[earlyretirement]

[quote=cvmom]I would say the only reason to buy in CV over other areas is the quality of the public schools. I can’t speak for the elementary schools but I am very impressed with the middle and high schools. There are a lot of very academically-focused students, which has its plusses and minuses, but I think it is mostly plusses.

As soon as our kids are out of school, we plan to move out of CV. Not huge fans of soulless suburbia…but we think it has been the right choice to raise our kids.[/quote]

I agree cvmom. I think the main reason why many families buy in that area are the wonderful schools in the area. That’s what got us even looking in that area is the school system.

The weather is pretty darn good as well plus you are just minutes from the beaches in Del Mar. That is a big plus as well.

[earlyretirement]

Thanks for posting those articles CAR. Yep, I agree with you that the ease and vast availability for the typical college student to get these massive student loans is what causes these colleges and universities to keep driving up prices.

These banks and lenders are almost totally protected with the way the laws are set up. And they want to dole out as much as possible.

I also think that students taking out student loans should be required to go through some mandatory class that explains the student loans, understand the payment schedules and interest rates, etc.

So many students are clueless and don’t even know what interest rates they are paying on their many loans.

[earlyretirement]

If you want to read a great but depressing article on student loans and how difficult student loans are to discharge, read this article from the New York Times from last year.

While I certainly am not advocating that student loans should be easily discharged in bankruptcy. If so, I’m sure that there would be many deadbeats cheating the system. But when partially blind people are getting turned away, it’s depressing.

Student loans are something that is very necessary for people that don’t come from wealthy families. I worked all through University and still had to get many student loans. Not just for tuition and books but more so just for living expenses, etc.

My biggest problem is that the system they have in place is basically broken. There is almost NO RISK at all for these lenders. Even social security and disability disbursements can be withheld.

Lenders are all lined up to give tons of student loans without regard to the major that will be received, the type of job the student can expect to get along with their expected salary. After all, it’s almost a guarantee that they will get paid back and the interest rates are surprisingly high on them.

And it doesn’t matter if the student already has loans out. Students can pile loans on top of one another.

Again, I’m not saying that I’m against student loans because I’m definitely not. I wouldn’t have made it out of University without them. But some of the stories i’m hearing now from friends are pretty bad.

My best friend’s sister in law graduated a few years ago. She went to some private nothing special school that was very expensive. She got some almost worthless degree. Then she went to grad school but it didn’t sound like it was a beneficial degree either.

She has something crazy like $180,000 in student loans and it turns out she has 6 separate loans out. Some with interest rates as high as 8%. She finally had to cash in part of her 401k to pay off some of them as her and her husband couldn’t even qualify to purchase a house with all her debt.

[earlyretirement]

SK,

Surely you can’t tell me that you don’t at least agree with many things this author has mentioned in his article? None of them?

[earlyretirement]

[quote=flyer]I agree with all of you “younger” guys, because I was doing the same thing when I was your age, but, building wealth then seemed to be less of a challenge than it it today.

Also agree that paying off a home while you are younger, and in the wealth-building mode, might not be the best thing to do–especially if you don’t have your ultimate nestegg, medical coverage, etc., etc., covered for the balance of your life–and that “number” will be in the millions for anyone in their 30’s and 40’s–if you want to live well.

Going back to the OP, I’d guess most of the 21% have everything covered, so it’s probably not a problem[/quote]

Flyer, I totally agree with you that today it’s much more difficult to make money than in previous years. And I’ve always believed the older you get, the tougher it is to make money (at least the more traditional way being an employee).

The world is a much different place now than decades ago. Heck, when I was growing up I remember my dad always pushing the idea of working forever for a company, getting a pension and social security. Living a debt free life, having your house paid off as soon as possible and taking advantage of the power of compound interest even being fairly conservative.

I remember my next door neighbor. Amazing guy. I grew up cutting his lawn and shoveling his snow, etc. This guy went to the military out of high school for 20+ years and got a pension. Then he went to work for a Fortune 500 company for 20+ years and got another pension. Then when his wife died I think he got her social security and pension as well and of course when he was in his late 60’s he got his social security as well. This guy was getting something like 4 or 5 pensions a month! It was amazing! Things like this don’t exist anymore.

Now fast forward a few decades and pensions are like dinosaurs and for the most part they don’t exist or totally vanishing. The days of working 20-30 years for the same company is pretty much gone and even if you did, you won’t get a pension. Before the “company” would take care of you if you did the time. Now no one will really take care of you.

And for some of us, we don’t even believe social security will be available for us when we need it. I’ve paid a small fortune to social security and I’m not even sure it will be around for me by the time I’m eligible. Either that or they will keep pushing the minimum age up.

