. Your roof will last 25 or so years, so in 10 years I need to be prepared for shingles, let's put that at $10K. My water heater is relatively new and should need to be replaced in 15 years or so (tankless) so I need to be ready to take a $2K hit. It all sounds like a ton of money, but with $10K available you can cover most any repair from small to large. Most larger items can be financed if need be so a slush fund of $3K would be adequate IMO.

I can just see the OP crunching numbers, so let's put it in perspective. I purchased the home in 1998 and in 2010 when we refinanced the value was up 40% even in our down housing market.

- -

Growing up we always had a large garden. I'd say ours was at least 1/4 acre, perhaps 1/2 and 5 of us ate a ton of vegetables often giving extra away. I don't know how much it saved my parents, but we were not well off as it turned out. I thought my parents were cheap, turned out we were poor ;)
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Offline MrNate

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Re: Working on finances
« Reply #23 on: August 02, 2011, 06:25:38 AM »
I always kind of saw the financial advantage of home ownership being that you're paying a fixed amount for housing in dollars that are rapidly depleting in value. A $2000 mortgage today is going to seem like a pittance in a few years. Maybe. I dunno, that's always been my thought on the matter. You're basically betting on inflation.

I also like being able to do whatever the hell I want with the place. But there is definitely a short-term premium.

And I agree about the motorcycle BS. A 30mph crash, especially in city traffic, is not going to be fun. Tell the nurses at STU I said "Hi." Oh wait, you won't be able to. Nevermind.
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Offline dbeechum

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Re: Working on finances
« Reply #24 on: August 02, 2011, 10:43:38 AM »
Mike,

You're not making me feel good about my house built in 1925. :)

Actually really I'm fortunate, the last owner of the home replaced the roof and a/c 3 years ago.
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Offline euge

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Re: Working on finances
« Reply #25 on: August 02, 2011, 11:58:50 AM »
In 2007 I bought a 34 year old house for 66% down and a 15 year note. The bank was willing to lend me far more than I would have been able to pay back comfortably. That was very alarming to me at the time- and the end results of that practice are plain for everyone to see.

There have been repairs- mostly peripheral stuff but she does need a new roof and some carpentry work. Home insurance should take care of the roof.

I'm cheaper than rent with my total payment including taxes and insurance. I'm fortunate that this purchase went well, but I planned it that way to minimize my interest payments. Also plan to pay it off early.

Buy a 100K house at 7% interest on a 30 year note and 10% down. Simply put- that property just became a 250K liability on your ass. That is not how one builds or even keeps wealth unless they are doing the lending. :-\
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Offline Slowbrew

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Re: Working on finances
« Reply #26 on: August 02, 2011, 12:31:07 PM »
While it is true that it's a mistake to assume your home is an investment, I prefer to pay rent to me in the form of paying down my mortgage and having a asset that I own when it's done.  This position works for me because I have 4 kids and a wife.  I would be paying more to rent a place big enough for us to live in than it costs me service a mortgage.

That being said, there are major expenses you have to be prepared for when owning a home.  Some have already been mentioned so I won't repeat them now. 

Add to the list $4000 to replace the driveway last year.  It was buckling due to a 45 year old tree that had grown up next to it and was pushing the whole slab to the north.  It cost less to replace and reshape the driveway than to have the tree removed.  Plant any trees at least 4 feet from your concrete.

If you have a water problem in your basement (assuming you have a basement) that will hasten the death of your furnace, furniture, carpets, etc.  Mitigating the problem will cost $10K+.  Many home owners policies exclude coverage for basement water damage.

Home owners insurance is really hazard insurance.   Same as the insurance on your car.  It doesn't pay for for maintenance and up keep.  It for major unavoidable damages or liability for injury to others on your property.  It also excludes many specific situations so read your policy closely.  It will typically cover your roof if it's damaged by a storm but what is covered is prorated against the age of your current roof.  If you have a hail storm that destroys your 24 year old shingles, you will get a check for 1 year (out of 25) worth of roofing costs.  Same for siding, trim and fences.

You need to make sure you have a replacement cost rider on your policy if you would like to have the same house back after a fire.  If you don't, that $150k policy you bought 12 years ago will not cover the cost to actually rebuild you house today.  It will cover $150k.

To me all these things are worth it for not having to listen to my neighbors through the walls and not having my static costs change due to someone else's whim (excluding the taxing authority at least).

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Offline punatic

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Re: Working on finances
« Reply #27 on: August 02, 2011, 12:33:26 PM »
I don't think your homeowners insurance will cover replacing your roof euge, unless it was damaged by hail, hurricane, fallen tree, etc.  Insurance doesn't cover roof replacement at the end of useful life.
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Offline 1vertical

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Re: Working on finances
« Reply #28 on: August 02, 2011, 12:33:38 PM »
I see a need to sever the love affair with automobiles.  New ones are definately a loose loose
proposition unless you have ALL the cash in your hand.  How can they justify the price of
an automobile at the current asking prices  ???  Heck even a 2 yr old with low miles is
Beyond recognition.... Yep priorities are wrong..

Edit; I do not do 2 wheel transportation it is just too dangerous....I live too far out in BFE
to walk to town....guess I may have to ride my ATV.
« Last Edit: August 02, 2011, 02:53:09 PM by 1vertical »
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Offline Slowbrew

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Re: Working on finances
« Reply #29 on: August 02, 2011, 01:47:08 PM »
I see a need to sever the love affair with automobiles.  New ones are definately a loose loose
proposition unless you have ALL the cash in your hand.  How can they justify the price of
an automobile at the current asking prices  ???  Heck even a 2 yr old with low miles is
Beyond recognitgion.... Yep priorities are wrong..

Edit; I do not do 2 wheel transportation it is just too dangerous....I live too far out in BFE
to walk to town....guess I may have to ride my ATV.

You're right about new cars unless you plan to keep it for a long time.  I usually buy new but I drive it for at least 10 years.  Sort of evens out after a few years.

Paul
Where the heck are we going?  And what's with this hand basket?