"100% of people who do not save money do not have any!"--Dave Ramsey

[Xist]

College is fun. I am always glad that I earned my first degree, but I had $40,000 in student loans, and I insist that I could not use it.

I am a huge advocate of studying something that leads to a career and if you decide that you do not like it, unless you have better options elsewhere, at least use it long enough to pay off your loans before pursuing something else. If you have an actual skill you are more likely to be able to afford to pursue your dreams.

I used to always hear about out-of-state students that never got residency. Why pay ridiculous tuition for four times as long as necessary?

Graham Stephan always tells people to not go to college, but we will see how many realtors there still are in five or ten years.

People say that if you cannot afford 20% down then you cannot afford a house, but how will you ever afford a house if you can hardly save anything? Yes, there are many ways that things could go horribly wrong, but if you get a good inspection, and can get a mortgage comparable to what you were paying in rent, why wouldn't you?

I was wondering what the math would need to be to be safe with rental properties. I had thought that if you needed the rent from 8 to pay the mortgage for all 10 you should be safe, but since I cannot get a rule-of-thumb from anyone, I can only guess that a 10% profit margin would be reasonable, which isn't much of a safety net.

I have asked Kevin how many of his tenants have said they couldn't pay rent, but he hasn't answered. Someone claimed that Kevin was producing so many videos because he was broke, nobody was paying rent, and he needed the money.

People always want to complain about something.

I did math on how much Kevin is probably earning through YouTube and people just criticized me.

It seems absurd now that everyone insisted that house prices were going up forever. People said the same thing a few years ago, but nobody could have anticipated TPgate. At least I have not seen anyone claim that they tried to warn everyone, like I did about the housing crash, but maybe that did not happen until well afterward.

My sister bragged about how much value her house gained until it lost value, but she was half an hour from anyone and everyone. House values dropped and she was able to buy a house in a nice suburb for significantly less.

She rented out the old house and made enough to continue paying her mortgage, but she did not see the point. She had already bought a new house and they had relatively new cars, so she stopped paying her mortgage and charging rent.

The tenants ruined her old house and it went into foreclosure, just like most of the neighborhood.

I wish that she had rented out the second house when they moved to Oregon because, as we suspected, she moved back, but she could no longer afford that neighborhood.

Millions of people got in trouble in 2008 / 2009, but allegedly ridiculous numbers bought houses without any intention of paying their mortgage.

I cannot find anything about that now, but even though I put 2008 / 2009, many results were recent.

I do not know that I had a wake-up call, but arguably hitting bottom for me was only being able to pay some of my bills, skipping lunch to save money, and then joining the Army. Uncle Sam helped me pay all of my bills and the food may not have been great, but it was consistent.

The thing is, I don't know that I ever used my credit card recklessly, but I was an idiot about choosing my first one. My parents kept telling me to get one to pay for my schoolbooks while I looked for a job, I kept saying that credit cards were evil, and when I finally did not see any other way to make it happen, I accepted the first offer.

Did I mention that was idiotic?

It had crazy interest and an annual fee!

For whom would Financial Peace University not work? I feel that his plan is like my opinions, boring and safe. Some people cannot be trusted with credit cards, but I feel like his reasoning is misleading. Banks make money from transaction fees and can afford to make using credit cards worthwhile.

In one of Graham Stephan's videos someone said "I don't do budgets, I just" and then described exactly how to do a budget.

There was one point, probably in the last year, where I did not have enough in my checking account to buy gas, I forgot to use my credit card, and I needed to transfer what little I had in savings into checking to cover it.

However, I usually have enough in the bank to pay my bills, buy inexpensive food, and occasionally get stuff that I do not necessarily need from Dollar Tree.

If I really wanted to buy a house or had some other goal then it would make sense for me to adopt a strict budget, but if I moved out I would still want to spent as much time here as possible. I never know when my brother will throw a tantrum, Mom will have her blood sugar drop, etc.

Plus I generally like them.

I try to use the credit card for everything and a couple of times a month I pay it off. Yes, I can automate it, but I like to make sure that I have enough in checking.

My savings account does not pay much, but I plan on getting the highest rate that I can for next year.

I have driven $2,000 beaters for years!

They are no longer worth that much...

I am not a fan of new cards or Volkswagens, but it sounds like everything is working well for you.

Well, I believe that I have a response from you elsewhere.

[Fat Charlie]

Originally Posted by Xist

I have driven $2,000 beaters for years!

Luxury!

We were in the $500-$700 range for a while. Called them our tax-return mobiles.