Like you said, it’s much more difficult to make money today. Heck, I remember a few short years ago just sticking money into CD’s and making 5.5%. Man I miss those days.

[quote=flu]

Agewise, I’m not an old fart. Physically I feel like an old fart.

Actually, I wish I took slightly more diversified risks when I was younger, when I could afford to take them…Either I was too scared on some or too reckless on others…Balance would have been the key.

These days, it’s more like a game for me… I mean i enjoy trying to earn more in different ways. And oh yeah, I hate losing….:)[/quote]

I DREAD birthdays and getting older. I always have. I hate birthdays and the type that ask employees NOT to celebrate it. It’s depressing getting older but having kids really helped on the outlook of getting older.

I do agree it’s important to take diversified risks when you’re younger. That’s the time to do it.

[quote=CA renter]

But in your scenario, the person with the paid off house still has the house at the end of that 7.3 years, and will NEVER have to make mortgage/rent payments for as long as he lives in that paid-off house. As his employment prospects pick up going forward, more of his income can go toward investments at a time when prices will probably be exceedingly low as a result of a multi-year depression (which is what it would be if he were totally unemployed for 7+ years) — exactly when you want to be getting back into investing.

Additionally, if the house were a nicer house, it could be rented out and the owner could easily downsize into a tiny apartment in a flyover state, giving him extra income for however long it takes to find employment and move back to his home area.

At the end of the 10.8 years with the “investor,” he is totally broke, has no home, and will be saddled with housing payments for at least 30 years (in most cases), preventing him from having that extra money for investments when it’s most valuable.[/quote]

My game plan has always revolved around despising debt. I know there is good debt and bad debt but I’ve hated debt of any kind. I graduated college with a 6 figure + debt and it was a horrible feeling for me. Many of my friends had wealthy families paying not only for their tuition but everything else. I was always envious of them. Fortunately I’ve always had great jobs, worked hard and made great income.

I guess one of my goals was always to pay off my house as quickly as I could. I’m sure it’s not for everyone but I’ve always loved the feeling of NEVER having another mortgage payment again. And although real estate is more expensive in San Diego vs. other places around the country, man I LOVE LOVE LOVE Prop 13! Some of the property tax rates in other places is insane! Yeah, you can buy a house cheaper in places in Texas but (a) you’re stuck in Texas and (b) you could end up paying more property taxes in Texas (some areas are as high as 3% a year).

My philosophy is San Diego is a wonderful place to be retired and own a paid off place to spend your glory years. Yeah, the taxes here are horrible in California but it’s as close to paradise than most places around the world. And I’ve been to many many cities around the world.

I have a friend that is exactly in the situation you mentioned CA Renter. He has a really nice townhouse in La Jolla. He was in exactly the situation you described. He lost his job but found another one in Dallas and is renting his place out for a VERY NICE amount. His house is also paid off. His plan is to return to San Diego again when he permanently retires.

[earlyretirement]

Flu,

Your last post was great. I’m not even disagreeing with your points. I’m just throwing another perspective as I found these kinds of threads educational. I wish they were around a long time ago.

No, I’m not retired yet. I’m still building wealth (or at least trying to.. LOL). I’m still fairly young (or at least not an old fart yet…). The investment property income definitely helps but I still have many years ahead of me with young kids.

You make good points about time frame of buying. I absolutely wouldn’t have even bought real estate during the bubble as I didn’t find it a good buy. As we entered 2011 I thought it was a good price. But honestly even if I bought during the bubble and was in the same situation now buying for the long haul and buying to live in, I wouldn’t sweat the lost equity.

I’m by no means advocating people putting all of their eggs into one basket paying off their home. Not by a long shot.

But you make some excellent points as usual.

[earlyretirement]

[quote=paramount]Lance is a predatory sociopath.

When will people learn to stop worshiping other humans: be they athletes, cops, fireman, soldiers, actors, musicians…whomever.

Put them on a pedestal and you know what happens….[/quote]

I totally agree. As an entrepreneur, I used to really admire Steve Jobs. I guess not so much the guy but the mind and his relentless ability to create great products.

But then I would find out more about him and anyone that read his authorized biography by Walter Isaacson, knows how much of an @sshole Jobs really was. Even after he got cancer, he was a very bitter guy and continued to be a jerk to many people until the very end.

It was unbelievable what a jerk the guy was. Also, after reading it I wondered how many of the ideas were really his because he would often take credit for something that his employees would come up with.

I agree we really need to take a good look at who are “heroes” amongst us. Lance Armstrong certainly shouldn’t be on anyone’s hero list.

[earlyretirement]

asegal,

Ah ok.I’m glad you checked out Maricel. I was curious about them. I didn’t know it was a gated community.

