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January 18, 2013 at 4:49 PM in reply to: Over 21% of homeowners in SD County have paid off houses #757995
flyer
Participant[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.
Economic situation changes, and so does one’s strategy. Maybe decades ago when mortgage rates were at the bendover 10+% rate, there was an incentive to pay off early…But look around. Mortgage rates are 2.5% for 15 years fixed, 3.375% for 30 years on a primary. Equity in primary home is pretty dead (at least until you move out or move up)…In this current environment, why do you want your money just to still there doing nothing?
Phillip Morris pays a 3.4% dividend, AN probably has a few recommendations on dividend stocks that do over 10%, and even the sucky Intel will be paying close to 5% dividend (though, it’s still a crappy company)…And these rates won’t ever change. Someone who is well qualified and who can take advantage of this. Hell, you probably can get more than 3% by buying and selling crap on craigslist.
Paying off early is sooooo old school. Hell, I was part of that old school of thinking. Not so much anymore.[/quote]
flu, I agree, for younger people who purchased their homes in the last decade or so, and paid hundreds of thousands more for their homes than previous buyers, keeping a mortgage might not only make more sense, but, in many cases, is probably a necessity. Personally, I always wanted to keep funds free for investment properties, so I had a different strategy when I was in the “buying” mode.
On the other hand, I can also understand why the younger folks (and/or their parents) who are part of the current 21% mentioned in the OP might want to be free and clear homeowners.
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….
To each his or her own–whatever works for your bottom line!
January 18, 2013 at 3:52 PM in reply to: Over 21% of homeowners in SD County have paid off houses #757982ParticipantBG, I think you’re right that probably a fairly large percentage of the homes that are paid off are in “older” areas.
Of course, those who purchased homes here many years ago most likely have homes that are paid off, but, in general, it would still be possible, even for those who bought as recently as the late 80’s and 90’s, when property was much more “affordable.”
For example, you could purchase a SFH in CV for under $200K during in that time period. Homes that are now $1M++ in LJ, Sunset Cliffs and Point Loma, Del Mar, etc. were not much more.
Just using my family and friends as reference points–along with the great areas in east and south county–there still seems to be quite a lot of interest in “older” areas such as Del Mar, LJ, Point Loma, Sunset Cliffs, RSF, etc., by the current crop of buyers.
Many of the folks in those areas also own their homes free and clear, so it would seem the distribution is pretty much countywide.
January 17, 2013 at 11:30 PM in reply to: Over 21% of homeowners in SD County have paid off houses #757934ParticipantInteresting–er, but not really too surprising, especially for those who have lived here for quite awhile.
Regarding the 20-24 age bracket and beyond, this stat reflects a trend we’ve been seeing for quite awhile also, since we, and lots of people we know have been buying real estate here for years, not only as investment properties, but for our kids and other family members.
Unless I missed it, the article didn’t distinguish between condos, SFH’s, or zip codes, so I’m guessing the stats are countywide, and include both condos and SFH’s.
Overall, perhaps another indication of an increasingly tight market, and ever-escalating pricing the majority of young people, and future buyers in general may face in San Diego in years to come.
Participant[quote=CA renter][quote=squat300]
I’d rather owe 250000 on a place worth 800000 than own a 250000 place outright. I’d be prouder to have the debt. A free and clear deed would not bolster my pride.
i’d also rather ahve a super cheap monthly payment ona bitching place, than a free and clear dump.[/quote]
This surprises me. I’ve always thought you were debt-averse and financially conservative to an extreme.
Nonetheless, you’ll probably be living in your paid-off house for a good decade or more. You’d be surprised how many people think they’re going to die early, but live well beyond average life expectancy (and many of them are totally unprepared for it financially).[/quote]
Have to agree, CAR. Even though it’s all temporary, it’s still wise, and does make life far more enjoyable to be financially solvent for as long as each of are here.
Also nice to be able to pass things along to the family, so they can enjoy their lives as well.
ParticipantWe all have different dreams in life, and, IMO, if you achieve those–regardless of what anyone else has, does, or is–that’s what really matters–and, as you said, squat, you should be very proud of those achievements.
When you realize everything on earth is temporary, you really see life from a different perspective, and it is very liberating.
January 10, 2013 at 4:39 PM in reply to: Personal Financial “Advisors” and Self Help “Financial Coaches”…What so many people already knew… #757501ParticipantOne of the best descriptions I’ve heard with regard to financial independence is that you know you’re there when you “WANT to work,” but you don’t HAVE to work.”
According to the stats, it’s shocking how few people realize how much they will need to achieve financial independence–at any age–especially if you want to live your “dream life,” rather than just “exist.” No wonder the financial gurus have such a large target market.
Perhaps a good title for a book would be–“Make Your Money While You’re Young, and Hang Onto It”–because, that’s the REAL challege.
