Author Topic: Pay off everything or buy land first?  (Read 11724 times)

Offline 4Doose

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Pay off everything or buy land first?
« on: May 05, 2013, 11:21:36 AM »
Hello

The question:
Should I dig in and put every penny into debt elimination or purchase my property and put every penny into paying off that first?

The background:
A very long story short... Silver State Helicopters, in a nut shell, stole millions from thousands of students across the country. Our slice of that is roughly $140,000. After all the dust from litigation settled we were left still owing the money, as were many others with this same lender. In order to be able to make the minimum payments we were forced to file bankruptcy on everything else. Even though the loan was a private signature loan it is protected under the huge "educational purposes" umbrella. Its never going away.

Since then I took a job in the Bakken oil patch. I more than doubled my income in doing so. But at an average of $4k a month take home it will still take me almost 4 years to pay off that debt. That assumes my job and wage lasts 4 years and I can last 4 years in a man camp.

With the nations financial death spiral being as it is I am wondering if it may not be better to get the land we want and pay it off in 4 years or less and then go to work on the school debt from hell.

Another thing is that not being married I am being eaten alive by taxes due my income. A home may help mitigate that a bit but having never owned one before I am unsure. I can use a VA loan if needs be and its been 3 years since the BK.

I rather suffer a few years and get things settled than limp along in the land of minimum payments for decades. But what to do first... school debt or land.

I still have much research to do but I thought more minds may offer more ideas I may not think of.

Thanks,
4Doose

Offline Oil Lady

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Re: Pay off everything or buy land first?
« Reply #1 on: May 05, 2013, 11:49:17 AM »
/watching thread]


 :popcorn:

Offline cheryl1

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Re: Pay off everything or buy land first?
« Reply #2 on: May 05, 2013, 11:53:46 AM »
land if you can get the loan (or save and pay cash). Then you can be enjoying it and improving it while you are paying your loans. my 0.2c

Offline fred.greek

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Re: Pay off everything or buy land first?
« Reply #3 on: May 05, 2013, 01:39:55 PM »
My choice would be land first, especially if I or my dependents could live there, no matter how modest the initial home. 

-    If the fertilizer hits the fan, I would not want to be standing in the middle of the street, holding a bunch of payment receipts but with nowhere to go.  In a crisis, it may turn out that banks close, credit cards & checks no longer work, etc., to the point that it may not be possible to make payments.

-    If we get hyperinflation, it might be able to pay off large debts by selling one tomato‚Ķ

-   Check applicable state homestead exemption, in general there is some value of a homestead that cannot be involuntarily attached. 

Offline MississippiJarhead

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Re: Pay off everything or buy land first?
« Reply #4 on: May 05, 2013, 02:16:32 PM »
I prefer to be debt free. My $.02.

My reasoning is, I think, unless there is a total collapse the government/banks will devise some mechanism to keep debts to them in a manner that will help the banks maintain their holdings. I don't want anyone to have a claim on me and mine.

Offline Freebirde

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Re: Pay off everything or buy land first?
« Reply #5 on: May 05, 2013, 02:37:40 PM »
Both sides have a point.   With just three years from a BR, your loan rates will be poor.   My suggestion would be to pay minimum plus payment and take the difference between that and your maximun affordable payments and save it.  That will give you an emergency fund and when you have enough saved you can either make a lump sum payment to pay off the loan, often at a discount, or to make a large down payment/pay for some land.
Have you been looking for property and what it is selling for where you want it?

Offline rustyknife

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Re: Pay off everything or buy land first?
« Reply #6 on: May 05, 2013, 04:13:00 PM »
Interesting question. I'll make a run at it but keep in mind that this is MHO based solely on my perspective.

I would buy land but only based on 50% of what you now make. If something should happen along the way and your income drops that could be painful. Depending on what part of the Bakken you're involved in could also mean that to stay at your income level your company might decide to move to Texas. Now you have a choice to make about switching companies or trying to sell.

As far as the financial dead end that our country is headed for you'll only own the ground you're standing on if it gets as bad as predicted. If you decide to buy land be sure it is a fixed rate 15 year loan. Don't even consider a variable rate mortgage.