I’m not sure what your maximum budget is but did you check out any homes in Santaluz? I’m not sure what is/isn’t on the market but I noticed this one just got an offer but it was on the market for a few months. It will be interesting to see what it sold for.

http://www.redfin.com/CA/San-Diego/14418-Caminito-Lazanja-92127/home/6462575

The guy bought it near the top of the bubble back in October 2007 so I’m curious to see what it sells for.

Santaluz is great if you have kids. And some of the houses we looked at were highly upgraded. I’m not sure what is on the market there but it would be worth checking out. The community is AWESOME to live in if you have kids. We absolutely love it here. (I’ll send you a PM).

Also, there are some nice houses in Verrazzano as well. It’s not gated there but it’s really nice and great parks there if you have kids. HOA fees I believe are lower there since it’s not gated.

The prices going up I think is just from lack of inventory. There isn’t anything too special on the market now. It was kind of tight back in 2011 but NOTHING like now. We are so glad we bought when we did.

[earlyretirement]

Excellent. Thanks for sharing.

[earlyretirement]

[quote=CA renter]

If you have no mortgage, the savings on mortgage interest is like tax-free income. This is “tax-free income” (savings) can be invested every month. This is one of the safest ways to make a return on your money, especially if you never intend to sell your house (don’t worry as much about home price fluctuations).

Yes, the value of one’s house can go up or down, but so can the value of all the other investments you’ve mentioned.

As far as you losing your job at the same time as a tenant not paying rent and the stock market crashing, etc…sounds exactly like what happens during severe recessions/depressions, which aren’t nearly as rare as some might want to believe. With a paid-off house, if one is wise enough to set aside the money that’s being saved by not making monthly mortgage payments, there should be sufficient enough savings to make it through a fairly prolonged period of unemployment, and you don’t have to worry about losing your house because you can’t afford to make the mortgage payment. For many people, this peace of mind is worth a million dollars.[/quote]

Exactly. To be honest, I don’t even care what housing prices are doing or how they might fluctuate. For the principle HOME that I live in, where I’ll raise my kids for the next 15 years, I don’t look at the house as an “investment”. It’s just a home.

Flu, you mentioned that these people are “hoping” that property prices keep going up but for the most part, for those that plan to stay in their homes for the long haul or raising kids in them….they could care less and don’t even think about it.

I do own other investment properties so I understand your chain of thought flu. But on a principle home I don’t look at it the same way.

Also, I probably won’t sell this house in the future even after the kids finish high school. Maybe we’ll rent it out as rentals are very solid and I think they probably will be in the future as well in good school district areas.

I totally agree with you CA Renter that there are many many scenarios where having a paid off place gives you great peace of mind.

I do agree that every person needs to look at their individual situation and see what makes sense to them but to dismiss people paying off houses as crazy isn’t correct.

[quote=flu]

And while personally I wouldn’t gamble on one stock , I wouldn’t want to tie everything into a non income house either if I could do something else with it.

And the way it is…no risk no reward..taking calculated risk is different from being reckless. Though I would say most people whom you are referrinf to either had poor money management skills ( they couldn’t handle an unexpected windfall ) or took on way too much risk beyond what they can handle.
.[/quote]

Well, I don’t think it’s just a matter of “gambling on one stock”. It’s easy now to sound so optimistic with the stock market up tremendously the past few years. But some people forget what it was like at the depths of the Great Recession. People don’t realize just how close we came to a systemic crash in the financial markets.

I don’t care how diversified you were, there was a period where everyone in the market (except short sellers) were taking big hits to the portfolios. Very few people didn’t have any worries at all. So I guess I’d mention to remember that period of time.

And again, it wasn’t just a matter of gambling on one stock. There are entire companies that aren’t around anymore. So it’s not a matter of waiting for their stock price to come back. Some of them are gone. Or others like Citibank which have rebounded, are still next to nothing compared to where they were.

The stock market is very frothy right now. I guess I wouldn’t have much of a problem if I read the same advice several years ago but the market isn’t a place I’d continue to expect these huge returns. The Fed has basically forced people to push their money into the stock market but it by no means is a safe place.

You mention investment properties. I know that area well as I own several investment properties. But I can honestly tell you it’s NOT for most people out there. Being a landlord isn’t for everyone. Most people just don’t have what it takes to be a good landlord. (i’m not saying it’s not a good investment because I do believe the returns from investment rental properties depending on where you buy are great). But no way I’d pretend that just anyone can be a landlord. Plus it sucks a lot of time as well.