Participant[quote=flu][quote=flyer]
In other fields, where jobs are not protected by unions, the answer might be to make your fortune while you’re young, so you don’t have to worry about being replaced when you’re older.[/quote]
ding ding ding… Counting on a today’s salary to fund future needs is financial suicide. It continues to amaze me that folks will argue over a pathetic 2-3-4-5% raise at work, it it entails working an additional 30% more. (It’s one thing if there’s a sense of personal enjoyment or accomplishment.But purely on a comp perspective…not the best ROI)
It’s never about how much salary you make. It’s always about what you do with it…Which is why I find it so ironic by folks who keep arguing the “sweat money” is soooo much more noble and “earned” than “investment equity”..Sure, go work on a rig lifting boxes up and down for $100-200/hr starting when your twenties or lifting an engine block day in and day out at a stealership…
Let me know how that works for you if you haven’t done anything meaningful with your money when you’re in your 40ies-50ies when your back goes out.…Furthermore, let me know how it works out if in your attempt to convert “sweat money” to passive investment but then are are taxed ridiculously 40,50,60% on investment income (as some people think investment income should but thankfully aren’t in office (yet)) such that you have to continue to work in your 60ies and 70ies lifting boxes.
I will agree with one fundamental thing though…Majority of younger generations are gonna have a tougher time building wealth because (a) reduced “sweat money” available (b) more importantly, importantly reduced ability to convert “sweat equity” to investment income in a meaningful way as we generally have increasingly unfriendly government encroachment (and frankly individuals who champion it ) via taxes.
Take care of your own. Because no one else will and they’re screwed if you don’t. And it’s probably more important ever so now than before. And now with the latest fiscal cliff deal, apparently government has green lighted this with the estate taxes exemption…[/quote]
It appears we agree, flu. I’m not really sure why more people don’t think this way. It’s always been important, but, IMO, will become essential going forward.
Even though young people never think any life changing events–job loss-health problems, etc.–will ever come their way, and that it will be smooth-sailing from here to a cushy retirement, might be in for a rude awakening–especially in the world of today, where life is changing faster than ever–as CAR mentioned.
I’ve seen countless people in their 40’s and 50’s go down the tubes in one way or another–invincible today–gone tomorrow. That’s why I was so determined, as I know you are, to insulate myself and my family from that fate.
Participant[quote=CA renter]AN,
For a long time, it was accepted wisdom that each successive generation would be better off than the last. We’re talking about many, many generations where this was true. Things have changed dramatically over the past few decades.
And while the mobile sector is hot right now, there is no guarantee that in some years’ time, the desire or ability to do more with mobile devices will fade away, and you may well find yourself in that unenviable position of being in your 50s and trying to compete with the younger generation for jobs that you are not trained for and in which you have no experience. Even if you do have experience, good luck competing with someone who doesn’t have a family or other obligations…one who is willing to work twice the number of hours for half the money as you were making in your prior job.
Not that long ago, people with Liberal Arts degrees were also being pinged by headhunters on a very regular basis. Many of them thought they were invincible, and that their opportunities would only grow with their experience, knowledge, and a strong business network. It’s always best to look at the bigger picture, IMHO.[/quote]
CAR, those are some very good observations. I can’t tell you how many people I have known in various fields over the years who were “excused” from their careers in their 40’s and 50’s.
Other than the fact that I always wanted to be an airline pilot, I also originally chose that career because it is protected by very strong unions. I’ve, personally, never known one airline pilot over the years who was “let go” because their skills were outdated, or because of their age. Many retired young, but none could be forced out.
In other fields, where jobs are not protected by unions, the answer might be to make your fortune while you’re young, so you don’t have to worry about being replaced when you’re older.
Participant[quote=AN][quote=CA renter]Personally, I prefer to live in a world where people have plenty of opportunities to achieve their dreams. Those opportunities have been shrinking dramatically over the past few decades, and you can’t blame the younger generations for being upset about it. This is not the same world that you and I experienced when we were young adults.[/quote]
One thing we all can be sure of is, it’s never the same experience between different generation. Never was, never will be. So, it’s survival of the fittest. Adapt or die. I’m party of this younger generation you’re speaking of and yet, I’m not upset, I have plenty of opportunities to achieve my dreams. I’m actually doing it right now. But I also see many in my generation who don’t have the same work ethic and/or the ability to see the world for what it currently is and adapt to it. They think they can just get a liberal arts degree from a private school, racking up big debts, and somehow, they shouldn’t be burden w/ the debt and be paid big bucks because they have a BA in underwater basket weaving. If you’re a s/w engineer today specializing in mobile, there are plenty of opportunity. I’m being pinged by head hunter at least once a week (some weeks, it’s once a day).So, although the opportunity isn’t universally available in all areas today like it was 20 years ago, there are many advantages of the current gen X/Y as well. We can go to work in jeans and t-shirts, we get big parties every Friday (Zinga), we get to be instant millionaires (if we work for a start up that succeeded like Facebook, Google, etc), we get to telecommute, we get food and gym for free (a lot of bay area companies), etc. None of this existed 20 years ago.[/quote]
Personally, I wouldn’t change the time I was born, and the life I and my family have been able to live for anything before or after. My hope would be that everyone had the opportunity to feel that way about life.
