[meadandale]

For java developers, you may want to post your opening on the San Diego JUG (Java Users Group) job board on yahoo groups:

http://tech.groups.yahoo.com/group/SDJUG-Jobs/

It’s free and you’ll reach a wide audience of local java developers.

[meadandale]

@4plexowner

Yeah, I’ve read this talk from Griffin, the author of that book:

http://www.bigeye.com/griffin.htm

It’s pretty scary that probably 99% of the people in this country have no idea the true nature of the Federal Reserve or how our monetary system works.

[meadandale]

Artifact,

I wholeheartedly agree that the banks that have gotten rich off of these predatory lending practices in the sub prime market need to face the music. I’m not advocating a bail out for anyone, individuals or corps.

Certainly both republicans and democrats alike want to grease the palms of the financial industry that is their bread and butter. However, I think that you are right regarding their motives. 1) They get to look like a savior for the little guy while 2) helping out their banking friends.

At least most republican politicians wouldn’t try and hide their true motives 😉

[meadandale]

@Artifact

The reason that this is being painted as a liberal issue is:

1) It is being proposed by Democrats in Congress
2) It is simply another example of the nanny state in action that liberals tend to embrace.

Examples?

Drop out of school and can’t get a job? No problem, we’ll give you welfare. Can’t get a good job because you are too lazy to take advantage of free educational and work training opportunities that we’ve provided? No problem, we’ll mandate a living wage. Have kids you can’t afford or have more kids when you can’t afford the ones you have? No problem, we’ll give you welfare and AFDC. Didn’t manage to save any money for retirement? No problem, we’ll confiscate it from others and send you a check.

I’m fiscally conservative. In general, I believe in a hand up not a hand out.

Don’t even get me started about the IRS…

[meadandale]

My favorite quote that I found recently:

A government which robs Peter to pay Paul can always depend on the support of Paul.–George Bernard Shaw

People made poor financial decisions and someone else (us) gets to pick up the bill? I’ve been living through this with the San Diego City Council for years and now I have to pick up the tab for people who couldn’t read a lending agreement or the escrow papers they signed? Or they could but counted on an appreciating market that didn’t happen?

Gee, maybe next the government will bail out some of the losses I’ve had in the stock market since it wasn’t really my fault that I lost that money.

I guess the phrase “Personal Responsibility” is becoming an oxymoron.

One more quote:

A liberal is someone who feels a great debt to his fellow man ….a debt he proposes to pay off with your money.
-G. Gordon Liddy

[meadandale]

@Perry

You are assuming that because I don’t have a significant chunk of my own money tied up in the house that I am simply willing to walk away if the market turns and let the bank eat the loss.

Nothing could be further from the truth.

I didn’t buy my house as an investment that I could turn over for a quick profit. I bought it as a place to live and a tax shelter. And, in spite of the fact that I could have pulled out a significant amount of equity in it in the last 4 years via a HELOC in order to do some remodeling and landscaping, I preferred not to take on an additional payment and have been socking away cash for that purpose.

There are plenty of people like me who understood the financial obligation that we entered into when we bought our homes and would never walk away from those obligations.

The only money I owe is on my house and my car. I pay cash for everything else.

[meadandale]

@josh

You’re comments are f@$cking amazing. Not everyone has a trust fund or bought into the market when home prices were 3x the median income as opposed to the 10x they are now.

Some of us were happy to have alternatives and it had nothing to do with a sense of entitlement.

My income went from $40k to $100k in 4 years. Even at a 20% savings rate, housing prices were going up faster than I would have been able to keep up with in order to have the required 20% down. I would have had to have almost $80k in cash as a down payment for the house that I bought back in 2003 (my first). Fortunately, with a high 700’s FICO and a solid credit history, I was able to get into a house I could afford with a 30 yr fixed 80/20.

I have no trouble making my payments and I never have to worry about my rate adjusting.

People like me aren’t the problem.

[meadandale]

http://www.irs.gov/formspubs/article/0,,id=164272,00.html

[meadandale]

@sstearns

“For the rent calculation you need to subtract the standard deduction, $5,150 if you single or $10,300 if you married.”

