Inspired to go into debt?


person0
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In general, the church counsels against debt. But one of the exceptions is a home purchase. 

Your percentages of payments are in line with your income, so for me this would be a no brainer. Go for it!

If it’s any comfort, I’m currently financing three vehicles with total payments of $3,300 per month.  The church would not like that!

Yeah, they’re great cars.:)

 

PS. One will be paid off in March.

Edited by mrmarklin
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On 11/15/2017 at 10:52 AM, JoCa said:

I tend to agree, you should have the ideal of staying in a place for a long period of time.  But more than that you need to have the flexibility to go where the jobs are! 

And given a recession, the best thing one can do is pick up and move (even if it is from the north end of town to the south end of town) to where the jobs are.  The people who are smart figure out real quick, "if I lose my job, I'm going to find a job and I'm going to go where that job is located!"  That's the part people don't think about.

And you can't have that flexibility with a mortgage hanging around your neck.

I really have to reject the idea that one should live one’s life planning for the next recession. OP has a good job, has a growing family.  No reason he shouldn’t buy this new property. 

If we all lived in fear of the might happen, nothing could ever get done. 

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1 hour ago, JoCa said:

Sigh ... yes dumb luck. 92 right about the beginning of the greatest bull market in history . .. dumb luck. Had you start in '98 different story.  Go ahead why don't you go through a 20-year rolling time span and show me what the returns look like . . .I've done it and it really does depend on when you start and when you stop.  

Here ya go

http://allfinancialmatters.com/wp-content/uploads/2013/01/SP-500-Rolling-Period-Returns-2013-Edit

1992 was nowhere near the best despite it being at the beginning of a bull

Like I said earlier- tell us what the next winner is. You are the smartest at this game. Help out themorons

 

Edited by paracaidista508
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1 hour ago, JoCa said:

Sigh ... yes dumb luck. 92 right about the beginning of the greatest bull market in history . .. dumb luck. Had you start in '98 different story.  Go ahead why don't you go through a 20-year rolling time span and show me what the returns look like . . .I've done it and it really does depend on when you start and when you stop.  

I really don't feel like explaining basic simple math to you . . .when you start and when you stop are critical and many times factors outside your control dictate both. If you start investing in a down period (or at beginning of a bull market), if you don't need to pull money, if you hold through the down time.  Like I said, I really don't feel like explaining it b/c history bears out that you were lucky rather than smart.

Like I said, I really don't care about your portfolio-it's dumb advice, it really is.  You can not base a society based on this advice . . .it will lead to nothing but ruin.  

Having a house bought and paid for is the way to go; I really can't help you if you think otherwise . . . man this sucker needs to crash so people will realize the idiocy of this type of advice . . .but not until after I sell :-).

If you want to invest in stocks for the dividend, i.e. b/c the stock actually pays something that is one thing . . .but investing b/c you think you'll be able to sell it at a greater price down the road is just the "greater fool" theory.

Oh and you've participated in the greatest bull market in bonds in history . . . easy to refi when rates are going down over 20 years . . .not gonna be the case for much longer.

Every study about the stock market ever done minimizes the effects of timing the market, and indicates that buying and holding with reinvested dividends is by far the optimal strategy. 

It is a FACT, that the US stock market has yielded average returns of 8% per year, dividends reinvested for well over 100 years now.  This is through two world wars and a depression, not to mention a lot of other minor disasters.

It is a fact, that the US is the world’s greatest nation and IMHO will continue to be so for the foreseeable future.  Don’t plan for the next recession. This is a fools strategy.   This is a great country with leading technology and strong international companies. Buy only good ones, of course. 

Edited by mrmarklin
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As a securities license holder I can state that markets are at an all time high. So there is risk. Buy solid stocks that yield a dividend. 

Those dividends will provide income and protect you against the worst of the downturn that will inevitably happen.

But if you hang on and have faith in the US economy, you’ll be OK in the long run.;)

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47 minutes ago, mrmarklin said:

If it’s any comfort, I’m currently financing three vehicles with total payments of $3,300 per month.  The church would not like that!

Yeah, they’re great cars.:)

 

PS. One will be paid off in March.

Better hurry; just a few months left to trade it in for $200 off a brand new one.