Like the players in the tech revolution today, many of us in my age group were able to cash in on real estate and other investments–franchises, etc.–in a comparable way. That,along with our chosen careers with the airlines, enabled us to become millionaires by the time we were in our early 30’s.
I can understand, as CAR mentioned, how many younger people would feel frustrated by the lack of some of these opportunities today. On the other hand, as AN mentioned, fantastic opportunities are still there for those who are educationally prepared, and looking in the right places.
Participant[quote=The-Shoveler]Shoveler’s 2 cents
1) Get your bucket list over while you’re young enough to
a) Enjoy it,
b) Accomplish it.
You never know what will happen in the future.2)Never fully retire, get some side biz going, you will get bored and your brain will turn to mush if you sit around watching TV etc… all day. Also a pension is great sure but it can be eaten away by inflation much faster than most think it can.
3)Stay as healthy as you possibly can, Health is the greatest wealth you have.
(No point being a multimillionaire if you’re not able to get out and enjoy it).[/quote]Agree with everything you’ve said. We’ve tried to live to the max throughout our lives–while planning for the future.
It’s a great way to live, rather than waiting for possible health or other issues that might cramp your style as you get older. We never wanted to miss anything we had ever dreamed of doing–so we didn’t!!
Participant[quote=CA renter][quote=flyer]
One generation hating another for who SOME of them are or aren’t isn’t going to make one bit of difference in the outcome of anyone’s life, whether it’s true or not.
That’s why I think one of the most important things any of us can do, is to try to take care of ourselves and our own to the highest level possible for as long as we possibly can.
That’s my 2 cents.[/quote]
Interesting article, and really liked some of the comments on it.[/quote]
Yes, I noticed the comments were definitely emotionally charged from one extreme to the other. Lots of hatred–which is really fear–floating around out there.
IMO–in the final analysis–each of us either achieve our dreams in life or we don’t–regardless of who or what is to “blame.”
Participant[quote=SD Realtor]Well yes flyer and you are not unlike most people on this board. Unfortunately that level of preparation is representative of a very very very small fraction of the population. The other hundred or so million people who will be 60 or older in about 15 to 20 years are pretty screwed wouldn’t you say?[/quote]
I absolutely agree SD Realtor–it’s an unfortunate situation–and I certainly don’t have the answers.
Wish I did.Whomever or whatever is to blame, we’re here, and, IMHO, there is no turning back. I’m very grateful that I started out in life at a time when everyone I knew talked about living their dreams–and we did.
I tried to raise my kids with that same feeling. Thankfully, I have been able to see them achieve that level of success in life also.
Eventually, though, and I think it has already started, I believe life will become a matter of survival for most people–even the most well prepared. (i.e. look no further than the dismal stats on recent college grads who expected to walk into their dream jobs and dream homes as most in my generation did.)
Even though I don’t know any “Boomers” with as low a net worth as mentioned in the article below, it is a highly entertaining, and somewhat sadly true commentary on our current state of affairs, as well as a possible foreshadowing of what lies ahead. . .
One generation hating another for who SOME of them are or aren’t isn’t going to make one bit of difference in the outcome of anyone’s life, whether it’s true or not.
That’s why I think one of the most important things any of us can do, is to try to take care of ourselves and our own to the highest level possible for as long as we possibly can.
That’s my 2 cents.
Participant[quote=SD Realtor]Maybe it will be an inverted sellout. That is, the younger generation that is screwed by our selfish behavior now, will perhaps in 15 or 20 years massively slash medicare and social security for senior citizens and simply say, sorry we cannot afford your care… so since you put us in this mess, we will create mega sized institutions with nominal care that will be a fraction of the cost of your care. You can go there to live and be cared for, or your families can take care of you.
Wouldn’t that be a laugh![/quote]
Actually, it would be a laugh, since everyone will be old someday, and unless they are independently wealthy, something like this would ultimately effect their own grandparents, parents, and, eventually even themselves.
That’s why I, and most everyone I know have planned their lives so we won’t be dependent on medicare or social security. Along with our own financial assets, we’ll receive pensions and healthcare from our employers. Darn unions.
Participant[quote=livinincali][quote=paramount]Are we certain future generations are going to pay for this all of this debt?
[/quote]No they probably won’t. They’ll probably be more than willing to throw granny under the bus, right after they default on their obligations to China.[/quote]
Actually, you may be right, and I wouldn’t be surprised if either of those things happened. In many ways the younger generations have been thrown under the bus with regard to well-paying jobs, affordable housing, retirement, etc., so turnabout is fair play.
My kids who are all in their late 20’s were lucky, but the great majority of their friends around their age and younger, seem to be fighting an uphill battle on all fronts, and it doesn’t look like it’s going to get better for them any time soon.
On the plus side, as flu and AN mentioned, for those of us who have the funds, the past few years have been a fantastic time to further cash in on some great buying opportunities with regard to real estate, etc. In that way, it’s actually been a great time to accumulate even more wealth that can be passed on to your kids.
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