[earlyretirement]

[quote=squat300]earlyret, i think what you’re saying is, there are lots dumber things you could do with money…

and that’s true…

but I’d say there are smarter moves, too…

for the dumbest, it’s not all that risky to pay off the house.

luckily, with college tuitions on the horizon for the next 12 years or so, I will be fortunate to not have any extra money to worry about…[/quote]

Oh yeah. By no means am I saying this is the smartest thing you can do with your money. Not at all. As mentioned, it only makes sense after your already well diversified or want to limit what you already have in the stock market or other investments/real estate.

I know how you feel about saving up for college. With young kids I started saving the day they were born and plugging away each year. It’s insane the prices of some colleges these days and I can’t imagine what it will be in the next 12-14 years once my kids hit college.

[earlyretirement]

I think the guy may be one of the biggest @ssholes imaginable. I know he inspired a lot of people but I assumed once ALL of the people he used to ride with all said he was using drugs that it was true. All those people didn’t have any reason to lie.

The nerve of this guy to sue people when he knew they were telling the truth is very telling to the type of person he is.

I believe in karma and this guy will probably get his again and this time no one will feel sorry for this guy.

I don’t really think you’d want to be more like him or do whatever it takes to “be on top”. I hope this guy loses every dime he ever made.

[earlyretirement]

flu,

You make some good points but you are also assuming that someone that comes into money and has the choice to either pay off their primary or do something else will be wise with those funds/cash.

I’ve seen plenty of people that come into money and aren’t wise with what they do with it. Plenty of people blow extra cash on either bad investments or just spend the money foolishly. So you have to look at it from that angle as well.

Absolutely leverage can and does work out for people but it does people in as well. From my experiences over the past many years investing, I’ve learned that people are quick to tell you about all the great genius stock picks or other investments they have made that made great returns. However, they neglect to tell you about all the bad investments or stocks they have made that have lost a lot of money. (Especially on these message boards).

[earlyretirement]

[quote=bearishgurl]Does any Pigg know exactly when the “30-year mtg” became available?

Even though, when we’re young, we think we’re invincible, when unexpected things in life happen, it’s really nice to have your home paid off–just in case you lose that job, or have to pay all of your medical insurance, or, or….

.[/quote]

It was right after the Great Depression when all hell broke loose. I believe mortgages started in the 1930’s but it wasn’t until the Great Depression that 30 years became the norm.

And I also agree with the point you made about everyone thinking they are always going to be invincible or even that they will always going to make $X per year. You never know in life what might happen. It’s always a good feeling to have your primary home that you’ll live in paid off.

One thing I’ve learned is you can’t go broke being very conservative. And I’ve personally met several people that retired with millions without taking huge risks or over-leveraging. Never underestimate the power of compound interest.

[earlyretirement]

[quote=bearishgurl]I forgot to add that 99% of the “paid-off” properties in CA lie in areas which are NOT FAVORED by or UNAFFORDABLE to the younger, family-raising set (read: OLDer areas).

The reason why you have been exposed to only the “over-indebted homeowner” crowd is likely because you have never lived in any micro-areas of CA where the overall indebtedness is low, ER ;=].

Nothing wrong with that, but just sayin’ …[/quote]

Thanks for the good points BG. Yep, you’re absolutely right. I’ve never lived or bought property in California prior to 2011 so I wasn’t exposed to any of this. Most of the exposure I had was watching friends or former classmates buy properties they apparently couldn’t afford. Or that they could afford and just milk the equity out of them. (None of them live in San Diego anymore).

And I LOVE LOVE LOVE Prop 13!

[quote=The-Shoveler]IMO with rates this low, it only makes sense to have a paid off place if you are completely retired (well at least if you have some self control with spending etc..)

But that’s just my opinion.

maybe BG is correct, maybe 21% represents for the most part the completely retired.[/quote]

The Shoveler. I agree it really makes sense to have a paid off place if you’re completely retired. But even being semi-retired, I love the feeling of having my place paid off. I know it’s super conservative to have properties paid off and not to have it leveraged but I’ve purchased several properties and waited until I had the funds to purchase them. In several parts of the world, mortgages either don’t exist or they are extremely expensive to finance so in many parts of the world people buy with cash.

Americans are VERY fortunate (and spoiled) with these super low interest rates and the ability to pay over 15-30 years.

[quote=flu]I don’t get the fascination in today’s environment with the desire to pay a primary home off early, especially for someone who is young that has still a lot of earning potential and can afford to take risks and still recover.

In this current environment, why do you want your money just to still there doing nothing?

Paying off early is sooooo old school. Hell, I was part of that old school of thinking. Not so much anymore.[/quote]

Flu, definitely I can see your point and chain of thought. I agree in this very low interest rate environment many want to take on leverage and debt. But there is a segment of the population out there that is already well exposed to the stock market and other investments.

Absolutely no need to hit “home runs” or take on really any risk at all. I know several people like this. They don’t need to take on any leverage whatsoever.

[Author]

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