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The Stock Market/Personal Finance Thread
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Author:  4/5 [ Tue Nov 10, 2009 9:00 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
given2trade wrote:
aprilfifth wrote:
I'm good with numbers so you don't have to take me there, but tell me how to get there. What am I putting the rent up against to figure out 1-2%? I tried doing it a few different ways, IE figuring out my current rent v. potential mortgage, homeowners ins, property taxes, maintance. Anyway that I did it I wasn't coming up with anything in the ballpark of a low percent. So what's the time frame I'm basing this on?


Here is a practical example:

House is for sale for $200,000. Property taxes = 1.5%. Maintenance = .5%. Mortgage = 5%. Rent = $500 month/$6000 a year.

How much are you paying in rent? $200,000/6,000 = 3%. Fairly simple. How much is ownership going to cost you? $40,000 down, $160,000 mortgage. $858 a month according to a mortgage calculator, 30 year fixed. Also, you will be paying $4000 a year in taxes and maintenance. Total = more than $14,000 a year out the door. But wait, there's more. The $40,000 you put down cannot be invested. Assuming you can make 8% a year off of that $40,000, your opportunity cost is $3200 you are not earning by buying vs. renting.

There is a lot more to it than this. There are tax advantages from buying vs. renting and there is also the possibility your house rises in value over time. Also, in 30 years, you would obviously own your home free and clear even if it doesn't appreciate. But you paid a lot for that privilege. If you took the $14,000 + the $3200 = $17200 and subtract it from rent, $6000, you're left with over $11,000 a year. That $11,000, over 30 years, compounded (and you add $11,000 EACH YEAR), is a huge amount of money.

This is why the "ownership" society can be bullshit. You owned something: stocks. You just didn't own your house.

Well based on that my rent is a steal. Doesn't quite feel that way, but hey.
Author:  pnjguy [ Tue Nov 10, 2009 9:00 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
given2trade wrote:
pnjguy wrote:
given2trade wrote:
homersheineken wrote:
given2trade wrote:
washing machine wrote:
pnjguy wrote:
what would you do financially in this situation?

I am 26 years old, and make about $50,000 a year.
I have close to $30,000 in savings.
Value of my 401k is about $3,000.
Only debt i have is a montly $400 car payment.

Lucky!


Actually, nothing lucky about it at all. He probably worked hard and instead of spending money on things he didn't need, he saved it. It's actually the exact opposite of luck...skill?


Well he is living rent free, that is like hitting the lottery ;)

But you're right that doesn't take away from hard work, frugality, etc....


And let's not forget how much it sucks living with your parents...which I assume he is doing.


Well, not exactly. I've been living in a family member's condo. For a couple of years i've been helping with the mortgage payments. The family member lost his job and is in the process of foreclosure. So as of now, i am living rent free. I was thinking about purchasing the condo. It's a 3 bedroom/2 bath penthouse in Chicago purchased for about $380,000 in late 2007. The bank won't allow him to sell to a family member so if i decide to buy it, i'll have to wait till it goes to auction. From what i hear, foreclosed condo's are going to be real cheap, it might be a good investment if the price is right. I know the expenses associated with owning a home, I just don't want to be held down by a $1500+ mortgage payment. I guess we'll see what happens.


Tread carefully. Flexibility is priceless. It might be hard going from not paying rent to paying someone rent. It might feel like you are pissing money away. Imagine if you were the family member who owned the condo you are in right now. He lost is job and now he is going to lose his home. He probably also lost a down payment.

If you think you are going to stay in Chicago for at least 5 years, you can look into doing it. But the flexibility of renting vs. owning is huge and should not be discounted.


