Author Topic: The Morality of Using the System  (Read 4464 times)

Offline Bard American Redoubt

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The Morality of Using the System
« on: September 16, 2012, 10:37:17 PM »
Short version:
If I can get a loan, should I and build my retreat immediately?  I believe I can do this for under $150,000.  This is an entire home, basement, and basically finished.  I believe with some other government benefits / programs I can get this on a very, very low interest, I am thinking of under 15 year, 3% or less interest rate, and pay it off as fast as possible.  However I am getting in bed again with the evil bankers. 

Longer version:
I know the answer to this question, which is “it depends, and you need to make your own decision.”  However I would like input, suggestions and thoughts of others on this question.  It is a hard question and there are not a lot of people in my “general circle” who understand the ramification of question; Fed, coming potential hardships, needing a retreat for the family ASAP. 

Basically I’ve been building my retreat / homestead / retirement property piece meal and with cash.   I hate the banks and don’t want them involved again on my critical property.  However it is taking a long time, as you can guess.   I own the land free and clear, but putting a house on it, will take years to save up enough money.  I am still paying off debit and making the payments on my primary residence.

With the new QE3 the government is basically trying to squeeze the mortgage rates down to nothing.  Since we know QE4 is coming and the continued printing of money, the government is basically paying us to borrow money and spend it. I am currently stuck in a deep blue state as it has my two jobs which are allowing me to do this; continue to pay my bills and aggressively put away money for the retreat.  It will still take me many years (about five) to get to somewhere to build the basic shell of my retreat home. 

My plan would be if the SHTF (as in I loose my job(s), I would try sell my primary residence, pay off its fix rate mortgage, and should have enough to either one, pay off the “hunting property” fix rate mortgage and / or have enough cash to pay it for awhile.   Depending one why I loose my job, and

Thus, that is my first question to this forum.  Should I get into bed again with the Fed based banks to get my retreat built if possible?


Thanks for your thoughts and ideas.

Alex the Bard of the American Redoubt.
http://www.charlescarrollsociety.com

Offline Alpha Mike

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Re: The Morality of Using the System
« Reply #1 on: September 17, 2012, 10:36:09 AM »
Credit is a tool just like a hammer.  If used wisely and intelligently, you can build wonderful things with it.  If used poorly, you can destroy your life.  Financial discipline is what it takes and the sad truth is many Americans can't or don't know how to handle their finances.

That said, Money is cheep.  Loans are at a great price and if you need to finance a property to achieve your goal, now would be the time to get a loan.  You can always pay a little extra each month to pay it down faster.  Only you can answer if you if your financial/job situation is right to take on a loan. 

I have 5 first mortgages myself (don't tell the bank ;) ) Credit is one tool I am using to achieve my personal goals in life.

AM

Offline MTUCache

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Re: The Morality of Using the System
« Reply #2 on: September 17, 2012, 11:58:43 AM »
Should I get into bed again with the Fed based banks to get my retreat built if possible?
First, that's a much different question than the subject line of your topic... "Using the System", to me at least, sounds as if you're getting some kind of a hand-out from the government that you probably shouldn't qualify for.

If you're simply asking whether it's "moral" to establish a financial agreement with a party you feel is possibly immoral, my answer would be a resounding yes.

Assuming that both parties are completely aware of the arrangements, informed about what their responsibilities are, and are willing to bind themselves to the agreement with the intention of seeing it completed, then I think you're well within your own moral high-ground to sign that contract.

It would be different if you were investing in a terrorist organization, or expecting to make a financial gain through a known criminal. Even if these banks were a "criminal enterprise" (choose your own definition here), it's not as if you're providing them with anything that will hurt other people. Any asset you're putting in their hands is completely legitimate and respectable. If they choose to do something illegal, immoral, or disrespectful with it that's on them.

Likewise it would also be different if you were doing this with the intention of not following through on the contract. Assuming that you're fully intending to pay off the loan within their terms, again, you're on moral high-ground.

Borrowing money based upon credit is one of the fundamental principles of an advanced society and economy. As the poster above me pointed out, there's a reason why the bank would be interested in loaning you money, because you're a good credit risk.

