Just curious, what makes his methods safe and not feasible for wealth?
Just curious, what makes his methods safe and not feasible for wealth?
He views debt as bad, regardless. No way that I'll be paying off my 30-year fixed mortgage a day early at 2.75%. Same with my auto loans. Under a certain threshold, I take a loan and throw cash into the markets.
Debt is healthy and can be used to build wealth much quicker than paying off loans early typically can.
He views debt as bad, regardless. No way that I'll be paying off my 30-year fixed mortgage a day early at 2.75%. Same with my auto loans. Under a certain threshold, I take a loan and throw cash into the markets.
Debt is healthy and can be used to build wealth much quicker than paying off loans early typically can.
He knows his stuff. He’s been in real estate for over 40 years and finance for 35.
So laugh all you want.
Ramsey is speaking to the 75%.Yup. Not paying off anything faster now since all my loans are near or at 3%.
I think Ramsey has a point for some who overspend past their means. But like you said debt can be a good thing when not abused.
You only get hurt if you jump off in the middle of the roller coaster.Literally every single point he used to explain why prices went up so much will go away in the next 12 months.
You would really have to be foolish to think there won’t be a significant price retraction. Wipe out all gains? No.
I think you will find a segment of people that have bought with the higher rates and higher price point struggling to justify their purchase in a couple years.
Stings less if you rotated out of one house and profited. Gave all your profit to the next guy though and now you just have an overpriced house.
I don’t care if you’re talking about real estate, stocks, or BTC. If you’re up 51-75% in just a year or two, you’re foolish to A. Not sell. B. Not expect a price retraction.
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You only get hurt if you jump off in the middle of the roller coaster.
Yep. That's actually how Warren Buffet made some big money back in the day. He bought a vacation home in 1971 in Laguna Beach for 150k. He was already worth many millions then and could have paid cash but put down 30k and borrowed the rest because he thought he could probably do better with the money than have it be an all equity purchase of the house. Buffett ended up buying shares of Berkshire Hathaway with the money he could have used to purchase the home. As a result, he ended up turning the $110,000 or $120,000 that he'd have paid in cash for the home into a whopping $750 million because Berkshire shares have gone up so much in value.He views debt as bad, regardless. No way that I'll be paying off my 30-year fixed mortgage a day early at 2.75%. Same with my auto loans. Under a certain threshold, I take a loan and throw cash into the markets.
Debt is healthy and can be used to build wealth much quicker than paying off loans early typically can.
Just curious, what makes his methods safe and not feasible for wealth?
As a few have said, the carrying cost of low interest debt means it’s more valuable to keep your money in your pocket.Just curious, what makes his methods safe and not feasible for wealth?
Your friends took some ballsy gambles. You don’t need to get fancy for 7-8% to pay off huge in the long run.trump filed bankruptcy too in the past. I dont think any less of him for it. I was raised its more important how you get back up rather than how you fall.
I paid off all my debt as soon as possible long before I ever heard of dave. I was raised you only get what you can work to afford.
I saved over 30k in interest on my house paying it off undrr half of the term and since it was paid off i saved 4k a year in home owners insurance I didnt need.
I put that money in a savings for my emergency home fund. Every few years it builds up enough that I buy another property with it. I then rent lease or sell that property later down the line if a deal comes along.
Im not rich nor am I poor. Id say im average middle class. I live within my means.
I dont do anything with the stock market. I have way too many friends that have lost millions doing so.
Id think Dave would approve.
We moved to the Las Vegas metro in 2018 but lived in Madison prior to moving here. We lived in Cottage Grove (I think that is where they built the Amazon distribution center?). When we left Cottage Grove it was a small, sleepy little place with the only houses being built over behind Glacial Drumlin MS and they were bigger homes that were expensive. There was absolutely no building going on when we lived there. My wife and daughter went back to visit in May of this year and said the town is blowing up. Upscale apartments and new single family homes. Place is growing like CRAZY.Same here. I saw a recent story that said the county I'm in (Dane) underbuilt by 11,000 housing units from 2006-2017. The county is also growing faster than pretty much anywhere in the Midwest.