I hear ya. I rented in college so I know what it's like. The thing is, i don't plan on leaving Chicago. If i can get the condo for $280,000-$300,000, (i don't know how the housing market will look in a year) i will seriously look into it. The condo has roof rights and it has one of the best views of the city. I'm scared that I have developed feelings toward this place that will impair my decision. I have been living there for 2+ years. Worse comes to worse, i guess i can rent it out.
Author:  Sandler [ Tue Nov 10, 2009 9:01 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
given,

I understand that you can lose a lot of money in the stock market short-term (as seen in the last couple years), but in the long term, you stand a good (great) chance of making money. Isn't this why people our age invest more in stocks?

Why isn't this the same as far as home ownership? I know my house might lose value over the next 2-3 years, but if I'm there for the next 15 years, wouldn't I have a great chance of making (good) money off it? Even with the housing collapse of late, if you bought your home in the late 90's, you've gotten good returns (at least here in the northeast). Why is this not safer than renting and using the savings to invest in potentially risky stocks?
Author:  given2trade [ Tue Nov 10, 2009 9:02 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
Doug RR wrote:
ha, I'm drinking Sierra Fresh Hop ale...I've never invested in a brewery but I was going to say boston as well...btw matt, I used to work in a card shop in the early 90s as well...good times


I worked at shop my freshman year of high school. No wonder I couldn't get any girls to go out with me. At least I didn't read comic books, though I collected/sold those too. My parents made me quit cause my grades were shitty. :shake:
Author:  pnjguy [ Tue Nov 10, 2009 9:02 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
homersheineken wrote:
pnjguy wrote:
given2trade wrote:
homersheineken wrote:
given2trade wrote:
washing machine wrote:
pnjguy wrote:
what would you do financially in this situation?

I am 26 years old, and make about $50,000 a year.
I have close to $30,000 in savings.
Value of my 401k is about $3,000.
Only debt i have is a montly $400 car payment.

Lucky!


Actually, nothing lucky about it at all. He probably worked hard and instead of spending money on things he didn't need, he saved it. It's actually the exact opposite of luck...skill?


Well he is living rent free, that is like hitting the lottery ;)

But you're right that doesn't take away from hard work, frugality, etc....


And let's not forget how much it sucks living with your parents...which I assume he is doing.


Well, not exactly. I've been living in a family member's condo. For a couple of years i've been helping with the mortgage payments. The family member lost his job and is in the process of foreclosure. So as of now, i am living rent free. I was thinking about purchasing the condo. It's a 3 bedroom/2 bath penthouse in Chicago purchased for about $380,000 in late 2007. The bank won't allow him to sell to a family member so if i decide to buy it, i'll have to wait till it goes to auction. From what i hear, foreclosed condo's are going to be real cheap, it might be a good investment if the price is right. I know the expenses associated with owning a home, I just don't want to be held down by a $1500+ mortgage payment. I guess we'll see what happens.


Where in Chicago?


Ukie Village, don't be messing up my plans now!
Author:  $úñ_DëV|L [ Tue Nov 10, 2009 9:03 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
aprilfifth wrote:
$úñ_DëV|L wrote:
Another thing to think about if you're singled and you're going to stay put for awhile.... If you get a roommate or two, you can significantly reduce your monthly cost of owning a home. I consider it a mistake to have bought my house (a year and a half ago I didn't understand finance and economics nearly as well as I do now), but having roommate(s) has reduced my monthly payment by 25-50%. And I still have empty rooms. If I fully utilized my spare rooms, I could give them a below-market price and still pay no more than what I charge them (after tax deductions, it would basically be free). It is a little bit of work having tenants, but it can definitely improve the bottom line.

Yeah, but what if they bring dogs home?

There's always that risk.
Author:  pnjguy [ Tue Nov 10, 2009 9:03 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
Chris_H_2 wrote:
pnjguy wrote:
given2trade wrote:
homersheineken wrote:
given2trade wrote:
washing machine wrote:
pnjguy wrote:
what would you do financially in this situation?

I am 26 years old, and make about $50,000 a year.
I have close to $30,000 in savings.
Value of my 401k is about $3,000.
Only debt i have is a montly $400 car payment.