If you're able to get a loan based on a reduced income then there should be some room for student loan payments. Keep your house payments on time every time and double up on student loan payments when you can. There will be lots of temptation to over spend and buy things on credit. If you can't afford them on 50% of what you now make, avoid them. Best wishes.

Offline BriGy86

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Re: Pay off everything or buy land first?
« Reply #7 on: May 05, 2013, 04:39:19 PM »
First thing, Download an Excel Amortization sheet.
http://office.microsoft.com/en-us/excel-help/using-the-loan-amortization-and-loan-analysis-templates-HA001034640.aspx

I downloaded a pre-made one that you can plug your numbers into but it doesn't seem to be online anymore.  You can Google amortization sheet or something if the above link doesn't help.  I'd attache a blanked out version here if I could.

With this sheet you can plug in your potential numbers for the purchase of your land and see how much money goes towards principle and what goes towards interest EVERY pay period.  From there you can add a special payment of 50 bucks to the principle, all the numbers will shift and you can see how much of a dent it will put towards the loan in the long run.

Example of what I can find out:
Loan/mortgage amount:150,000
Interest rate: 4%
Term: 30 years
Payments: Monthly (260 total payments.)
Resulting money that will be spent: 257805.27
Resulting Interest paid: 107.805.27

Payment due each month will be 716.12.  500.00 will go towards interest. 216.12 goes towards actually paying the principle on the loan. (The bank gets their money first.)  As you pay that over the years those ratios change.  A year later; the amount due is still the same but 491.19 goes towards interest and 224.03 goes towards the principle. 

You can see that the principle number goes up as time goes on and the interest number goes down.  This means that a large down payment or extra principle payments early on are the best bang for the buck.  Towards the end of your 30 year mortgage most of the payment is principle.

Now; if I take a 30 year mortgage based on the specs above; lets say I pay the first payment and don't put anything towards principle. keeping on that track the full term of the loan will play out. But. If I just put 50 bucks towards principle each month I save 14k over the life of the loan and pay it off about 4 and a half years early with only 318 payments.  That's just 50 bucks, if you do more it compounds even more.  If I do 200 dollars extra towards principle that loan is payed of 10 years early with a savings of 40k.

One thing I like to do if I need to take a large loan out, Car for example.  Take the longest loan you can.  This results in the lowest monthly payments.  But have the discipline to put extra money towards principle.  If things go south, you can stop the extra contributions and you have the lowest monthly payment required (Like 300 bucks instead of 500), if things don't go south, you can pay a 7 year loan in about 2 years like I did.

Like Jack says the truth usually lies somewhere in the middle, I wouldn't go balls out towards one option or the other, is there a way you can meet halfway on both?  Buy the land but don't worry about paying it off in 4 years. And with the student loans, don't totally neglect them and don't go all in on them either.

The land purchase is tempting especially with rates right now.  I tried to refinance at 3.25% but owed too much on my house.  I currently have a rate of 6.9%  If I could have refinanced I would have had an extra 400 bucks each month.  In the 70's that rate was around 20% :-0!

My post may be long but don't go on my info alone,

Offline BriGy86

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Re: Pay off everything or buy land first?
« Reply #8 on: May 05, 2013, 04:45:06 PM »
Interesting question. I'll make a run at it but keep in mind that this is MHO based solely on my perspective.

I would buy land but only based on 50% of what you now make. If something should happen along the way and your income drops that could be painful. Depending on what part of the Bakken you're involved in could also mean that to stay at your income level your company might decide to move to Texas. Now you have a choice to make about switching companies or trying to sell.

As far as the financial dead end that our country is headed for you'll only own the ground you're standing on if it gets as bad as predicted. If you decide to buy land be sure it is a fixed rate 15 year loan. Don't even consider a variable rate mortgage.

If you're able to get a loan based on a reduced income then there should be some room for student loan payments. Keep your house payments on time every time and double up on student loan payments when you can. There will be lots of temptation to over spend and buy things on credit. If you can't afford them on 50% of what you now make, avoid them. Best wishes.

YES! Don't even entertain the idea of adjustable rate mortgages (ARM.)  Another thing to keep in mind, is that mortgage interest is tax deductible.  I wouldn't create your budget on that though, just some icing on the cake if you find a budget that works for you.

