Posts Tagged ‘purchase’

“Home ownership is viewed as the most coveted part of the American dream, but nearly two-thirds of millennial homeowners (63%) expressed regrets about their current home purchase – the highest share of any generation….  Homeowners (18%) cited unexpected maintenance or hidden costs as their biggest pain point, with a quarter of millennial homeowners indicating this as their top regret.” -Bankrate

Fannie Mae announced that it will offer a HomePath Ready Buyer Program.  They will offer up to 3% toward the purchase price of a home (if they take a home buyer education course).

“That’s right: We’re back to 3% down payments, rebated. And we’re back to the feds (Fannie Mae is a government entity) encouraging people to load themselves down with mortgage debt.  ‘Stimulus’, is what they call it.  ‘A debt trap’ is what it really is.” -Bill Bonner

Fannie Mae is already in receivership with the assistance of the government.  Now, they will be putting even more on their backs with this program.  This low down payment program didn’t end up so well just a few years ago, now it is being reinvented.

Is home ownership “affordable” if someone needs assistance?

Do you want to be like everyone else?  Are you one to follow the beaten path?  Does conventional wisdom seem like the most comfortable place to be?  Let’s take a peek at what others are doing before you give a final answer.

The news is filled with, what is to me, troubling discourse.  Bloomberg News reported on March 9th that “global debt exceeds $100 trillion”.  They explain this to be a 40% increase since 2007.  Wow, that is a lot of money!  “Governments have been the largest debt issuers,” according to the Bank for International Settlements.  How long will it take to pay that off when governments have to borrow more money to cover their current expenses?!!

In a DailyFinance article from January 2, 2014, another bubble seems to be forming in automobile loans.  They give an example of a gentleman who had just filed for bankruptcy, yet received a check in the mail from a finance company for $30,000 to purchase a car from any car dealer in the area.  He went out and purchased a used BMW.  They report that “88% of GM’s North American financial receivables are firmly in the subprime category”.  With delinquencies on the rise, this cannot be a good sign.

What do these examples mean to you?  Are you currently a part of the credit growth people and governments are experiencing?  Can this discouraging news have any positive benefit for you personally?  Well, that depends!  Positive things can only happen if someone takes advantage of a situation.  The only way it can benefit you is if you do something other than the majority.

You can be different from those treading in their own sea of debt.  They are simply trying to meet their current expenses, paying interest but making no headway on their debt load.  This may even be you.  However, a simple yet willful defiance to increasing debt is the starting point.  It takes a first choice to turn the negative compounding of interest payments into your own financial reservoir.  Is it time to make a willful decision to be different?

Forcing people to take certain actions, or make certain decisions isn’t healthy.  As Bill Bonner notes about force, “People don’t get what they really want; they get what someone else wants them to have….  And since all value is measured by what people really want and freely choose, it makes the world poorer.”

There are many things being pawned as incentives which could easily be called force.  Bill points out that artificially low interest rates may persuade people to take out loans they normally wouldn’t.  And what about tax credits for buying cars, changing windows and doors, putting in new furnaces, buying new homes, etc. 

Now, on the surface, these may seem like good things, but how many people purchase these things not being able to afford it?  How does this alter the normal course of purchasing products as people see fit, or as they afford them?  What happens after these incentives expire?  Seems as if there would be large lulls in the purchasing of these products.

Private choice, in all aspects of life, provide true freedom.  Forced economics results in a false economy.

Deceiving Looks

Posted: August 30, 2013 in Money Matters
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You’ve heard that looks can be deceiving.  Well, it also rings true in financial matters.  People can look rich because of the clothes they wear or the car they drive, but this could be as close to rich as they ever get.  The wealthy spend money on the things that make them more money, first; then with that money they purchase the finer things of life.  Those that only look rich spend money on items which consume their money and, as a result, are left with nothing but rags and rust.  Commit to becoming a person who becomes independently wealthy, not one who strives to look rich.

Build Wealth

Posted: March 15, 2013 in Money Matters
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It is my belief that anyone can build wealth, if one:

  1.   Spends less than they earn (lives below their means),
  2.   Maintains control over their money,
  3.   Refuses to use debt to purchase products that lose value,
  4.   Doesn’t “lose” money.

Money and Necessity

Posted: July 13, 2012 in Money Matters
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Money is a necessity in life.  Its importance becomes obvious when lacking in availability.  The ironic thing is its inability to purchase those things which bring ultimate happiness, meaning, friendship and purpose.  For this reason, money must be a priority in life, but not one’s all consuming focus.

Money Pockets

Posted: January 20, 2012 in Private Reserve Strategy
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Mental pictures can be beneficial in helping us understand various concepts.  When considering money, take a moment to visualize the different types of pockets people use to “hold” their money.  Banks hold money in vault pockets.  Women keep money in purse pockets.  Men hold money in pant pockets.  Children put money in piggy bank pockets.

Now, if a person wants to make a purchase, they must pull money out of one of these different types of pockets.  Most borrow money out of the pocket of banks.  In turn, they must agree to pay this money back over time, with interest.

Even if someone were to pull money out of their own pocket, they would be overly intelligent to pay that money back in the same way they would the bank.  If not, they would have no money to use if they were to make any future purchases.

There are several important concepts to remember when considering which pocket to “take” the money (and many more details).  However, most importantly, when the money is paid back, it will return to the pocket from where it was taken.  If you pull money from the pocket of the bank, you are filling their pocket back up, with interest.  But, if you use money out of your own pocket, you have filled your pocket back up; with interest if wise.

True Cost

Posted: March 11, 2011 in Money Matters
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What does it cost?  This is the first question asked when considering a purchase; and rightly so, it is a key consideration.  The problem is, many consider the initial purchase “price” as the cost.  Some purchases actually result in a longer term savings; thus, the “cost” is in not making the purchase, or in doing nothing.