All that being said... if I was in a position such as this (which I'm not, I don't have good credit currently, and I'm not in a position to build a BOL), I don't know if I'd be willing to get that far under the thumb of this monstrosity again. I've spent the better part of the last three years just starting to extricate myself from this mess (short-sale'd an underwater condo, got rid of the "new" cars for old, and paid off a bunch of credit card debt). After working for so long to get these people out of my life I'd be very leery about letting them back in.

This is a very similar situation that MANY people are going to be finding themselves in when inflation really takes off... paying off debt seems like a dumb idea when interest rates are below inflation rates, but most people aren't counting the risk that comes into play when you're holding onto that debt. It's a moral quandary that will see many people gladly borrowing money and spending it as quickly as possible because they feel it will be easier to pay it off later. Time will tell whether those people are winners or losers.

If I was going to do this I would be strongly leaning towards a small, local Credit Union that does not have a history of selling off mortgages to other lenders. Ironically (or, probably fittingly), these establishments will be the hardest to get a loan from and probably aren't all that interested in letting someone borrow money for 15+ years right now...

Offline Jack Crabb

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Re: The Morality of Using the System
« Reply #3 on: September 17, 2012, 03:50:27 PM »
I'll leave the morality issue to someone better qualified to address.

However, you own your land free and clear (subject to timely payment of real property taxes). If you take a mortgage to build on the land, you will likely have to pledge the land as collateral to secure the loan.

If you envision a future where it is more likely that the judicial system fails and banks no longer repossess collateral for loans in default, then a mortgage may be the way to go. It does not matter if you pay the mortgage payments or not because no one is coming for the property. See judicial and banking failure.

If you envision a future where a job loss or similar disruption of income is more likely, then I would try to keep the land free and clear. You may be down and out, but the sheriff may still be doing evictions for lenders.

It may even be worth transferring the land to a trust so your creditors cannot take the land to satisfy judgments. Let Visa and Mastercard ding your credit report. At least you have your land.

For a few tens of thousands of dollars, one could have a prefab home, i.e., trailer, or permanent camper on the property. It may not be your dream retreat, but a third-class ride beats a first-class walk any day.

The expenses could be charged to a credit card. By use of a trust and unsecured loans, you can compartmentalize your living quarters from everything else.

As long as you stay current on taxes, any other unsecure debts and judgments can be discharged through bankruptcy.

Offline Bard American Redoubt

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Re: The Morality of Using the System
« Reply #4 on: September 17, 2012, 07:40:15 PM »
"All that being said... if I was in a position such as this (which I'm not, I don't have good credit currently, and I'm not in a position to build a BOL), I don't know if I'd be willing to get that far under the thumb of this monstrosity again. I've spent the better part of the last three years just starting to extricate myself from this mess (short-sale'd an underwater condo, got rid of the "new" cars for old, and paid off a bunch of credit card debt). After working for so long to get these people out of my life I'd be very leery about letting them back in."


This is where I am at.  This is the deal.  It is not the morality of using usury in this totally corrupt system, I am really trying to "simplify."  I know that this is usury, but it also allows me to get to where I am going faster and time may be of essence.  I am like you, working my butt off getting these people and their system out of my life.   No credit card debit (of note) any more, but that second keep staring at me when I close my eyes.  However I also am thinking of where my family goes when I loose my job and / or TSHTF.  I think of it as a morality issue in that, I know they are wrong, I know they are corrupt, but I am considering in getting into bed with them.   You don't buy legal things from criminals, if you are smart.  (actually this is very much like what I am doing, and you do buy things from criminals (sometimes) if that gets you to what you need).    I plan on (as long as I am able) of paying any thing off.  However the other option is to refinance my current residence.  The issue with that is putting more of my value into my current Deep Blue State property.   Jack S. talked about "right now I would not buy a home in a deep blue state."  The more complex question is should you pour more of your assets into a Deep Blue Property to cut the interest / usury you are paying them by 1/5th.  I think his answer would be no. 

I've looked at what is available and it seems these corrupt people are willing to loan me the money.  I get my retreat built, but I have a note on it it now.  That is what I was avoiding, but then again my family now has "some where" to go when TSHTF, which I think is very, very possible, even likely in the next 10 years.  I may not be able to build that house in 10 years. 

This is the quandary.  I think I need the "out" now, but I have to deal with these people to get that out, and it feels too much like I am buying drugs or maybe buying a (legal) gun from criminals.  The first hit is free, come on back. 