I find it nuts that a decent 800 sq ft apartment is going for a minimum of $2k right now and could easily be $2700 for better locations.
We just paid far more for a house than I ever thought I would but we relocated into a community that is in high demand and an Amazon distribution facility has been approved there and will bring 1500 jobs to a village with a population of 7300. I'm not the slightest bit worried that the market will crash in my area.
I never understood the attraction to Madison city. My buddy lives in Tenny Park (has rented there for at least 8-10 years) and the prices of real estate 10 years ago was insane. Old homes, no central AC, no attached garages. I never understood the attraction. I guess the park is nice, and a lot of young people with good jobs like city living there. We had some great parties in his neighborhood because it was a younger crowd. But for me, I wouldn't consider city living like that if we still lived in WI.For reference and for shits and grins, when I rented a one bedroom out there on the SW side (Waterford Circle), I paid $785/month rent. This was in ~2014. I always figured part of the higher rents were due to students and Epic employees.
A shanty two houses down from me just went up for sale. 15xx sq ft ranch built in the late 60s. Partially updated. Good starter house IMO. Asking $329,900. That's ridiculous for that house around here. And they've got an offer! Fingers crossed a burner who likes to drink moves in. I like fun neighbors. haha
Rewinding for the sake of local comparison, four years ago I paid $335k for 2500sq ft, completely updated (inside and out including roof, siding, windows, gutters, garage doors...) two stories, 4 bdrm, 2.5 baths (upstairs are both dual vanity) and 3.75 car climate controlled garage. Really puts things into perspective when you've got places right around you going for insane prices. Also makes me happy we bought when we did. lol
I was only living there because I was promoted (UPS) and had to move to follow it. 4.5 years later I was outta there. ha Nowadays I try to avoid that city much like i try to avoid Chicago traffic. lolI never understood the attraction to Madison city. My buddy lives in Tenny Park (has rented there for at least 8-10 years) and the prices of real estate 10 years ago was insane. Old homes, no central AC, no attached garages. I never understood the attraction. I guess the park is nice, and a lot of young people with good jobs like city living there. We had some great parties in his neighborhood because it was a younger crowd. But for me, I wouldn't consider city living like that if we still lived in WI.
If interest rates get up to 7-8%, the housing market is going to see more than a 25% correction. In the 70-80s, when interest rates were high, the average home was $60-70k. Now the average home is around $400k. At 3% interest, you could buy a $700k house on a $2900 payment, which is the same payment at a $400k house at 8%. That is a lot more than a 25% correction. Then you have to consider how much home the banks will qualify people to buy. Allowable debt to income on the high end is around 40%. At 80k median income, that allows about $2700 in house payment if their are no other debts. Now the average car payment is $700 a month. One car payment knocks the house payment down to $2k a month. I think $275k is where the average home price is going to drop in order for people just to be able to afford to buy.As far as the topic discussion goes, we bought our house in Henderson/Vegas two years ago for $525k. It is valued at $840K currently. Even if it lost 25% of its value due to a "crash" it would still be worth $640k, which is insane considering we purchased it two years ago. The market has to cool. That type of increase in value cannot be sustained.
You might be right, I don't know. And it seems realistic IMO. To go from $400k to $275k that is a decrease of about 42%. If you apply that to my situation, the value of my home would be about $575k. If you told me I would buy a house and in 2 years the value would increase by $50k I'd be happy; that's about 5% growth per year. Seems "normal" to me. For a home's value to be artificially pumped up by over $300k in 2 years is unrealistic. Easy come, easy go!If interest rates get up to 7-8%, the housing market is going to see more than a 25% correction. In the 70-80s, when interest rates were high, the average home was $60-70k. Now the average home is around $400k. At 3% interest, you could buy a $700k house on a $2900 payment, which is the same payment at a $400k house at 8%. That is a lot more than a 25% correction. Then you have to consider how much home the banks will qualify people to buy. Allowable debt to income on the high end is around 40%. At 80k median income, that allows about $2700 in house payment if their are no other debts. Now the average car payment is $700 a month. One car payment knocks the house payment down to $2k a month. I think $275k is where the average home price is going to drop in order for people just to be able to afford to buy.