Lucky!


Actually, nothing lucky about it at all. He probably worked hard and instead of spending money on things he didn't need, he saved it. It's actually the exact opposite of luck...skill?


Well he is living rent free, that is like hitting the lottery ;)

But you're right that doesn't take away from hard work, frugality, etc....


And let's not forget how much it sucks living with your parents...which I assume he is doing.


Well, not exactly. I've been living in a family member's condo. For a couple of years i've been helping with the mortgage payments. The family member lost his job and is in the process of foreclosure. So as of now, i am living rent free. I was thinking about purchasing the condo. It's a 3 bedroom/2 bath penthouse in Chicago purchased for about $380,000 in late 2007. The bank won't allow him to sell to a family member so if i decide to buy it, i'll have to wait till it goes to auction. From what i hear, foreclosed condo's are going to be real cheap, it might be a good investment if the price is right. I know the expenses associated with owning a home, I just don't want to be held down by a $1500+ mortgage payment. I guess we'll see what happens.


Are you even allowed to finance a purchase through a foreclosure auction?


Why wouldn't you be able to? I would think it would be the same for any purchase.
Author:  4/5 [ Tue Nov 10, 2009 9:04 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
given2trade wrote:
Doug RR wrote:
ha, I'm drinking Sierra Fresh Hop ale...I've never invested in a brewery but I was going to say boston as well...btw matt, I used to work in a card shop in the early 90s as well...good times


I worked at shop my freshman year of high school. No wonder I couldn't get any girls to go out with me. At least I didn't read comic books, though I collected/sold those too. My parents made me quit cause my grades were shitty. :shake:

I thought you didn't "get" sports?
Author:  Doug RR [ Tue Nov 10, 2009 9:05 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
aprilfifth wrote:
given2trade wrote:
Doug RR wrote:
ha, I'm drinking Sierra Fresh Hop ale...I've never invested in a brewery but I was going to say boston as well...btw matt, I used to work in a card shop in the early 90s as well...good times


I worked at shop my freshman year of high school. No wonder I couldn't get any girls to go out with me. At least I didn't read comic books, though I collected/sold those too. My parents made me quit cause my grades were shitty. :shake:

I thought you didn't "get" sports?


the card business was a lot like pro sports..the jews dont play, they just own
Author:  given2trade [ Tue Nov 10, 2009 9:07 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
Sandler wrote:
given,

I understand that you can lose a lot of money in the stock market short-term (as seen in the last couple years), but in the long term, you stand a good (great) chance of making money. Isn't this why people our age invest more in stocks?

Why isn't this the same as far as home ownership? I know my house might lose value over the next 2-3 years, but if I'm there for the next 15 years, wouldn't I have a great chance of making (good) money off it? Even with the housing collapse of late, if you bought your home in the late 90's, you've gotten good returns (at least here in the northeast). Why is this not safer than renting and using the savings to invest in potentially risky stocks?


Yes, hold anything long enough (a house or an index fund) and provided you don't go insolvent, you will probably not lose money. However, everything in investing needs to be looked at in context. I kind of explained it in a previous post. A house can go up and it could be a better investment than the stock market. Historically, however, a house was a safer investment than the stock market and thus provided lower returns. That seems funny today given all that's happened the last few years. If you bought a condo in downtown San Diego in 2006 you will probably be sitting on it for 10-20 years before it gets back to it's purchase price. That money could have been invested elsewhere. Opportunity Cost.