Offline 4Doose

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Re: Pay off everything or buy land first?
« Reply #9 on: May 05, 2013, 05:24:40 PM »
Excellent input everyone. Thank you.

In the time I have been here so far I have paid off a car loan, several medical bills, a very kind personal loan for a car repair and many other little things. I finally have us caught up and am facing off against the last debt giant with my little stick. I think I can take him....

IF I went in on a piece of dirt it would be a fixed 15 year mortgage. There are two areas I am looking at. Texas from the hill country around San Antonio to the north east. My weakness... I hate brutal heat. I'm a Yeti at heart. The other is Montana, withing an hour or so of Missoula or anywhere with useable land AND trees. Trees and green make me happy. It would be handy to get property here in ND but to be honest.... well I'll just offend someone so never mind. ND = blah to me.

A good state is surprisingly hard to find once you start digging into politics, local codes and laws, past voting on issues, financial status, zoning, taxes and on and on. I'm loving the WTF site. Good stuff.

Another tough thing to find is any type of financial and real estate personnel that are honest, open minded and not stereotypical of their trade. All I have encountered to help with this question are too focused on their one size fits all products or methods.

Just reading your input thus far as triggered a few ideas to investigate.

Again, thank you all. Keep it commin'

Offline r_w

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Re: Pay off everything or buy land first?
« Reply #10 on: May 05, 2013, 06:51:22 PM »
What if interest rates double before you are out of debt?  Zero interest can't last forever.

What if land prices double by then?  Some say farmland is due for a correction, but don't see investors walking away until the balloon goes up. 

My personal philosophy is buy land now.  It is more finite than gold or silver--they aren't making more land.  Plant a food forest, or at least an orchard, ASAP--even before you build a house!!!! 

Offline MTUCache

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Re: Pay off everything or buy land first?
« Reply #11 on: May 05, 2013, 08:01:42 PM »
Personally, I'd have a real hard time buying land if I wasn't going to get anything out of it for the forseeable future. If you're going to be in ND working your butt off to pay for it, you darn well better to be able to put some time and energy into it (and get some enjoyment out of it). Not to mention, if SHTF, you'd better be able to get there (and have the things you need with you or already there).

Add in that you've probably still got a pretty rough looking credit score since it's only been a few years since the BK... you're not even sure what kind of terms you could be looking at for the loan, but they're probably not ideal.

There's no way to know what's going to happen to your current debts in the next few years. Hyperinflation, currency re-base, all of these things are the same arguments that grasshoppers use to justify financing themselves to the hilt and then hoping things work out right in the future. You get in bed with the banks and I can guarantee you that you won't be getting off scot-free by selling a couple of tomatoes. None of the powers that be are going to let that happen. Interest rates WILL keep up with inflation, even if it's out of control, even if it means changing the terms on a bunch of loans that people thought were fixed. By now it's pretty obvious that the banks aren't going to be the ones getting screwed over, right?

Sure, it seems silly to end up holding a bunch of payment receipts and a zero-balance in the middle of SHTF... but not much sillier than holding a deed to a parcel you owe money on that's several states away and you've only seen a handful of times. It's not like you're going to own it free and clear, right? And even if you did it's just a chunk of land with your name on it that's nowhere near your job... if SHTF for real you'll be able to pick any piece of land you want if you make it past a year. Deeds, courts, lawyers, mortgages, and even banks won't have a whole lot of meaning if everything gets re-set to the Wild West, so it doesn't do much good planning for it by staking your claim to something by name only.

If it was up to me, I'd be working to have less banks in my life. Not more.

Of course, this is coming from a guy who's been renting for the last four years and just went through a short-sale last year. I've still got one CC, 16 auto-loan payments, and then my wife's college loans to pay off. Best case scenario I may be able to move where I want, get a 15-year mortgage with only 1 or 2% down.
« Last Edit: May 05, 2013, 08:23:32 PM by MTUCache »

Offline Bradbn4

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Re: Pay off everything or buy land first?
« Reply #12 on: May 05, 2013, 08:27:36 PM »
If you can find the "perfect" chunk of land - and live on it now - that would be the route I would go.
Now if it's not perfect; or you can't live on it - that is going to make it harder to say go in debt.

