Author Topic: Pay off everything or buy land first?  (Read 11730 times)

Offline Prodigy

  • Survivalist Mentor
  • *****
  • Posts: 636
  • Karma: 41
  • Better to die on your feet than live on your knees
Re: Pay off everything or buy land first?
« Reply #30 on: May 07, 2013, 07:47:20 AM »
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 can definitely understand that, and I'm sure most of us feel the same way.  The main point, though, is that it is a temporary situation.  Renting while you pay off the debt is a sacrifice for the long term goal of a self sufficient life that is debt free.  If you are willing to make that sacrifice for 5 years (or however long it ends up being) you will probably end up saving at least tens of thousands of dollars and will be in a much better position once you have that land.

Was it Einstein who supposedly said 'compound interest is the most powerful force in the universe' ?  It becomes exponentially harder to pay off debt the more there is, which is why our country is headed for bad things in the first place.  If you are ok with the trade off of more debt to get that land, then do it with a smile.  Just be sure you research where your path will take you, first (which clearly, the OP is doing).

nelson96

  • Guest
Re: Pay off everything or buy land first?
« Reply #31 on: May 07, 2013, 07:54:41 AM »
I can definitely understand that, and I'm sure most of us feel the same way.  The main point, though, is that it is a temporary situation.  Renting while you pay off the debt is a sacrifice for the long term goal of a self sufficient life that is debt free.  If you are willing to make that sacrifice for 5 years (or however long it ends up being) you will probably end up saving at least tens of thousands of dollars and will be in a much better position once you have that land.

Was it Einstein who supposedly said 'compound interest is the most powerful force in the universe' ?  It becomes exponentially harder to pay off debt the more there is, which is why our country is headed for bad things in the first place.  If you are ok with the trade off of more debt to get that land, then do it with a smile.  Just be sure you research where your path will take you, first (which clearly, the OP is doing).

Excluding mortgage and rent, is their more debt owning than renting?  I suppose their usually is, but that doesn't have to be the case. 

My mortagage payment isn't any more than a rent payment would be.  And my down payment, if you want to call it that, was $150. . . .  You just have to be smart about it and be willing to work for it.

Offline Prodigy

  • Survivalist Mentor
  • *****
  • Posts: 636
  • Karma: 41
  • Better to die on your feet than live on your knees
Re: Pay off everything or buy land first?
« Reply #32 on: May 07, 2013, 08:46:59 AM »
Excluding mortgage and rent, is their more debt owning than renting?  I suppose their usually is, but that doesn't have to be the case. 

My mortagage payment isn't any more than a rent payment would be.  And my down payment, if you want to call it that, was $150. . . .  You just have to be smart about it and be willing to work for it.

That's a good point, and I guess I assumed that you can typically find a much lower monthly payment renting over a mortgage.  But, if you can find a good deal on a house that is comparable to a rental payment in your area (and of course, like MTUcache was saying, you are willing to live there for a long time) then that could work out too.  Be sure to figure in all the extra costs of ownership though, as well, in your calculations - property tax, insurance, maintenance, etc.

Offline MTUCache

  • Dedicated Contributor
  • ******
  • Posts: 1067
  • Karma: 89
Re: Pay off everything or buy land first?
« Reply #33 on: May 07, 2013, 10:00:57 AM »
...I guess I assumed that you can typically find a much lower monthly payment renting over a mortgage.
In my area at least (suburban Chicago), that is most decidedly not the case.
The rental market around here is heating up quite quickly (again).

If you can get approved by a bank for a mortgage your principal, interest, taxes, PMI, insurance, etc (usually a condo or HOA fee), will still be hundreds of dollars per month less than you would pay to rent the same property. Rental properties are usually getting snapped up within a couple months of listing, and from what I hear people are usually getting what they're asking for without any negotiation.

I currently have a great deal where I'm at now, as I've been renting the same place for going on four years now at the same rate, but just within our subdivision there have been many, many more houses that are being rented at hundreds of dollars more per month than we pay.

