Good day,

A friend and I had the following debate when I said that I would one
day like to buy an $800K house, upgrading from my current $200K
condominium apartment, and I would like to hear more opinions on the
matter.

I said that we planned to stay in the condo as long as possible,
putting extra money down on the mortgage.

My friend said that we should move to an intermediate house of, say,
$400K, as it would provide more "financial leverage" that would be
required for the big house.

I argued that selling a home costs a lot of money in real-estate agent
commissions, legal fees, moving fees, renovation costs, etc.

He argued that the value of the houses increases at a rate that more
than compensates for these charges.

This is a possibility, but the market is at a high right now (area:
Toronto, Canada), and could conceivably "correct" in the next few
years once the glut of new homes are bought-up.

I also mentioned that a larger (intermediate) house begets larger P&I
payments, and larger interest payments mean a greater waste of money
that could otherwise have gone towards principal on my current
mortgage.

He then mentioned that the increase in value of property is
proportional to the size of the property (i.e., greater absolute
capital gain on a larger property than on a smaller one), to which I
must agree.

Can anyone offer any thoughts on this?

Thanks
A. Huahua

In article , Warren X
wrote:

A friend and I had the following debate when I said that I would one
day like to buy an $800K house, upgrading from my current $200K
condominium apartment, and I would like to hear more opinions on the
matter.

There really are only 2 issues to consider:

1) can you put down a $160,000 down payment (the normal 20%), or
at least $80K plus closing costs?

2) can you carry $4000 a month house payments for 30 years?

If you answer no to either of these questions, then everything
else is a moot point.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708
Newave Communications http://www.johnweeks.com
================================================== ==================

In article , (Warren X) wrote:
Good day,

A friend and I had the following debate when I said that I would one
day like to buy an $800K house, upgrading from my current $200K
condominium apartment, and I would like to hear more opinions on the
matter.

I said that we planned to stay in the condo as long as possible,
putting extra money down on the mortgage.

Sounds like a wise plan to me.


My friend said that we should move to an intermediate house of, say,
$400K, as it would provide more "financial leverage" that would be
required for the big house.

Doesn't make sense to me.In essence, he's arguing that, say, $150K equity in a
$200K house provides less "leverage" than $150K equity in a $400K house. Ask
him to explain his reasoning. I think he has it backward. Which home will be
easier to sell when you decide to buy the palace, the $200K one or the $400K
one? Which one will you have more equity in?

Seems to me that a paid-for $200K house, and a big chunk of money in the bank,
should be all the leverage you need. Maybe things are different in Canada, but
here in the U.S. it's more or less the standard to make a down payment of at
least twenty percent when buying a home. If you have that $200K house paid
for, that's a 25% down payment on an $800K house -- plus you would have
additional funds saved that you did *not* spend on the $400K house while
waiting to buy the $800K house.

I argued that selling a home costs a lot of money in real-estate agent
commissions, legal fees, moving fees, renovation costs, etc.

He argued that the value of the houses increases at a rate that more
than compensates for these charges.

Sometimes it does, sometimes it doesn't. If anyone could reliably predict the
future, he'd be a billionaire many times over.


This is a possibility, but the market is at a high right now (area:
Toronto, Canada), and could conceivably "correct" in the next few
years once the glut of new homes are bought-up.

There is an inherent contradiction in what you say here. If there is a glut of
new homes, then supply exceeds demand. If supply exceeds demand, the market
cannot be at a high.

If it *is* at a high right now, you're best off to keep your current home, or
sell it and buy a *less* expensive one. Trading up when prices are high will
cost you dearly.

I also mentioned that a larger (intermediate) house begets larger P&I
payments, and larger interest payments mean a greater waste of money
that could otherwise have gone towards principal on my current
mortgage.

That is correct.

He then mentioned that the increase in value of property is
proportional to the size of the property (i.e., greater absolute
capital gain on a larger property than on a smaller one), to which I
must agree.

The pool of potential buyers for $800K houses is necessarily much smaller than
the pool of potential buyers for $400K or $200K houses. This makes the price
of the expensive houses more sensitive to changing economic conditions. They
are likely to increase in value faster during good times -- but they also lose
value faster during bad times.

Consider also the jeopardy in which you place your financial security by
living above your means, if indeed an $800K house would be above your means;
even after converting to US$ -- around a half million -- it's certainly above
*mine* :-(, and conversely, conisder the benefits to your financial security
from living below your means.