Land you don't live on is going to have different rules on payment schedules; what is tax deductible.

If I found the perfect size lot (35 acres); good location to secondary road off dirt; good sun; good water; at a good price.  Yep - I would go into debt.   If the projects I want to do take 15 years (growing trees, etc) - then it's best I obtain the land sooner than later.

Currently I have less than one year left on my house payments.  Then I will start saving up for my perfect spot of land. 

Offline BamaPrepper

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Re: Pay off everything or buy land first?
« Reply #13 on: May 06, 2013, 08:10:35 AM »
Just my 2 cents....I heard a long time ago when it comes to debt, pay off the items that will add an asset....

For example, if you have $10k in student loans and $10k in vehicle debt and you are able to pay off one of the items, pay off the car.  By doing that, you will eliminate a debt and add an asset.  If you pay off the student loans, you are only eliminating a debt, no asset is gained. 

With that said, I would purchase land.....

Offline MTUCache

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Re: Pay off everything or buy land first?
« Reply #14 on: May 06, 2013, 08:41:34 AM »
A very long story short... Silver State Helicopters...

Wow... just read a bit more detail about this. This is the first I've heard of Silver State Helicopters and the tuition scam. :o

Are you making these payments to Key Bank? Are you involved in the class action lawsuit against them? Or has this already been resolved?
If nothing else I'd be checking in with the Pinnacle Law Group in SF to see what course of actions they're recommending for their clients.

I don't want to tell you not to pay off this debt, as you may well owe it and your credit score might be at stake, but I'd be VERY leary of sending any money to anyone involved in this right now. Who knows what black hole this money is finding it's way into right now.

 :( >:( :-\

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Re: Pay off everything or buy land first?
« Reply #15 on: May 06, 2013, 10:35:14 AM »
It's impossible for me to give advice on whether you should buy or not given that I don't know how secure your job is (neither do you it sounds) or ig you will want to stay in the area if your job goes away.

Contrary to what others are saying about a short term loan, I like having a long term loan with a more modest payment required of me each month.  I then have the freedom to make a larger payment to pay it off sooner, or drop back to my lower payment if the need arises.  I do agree with others that say not to go over 50% of your income (net).   

Offline rikkrack

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Re: Pay off everything or buy land first?
« Reply #16 on: May 06, 2013, 11:37:06 AM »
 :popcorn: watching, we are in a similar situation and LOTS of good info and opinions on here. 

Offline MississippiJarhead

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Re: Pay off everything or buy land first?
« Reply #17 on: May 06, 2013, 12:17:11 PM »
I agree that I'd pay of secured debt before unsecured debt.

Offline Prodigy

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Re: Pay off everything or buy land first?
« Reply #18 on: May 06, 2013, 12:48:34 PM »
If it was up to me, I'd be working to have less banks in my life. Not more.

Sums up my opinion perfectly.  If it were a clear case of student loan debt, I'd suggest putting a large portion of my income to paying it off, then a smaller portion to savings.  I may not wait until the loan was 100% paid off before I bought some land, but I'd make sure it was toward the end of the debt.

This situation is not that cut and dry, though.  The bankruptcy will make the loan rather difficult, and likely result in a much higher interest rate.  That would make me lean even more toward paying off the student loan debt.  Then there is also the nature of the loan in the first place, but it sounds like you're all finished with the court system and you still owe a house-worth of money to them.

Assuming your situation has no more legal avenues to travel, I can't see how it would be a good idea to double your current debt right now, especially if the interest rate you may get could be less than ideal.

Having your name on a deed (that you won't technically own until it is paid off) isn't going to be the silver bullet in surviving some sort of possible break down.  Putting the money you -do- have to it's best use now will help much more down the line.  People talk about the collapse of our economy, or hyper inflation, but I promise you nobody knows what is going to happen.  We could have decades of 'good times' ahead, or we could have DEflation.  Don't pick and choose your disaster scenarios - prepare for the range of possibilities as best you can.

Offline Morning Sunshine

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Re: Pay off everything or buy land first?
« Reply #19 on: May 06, 2013, 01:14:50 PM »
I have waited to chime in.  Here are my thoughts.

