[carlislematthew]

Additional *credit* is additive, but adding more cards just makes the average age of your credit less, which is bad.

[carlislematthew]

Just exactly how much is all of this good weather worth to someone? Thats the question.

You’ll never know until you leave and try the weather somewhere else, or if you’ve lived somewhere else before.

In my opinion, the weather is a huge factor and explains the general extra cost of real-estate in SoCal. It DOESN’T explain the insanity with current prices, but I do think that it’s part of the premium. In my experience, the prices in SoCal are around 50% higher than in Seattle, WA, regardless of the current state of affairs. When I moved here from Seattle, that was a premium I was willing to pay for an area in which I could actually *enjoy* the place more.

In Seattle, unless you’re really insane, you just don’t go mountain biking from November to May. Here in SD, you can pretty much go every day. In fact, I’ll be going in about 30 minutes! 🙂

[carlislematthew]

There have been some really good replies so far, but I’ll add my experience too.

I was in a similar situation about 3 years ago. I arrived from England in 1999, didn’t need credit and didn’t want it anyway. A couple of years later, I realized that I needed a credit history and did some research. Here’s what I did (that got me up to to a FICO of about 700 in a year). I have included some general advice too.

1) Got a crappy VISA card with $250 limit and $75 annual fee! After one year they waived the fee..

2) Got a SECURED credit card through my bank. No annual fee. They took $300 of my money and gave me a $300 credit limit. Make sure that they report the account to credit agencies – they usually do.

3) Bought a car and financed a small portion. While others were getting 2.9%, I got 7.9%. Pay off loan regularly, as agreed.

4) Paid off all credit line accounts every month – carrying a balance on credit line doesn’t help your score (I’ve been told that by a few financial advisors).

5) Try and not use too much of your credit – like under 30% if possible. Tricky when you only have $500 of credit, but it’ll get easier once they start to trust you.

6) Get 2 or 3 credit cards, keep them (age of accounts is a critical score measure), and every six months or so you’ll find your limit increasing. If it doesn’t after some time, then call the credit company and ask them if they’ll increase it.

7) Do not go crazy with store cards. The temptation to get that 10% off is high, but don’t do it if you’re planning on needing a good score in the next couple of years. It will cost you more in the long run with a higher interest rate.

8) Do not open new accounts all the time, and don’t go for mortgage pre-approvals unless you’re serious about it. Just check your FICO score every 6 months… These “inquiries” can count against your score. Someone looking for more credit is more likely to get into more debt! That’s the theory anyway… Your FICO score “inquiries” do NOT count against you.

In general, you should have lots of old, established credit (but not “too” much, whatever that is), not be using the bulk of it, be paying it back on time ALWAYS, and not be looking to borrow more.

FYI – I’ve got about 5 years of credit history now and my FICO is 785. After 2 or 3 years I was in the 700s.

[carlislematthew]

I don’t think he’s nuts. A lot of the stuff we hear is *national* commentary. Most people in the US just don’t have anywhere NEAR 600-800K in mortgage debt. They often say “things will be OK” and then temper that with “some overheated markets may experience problems”…

[carlislematthew]

When/if things get *really* bad in the economy, that’s when you’ll need as much cash (or near cash) as possible. I’m in a similar situation to you and have seen my tax bill sky-rocket. If you or your wife are self-employed, then look into solo 401Ks. If not, then I would say the obvious stuff is to avoid paying tax as much as you can!!! As others have said, a good CPA will really help with this.

Ultimately, the tax rates right now are very low and I think they’ll probably go up. Therefore, if you’re able to save cash in Roth 401ks, or IRAs that you can convert (post 2010) to Roth IRAs, then look into that too.

My feeling is that the near future (next 5 years or so) are going to require the following:

-Liquid assets. Helps with unemployment *and* opportune buying moments when things hit bottom. The interest rates will probably suck at the time, and you’ll need wads of cash to get half decent rates.

-A mix of tax deferred and tax paid retirement assets so you can blend withdrawals from both when you retire.

CASH IS KING! 😉

[carlislematthew]

I am a happy renter.

Me too! But I know it won’t last too long… I can’t paint the walls without asking, I can’t get rid of the awful deck, and I don’t want to make too much of an effort on the yard.

Conversely, I like not giving a damn about when the roof needs to be replaced, or if the fridge will hold out another year or so. If something goes wrong, I’ll just call the landlord and let them fix it. If I get fed up, I’ll move and it won’t cost me an arm and leg to do so.

Right NOW, I’m a happy renter. As time passes, I’ll be a happy house hunter. 🙂

Matthew

[carlislematthew]

But but, they’re not making any more land!!!

