Impending gloom and doom

[dawnwes]

Hopefully the part about guns, ammo & gold was facetious.

OTOH, he's absolutely right about sticking your money in a metaphorical mattress (CapitalOne 360 offers 12 month CDs paying 1.3%) if you have no stomach for short term loss.

Of course, (non-401k & 403b) investing is only for people with low debt and a good e-fund.

We're making hay while the sun shines: paying down the mortgage and growing various e-fund subcategories.

Savings/Investments can be left where they are. A job transfer would mean an immediate move. That is all I was trying to say.

[Nutria]

Savings/Investments can be left where they are. A job transfer would mean an immediate move. That is all I was trying to say.

We can't even begin to give you intelligent opinions without knowing a lot more about -- at a minimum -- your financial health, your current housing market, and the one where you might move to.

[dawnwes]

We can't even begin to give you intelligent opinions without knowing a lot more about -- at a minimum -- your financial health, your current housing market, and the one where you might move to.

We are fine. Only owe on house and make over 6 figures. Looking at a $275K house and only needing a $100K loan.

This isn't about me not being financially stable. This is about just wondering what you all thought about the news.

I have gotten my answer.

[QuarterMillionMan]

The writing is on the wall people. The USA is $18 trillion in debt with no way to repay its debt. The Federal Reserve has been printing fiat currency to paper over its debt. They kept interest rates artificially low. Don't get me wrong, I'm an America and I love America but the USA cannot repay its debt. It's an out of control train wreck. The USA has a trump card called the U.S. dollar as the World Reserve Currency. Should the dollar no longer be the world reserve currency I believe that is when the sxxx will hit the fan. If you think America is too big to fail, look back at the Roman Empire when it was once the mightiest government on the planet. I hope America can pull itself up by its bootstraps. Guns and ammo (and gold/silver) looks very attractive to me (lol).

[dawnwes]

Questions to answer before asking what you just asked:

• How secure is your job? Your spouse's?
• How disciplined of a spender & saver are you and your spouse?
• What's the COL where you are?
• Are house prices currently inflated in your area? (A recession would knock them down.)
• Are you currently saving for a down payment?
• Do you have an emergency fund?

Again, this really isn't relevant to the question I asked but if you must know:

Job is very secure. Dh has worked at the same company (two different locations though) for 20 years. I have worked for 17 in the same field.

We save a lot.

COL is medium. Not like LA where we used to live, but not cheap.

Houses are somewhat steady.

We put down $175K on this house and once we sell, we will use that and any additional equity to put into the next house. We may even have more than that.

Emergency fund is in place.

Financially we are not hurting. We actually have a much more expensive house right now but plan to downsize.

But I was asking about the current thoughts on the market issues.....

[dawnwes]

The writing is on the wall people. The USA is $18 trillion in debt with no way to repay its debt. The Federal Reserve has been printing fiat currency to paper over its debt. They kept interest rates artificially low. Don't get me wrong, I'm an America and I love America but the USA cannot repay its debt. It's an out of control train wreck. The USA has a trump card called the U.S. dollar as the World Reserve Currency. Should the dollar no longer be the world reserve currency I believe that is when the sxxx will hit the fan. If you think America is too big to fail, look back at the Roman Empire when it was once the mightiest government on the planet. I hope America can pull itself up by its bootstraps. Guns and ammo (and gold/silver) looks very attractive to me (lol).

When did I ever imply that?

[Nutria]

Again, this really isn't relevant to the question I asked but if you must know

Sure it is, because regardless of what the rest of the economy is doing, whether to buy or rent is strongly based on:

• your financial health,
• housing prices where you're might move to,
• where you live now, and
• how long you might live there.

But I was asking about the current thoughts on the market issues.....

In regards to buying a house somewhere else.

Anyway, the stock market goes through regular 10% corrections.

[Nutria]

When did I ever imply that?

Fear mongering cuckoos spew their inanity randomly and without warning.

Just ask him how his gold investments are doing, and what nitrocellulose tastes like.

[dawnwes]

Sure it is, because regardless of what the rest of the economy is doing, whether to buy or rent is strongly based on:

• your financial health,
• housing prices where you're might move to,
• where you live now, and
• how long you might live there.