1) I, like MTU, had never heard of Silver State Helicopters.  That is a stinky situation.  Is it finalized that you are fully responsible for that 140k?  ouch.

2) you are working in ND.  You (for obvious reasons) do not want to be there permanently.  Do not buy land there.  It is a boom town mentality.  Rent cheap, I know hard to do at this time, but find a roommate, rent a room, whatever to save money right now.

3) save save save.  pay your minimums on the student loans.  I would pay min on this for another year or two and just wait and see if there will be any forbearance on this travesty.  If there isn't, in say 2 years, pay a lump sum on it and be done.  This continual payment will build up your credit score - they look at the way you are paying back over time, not that you paid it off quicker.

4) save save save.  When you leave the ND oil fields, have a large downpayment in your pocket (figuratively - do not carry a wad of cash to the realtor) for when you find your homestead.  Look for it in Tx, Id , Mt, wherever you want.  but I think you are being smart right now and working your way out of this mess.

Offline livinitup0

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Re: Pay off everything or buy land first?
« Reply #20 on: May 06, 2013, 03:11:37 PM »
I'd say you've got more than enough debt on your plate right now. I'd knock out that $140K, save up for another year afterwards and buy land with cash, then get a shorter-term mortgage to build on it. I dont see any situation where adding on more debt while paying off $140,000.00 at the same time is a good idea.

Offline MTUCache

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Re: Pay off everything or buy land first?
« Reply #21 on: May 06, 2013, 03:38:55 PM »
Sums up my opinion perfectly.  If it were a clear case of student loan debt, I'd suggest putting a large portion of my income to paying it off, then a smaller portion to savings.  I may not wait until the loan was 100% paid off before I bought some land, but I'd make sure it was toward the end of the debt.
Not to toot my own horn here or anything, as I've got plenty of junk to fix in my own life, but this is really the one solid lesson that I've taken to heart in my past six years.

I've chased work across the country twice, lived in three different time zones, had two kids, and short-sale'd a condo that was $50k+ underwater, all since 2007 (most in the last two years).

There's a lot of smart people out there who don't know what to do with their money. They've got a lot of it, and they're in panic mode right now trying to figure out how not to get their knees broken. Some of them are going all-in with precious metals. Others are going after different kinds of real estate.

I've got other problems. I know I need some PMs, just like I need some food and gas-storage... but more than anything in my life I need less risk. I don't really care what to do with all my extra money, because I don't have any extra money. All of our jobs are an unknown. Where we want to live in five years is an unknown. Could I save money on my current place if I just got a mortgage and stuck to this place for a while? Hell yes. Hundreds of dollars per month. But if I lost my job I'd be stuck trying to short-sale another place. I don't want to live permanently where I am, so I'm staying as liquid as possible right now.

That means getting banks out of my life. I have a checking and savings at a credit union. I have my remaining credit card balance through them. I was considering transferring the last of my one remaining auto loan to them as well, but figured that's only going through next October anyway. Outside of that we have my wife's college loans, which I'm not sure are ever going to go away (or at least not this decade). Once I get this CC and auto loan done with (hopefully both early next year), then I'll be looking for what to do with my money. But until then, I don't really have any money to play with. Twelve months from now I hope to be completely free (with the notable exception of my wife's loans). I can go wherever work takes me. I can pick up and move my family wherever we want to go on a moment's notice, because we don't owe anyone anything.

Would I like to buy some land where I eventually want to end up? Sure... but I don't know if I'll ever be able to find a job around there, so there's no point in putting my name on it if I don't know if it will ever be anything more than a BOL. If all it is to my family is a remote vacation destination for once or twice per year, I might as well save that money and rent a campground spot.

Like I said, best case scenario is two years from now I find the place I want and put 1-2% down on a 15 year mortgage. That probably won't work out too smoothly for me. More than likely, I'll be renting somewhere else, still trying to stay liquid and terrified of putting roots down anywhere because the job market keeps me skittish.

