On Sun, 9 May 2021 12:05:07 -0700 (PDT), DerbyDad03
wrote:

On Saturday, May 8, 2021 at 12:53:42 PM UTC-4, wrote:
On Sat, 8 May 2021 09:19:50 -0500, Leon lcb11211@swbelldotnet wrote:

On 5/7/2021 10:13 PM, Clare Snyder wrote:
On Fri, 7 May 2021 14:17:36 -0500, Leon lcb11211@swbelldotnet wrote:

On 5/6/2021 11:49 AM, wrote:
On Thu, 6 May 2021 09:13:19 -0500, Leon lcb11211@swbelldotnet wrote:

On 5/5/2021 2:01 PM, wrote:
On Wed, 5 May 2021 08:30:29 -0500, Leon lcb11211@swbelldotnet wrote:

On 5/4/2021 8:07 PM, wrote:
On Tue, 4 May 2021 13:35:40 -0500, Leon lcb11211@swbelldotnet wrote:

On 5/4/2021 10:41 AM, Clare Snyder wrote:
On Tue, 4 May 2021 10:16:44 -0500, Leon lcb11211@swbelldotnet wrote:

On 5/3/2021 8:34 AM, Ed Pawlowski wrote:
On 5/2/2021 8:32 PM, Clare Snyder wrote:
On Sun, 2 May 2021 17:44:19 -0400, Ed Pawlowski wrote:

On 5/2/2021 4:42 PM, Bill wrote:
On 5/2/2021 3:43 PM, DerbyDad03 wrote:

Their offer was accepted, not just based on the offer price, but also
based on the appraisal clause. Another offer also had an escalation
clause that maxed out at $410K, but the appraisal clause was only
$13K above the appraisal value, $2K less than their offer. That was
close!

I'll assume my previous message has been read. Color my cynical but all
I have to say is "what a coincidence!". That said, I congratulate the
buyers on their new home. The way property is appreciating, it will
surely be a great investment in the long run, and you can live in
it!


I wonder in 3 to 5 years if the house price today will still be a good
investment when interest rates are back up.
I'm betting there will be a lot of people with upside down mortgages
in 5 to 10 years in several areas of the country. Our area is less
likely to see it than many others due to our resiliant economy - but
%7 would definitely be painfull for MANY buyers - even here.


Exactly. A scenario like: I paid 500k for this house, owe 400k and the
highest offer is 300k.

Live there long enough and you are ok, but if you have to relocate, you
are screwed.


This is what is happening now. It will be interesting to see how many
people will be upside down in 2~5 Years.


I paid $63700 39 years ago. That is about $170,000 in 2021 dollars. I
assumed a 6.3% mortgage when the going rate was 23% - 18% if you were
lucky and had an 800 credit score.

40 years and 4 months ago my wife and I paid 60K. 30 years, 12%
interest in Jan 1981 Refinanced 6 years later for 9% for 15 years. We
accelerated the payments after refinance and paid the mortgage off Feb,
1997.

When we first started (July) looking for our first home ('82, I think)
we were looking at 18% interest. We bought in September, with a 14%
30-year mortgage. A couple of years later we re-fi'd to 8%. We paid
$60K.

I recall mortgage rates going up to 18 % shortly after we closed at 12%



Estimated value today $164K. $98K 10 years ago when we sold.

Ours is now $304K (Zillow).

Cash for the next home in 2010.

I wish. The next house was in VT. We paid $150 and sold 14 years
later ('07) for $300. It's now $404. Last I looked the taxes were
$8K but it's not listed now.

Farkin taxes! You can afford to buy a home but can one afford to pay
the taxes on it.

We moved from VT to AL. We bought there for about the same as the
house in VT for ($300K). Taxes, close to $4K. It was about 1.5x the
size and *far* nicer. SWMBO loved the kitchen. She was rather ****ed
when we moved here.

When we asked the RE agent about property tax, she said $1200, maybe
$1500. Wife asked "is that half year", quite seriously. The RE agent
looked at her like she had a third eye.

That wasn't in rural AL, either. It's major employer was Auburn
University. Football weekends were nuts - corporate jets by the dozens
(and dozens) flying in from all over and Class-A motorhomes by the
hundreds, standing ear to in the tailgating area for the weekend.
There is a lot of money among Auburn alum and they show it.

Anyway, we moved here and the taxes are now $3K after about a 30%
discount for being over 65. In this county, school taxes go away
completely after 72. Other counties forgive it at 65. GA is a very
retiree friendly state. Essentially, there is no state income tax on
retirement (pensions, IRA withdrawals, SS, etc.).


That was when people WERE upside-down on their mortgages in a lot of
cases because of the 1980s recession with high rates causing prices to
drop. My MIL was in real estate in Windsor and people were walking
away from $800000 homes. Sadly for Windsor some of those homes are
still not worth very much more than that - - -

The dangers of ARMs. Without enough equity there's no way to
refinance when the interest rate climbs. Same problem in '07-'11.


We almost went with an ARM in 2010. It was locked in for 5 years. We
were only going to borrow about 20K, just to give us some kush after
moving in. We would have paid it off within the next couple of years so
the rate would not have ever gone up on us. But we decided to go all
cash to get and additional 3% discount off of the negotiated sale price.

An ARM in 2010 probably would have been so bad. The neutron bomb had
already been dropped by then.

I remember you buying that house. Have I really been around here that
long?



You should check out Arkansas property taxes.. :~)

Hundreds od dollars vs. thousands.

Swingman has a home in West University TX and a home in Hot Springs AR.
The AR home is certainly smaller than the West U home but not 40 times
smaller. IIRC $24K per year vs.
$6 hundred.

$24K/yr?!! I bet he didn't like Trump's middle class tax reduction
much.