You might want to visit the library or a bookstore, and get a copy of "The
Millionaire Next Door". It's an analysis of typical American millionaires, how
they got that way and how they *stay* that way. I'm sure the same principles
apply in Canada :-). Seems the typical millionaire in the U.S. drives a Buick
or a Ford F-150 that's a few years old, has been married 30-some years or more
to his first wife, has never spent more than a few hundred dollars on a
suit, and lives in a $200-300K (U.S.) house in a middle-class neighborhood.
Bottom line is, part of how they got to be millionaires is by not spending
money needlessly.

One of the more interesting parts of the book, IMO, is the comparison of the
spending habits of millionaires and high-income non-millionaires. I suspect
your friend may fall into the latter group.

Can anyone offer any thoughts on this?

It obviously costs less money to buy a $200K house than a $400K or $800K
house. I think your friend has not thought this through as well as you have.


Thanks
A. Huahua

--
Regards,
Doug Miller (alphageek-at-milmac-dot-com)

Save the baby humans - stop partial-birth abortion NOW

On 27 Jul 2003 16:24:18 -0700, (Warren X) wrote:

Good day,

A friend and I had the following debate when I said that I would one
day like to buy an $800K house, upgrading from my current $200K
condominium apartment, and I would like to hear more opinions on the
matter.

I said that we planned to stay in the condo as long as possible,
putting extra money down on the mortgage.

My friend said that we should move to an intermediate house of, say,
$400K, as it would provide more "financial leverage" that would be
required for the big house.

I argued that selling a home costs a lot of money in real-estate agent
commissions, legal fees, moving fees, renovation costs, etc.

He argued that the value of the houses increases at a rate that more
than compensates for these charges.

This is a possibility, but the market is at a high right now (area:
Toronto, Canada), and could conceivably "correct" in the next few
years once the glut of new homes are bought-up.

I also mentioned that a larger (intermediate) house begets larger P&I
payments, and larger interest payments mean a greater waste of money
that could otherwise have gone towards principal on my current
mortgage.

He then mentioned that the increase in value of property is
proportional to the size of the property (i.e., greater absolute
capital gain on a larger property than on a smaller one), to which I
must agree.

Can anyone offer any thoughts on this?

Thanks
A. Huahua


I tend to agree with your friend tho maybe not for all the same
reasons. Unless you need a larger house, I'd go for the smaller house
now. Your values / needs may change and the savings in the difference
in the extra payments may help pay for them. Also its no guarantee
houses will go up in value; they can go down in value. If you think
of a house as an investment (I don't any longer), I'd rather hedge my
bets and buy the smaller house and spread my money out in other
ventures.


** remove .invalid from my email address to reply by email **

(Warren X) writes:

It sounds like your dispute depends on:

- Your current mortgage interest rate.
- The rate of appreciation on your current condo.
- Commission you'll have to pay when you sell it.
- Mortgage interest rate at the time when you buy "intermediate" house.
- The rate of appreciation on the "intermediate" house (which
may be quite different from that of a condo).
- The rate of appreciation on the "final" house (by the time you
are ready to "step up to it", it may already cost $2M ;-(
- The rate of return you could get on your investments if you do
not buy the "intermediate" house.
- The amount of money you can put aside now, and N years from now
(assuming you'll have a job, and will not have any major illness,
nor triplets ;-)

That's a lot of variables, many of which could only be guessed ...
Plug them into a spreadsheet, and play "what if" game ...

the market is at a high right now (area:
Toronto, Canada), and could conceivably "correct" in the next few
years once the glut of new homes are bought-up.

If there is a glut of new homes now, the correction will be *up*
when they are all bought-up and there is a shortage, not down.
Or am I missing something?

Cheers,
--
In order to understand recursion you must first understand recursion.

(Warren X) wrote in message

A friend and I had the following debate when I said that I would one
day like to buy an $800K house, upgrading from my current $200K
condominium apartment, and I would like to hear more opinions on the
matter.



If you're a multimillionaire and your wife can't live without a big
stinking house then that's one thing. But if you're just a working
stiff with no real *juice* and have to finance the big thing then your
a mere two clicks away from any other entitlement minded welfare
person.

Poor people imitating rich people ... yum yum yummy. This is the
exact mindset that keeps the foreclosure business humming.

Big hat ~ no cattle, now is that anyway to live? Don't forget to
plaster your office wall with a half dozen fake university degrees
while you're at it.

It is no fun to buy or sell a house. Plus you can be stuck trying to sell a
home that no one wants to buy.

Wait until you are ready to buy the 800K house, then go for it.


"Warren X" wrote in message
Good day,

A friend and I had the following debate when I said that I would one
day like to buy an $800K house, upgrading from my current $200K
condominium apartment, and I would like to hear more opinions on the
matter.