Offline Prodigy

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Re: Pay off everything or buy land first?
« Reply #22 on: May 06, 2013, 04:12:03 PM »
Coming to a board on a survival forum, you might expect to get the majority saying to get the land.  Clearly we all recognize that bad times might be coming, but you have to look at it from the perspective a few others have stated, translated to:

If you get a mortgage with even a mediocre interest rate, your risk of disaster absolutely skyrockets.  Personally I would say 100% risk because doubling (or more) your debt is instantly bad, but that's just me.  Whereas if you have the land, and some awful collapse happens to where it actually saves you... what are the chances of that?  A hell of a lot less than 100%, in my opinion.

You can be very self reliant without owning land, you just need to be more resourceful about it.  The biggest problem renters face is the lack of land to grow your food, but that can be solved by community gardens, using land from a family member/friend/neighbor/the rental property itself (not ideal, but still).  Just remember in really hard times, there will still be plenty of people who own rental buildings who may likely be desperate to find tenants, so it's rather unlikely you won't be able to find somewhere to stay.  To me, the potential benefits of owning land don't come anywhere near the guaranteed benefits of a debt free life.  You will have to weigh those options yourself though, of course.


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Re: Pay off everything or buy land first?
« Reply #23 on: May 06, 2013, 04:40:12 PM »
Coming to a board on a survival forum, you might expect to get the majority saying to get the land.  Clearly we all recognize that bad times might be coming, but you have to look at it from the perspective a few others have stated, translated to:

If you get a mortgage with even a mediocre interest rate, your risk of disaster absolutely skyrockets.  Personally I would say 100% risk because doubling (or more) your debt is instantly bad, but that's just me.  Whereas if you have the land, and some awful collapse happens to where it actually saves you... what are the chances of that?  A hell of a lot less than 100%, in my opinion.

You can be very self reliant without owning land, you just need to be more resourceful about it.  The biggest problem renters face is the lack of land to grow your food, but that can be solved by community gardens, using land from a family member/friend/neighbor/the rental property itself (not ideal, but still).  Just remember in really hard times, there will still be plenty of people who own rental buildings who may likely be desperate to find tenants, so it's rather unlikely you won't be able to find somewhere to stay.  To me, the potential benefits of owning land don't come anywhere near the guaranteed benefits of a debt free life.  You will have to weigh those options yourself though, of course.

I disagree, but only because I don't want to have to rely on anyone to get what I need and I feel secure for work.  I like that I can grow it, raise it, preserve it, and store it on my own property.  I am not complete without having something I can call my own and I sure don't want to ask permission from somebody else as to whether I can do something or not.  Sure, I am in debt to the bank but I'm working toward owning something of great value to the future of my family and it's not rent that somebody else is using toward their future.  If things go terribly wrong, I still have the option to sell it, rent it out to someone else, or walk away if I can't and be no worse off having never tried. . . .  Having a landlord is worse than a mortgage IMO.  You pay both, but have far more control and a whole lot more reward with a mortgage.

Offline MTUCache

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Re: Pay off everything or buy land first?
« Reply #24 on: May 06, 2013, 06:44:40 PM »
I disagree, but only because I don't want to have to rely on anyone to get what I need and I feel secure for work.  I like that I can grow it, raise it, preserve it, and store it on my own property.  I am not complete without having something I can call my own and I sure don't want to ask permission from somebody else as to whether I can do something or not.  Sure, I am in debt to the bank but I'm working toward owning something of great value to the future of my family and it's not rent that somebody else is using toward their future.  If things go terribly wrong, I still have the option to sell it, rent it out to someone else, or walk away if I can't and be no worse off having never tried. . . .  Having a landlord is worse than a mortgage IMO.  You pay both, but have far more control and a whole lot more reward with a mortgage.
I won't argue with you. This was precisely my point of view when I did own a house.... I always thought I would rather pay money for equity rather than just "throwing it away". Add in the ability (nowadays) to essentially use somebody else's money almost for free... it sounds like a great deal, but it all hinges on one very important component: willingness to stay there for the long-term, come hell or high water, regardless of what happens with your job, your health, your family size, etc...

I now see things from a slightly different perspective. I don't simply throw this money away while living here, I'm literally paying for the freedom that enables me to walk away at any time, freedom from worrying about depreciation, or even maintenance (not that I have a problem maintaining some place). Does my landlord get a sweet deal, having a tenant willing to pay his mortgage for him (on top of being respectful, keeping the place up, and paying on time)? Yeah... he does, if he didn't like the arrangement he could do what I did, ask his tenant to leave and put the place up for sale.

