Pay off debt or keep savings

Pay off debt and try not to owe anyone money. Having said that vehicles (even though Tacoma's hold their value) are not generally a good investment IMHO.

 

Now imagine you'd picked it up in 2005 and were trying to sell in 2009.

If they're being short-sold, other investors are by default losing money. The demographic of "investors" isn't doing better overall, some investors are gaining from others' losses. That's sidestepping, not forward progress. The "new" investors are just smelling blood in the water from those that bought these properties during the bubble and are so far underwater they're surfacing on the other side of the globe.

Got that shit right.

Now, seriously, it's late. I'm going to sleep.

 

good golly $405k homes here in WV would be considered mansions. like 4500+ sq ft homes. The ones you see on tv more or less. In your case, if or when the market comes back you should have some serious equity in your home

 

If i was lucky enough to be in your shoes, I would pay down the rzr's principal to a very few hundred dollars, interest is based off the principal of the loan. if the principal is very low, your interest on top will be very low. you can establish very good credit by making good consistent payments, and have your toys to yourself. As part of that plan, keep enough in the bank to pay it off, for two reasons, if you lose your job, you can pay it off and have no negative credit rating. also, toys are toys. if you break it, bad enough to where it is no longer fixable, you can either cash out huge and have enough to get another toy, or, put more money that you have essentially invested into something else.

 

The housing market is NOT dead everywhere. I bought a house a year ago for 438k and it appraised at 510k the day I did. Last month I did a refi and it appraised again at 510k. 70k in equity is nice out to start with. Try saving up that much. Nobody tells me what I can't do to the inside of it either. I write off taxes every year as well. Some of us enjoy doing things around our own houses. It all comes down to the starting price of the house. The goal is to own it by the time you retire. Then that tiny pension or 401k (if it
is still around) goes a lot further. Try paying rent when you are on SS

 

Pay the Debt off and follow your plan of putting half the money back your right on track , I will agree with moving some toward a Roth as at your age you will do a bit better but know that I am not an investment counsler just been around the block a few times. You have a good head for money management for a younger person congrats on that , make sure though you have life insurance, disability insurance and renters don't over insure which is easy to do but have some. I know your young but things happen.

Cypher

 

I plan to live in it for a long time. My mortgage and taxes are less then I was paying when I rented it for a year before buying it. I get to write the taxes and interest off as well. not the best for every place but some places still make sense to buy. these days appraisers don't fuck around, if anything, they go low.i am not looking to make money by selling, but when I retire and my income is fixed, it will be nice to not have to pay $2300 per month in rent.

 

I own a condo that I could not sell so I rent it out now. The tenant is paying down my principle for me. I break even at the end of each year while m y principle drops. If the market ever comes back, I win on top.
If your job is in question, renting is the way to go by all means. Too many people can't go to where the work is because they cannot sell their houses.

 

Who took the hit for you to buy it 70k under the appraised value?

YOU are doing fine. The housing market, in entirety, in the United States, is in the shitter.

This. Illiquid assets look nice on paper, and that's the only place.

This is basically what I said earlier - home ownership makes sense if someone else is paying for it.

As America goes more and more corporatist and ageist, I have a feeling this trend will only become more and more apparent. I also think the housing market is going to stay permanently depressed on account of:

- No repeats of the subprime fiasco.
- Millenial generation and their employers will come to view home ownership as an employment liability.

 

Back to the original topic...

I would keep the 10k in a savings account. What if you lose your job, get a cut in pay or the economy re-collapses? It is always smart to keep a savings cushion in case of emergency. Maybe invest the 10k in AA+ rated bonds, so at least you will yield around 5% (about $500/year). It's not a lot, but it is better than a few cents.

Use the $400 you are currently saving per month to apply as additional principle of the loan. That way, you keep your $10k, you are still making a little money on it, and it will cut the interest out-out-of-pocket and loan term in half.

Just my .02.

 

Maybe renting is the way to go right now for a younger person. A lot of area's very depressed as far as realestate goes, but NOT everywhere. Boston area never even slowed down as far as values go. Areas close are doing just fine and some are gaining. We have a bit of a microcosm with high tech and lower unemployment (around 6.5% I think). So all real estate is local. Do what suits the area and economy locally.

 

Hmmmm... How to retire early from buying and selling Real Estate. Well at first I bought for appreciation. I'd buy the worst properties (usually distressed in very good areas - good schools.. low crime.. major shopping close by.. etc..) Fix em' up and dump em' quick... started in 1998. Buy 2002 I began to shift into cash flow commercial apts... medical office then my final 1031 exchange into a self storage facility ... Figuring once I had $1mil with a flip I'd do my final 1031 into a self storage facility in a great area - Mtn. View less than one mile from Google Headquarters... done at age 37 in 2004. The key to my goal was always buying in desirable areas... the art is in the buying - selling often times is not the focus ie.. when exchanging you are on a short time frame to identify a property of like kind... if you take too long selling you loose the focus needed for buying right.... Exchanges defer capital gains, however they get tricky with the short time frames to identify and close on the next buy... screw up - and you'll pay the capital gains and uncle sam won't even kiss you! Love talking about this stuff!

 

Not incorrect.

I still think on a conceptual basis it's not possible to make money on home ownership. I think you just fake it for a while. That's what got us our last crash. Everyone was making tons of cash on home value appreciation...until suddenly they weren't.

But yes, when you move away from concepts and into context, then things change.

A good textbook on riding a bubble upward. The problem is, predicting bubbles is hardish.

 

This topic has definitely expanded in a great direction. Being fairly young with a good job and many options to invest my money in. It's great to hear some opinions and discuss them each.

 

I compare home ownership/ renting to buying/leasing your car. I don't like leasing my cars.

 

I would keep making payment and keep the money for a rainy day. Things may not get better in this country with Europe banks falling apart and our own banks tied in with them. I hope not but if it does crash there going to a world of hurt over here, more then we are seeing now.

 

I just read this quickly so forgive me if i missed it, but your link to the inflation calculator kind of contradicts what you are saying. When the house is "paid off" at the end of 30 years, you in theory would be able to sell the house for its value (a little simplified but you get the idea), say the house sold for 150 000 in 2042, you may have spent 150 000 today but as your calculator shows, now you have the buying power of 418xxx, whereas the person who rented has lost the buying power of 418xxx.

(Again i know im using inflation of the past 30 years to project the future but it makes the point im getting at)

 

Yes, don't be in such a hurry to eliminate your cash on hand. I pondered the same dilemma a short while ago. I chose to just hold the course and sit on a junk of money in my bank. Very nice feeling being liquid. If or when the right deal shows up, (renting or buying) you will always have the option.

 

Hey man I saw your post, Couple things I would do::::>

1. How much do you owe on your RZR Back? Depending on that answer it sounds like you have good credit and I would take out a credit card 0% to pay it off. I like to keep things liquid because you never know what your gonna run into. even if its 0% for 12-18 months do that then get another one and do the same thing. Pay nothing for the loan

2. As far as your savings account I would find something with a better interest rate or play the market a bit in a conservative mutual fund which would still be a higher interest rate of 6-8% better than savings which with some banks is <1%.

Starting a Roth is a great Idea along with a traditional IRA for Tax deduction

Even some banks are paying 3% on your checking account.

You don't have to take my advice but I've been juggling debt for 3 years thanks to student loan debt of over 120k, and I dont even own a house. haha kinda sad. I currently work for one of the biggest Banks in the world. But still looking for something in my field but the stuff I learned has been pretty valuable.

What do you do for work anyway?