Not necessarily. On a $130k income, you would certainly have more than this in state income tax that you could write off, which means that you probably wouldn’t take the standard deduction, you’d itemize to take advantage of the higher deduction.

So, in reality, the $5k isn’t an ADDITIONAL deduction.

[meadandale]

Well, here’s the approximate math.

Assuming 100% financing on $500k at 6% your monthly payment is about $3k. Let’s say that $2700 is interest. Total payment: $36k, interest: $32400.

Let’s assume a property tax rate of 1.1% for an annual bill of $5500.

Let’s also assume about $700/yr in insurance.

Therefore, your annual carrying costs of the house are $36000 + $5500 + $700 = $42200. Your tax write off is ($2700*12 + $5500)= $37900. Assuming a 28% tax bracket, this will save you $10600/yr in taxes.

So, your net annual outlay for buying is $42200-$10600=$31600. Your taxable income is $130,000-$37900=$92000

For renting at $2k/month, your annual outlay is $24k but you will also have to pay tax on the whole $130k (since we are assuming no other write offs) this increases your tax by the amount we subtracted before ($10600) so your net annual cost would be $24000 + $10600 = $34600 (if you assign all of the loss of tax write off to housing).

So, in essence, you are paying pretty close to the same amount to rent and buy (within a few thousand dollars). However, [b]in the long term[/b], owning a property should have some tangible benefits since you will be paying off the loan with cheaper and cheaper dollars and the house will increase in value (NOTE I said ‘long term’, not short term pump and dump investment).

Of course, this simple calculation ignores the additional expenses incurred by owning a house (maintenance, water/sewer/trash, etc).

[meadandale]

@kewp

You clearly don’t know what you are talking about regarding high tech workers and offshoring.

If you’re paying attention, workers in India are demanding higher salaries and, despite FUD to the contrary, the quality of work offshore, except in the case of very simple tech work, tends to be substandard to that produced in the states.

I’ve been gainfully employed in the software profession in san diego for years and my salary in the last few years has always been over 6 figures.

In fact, I’m working from home tomorrow….

[meadandale]

You know, its funny…I hadn’t really heard from the realtor who sold me house 3 years ago since we completed the transaction. Lately (probably the last 6 months) however, I have been getting mail from him all the time. He must be desperate for business.

[meadandale]

Suze Orman recommends the ‘practice’ payments in one of her books that I’ve read. Great idea and if you decide not to buy, you’ve got a nice little nest egg for a rainy day.

[meadandale]

My next door neighbor is the original owner. He paid ~$10k for his house when it was new.

A house in my neighborhood rents for about $2k. My PITI is about $2700/month. So, I’m paying $700 more per month than I could rent for. By selling, I’d lose almost $30k/year in tax writeoffs. At 28%, that would mean I’d lose about $8400 from additional taxes but I’m paying about $8400 additional in carrying costs. In other words, I would have NO additional cashflow from renting (aside from things like maintenance costs). A wash.

I certainly wouldn’t go out and buy something right now if I wasn’t already in the market. However, if I were to sell, by the time I calculate closing costs from the original purchase, commission by RE and closing costs on the sale, I’d probably end up with around half of the current ~$100k in equity that I have.

I won’t argue that there is a bubble in San Diego and many other regions but you guys sound like so many equity day traders. In RE as in equity investing, most people who try to predict the market and time their entry/exit end up holding the bag in the long run. Those who invest to hold for the long run and weather the ups and downs are the ones who prevail.

I’ll stick it out, thank you very much. Loses, just as gains, aren’t realized until you actually sell your investments. Otherwise, they are just on paper.

[meadandale]

“Every person who sells now trades in potential bankruptcy for financial security”

Uh, not exactly.

I bought my house 3 years ago. I have a 30 year fixed loan and can afford the payments. What happens if I follow your advice and cash out and prices never fall below what I paid for my house (comps in my area are still about 30% over what I paid)?

Then, I’d have to rebuy at higher cost and a higher interest rate.

Your approach has an enormous amount of risk as well–you just choose not to acknowledge it.

[Author]

Posts