I looked at my current home, and if I keep on the 30 year plan, I end up paying FIVE times as much interest as if I convert it to a 15 year deal.  I could use this very stupid QE3 to drive myself down to a 15 (from the current 22 years remaining), but then I have more money going into the current Blue State residence. 

Man, options are some times harder then no options.

Alex The Bard of the American Redoubt.
http://charlecarrollsociety.com 

Offline Bard American Redoubt

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Re: The Morality of Using the System
« Reply #5 on: September 17, 2012, 07:42:17 PM »
Credit is a tool just like a hammer.  If used wisely and intelligently, you can build wonderful things with it.  If used poorly, you can destroy your life.  I have 5 first mortgages myself (don't tell the bank ;) ) Credit is one tool I am using to achieve my personal goals in life.  AM

This is great advice.  This suggest if you can pay it back I go ahead and  build my "remote hunting lodge" now, and have an out for a TSHTF moment. 

Offline Bard American Redoubt

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Re: The Morality of Using the System
« Reply #6 on: September 17, 2012, 07:51:45 PM »
I'll leave the morality issue to someone better qualified to address.

However, you own your land free and clear (subject to timely payment of real property taxes). If you take a mortgage to build on the land, you will likely have to pledge the land as collateral to secure the loan.

It may even be worth transferring the land to a trust so your creditors cannot take the land to satisfy judgments. Let Visa and Mastercard ding your credit report. At least you have your land.

The expenses could be charged to a credit card. By use of a trust and unsecured loans, you can compartmentalize your living quarters from everything else.

As long as you stay current on taxes, any other unsecure debts and judgments can be discharged through bankruptcy.

This is wise counsel.  Of course I have the typical "issues" of moving from middle class suburbia to "shocking" my family into moving into a more rural environment.  I am pretty sure I have prepared them enough for the move to something that minimally mimics their norms (not really, but looks good), but a trailer on a remote land?  I could do that, but...  I am moving toward the breaking point with the family.   

The move from where we are now, to where we are going should be as smooth as possible to minimize ... "disruption" and me living alone. 

You are right, I have to put the land up for collateral.  That is something to worry about.  I don't know.  It feels either "brave" or "stupid."  Why are those two things always so similar?!?

Alex Bard of the American Redoubt
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Offline livinitup0

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Re: The Morality of Using the System
« Reply #7 on: October 18, 2012, 09:12:52 AM »
as far as using unsecured loans to purchase tangible things... if the theory is that if you file bankruptcy that you'll still be able to have the land and just file on the unsecured debt, unfortunately that is not true. You have to list all your assets (and even if you dont list your land, if its in your name they'll find it... and fine you for lying to the government) and the bankruptcy trustee will make you sell or reaffirm the property before the bankruptcy will be discharged....not to mention an unsecured loan on property would be an astronomical interest rate....not a good idea imo.

if it were me... id pay off the first mortgage before thinking about a new property.  this type of property is an investment and imo the best way to plan for the future is to pay off current debt and use that savings to make a real effort into investing.

just my 0.02

osubuckeye4

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Re: The Morality of Using the System
« Reply #8 on: February 07, 2013, 10:31:34 AM »
A lot of this really depends on what kind of timeframe you're looking at.

If you are looking to move into this place soon (within the next 5-7 years), I would definitely recommend taking the loan right now. Property values and interest rates are incredibly low, so you should use that to your advantage. If you come back to this in 5 years, it's going to be hard to imagine that you're going to be paying more than you would right now (even adjusting for inflation). If you somehow are paying less, it probably won't be much less than right now.

However, if this is one of those 10+ year down the road plans... just stockpile your cash and go ahead and pay in cash when the time comes to move. If need be, you can take out a small personal loan (not a mortgage) to cover any gap. Now, you might pay a bit more if housing rates rebound, but you will also have made interest on the money that you are saving over that timeframe so it should somewhat balance out.


Just my .02, you're obviously in the drivers seat here and know the details of this much better than anyone on the boards. I have no idea what the property in question looks like or if it's in a market that is projected to grow or decline, so it's really hard to tell you to do anything with a high level of certainty.

As far as the morality of using the system... that is completely up to you to decide. Personally, I have a mortgage and pay it every month. Yea, my property has tanked over the last few years, but I don't really feel it because I wasn't planning on flipping it any time soon anyways.