I said that we planned to stay in the condo as long as possible,
putting extra money down on the mortgage.

My friend said that we should move to an intermediate house of, say,
$400K, as it would provide more "financial leverage" that would be
required for the big house.

I argued that selling a home costs a lot of money in real-estate agent
commissions, legal fees, moving fees, renovation costs, etc.

He argued that the value of the houses increases at a rate that more
than compensates for these charges.

This is a possibility, but the market is at a high right now (area:
Toronto, Canada), and could conceivably "correct" in the next few
years once the glut of new homes are bought-up.

I also mentioned that a larger (intermediate) house begets larger P&I
payments, and larger interest payments mean a greater waste of money
that could otherwise have gone towards principal on my current
mortgage.

He then mentioned that the increase in value of property is
proportional to the size of the property (i.e., greater absolute
capital gain on a larger property than on a smaller one), to which I
must agree.

Can anyone offer any thoughts on this?

Thanks
A. Huahua

wrote in message . com...
(Warren X) wrote in message

A friend and I had the following debate when I said that I would one
day like to buy an $800K house, upgrading from my current $200K
condominium apartment, and I would like to hear more opinions on the
matter.

Big hat ~ no cattle,
That is such a great phrase.
I've known so many high living people one missed credit card payment
away from a downward spiral into financial misery.
Speednxs

Thus said (Warren X):
A friend and I had the following debate when I said that I would one
day like to buy an $800K house, upgrading from my current $200K
condominium apartment, and I would like to hear more opinions on the
matter.

Does "one day" mean in three months, or three years, or thirty years?

I said that we planned to stay in the condo as long as possible,
putting extra money down on the mortgage.

My friend said that we should move to an intermediate house of, say,
$400K, as it would provide more "financial leverage" that would be
required for the big house.

If "one day" means "three years" then I agree with you, although you'll
still need a pretty darn healthy income to get that $800K house (which
will probably run more like $900K or so by then.)

If "one day" means "thirty years" then I agree with your friend,
although you should remember that in thirty years that 800K house will
cost somewhere between a few and several million.

In article ,
wrote:

If you're a multimillionaire and your wife can't live without a big
stinking house then that's one thing. But if you're just a working
stiff with no real *juice* and have to finance the big thing then your
a mere two clicks away from any other entitlement minded welfare
person.


As opposed to most homeowners who are...?


Poor people imitating rich people ... yum yum yummy. This is the
exact mindset that keeps the foreclosure business humming.


Unfortunately for the foreclosure business, very few homes are ever
foreclosed upon. Isn't the number around 1%?


Dimitri

(D. Gerasimatos) wrote in message news:bg407t$2eq7

a mere two clicks away from any other entitlement minded welfare
person.


As opposed to most homeowners who are...?


who are average ~

The average guy that buys an average house financed with an average
income is under some stress to meet his payment schedule. All I'm
saying is if one is fortunate enough to enjoy a higher than average
income, there is no reason to take on an uncomforable payment. I
personally know several multi-millionaires and none of them live in a
$800K house for which they could easily pay cash for.

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

"The Millionaire Next Door" illustrates well the fact that wealthy
folks do not generally live in the most expensive homes. This task is
left to the lower income fools who wish to appear to be what they are
not. The book tracks well on my own observations, its a pretty good
*read* ~ check it out at your library.

The guy who strains to buy a big big house is the same guy that
started smoking at age 13 to appear *grown up*. If you happen to
believe in "life after this life" you realize its not about what we
have, its about who we are.


Poor people imitating rich people ... yum yum yummy. This is the
exact mindset that keeps the foreclosure business humming.


Unfortunately for the foreclosure business, very few homes are ever
foreclosed upon. Isn't the number around 1%?


If you abstract titles on the homes on the street where you live you
will likely find many of your neighbors homes were once in default.
Perhaps your 1% figure is ballpark per year but over time many many
homes fall into default. There are over 100 defaults per week
currently filed in my county which has a population of say 750,000.

Back when I employed $$$ partners, we snagged a 10,000 square foot
castle for one partner and an 8,000 sq ft home on 6 acres for the
other partner. If you are patient, you can acquire foreclosure homes
in about any neighborhood you want.

In article , (D. Gerasimatos) wrote:
In article ,
wrote:

"The Millionaire Next Door" illustrates well the fact that wealthy
folks do not generally live in the most expensive homes. This task is
left to the lower income fools who wish to appear to be what they are
not. The book tracks well on my own observations, its a pretty good
*read* ~ check it out at your library.