This just reinforces the idea that Jack talks about frequently though... the only place you should finance should be the perfect place. Can you picture spending the rest of your life there? Will you be able to provide for your family even if your career takes a drastic turn? If so... congratulations, you should do whatever it takes to get that place nailed down. If not, why bother? Why pay a 7% premium for a realtor, get locked into a HOA's bullshit rules, etc.

The biggest problem with todays "reawakening" of the sheeple? Now they're all out looking for the same types of property that we are. :p

nelson96

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Re: Pay off everything or buy land first?
« Reply #25 on: May 06, 2013, 07:05:02 PM »
I won't argue with you. This was precisely my point of view when I did own a house.... I always thought I would rather pay money for equity rather than just "throwing it away". Add in the ability (nowadays) to essentially use somebody else's money almost for free... it sounds like a great deal, but it all hinges on one very important component: willingness to stay there for the long-term, come hell or high water, regardless of what happens with your job, your health, your family size, etc...

I now see things from a slightly different perspective. I don't simply throw this money away while living here, I'm literally paying for the freedom that enables me to walk away at any time, freedom from worrying about depreciation, or even maintenance (not that I have a problem maintaining some place). Does my landlord get a sweet deal, having a tenant willing to pay his mortgage for him (on top of being respectful, keeping the place up, and paying on time)? Yeah... he does, if he didn't like the arrangement he could do what I did, ask his tenant to leave and put the place up for sale.

Or you can become a landlord yourself.  I have a friend that has moved around a bit and he kept every home he lived in (in mutliple States).  He now has them all payed for and has a very nice nest egg for his retirement.

I've never had an HOA over my shoulder and never will.  And I hope one day that a developer will want my farm.  I'll use that money to set myself up even better.

.
« Last Edit: May 06, 2013, 07:10:52 PM by nelson96 »

Offline atherts

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Re: Pay off everything or buy land first?
« Reply #26 on: May 06, 2013, 07:40:37 PM »
We've chosen to go debt free except for our home loan and are now stashing money for a chunk of land. Initially we're thinking raw or semi raw land to keep the cost down.

Offline kimdvm

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Re: Pay off everything or buy land first?
« Reply #27 on: May 06, 2013, 07:54:18 PM »
I like what a previous poster said in general:

make minimum payments, save up an emergency fund, then consider using some of that to put a big chunk on land.

HOWEVER, there is a high probability that when the can-kicking meets its wall, that interest rates will rise and therefore land prices will drop.  If you are talking places like Illinois or Indiana where they have been skyrocketing, it's a fair bet that land prices will PLUMMET.   I don't know about other areas, but take a look at what land prices have been doing in the region you are contemplating.

Either way, you need an emergency fund first anyway, and some more time between you and that bankruptcy. 

Offline Jeremy Downing

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Re: Pay off everything or buy land first?
« Reply #28 on: May 07, 2013, 04:25:29 AM »
I'm marking this for later comment.  Yall are speaking right at me.  ;)

Offline Speck

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Re: Pay off everything or buy land first?
« Reply #29 on: May 07, 2013, 06:39:25 AM »
I have the land (40 acres, 8 acre pond, older farm home) and the debt from student loans and from money used to pay for the move / initial fixup of our home.  We looked for our property for about 6 years, but another 5 would have seen us almost (if not totally) debt free.

Past me was really anxious to get out of our last house and into this farm home.

Present me is glad to be on the land, but realizes that if I'd waited I could be moving onto the land this year with substantially less debt.

Future me will go back in time and smack past me around a little for getting into debt in the first place if he ever gets the chance.

A big part of my decision was a desire to get onto the land as fast as possible so I could raise our children there.  I didn't realize how important that would be to us until our first was on the way.  Short of children and/or other emotional factors, I think you should prioritize the debt, or at least most of the debt, higher than buying the land . . . that shouldn't stop you from perparing now though.  Even the most urban settings can keep bees and vegetable gardens, and in many cases chickens.  The extra time learning what to look for in the property you want and learning about the different options for what to do with it will serve you well while looking.