Seriously though, I find it interesting that they estimate about a 50% chance of a decline in San Diego. Prices have already come down! You only have to look at the data a little more closely than a quick copy-and-paste of some median value increase, and you can find the truth.

[carlislematthew]

Perhaps the recession and population decline will entice Sacramento to bring some business friendly regulation back to our state, and employers will start moving here. With cheaper housing prices by 2010, why not?

I hope you’re right!! If I was starting a business, I wouldn’t do it in CA right now.

[carlislematthew]

If people, in general, believed in bubbles then you wouldn’t *have* bubbles. They would have objectively looked at prices back in 2002 (or whenever) and said, “you know, the price to income ratio is out of whack and price increases will not be sustainable”, and they wouldn’t have bought houses. Then, house prices wouldn’t have gone up!

I know someone who did this in 2002 – he sold his house because he felt like the prices were not going to hold up. He’d been reading too many reports by economists and had not got out enough and realized that prices were being held up by *people* and not fundamentals.

Ultimately, he was right, but only after missing another 50% increase in prices.

[carlislematthew]

Repeal prop 13

YES! Since moving to San Diego recently (I’m one of the few!) I’ve learnt a little about this stupid tax system. I understand what the intent is, and I can understand how it might be for *some* people if it were repealed, but I don’t care. It’s fundamentally unfair!

If I live in a house in a neighborhood receiving identical services as the identical house next door, why should I pay 2, 3, 4 times as much in taxes?

Perhaps we should have different, lower rates of sales tax for those that have lived in the state longer? Or maybe a smoker that’s smoked for 40 years should pay the tax on the valuation of a pack of cigarettes from 1960 when he/she started smoking?

Everyone should pay the same *rate* of tax for their property based on current valuations. If the value of houses shoots up (like it has) then lower the percentage to keep the overall revenue similar, after taking into account inflation or whatever needs to be added on a yearly basis to make sure we’ve covering the costs.

[carlislematthew]

Granted, sometimes it’s hard to tell if someone is legal or illegal, so that’s easier said than done…
I’m a *legal* immigrant and there’s absolutely no way I can get a job (in my field, technology) without proper documentation. I have to show my permanent resident card on the first day of employment and they’ll also do a background check on me.

My point is that it’s easy for an employer to verify correct legal status, but they actually have to give a damn.

I have sympathy with businesses that say that they *need* the labor and that “Americans just won’t do the work”, which I think is true to an extent. But if they REALLY WANTED a decent guest worker type of program they would have got it years ago. They don’t want it because ultimately it will cost them more in higher wages and taxes. If there’s one thing that’s true about government today, it’s that businesses get what they want.

What pisses me off is that they are willing for the additional cost of these illegal employees to fall on the rest of society: ER care, “under insured driver” insurance, and so on.

I suppose I should mention real-estate, so I don’t get slapped on the wrist.

SoCal is expensive.
Housing will go down.
Recession will begin.
People will lose jobs.
Etc.

[carlislematthew]

Bugs, thanks for the insight into your world! 🙂

[carlislematthew]

Bugs, thanks for the insight into your world! 🙂

[carlislematthew]

What is included in the 70%? Food? If so, will people stop buying food when they can no longer refinance and take more money out of their house? Will they stop buying printer paper? Cat litter?

I’m not sure how *much* of the 70% has been funded by MEW (I’m sure it’s a substantial portion), but it’s certainly not all of it and I don’t believe that the entire 70% of GDP is dependant on MEW.

I do however agree with you regarding a recession and your advice regarding being frugal and saving – that’s my plan too. I also feel a recession coming, and have just landed myself a job at a company with money in the bank, a fairly stable outlook, and conservative growth plans. I’m hoping I can weather the storm (however severe or mild it is) and come out the other side with savings intact. If possible, I’m hoping to have the courage to buy a house in the middle of it all!

[carlislematthew]

Bugs (and other appraisers),

There is a lot said these days about appraisers being under pressure to appraise for exactly the purchase price, and not really being able to appraise for less because then you get less business from the lenders.

I myself experienced this when the house I bought magically appraised for exactly what I was purchasing it for. Similarly, for a plot of land! The price was exactly right.

I really don’t want to sound like an asshole, and I’m asking this question 100% seriously and sincerely: what do you *do*? I understand the basics of the job and how you appraise properties, but what percentage of appraisals have a “target” in mind and is it frustrating to have to meet that target? Or, is it frustrating to have people like me ask these silly questions? 🙂

Thanks!

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