[Xist]

You received a return?! Luxury! I needed to pay for the privilege of filing my taxes! But we were happy.

[Ecky]

Originally Posted by Xist

There was one point, probably in the last year, where I did not have enough in my checking account to buy gas, I forgot to use my credit card, and I needed to transfer what little I had in savings into checking to cover it.

However, I usually have enough in the bank to pay my bills, buy inexpensive food, and occasionally get stuff that I do not necessarily need from Dollar Tree.

If I really wanted to buy a house or had some other goal then it would make sense for me to adopt a strict budget, but if I moved out I would still want to spent as much time here as possible. I never know when my brother will throw a tantrum, Mom will have her blood sugar drop, etc.

Plus I generally like them.

I know it's not my place, but what is your plan for the future?

One's health typically doesn't have an upward trend after 40. At some point you won't be able to continue doing what you're doing.

[Piotrsko]

Really don't need a budget to save $10 a paycheck in an saving account you NEVER raid. Or go buy saving bonds online although I liked the paper ones better BITD.

[redpoint5]

When I was in prison, I learned that the guards at the time averaged about $55,000 a year. As a 19 year old, that seemed like a very large salary, especially given the low IQ and low skill requirements of the job. Some of the guards were despicable people (some were smart and/or honorable too), and I was determined to make more than $55k within 10 years.

Once I landed a full time job paying $36k (and didn't have a girlfriend), I started living in my $3,000 Subaru and saving 95% of my take home. My only expenses were food, gas, and insurance. Gym membership was (and still is) $8/mo. 2 years of this put something like $40k in the bank. Eventually I took my friends offer to rent a room from him for $400/mo. Did that until 2010 when he got married, and I put 20% down on a 4 bedroom house and still had lots of cash in the bank. Rented out 2 of the rooms which paid the mortgage. Had roommates even after I got married as my wife was renting an apartment in Portland for school and was always gone.

I don't know a rule of thumb for rental income vs expense ratio, but I'd shoot for regular expenses to be no more than about 80% of income. You need to accumulate cash for big expenses like replacing the roof or unforeseen issues. Probably easier to get a good margin on slum property, but it's more work and those unforeseen issues are more common due to the lowlifes that don't respect anything. I've had good tenants, but they are less common because if you're conducting your life well, you probably can afford to not live in my $400/mo place.

I achieved my goal of making $55k within 10 years. Of course, I'm sure prison guards make more than that now. Probably closer to $70k now.

[JSH]

Originally Posted by Xist

People say that if you cannot afford 20% down then you cannot afford a house, but how will you ever afford a house if you can hardly save anything? Yes, there are many ways that things could go horribly wrong, but if you get a good inspection, and can get a mortgage comparable to what you were paying in rent, why wouldn't you?

There are a lot more expenses to owning a house than just the rent. There is insurance (Homeowners, Earthquake, Flood, etc). The tax man sends a bill in the thousands every year. When something breaks, it is up to the owner to fix it. No calling the landlord when the stove stops working, the water heater leaks, the furnace stops working or the roof starts leaking. The little things add up and the big things are expensive. Our house in Alabama was built in 1998 and we had to replace the heat pump in 2010 and the roof in 2013. The materials used by contractors on spec houses are junk. The heat pump and roof each cost about $7000. Do you think someone that cannot save a 20% down payment is going to have $7,000 to replace a heat pump or roof?

Originally Posted by Xist

I was wondering what the math would need to be to be safe with rental properties. I had thought that if you needed the rent from 8 to pay the mortgage for all 10 you should be safe, but since I cannot get a rule-of-thumb from anyone, I can only guess that a 10% profit margin would be reasonable, which isn't much of a safety net.

My research has that closer to 5% in the right locations once your factor in long-term capital costs to replace things like roofs, heat pumps, appliances, etc. Here in Portland the cash flow is negative if you are looking to buy a turnkey house not a fixer-upper. Prices are too high and rents too low to make money on a month-to-month basis. Any profit comes from the equity in the house not monthly cash flow which doesn’t work for my needs.

Originally Posted by Xist

I have driven $2,000 beaters for years!

So have I but at the time I was routinely out of the country for work for 2-3 weeks at a time so having my wife drive an old beater 100 miles a day didn’t seem like a good idea.

While my wife was driving that VW I had:

The free 1987 / 1991 Frankenstein Ranger. My brother’s abandoned project made up of 2 different trucks that he never got running right. I drove it for about 2 years and it left me stranded many times. Once I got everything sorted out I sold it to a coworker - which turned out to be a mistake. He drove it back and forth to West Virginia every weekend for a couple years before he lost it in a divorce.

