In article ,
wrote:
(D. Gerasimatos) wrote in message news:bg50cv$337

While its sad to see an average family fall into foreclosure, it is
damn funny when the $1,000,000 homes are in default.


Why?


The average guy needs a certain size of home to acommodate his family.
This average home he buys may stretch his resources but he doesn't
want all 3 kids in one bedroom so he goes for it.

The next fellow with 4X the income of the average dude arbitrarily
decides to super-sized his home to the point of being on the edge
financially. This vain dude had a choice and could have bought a
comforable home to acommodate his family for half the money. When he
stumbles and finds himself in default, you may well see him in the
same light as the average guy described above ... I don't.


The situation is the same. Whether the person's mortgage payments were
$800 or $4000. What does it matter? Should people paying $600 per month
for rent laugh at me if I cannot make my mortgage suddenly (which is
considerably higher than $600)?


Fine, do you recommend the book or not?


It is worth reading, but it sort of states the obvious which is that
doctors, lawyers, dentists, accountants and other professionals make
it to the next level by investing in their businesses and keeping expenses
low. It's hardly a guide that is going to lead most people to wealth. It
talks about spending habits, which is the most useful part. So the average
millionaire drives a late model Jeep Grand Cherokee. Good for him. I'm
not about to go buy one.


you spend your money on stuff that I think is foolish

But I pay cash for everything so foolish or not the purchases do not
risk my family's financial health.


You paid cash for your house? Isn't that what we are talking about, this
guy's house? I think you are a little too proud of yourself here. As I get
older I am learning something interesting:


If the bank gives you money then TAKE IT!


If you want to buy a house, start a business, or make some other kind of
investment you will NEVER save for it in cash. Well, never is a strong
word, but it will be much more difficult with minimal gain. Borrow what
you need to borrow. If you are spending the money on investments like
real estate or your business then it's money worth borrowing. What's silly
is borrowing money to spend on depreciating assets or consumer goods. That
is silly, of course.


As for your family's financial health... bankruptcy is the worst thing
that can happen. No one is going to die. I know friends who started
businesses that failed SEVERAL TIMES and lost everything. Eventually,
they got it right. If you're too conservative and never take any risks
then success will be difficult.


This guy's goal is to have an $800,000 house. That's a good goal and it's
an attainable goal. Now he is going to have to figure out how to achieve
that. His question was if he would be better off leveraging his cash by
investing in (more) real estate or taking that cash and doing something
else with it. I think the answer obviously has to do with what one expects
to happen to real estate prices in the timespan he is concerned with. No
one has that answer. If they will drop, then do not leverage. If they will
rise, then leverage all you can unless there is a better investment
available that you can leverage (margin account?).


Ok, but back in the real world even the frugal wealthy folks that I
know live very comforably. Do you personally know anyone with
20-million living as you discribe?


No, but wouldn't that make the most financial sense?


Dimitri