In regards to buying a house somewhere else.

Anyway, the stock market goes through regular 10% corrections.

We live in a suburb. We are moving into the city. Same area.

Houses are more expensive where we are moving into, but we actually are wiling to not only buy a less expensive house than our large suburb house, but are wiling to downsize. Our house size will likely go down about 75%. We can't quite bring ourselves to go 50% less space, but we will see.

We hope to stay there indefinitely. However, jobs change and there have been moves.....or job opportunities, which is how we moved here. An opportunity to move up the ladder.

I doubt we would move just to move up the ladder until the kids are grown and gone at this point because we have teens a a pre-teen and unless moving is absolutely necessary, we will not do it.

Last night we ran some numbers. Around the city, a 2500 sq. ft. house rents for around $2,000-$2,500 per month.

In 3 years, that is $90K on the higher end.

If we buy a $275K house, I have a feeling that even if the market goes down, we wouldn't lose $90K, and if we did, we would break even.

So, buying still makes sense I think.

[autoxer]

Last night we ran some numbers. Around the city, a 2500 sq. ft. house rents for around $2,000-$2,500 per month.

In 3 years, that is $90K on the higher end.

If we buy a $275K house, I have a feeling that even if the market goes down, we wouldn't lose $90K, and if we did, we would break even.

So, buying still makes sense I think.

To do a fair comparison, you might want to include the sunk costs of buying, like closing costs, loan interest, real estate taxes and maintenance. There will also be some opportunity cost lost from not having that 'down payment' money invested.

$10,000 in closing costs
$19,500 for (3) years of interest to the bank assuming $175k loan, 4% interest, 15 year term
$8,250 for 3 years of maintenance, assuming 1% of home value annually
$16,500 in real estate tax for 3 years, assuming 2% of home value annually
$5,250 that could of been earned by keeping the $175k in a savings account earning 1% interest.

The cost of buying is nearly $60k for that three year period. And then if you sell after 3 years, you have to include another 6% for selling costs. I've also been crunching numbers for myself, wondering if I should consider renting my next house. It wouldn't take much of a market shift to make renting more attractive, but the advantage of buying over renting certainly gets better with longer timelines.

[Weird Tolkienish Figure]

I try not to be an alarmist, but I also want to be prudent.

I keep reading about predictions of a recession "worse than 2008"

What are your thoughts? Is there any concern?

As we are looking at selling and either buying or renting a while first, we are wondering what might be the better choice.

Recessions are a normal, healthy part of the business cycle. The economy follows a modified sine wave pattern. Recession, trough, recovery, growth, boom, bust, recession, and so on and so on.

Absorb this information.

[ua_guy]

Again, this really isn't relevant to the question I asked but if you must know:

Job is very secure. Dh has worked at the same company (two different locations though) for 20 years. I have worked for 17 in the same field.

We save a lot.

COL is medium. Not like LA where we used to live, but not cheap.

Houses are somewhat steady.

We put down $175K on this house and once we sell, we will use that and any additional equity to put into the next house. We may even have more than that.

Emergency fund is in place.

Financially we are not hurting. We actually have a much more expensive house right now but plan to downsize.

But I was asking about the current thoughts on the market issues.....

I kind of see you nudging folks back to the question about market issues, and saying you haven't found your answer. It sounds like from your perspective, you're ready/able/"in a good place" to buy, but you are worried about the talking heads saying things like we're headed for the worst recession ever. It makes for great news and speculation, and I have to believe PART of it is based in truth (but how much?).

I guess my question back to you would be, what is the answer you are looking for? Is there any specific issue in the latest onslaught of gloom/doom recession prophesies that is giving you pause?

It seems like the answer to me is, no matter where you are, if things turn out as poorly as the worst projections describe, I don't think you're safe anywhere. If you're in good financial shape, you're already prepared. It's the best you can do --beyond that, it really becomes about stocking up on TP, water, and ammo-- are you really going to let that kind of worry dictate how you enjoy life right now?

[rennigade]

To do a fair comparison, you might want to include the sunk costs of buying, like closing costs, loan interest, real estate taxes and maintenance. There will also be some opportunity cost lost from not having that 'down payment' money invested.