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For those debating the Ric Edelman video, it encourages the following (either explicitly or implicity):

  1. Find out how much you would pay monthly for a shorter mortgage
  2. Get a 30-year mortgage and invest the difference
  3. Don't have any major financial issues for ~3 or 5 years while you build up an investment base (remember how he mocked the 15-year person for having no savings, to make an apples comparison we must assume you don't either).
  4. After 30 years, enjoy a 10-12% difference in your investment - that is, if you minimized risk and paid off your house quickly and then invested your house payments, you would have ~10% less than you do with this great strategy! (seriously, look at the numbers on the chart)

If you're comfortable with that kind of a risk for a 10% boon, knock yourself out. For myself, I learned many Black Fridays ago that 10% wasn't worth getting out of bed.

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1 hour ago, mordorbund said:

For those debating the Ric Edelman video, it encourages the following (either explicitly or implicity):

  1. Find out how much you would pay monthly for a shorter mortgage
  2. Get a 30-year mortgage and invest the difference
  3. Don't have any major financial issues for ~3 or 5 years while you build up an investment base (remember how he mocked the 15-year person for having no savings, to make an apples comparison we must assume you don't either).
  4. After 30 years, enjoy a 10-12% difference in your investment - that is, if you minimized risk and paid off your house quickly and then invested your house payments, you would have ~10% less than you do with this great strategy! (seriously, look at the numbers on the chart)

If you're comfortable with that kind of a risk for a 10% boon, knock yourself out. For myself, I learned many Black Fridays ago that 10% wasn't worth getting out of bed.

It should be said that investing the difference on a 30 year vs 15 year mortgage is heavily dependent on interest rates.  Currently they are at all time generational lows.  Thirty years ago this advice would not have applied.  I had a 12-1/2% variable mortgage and felt lucky to have it!

I've learned that everyone is different when it comes to investing.  Many people have a low risk tolerance, some are quite the opposite.  My biggest problem in the investment area is managing expectations.

Most Mormons are taught that debt is "bad".  But it is really a tool that can help people in a lot of ways. 

It think the church counsel is wise in that we should stay away from high interest consumer debt that buys us items that are not necessarily needs.  For many of us living on tight budgets this is very wise advice.

I've learned over the years that for most of us in the affluent westernized countries we will always have a house payment and a car payment.  We need a roof over our heads, and a means to get to work etc.  Other debt should be used wisely, Typically in business or investing leverage.

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  • 1 year later...

UPDATE:

So. . . The Lord works in mysterious ways; obviously!  In December (2018) the house was finally ready.  It was a long hard road with a lot of repairs and contractors having to fix things they screwed up.  The tile in the Master Bathroom shower had to be re-done 4 times!  Anyway, we had holiday plans, and we got a phone call late December to have us close before the end of the year.  We explained our plans and that we had been waiting on their timeline for repairs to be complete and that we would not be able to close on the home until the first week of January.  That wasn't okay for them, so they kept calling us almost daily to try and convince us to close before the end of the year.

Eventually, to make it clear to them that it wasn't going to happen, I told the top guy I was working with that we could either close first thing in January, or they could terminate the contract and refund our earnest money.  They called us back with their final offer and ultimatum:  Close by the end of December and they would write us a check for $1500 as incentive; close in January and they would charge us a penalty for closing 'late'; terminate the contract and get 100% of our earnest money refunded.

We knelt in prayer and afterwards felt confident that we should terminate the contract.  My wife was crying; I was sad; we had invested so much time and effort into designing everything about the house, including how we would use it after moving in.

Just before calling the guy back to cancel our contract, I decided to look on Zillow just to see if anything was on the market that would give me confidence that we could find a house at a price that would work well for our family.  The very first house that popped up was $45,000 more expensive than the house we were building, but it was also 2x the finished square footage and still had unfinished area.  It had 6 bedrooms and 4.5 bathrooms; the house we were building came with 4 bedrooms and 3 bathrooms, with the possibility of 1 additional bed and bath in the unfinished basement.  I had seen the house on Zillow before when perusing, but dismissed it because it needed 'work' and was more expensive; this time, however, the Spirit prompted me that we needed to look at this house!  I called my banker immediately to confirm we would qualify; he confirmed.  I called our realtor immediately to schedule a viewing; she arranged it for early the next morning just before we were leaving town. 