Offline Prodigy

  • Survivalist Mentor
  • *****
  • Posts: 636
  • Karma: 41
  • Better to die on your feet than live on your knees
Re: Pay off everything or buy land first?
« Reply #34 on: May 07, 2013, 11:48:08 AM »
In my area at least (suburban Chicago), that is most decidedly not the case.
The rental market around here is heating up quite quickly (again).

If you can get approved by a bank for a mortgage your principal, interest, taxes, PMI, insurance, etc (usually a condo or HOA fee), will still be hundreds of dollars per month less than you would pay to rent the same property. Rental properties are usually getting snapped up within a couple months of listing, and from what I hear people are usually getting what they're asking for without any negotiation.

I currently have a great deal where I'm at now, as I've been renting the same place for going on four years now at the same rate, but just within our subdivision there have been many, many more houses that are being rented at hundreds of dollars more per month than we pay.

Wow, that is just completely foreign to me.  Very hard to imagine where I live (which actually isn't very far in Madison, WI). 

Why is that?  Is that what happens when nobody can get a mortgage, or is there something else at play there?

Offline RitaRose1945

  • Survival Veteran
  • ********
  • Posts: 5526
  • Karma: 403
  • Asking the uncomfortable questions since 1964
Re: Pay off everything or buy land first?
« Reply #35 on: May 07, 2013, 01:27:48 PM »
The monthly difference between owning and renting can be huge, depending on where you are.

Where I am (metro Vegas), we hit the peak of the bubble around 2007, and many landlords are stuck trying to cover the mortgage payment from a high purchase price.  Renting a 1500 sq ft house in my neighborhood is going to run you around $1100-1200 per month (if the landlord is being realistic).  Buying that same house at current prices would be closer to $800 per month.  Obviously different parts of town will be higher or lower, but you get the general idea.

The only reason why we're not buying is because we're not sure we want to live here long enough to recoup the investment.  If we decide to move, we're stuck trying to sell a house and cover the mortgage.

I really try to keep debt to a minimum.  Debt forces you to make decisions in ways you might not otherwise.  But I think this situation is a little different.  I don't know... I think I'd stick to making minimum payments on the tuition debt in this case.

Offline 4Doose

  • Prepper
  • **
  • Posts: 76
  • Karma: 7
  • At the trailhead to freedom, finally.
Re: Pay off everything or buy land first?
« Reply #36 on: May 07, 2013, 07:37:13 PM »
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.

 :( >:( :-\

Its all over and done with. The bank was AES, there were over 2000 students, if I remember correctly, in our class action. Even though it was proven that they showed SSH preferential treatment and released ALL the funds in 3 chunks in the first 3 months, they got off scott free. The settlement was based on certificates or licenses received. Also the interest rates were drastically reduced. Default or miss a payment and everything goes back to the original terms. As you might imagine I have been religious with those payments.

There were many different lenders over time and some students received total forgiveness from many of the lenders. Mine just happened to pull out all the stops and fought tooth and nail to a victory.

As far as not feeling secure in my job, is anyone's job truly secure? I don't see any reason my job will go anywhere over the next 5 years at least. There is simply too much crude and natural gas here. There are at least 3 plays and we are currently only tapping into 1 of them.

I am enjoying all the input which is FAR more than I thought I would get. I have to say I am leaning towards paying off the debt first while growing a savings. I need to look into the possibility of making payments every 2 weeks instead of the 1 monthly payment. I'm not sure if they will allow a split payment like that since it will cost them interest and added accounting.

You guys are fantastic. Thanks  ;D

Offline Prodigy

  • Survivalist Mentor
  • *****
  • Posts: 636
  • Karma: 41
  • Better to die on your feet than live on your knees
Re: Pay off everything or buy land first?
« Reply #37 on: May 13, 2013, 10:05:40 AM »
I just heard your question about this on the show, and am glad we could get input from Jack as well.  I think what Jack said was mostly on par with my opinions, but with a few differences.

Before I post a little about Jacks opinion, I realized we were all missing a very important piece of information:  what is the interest rate on your student loan?