Real Estate agents (and stock brokers) like it say the same bullshit to get people to buy their products. "If you have a long term outlook, our product is the best!" Truth is, it's never so cut and dry.
Author:  given2trade [ Tue Nov 10, 2009 9:10 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
Doug RR wrote:
aprilfifth wrote:
given2trade wrote:
Doug RR wrote:
ha, I'm drinking Sierra Fresh Hop ale...I've never invested in a brewery but I was going to say boston as well...btw matt, I used to work in a card shop in the early 90s as well...good times


I worked at shop my freshman year of high school. No wonder I couldn't get any girls to go out with me. At least I didn't read comic books, though I collected/sold those too. My parents made me quit cause my grades were shitty. :shake:

I thought you didn't "get" sports?


the card business was a lot like pro sports..the jews dont play, they just own


:lol:

I also bet wildly on football in high school. Growing up in Las Vegas and having sports card shows in casinos is not a healthy way to raise a child. I knew every player on every team. I could give a shit about which city won or loss as long as I made money on their cards or my parlay cards. My rules for rooting for sports teams are:

You own the team
You're on the team
You have a bet on the team
You are dating someone on the team
You have a close friend/relative on the team

That's it.
Author:  homersheineken [ Tue Nov 10, 2009 9:10 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
pnjguy wrote:
homersheineken wrote:
pnjguy wrote:
given2trade wrote:
homersheineken wrote:
given2trade wrote:
washing machine wrote:
pnjguy wrote:
what would you do financially in this situation?

I am 26 years old, and make about $50,000 a year.
I have close to $30,000 in savings.
Value of my 401k is about $3,000.
Only debt i have is a montly $400 car payment.

Lucky!


Actually, nothing lucky about it at all. He probably worked hard and instead of spending money on things he didn't need, he saved it. It's actually the exact opposite of luck...skill?


Well he is living rent free, that is like hitting the lottery ;)

But you're right that doesn't take away from hard work, frugality, etc....


And let's not forget how much it sucks living with your parents...which I assume he is doing.


Well, not exactly. I've been living in a family member's condo. For a couple of years i've been helping with the mortgage payments. The family member lost his job and is in the process of foreclosure. So as of now, i am living rent free. I was thinking about purchasing the condo. It's a 3 bedroom/2 bath penthouse in Chicago purchased for about $380,000 in late 2007. The bank won't allow him to sell to a family member so if i decide to buy it, i'll have to wait till it goes to auction. From what i hear, foreclosed condo's are going to be real cheap, it might be a good investment if the price is right. I know the expenses associated with owning a home, I just don't want to be held down by a $1500+ mortgage payment. I guess we'll see what happens.


Where in Chicago?


Ukie Village, don't be messing up my plans now!

lol how am i doing that?
Author:  4/5 [ Tue Nov 10, 2009 9:11 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
given2trade wrote:
Doug RR wrote:
aprilfifth wrote:
given2trade wrote:
Doug RR wrote:
ha, I'm drinking Sierra Fresh Hop ale...I've never invested in a brewery but I was going to say boston as well...btw matt, I used to work in a card shop in the early 90s as well...good times


I worked at shop my freshman year of high school. No wonder I couldn't get any girls to go out with me. At least I didn't read comic books, though I collected/sold those too. My parents made me quit cause my grades were shitty. :shake:

I thought you didn't "get" sports?


the card business was a lot like pro sports..the jews dont play, they just own


:lol:

I also bet wildly on football in high school. Growing up in Las Vegas and having sports card shows in casinos is not a healthy way to raise a child. I knew every player on every team. I could give a shit about which city won or loss as long as I made money on their cards or my parlay cards. My rules for rooting for sports teams are:

You own the team
You're on the team
You have a bet on the team
You are dating someone on the team
You have a close friend/relative on the team

That's it.
You are one cold calculating son of a gun.
Author:  given2trade [ Tue Nov 10, 2009 9:11 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
Many foreclosed homes sold in auctions are "cash only" sales and do not allow for financing. Banks want it sold immediately and investors tend to get better prices by paying in cash (they don't get leverage, however). This isn't true for all foreclosed homes.
Author:  given2trade [ Tue Nov 10, 2009 9:12 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
aprilfifth wrote:
given2trade wrote:
Doug RR wrote:
aprilfifth wrote:
given2trade wrote:
Doug RR wrote:
ha, I'm drinking Sierra Fresh Hop ale...I've never invested in a brewery but I was going to say boston as well...btw matt, I used to work in a card shop in the early 90s as well...good times