$10,000 in closing costs
$19,500 for (3) years of interest to the bank assuming $175k loan, 4% interest, 15 year term
$8,250 for 3 years of maintenance, assuming 1% of home value annually
$16,500 in real estate tax for 3 years, assuming 2% of home value annually
$5,250 that could of been earned by keeping the $175k in a savings account earning 1% interest.

Just become a landlord. You're using too many real hard numbers here. No one wants to hear that. Real estate is a no brainer right folks...you cant lose money! No one lost their shirt during the housing crash, everyone made money! Just think once start to factor in all of those tax breaks along with perfect tenants that every single landlord on earth gets...the real money will start flowing. You wont even know what to do with yourself at that point.

If you dont believe me head on over to bogleheads and read about some of the wonderful stories previous landlords had to say...you'll enjoy it. lol

[dawnwes]

To do a fair comparison, you might want to include the sunk costs of buying, like closing costs, loan interest, real estate taxes and maintenance. There will also be some opportunity cost lost from not having that 'down payment' money invested.

$10,000 in closing costs
$19,500 for (3) years of interest to the bank assuming $175k loan, 4% interest, 15 year term
$8,250 for 3 years of maintenance, assuming 1% of home value annually
$16,500 in real estate tax for 3 years, assuming 2% of home value annually
$5,250 that could of been earned by keeping the $175k in a savings account earning 1% interest.

The cost of buying is nearly $60k for that three year period. And then if you sell after 3 years, you have to include another 6% for selling costs. I've also been crunching numbers for myself, wondering if I should consider renting my next house. It wouldn't take much of a market shift to make renting more attractive, but the advantage of buying over renting certainly gets better with longer timelines.

True there are more costs, and we do know that.

Real estate tax here is a bit less than 1%, so that is going to be around $8K
Interest is 3% right now (we currently have 2.6% and over 800 credit scores), so $8,700 in interest
Loan will be $100K at most, we are putting DOWN $175K
Closing costs haven't ever been that high, even on our $450K current home.

But your point is well taken, and why we are looking at only a $100K loan when our income is more than that per year. We have boys heading to college (although we have a plan for that AND I plan to go back to work to help too) and we will be losing kids as they grow up, so a smaller house now is sufficient.

The thought is that if the house can be paid for in fewer than 10 years, then even if there is a collapse of some sort, we have a home to stay in if necessary.

[dawnwes]

I kind of see you nudging folks back to the question about market issues, and saying you haven't found your answer. It sounds like from your perspective, you're ready/able/"in a good place" to buy, but you are worried about the talking heads saying things like we're headed for the worst recession ever. It makes for great news and speculation, and I have to believe PART of it is based in truth (but how much?).

I guess my question back to you would be, what is the answer you are looking for? Is there any specific issue in the latest onslaught of gloom/doom recession prophesies that is giving you pause?

It seems like the answer to me is, no matter where you are, if things turn out as poorly as the worst projections describe, I don't think you're safe anywhere. If you're in good financial shape, you're already prepared. It's the best you can do --beyond that, it really becomes about stocking up on TP, water, and ammo-- are you really going to let that kind of worry dictate how you enjoy life right now?

Look, if you don't think there is an issue and I am worried about nothing, that is fine....I just didn't expect people to be snarky and say I should hide under a rock with a gun in my hand and my bills under a mattress.

I also wasn't asking about my personal finances......those of you thinking I am green and have no clue what I am doing, that isn't what I was asking either. We are on house #4 in our marriage, we have a good income, have decent savings, have managed our money well. We both are professionals in our field.

So, the "Oh, but you just aren't doing this right" is not what I was asking.

The question was, do you think there is any truth to the rumor?

Most of you are saying NO.

I will be the first to admit I am a "what if" person. I like to think that makes me more prudent but it can also stop me from making decisions......what if DH's job asks him to transfer? That sort of thing.

So, the short term, 3 years of comparing wasn't because I plan to stay there only 3 years, but just to kind of have a reference.

We have been in this house for 10 years. We plan to stay in the next house as long or longer, so I should stop being stuck in the what ifs.....but the "what if there is economic collapse" comes into my mind. It is part of the reason I have thought a less expensive house may be a better choice.

Anyway, thanks.....I got what I asked and am done.