Right after all this, I called back the construction company; they didn't answer; I left a message letting them know we would be exercising the option to cancel our contract and receive a reimbursement; I also sent an email to make sure they got the message.  As expected, they were very upset.

The next day came; we visited the home.  The seller was having the walls painted; it just so happened to be the same color as we had chosen for the home we had been building!  We weren't in love with the home, however, we could clearly see it was a functional fit for our family of 9.  We got on the road and on the drive, we discussed; I was convinced and felt strongly that this was the house for us; my wife agreed, but was frustrated that while it was what we needed, it was not what she/we wanted.  We prayed about it (while driving); the answer was essentially, 'Do I really have to spell it out for you?' We called our realtor and were ready to place an offer.

The house was for sale by owner, so rather than writing up a contract immediately, our realtor reached out to the seller directly to get a feel for how much they would come down.  Afterward, she called us back, and we discussed what we were prepared to offer.  There was some back and forth with the seller, but finally we settled on a deal that was $4,000 below their initial asking price.  Our realtor wrote up the contract; we signed it that evening so that she could get it to the seller as quickly as possible!  The seller accepted and signed the contract that evening.  We were ecstatic!  Just 24 hours prior, we had no house to count on and were stuck in our small 3 bedroom, 1 bathroom home with 4 girls in one room and 3 boys in another!  The Lord had put things in place to answer our prayers before we even said them!

We had completed the offer contract process on Saturday evening.  On Monday we got a call from our realtor; the seller received another offer for $15,000 above their asking price, which was $20K more than what we had offered!  However, it was too late; the contract was legally binding, and the seller could not accept another offer unless we somehow chose to back out, or did not meet contractual deadlines.  If we had not hearkened to the promptings of the Spirit and acted immediately, and in a way that some would judge to be rashly, we would have completely lost the opportunity to have this home!  In the end the home appraised for $40,000 more than our purchase price!

We closed on the home on the last Friday in January and spent the first night there this past Friday.  Amazingly, the appliances we had purchased for the home we were building fit perfectly to replace the broken and missing appliances in the home we ended up in.

None of this was coincidence; this was the hand of God acting directly in our lives!

Hindsight is 20/20:
Initially when I started this thread over a year ago, I wanted to know if anyone else had an experience where they felt impressed to go into debt for something that was needed, but was more want than need.  Now that I have been through this process, I can see clearly how the Lord has blessed us through this process.  Here are some of my takeaways:

  • During the process of building our family grew from 7 to 9 (5 children to 7), our spacial needs increasing as a result.
  • The house we ended up purchasing was $45,000 more than the maximum budget I had set for us when we initially started looking for a house and began the process of building.
    • Going through the process of building a home made it very clear to us what we wanted and also what we needed.
    • Through this journey our eyes were opened to the real dollar costs that go into building a home.
    • At the end of the process, we were mentally and spiritually prepared to pay even more for the home than I initially would ever have been willing to pay.  I would have completely passed on this house without a second glance because I would have considered it out of our price range.
  • I learned so much about construction through the process of building (mostly because I had to research and point out all of their construction mistakes); it helped me know exactly what to look for in the home we bought.
  • Because of the great deal of stress brought upon us through the process of building a home, the physiological symptoms led me and my doctor to the discovery of a hereditary, non-serious, medical condition that otherwise I may not have discovered for a long time, and which is now properly treated.  This also led my younger sister to the same discovery and enabled her to receive treatment as well.
  • We initially felt a strong impression that we needed to be in this specific area when beginning the process of building; this helped confirm our decision as the home we bought is nearby to the home we were building and is in the same ward.  Interestingly, we actually have to drive by the house we were building to get to Church!

There are many more things I could bring up and ultimately the Lord's plan is still in the works.  We know we are exactly where he wants us to be, but we do not yet know what he wants us to do next.  I am both excited and nervous to find out!

At the end of the day, to answer my own question, like Zions Camp, the impressions that we received from the Lord that confused us early on have became clear.  With few exceptions, no matter which options and upgrades we had ultimately selected on the house we were building, the home we ended up buying would have been more expensive, and a much better deal overall.  Hence, we were inspired by the Lord to make choices that would seemingly put us in a great deal of debt, but which instead prepared us in many ways for the greater blessings he had prepared and lying in wait.

Follow the Spirit, even if it seems foolish or like the wrong thing to do!  God is the Gardener!

Edited by person0
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