$1000 1961 Buick Skylark. Drove it for a bit until the rear main seal went so it was leaking a quart of oil per day. Parted it for more than I paid

$300 1986 VW Jetta plus a parts car.

Mostly I just rode my motorcycle year-around because it was reliable and cheaper.

Near the end of 2006 my wife got tired of me wrenching on old wrecks all the time and told me we were getting a reliable used car. At that point she was about to defend her thesis so the end was in sight. We ended up with a 2 year old 2005 Prius that we kept for 10 years. Only thing that ever went wrong was a faulty valve for the coolant thermos bottle that didn’t effect anything. (Broke on my 2009 Prius too at the same mileage) That was the last car we took out a loan to purchase

Originally Posted by Xist

I am not a fan of new cards

I’m a big fan credit card companies giving me free money. Just the miles from the two Alaska card have paid for: A trip for my wife and I to fly home to visit the family for the 4th of July, flying my father and I to LA for a motorcycle trip in September, and we have 50,000 miles left.

Originally Posted by Ecky

I know it's not my place, but what is your plan for the future?

One's health typically doesn't have an upward trend after 40. At some point you won't be able to continue doing what you're doing.

I've wondered the same. Health and health insurance is one thing but I think about retirement too.

Xist is basically the same age as me and our generation is on our own for retirement. 40 means 2 decades of compounding interest gone. It is way harder to save for retirement starting at 40 then 20. On the bright side there are still 27 years to save before full retirement age.

Social Security is similar. Yes, it doesn't pay a lot but even what it pays is based on the average of the highest 30 years of earnings. The option to retire abroad starts slipping away too at a certain age.

[Xist]

Neither of my jobs is keeping me busy, but I am on-track to pay off all $13,600 of personal debt that I had when school started. My school hours have slowly increased and they are offering me a 2% raise, but I have had a few staffing agency recruiters reach out to me. I want to hear back from the latest one and check the local school district websites before I commit. Then again, I started working eighteen hours a week, and I think that I was authorized for twenty-three when TPgate started. Also, my supervisor talked about me picking up telestudents, but it looks like that is not beginning until next year.

It would be more hours.

Northern Arizona University was supposed to send out acceptance packets in February. I asked around back in March and eventually someone told me "The admissions committee has begun to send invitations. Though many have been sent at this time, some may go out as late as April. [...] Unfortunately, we can’t comment on the status of any specific application, but we hope to send out the final set of decisions soon."

However, the next day they commented on the status of my application, saying they never received transcripts from MUMU, so they never looked at the rest.

I think that I only completed two classes, although both were As.

Strangely, I never saw that last e-mail, not until just now when I went to see how long it had been.

Well, I had planned on reaching out to better-paying agencies in the valley and seeing if they would hire someone all of the way out here. If I were in grad school I might have difficulty maintaining six clients. I just reached out to the company that bought the clinic where I was offered a job in 2017. However, I had a bad feeling from the beginning, and when I interviewed the owner I learned that she was planning on selling the company and moving out of state. She hired someone else, that therapist couldn't handle being on her own, and quit.

Page didn't work out great, but this sounded worse!

Right now Western Vista Credit Union Rewards Checking seems like the best place to open a checking account, I would earn $200 in interest in the next year with them, but Wells Fargo offers $400 to open a checking account and set up direct deposit of $4,000+ within three months.

Then open up a Western Vista account once I have Well Fargo's money?

If I am able to save $13,600 in the next year I am unsure that I would be able to do anything significant with it.

[Fat Charlie]

Originally Posted by JSH

There are a lot more expenses to owning a house than just the rent. There is insurance (Homeowners, Earthquake, Flood, etc). The tax man sends a bill in the thousands every year. When something breaks, it is up to the owner to fix it.

That was the beauty of it: insurance and taxes were rolled into the payment. The bank set it up that way because they didn't want their collateral going away because someone wasn't ready for the biannual tax bill. When the market kept going up we got it reappraised and ditched the PMI, which was also rolled in.

Saving money while paying down your own mortgage is hard enough. It's even harder when paying down someone else's mortgage.

[redpoint5]

Originally Posted by Fat Charlie

Saving money while paying down your own mortgage is hard enough. It's even harder when paying down someone else's mortgage.

I don't pay someone else's mortgage; they pay mine and then some. That's the beauty of rental properties. You own it and build equity while someone else pays for it, all the while taking advantage of foolish government tax policy that advantages those paying mortgage interest.