I think he was participating in the over 65 exemption and not paying lately.

He is trying to sell now and probably regretting the exemption now.

That exemption costs you the tax owed plus 8% per year.
In other words its a "republican exemption" - AKA a "deferral"
Very few times that is a good deal.



IMHO only really good if you have no heirs and your money is running out.
Sort'a like some life insurance policies that pay before you die to help
pay medical bills.
Or reverse mortgages. If I plan perfectly, there will be nothing for
my heirs. It's the planning part that hard.

One planning method that many retirees have employed goes like this:

Plan for age 100. More and more of us are going to make it that far.
Adjust as desired for your own specific situation. It's your plan.

When looking at your retirement portfolio, forget about a 60-40 split or
the old school "Put your age in bonds". Instead, use your own actual
income and expenses as shown below.

I'm not so enamored with bonds anymore. Too many games being played
and they seem to be in-phase with stocks now. Makes no sense (in more
than one sense of the word).

Estimate your pre-tax retirement expenses vs. your pre-tax retirement
income. Based on those numbers, determine the annual pre-tax drawdown
from your retirement funds. (IRA's, 401(k), brokerage accounts, etc.)

I'm not sure I follow that. I get the pre-tax part. I'm looking more
at my post-retirement income vs. pre-retirement income. I'll have (a
bit) fewer expenses too.

You're above formula sounds like the draw down depends on expenses, no
matter what. It seems that one has to figure on how long one is going
to live and live within that.

The 4% rule sounds good but the brokerage advisor (when I rolled over
one 401K) said that was high, now. Well, interest is 0+delta so,
yeah, 4% is high. I have to contact him again. I may have him take
care of my account. The cost really isn't bad. .5%, IIRC (Fidelity).

Using pre-tax values for everything keeps things consistent. e.g. that
$3000 property tax payment is an after-tax number that will require
more than $3000 in pre-tax income.

(Pre-tax living expenses) - (Pre-tax income) = (Pre-Tax Portfolio drawdown)

I see where you're going here. I'm looking at what I'm making now vs
what I'll have then. I'm close with a "reasonable" draw-down.

Based on your feelings on the market (risk tolerance) choose a number
of years, e.g. 6. Multiply your annual drawdown amount by that number.
Put that amount of your retirement assets in stable investments,
e.g. bond funds, etc. Call these your "buckets of income", of which
you now have 6.

Yeah, I see where this is going.

When the market is doing well, withdraw the required money from your
stable buckets and re-fill them from the equity side. When the market is
doing poorly, withdraw the money from the stable side and leave the
equities alone. When the market rebounds (it *always* does) refill your
buckets to get back up to six years.

I was thinking a little differently. Stocks, bonds (maybe), cash,
commodities, and foreign. Depending on what's going good, draw down
from there (once a year). Stock are obvious. Bonds are supposed to
be out-of-phase but they aren't anymore. Cash in case nothing is
working. Commodities for crashes and foreign for dollar fluctuations.

This process should allow you to never have to withdraw money from the
equities when they are down. I'm not suggesting that you don't *trade*
equities when they are down. You just don't want to sell at a loss and
withdraw the money. Tax loss harvesting, moving to something that
may rebound faster, etc. are valid reasons to sell equities when they
are down as long as you also buy replacement equities when they are
also down.

Gotcha. I've already been thinking. I'd never heard anyone else
suggest this. It seems to be a no-brainer.

Why did I use 6 years? Take a look at history of the equity market. How
many reversals do you see that lasted more than 6 years? With 6 years
worth of buckets, you should never have to sell equities and realize a loss
by going to cash. If your risk tolerance is high, shorten the number of
years. 4 or 5 buckets might be enough for you to feel comfortable.
Maybe you feel like you need 8 -10. It's your choice.

Things have changed (more fiddling with the market) and that's going
to backfire, IMO.

The goal is to remove the emotion/stress that often occurs during
equity market reversals. If you know that you have X years of income
in fairly stable assets, you can ignore the volatility of the equity market
or use it to your advantage. Hopefully you can avoid making the
biggest mistake any investor can make: "I can't take it anymore. I'm
selling everything and will wait until the market recovers to get
back in." That shouldn't happen if you know that you have X number
of years of income that is remaining fairly stable.

Yes. I see that.

Assume an average growth rate for your portfolio, assume some
inflation, adjust the annual drawdown for one-off situations in the
years that they will occur (paying off the mortgage, paying for a
wedding, that Shaper Origin, etc.) It's not an exact science. There
will be things that you can't plan for. Accept it. Some plan is usually
better than no plan.

Understood. Mortgage is paid but there are roofs to buy and all that.
Lotsa Origin class stuff.

Really, there aren't many toys that I want left to buy. ...or won't
be by then. I want a better DC (HEPA) but we'll see.

This is not a one-time set-it-and-forget strategy. It requires review
and adjustments, probably at least annually.

Like doing taxes.

If you can set up a plan that allows you to withdraw the projected
amounts without running out of money until age 100 (or whatever
age you chose) you should be able to rest easy. If not, you need to
take a hard look at your budget.'

The old standby 4% withdrawal is intended for the money to last
forever, indexed for inflation. Living forever seems a little
conservative but it's a data point. Even 4% puts me in good shape,
now. Given that the state doesn't tax retirement income, it'll put me
where I am now. That is, give or take Medicare. Medicare is still
unclear but I'm getting there. It's almost like the rules were
written by movement or something.

My retirement part of it is a complete mystery. It makes no sense and
seems contradictory depending on where I look. Some of the links on
the site are broken, as well. Not a good thing considering it's IBM.
;-)

Get it right and you can bounce the check to the undertaker. ;-)

That's the plan. Execution (NPI) of that plan is the problem.