I worked at shop my freshman year of high school. No wonder I couldn't get any girls to go out with me. At least I didn't read comic books, though I collected/sold those too. My parents made me quit cause my grades were shitty. :shake:

I thought you didn't "get" sports?


the card business was a lot like pro sports..the jews dont play, they just own


:lol:

I also bet wildly on football in high school. Growing up in Las Vegas and having sports card shows in casinos is not a healthy way to raise a child. I knew every player on every team. I could give a shit about which city won or loss as long as I made money on their cards or my parlay cards. My rules for rooting for sports teams are:

You own the team
You're on the team
You have a bet on the team
You are dating someone on the team
You have a close friend/relative on the team

That's it.
You are one cold calculating son of a gun.


I'm just keeping it real.
Author:  given2trade [ Tue Nov 10, 2009 9:15 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
http://newyork.craigslist.org/mnh/acc/1457503611.html

Expert in Spreadsheets


We need someone to work on a complex financial project. You must be a whiz with advanced spreadsheets. We are putting together a biz plan and need to run many scenarios. You also need to be a good research person. This involves research and financial modeling in gay pornography.

:lol:
Author:  4/5 [ Tue Nov 10, 2009 9:16 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
given2trade wrote:
I'm just keeping it real G.
Author:  pnjguy [ Tue Nov 10, 2009 9:16 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
homersheineken wrote:
pnjguy wrote:
homersheineken wrote:
pnjguy wrote:
given2trade wrote:
homersheineken wrote:
given2trade wrote:
washing machine wrote:
pnjguy wrote:
what would you do financially in this situation?

I am 26 years old, and make about $50,000 a year.
I have close to $30,000 in savings.
Value of my 401k is about $3,000.
Only debt i have is a montly $400 car payment.

Lucky!


Actually, nothing lucky about it at all. He probably worked hard and instead of spending money on things he didn't need, he saved it. It's actually the exact opposite of luck...skill?


Well he is living rent free, that is like hitting the lottery ;)

But you're right that doesn't take away from hard work, frugality, etc....


And let's not forget how much it sucks living with your parents...which I assume he is doing.


Well, not exactly. I've been living in a family member's condo. For a couple of years i've been helping with the mortgage payments. The family member lost his job and is in the process of foreclosure. So as of now, i am living rent free. I was thinking about purchasing the condo. It's a 3 bedroom/2 bath penthouse in Chicago purchased for about $380,000 in late 2007. The bank won't allow him to sell to a family member so if i decide to buy it, i'll have to wait till it goes to auction. From what i hear, foreclosed condo's are going to be real cheap, it might be a good investment if the price is right. I know the expenses associated with owning a home, I just don't want to be held down by a $1500+ mortgage payment. I guess we'll see what happens.


Where in Chicago?


Ukie Village, don't be messing up my plans now!

lol how am i doing that?


buy the place i'm living in. Just kidding.
Author:  pnjguy [ Tue Nov 10, 2009 9:18 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
given2trade wrote:
Many foreclosed homes sold in auctions are "cash only" sales and do not allow for financing. Banks want it sold immediately and investors tend to get better prices by paying in cash (they don't get leverage, however). This isn't true for all foreclosed homes.


but if i'm pre-qualified i really don't see the problem.
Author:  4/5 [ Tue Nov 10, 2009 9:21 pm ]
Post subject:  Re: The Stock Market/Personal Finance Thread
Hey, as this goes along I think one idea might be for you to put your answers to questions that could be oft-repeated, like the rent v. own question, in the header post, which you can then refer people back to. The header would be like a sort of FAQ kinda thing so you don't have to answer the same thing 90 times, or at least keep quoting yourself.
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