I have read this book. It does not say what you think it says. What it
says is that wealthy people tend to have some of the least expensive
homes IN EXPENSIVE COMMUNITIES and that their ratio of wealth to price
of house is high. So they live in affluent communities, but own the
more sensible houses even though they have some of the most money in
those communities. This certainly makes sense. They live below their
means, which is still a very good standard of living compared to most
people.

I wonder how carefully you read the book. This is how it begins:

"Twenty years ago we began studying how people become wealthy. Initially, we
did it just as you might imagine, by surveying people in so-called upscale
neighborhoods across the country. In time, we discovered something odd. Many
people who live in expensive homes and drive luxury cars do not actually have
much wealth. Then, we discovered something even odder: Many people who have a
great deal of wealth do not even live in upscale neighborhoods."

The authors go on to note that millionaires "live in homes currently
[1996] valued at $320,000."

And: "...about half of the millionaires in America today do not live in
so-called high status neighborhoods."

I couldn't find anyplace where the book says what *you* say it says about
living in expensive communities.


--
Regards,
Doug Miller (alphageek-at-milmac-dot-com)

Save the baby humans - stop partial-birth abortion NOW

On 28 Jul 2003 21:59:19 -0700, someone wrote:


The guy who strains to buy a big big house...

There was nothing in OPs post to suggest he was straining to do
anything. There was something in OPs post indicating that he was NOT
living beyond his means. Rather, he indicated that he was living in a
$200k condo and putting extra payments on the mortgage there.

He was NOT asking if he SHOULD buy the $800k house some day, only
whether he should save up for it where he was, or follow "friend's"
advice to buy a $400k place NOW. I think "friend" is the one you
should be attacking.

What his Friend was telling him was to buy a $400k house, now,
claiming that this would 'help' him to get the $800k house sooner.

I see no indication that he won't be able to carry the $800k house
after he saves up the down payment by paying off his condo. I think
you are unjustifiably projecting someone else's sins on OP.

-v.

(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 Millionaire Next Door" illustrates well the fact that wealthy

I have read this book. It does not say what you think it says.


Fine, do you recommend the book or not?


Who said this guy was straining and what business is it of yours?


Hey, let the guy hang himself with his own rope. One of my fellow
vultures may benefit. People in most income brackets are hell-bent on
over extending themselves and getting into trouble. If this ever
changes then I'll be looking for another line of work. Are you
worried for me?


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.


It may not be about what we have, but on the other hand having $20 million
in the bank and living in a one bedroom apartment on the wrong side of town
isn't exactly living life to the fullest.

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?

What is the purpose of money if not to enjoy oneself? There's a beauty to
dying owing lots and lots and lots of money! Hence, the saying that "When
I die I want my last check to bounce!".

Dimitri


Yes Dimitri, if you know the day of your passing you can perhaps gauge
your spending like a smart bomb. You are very fortunate to be so in
tune with the universe. As for stupid fools like me, we have little
clue how long we're going to hang around this earth so we like to keep
a fat cushion just incase that Zocor is better than first thought.

lid wrote in message . ..

I tend to agree with your friend tho maybe not for all the same
reasons. Unless you need a larger house, I'd go for the smaller house
now. Your values / needs may change and the savings in the difference
in the extra payments may help pay for them.

Likewise, his values / needs may expand & he finds himself needing
that additional space. Better to have it then to have real estate &
moving fees etc. all over again. :-/

Also its no guarantee
houses will go up in value; they can go down in value.

Not if you care for them, and if the neighborhood is sound...right?

If you think
of a house as an investment (I don't any longer), I'd rather hedge my
bets and buy the smaller house and spread my money out in other
ventures.

OK, but I'd shy away from the stock market.

wrote in message . com...


Poor people imitating rich people ... yum yum yummy. This is the
exact mindset that keeps the foreclosure business humming.

I hardly think he's in the poor house, since he's "upgrading from
[his] current $200K condominium apartment!" Ha ha!

In article ,
Doug Miller wrote:

I wonder how carefully you read the book. This is how it begins:

"Twenty years ago we began studying how people become wealthy. Initially, we
did it just as you might imagine, by surveying people in so-called upscale
neighborhoods across the country. In time, we discovered something odd. Many
people who live in expensive homes and drive luxury cars do not actually have
much wealth. Then, we discovered something even odder: Many people who have a
great deal of wealth do not even live in upscale neighborhoods."

The authors go on to note that millionaires "live in homes currently
[1996] valued at $320,000."

And: "...about half of the millionaires in America today do not live in
so-called high status neighborhoods."

I couldn't find anyplace where the book says what *you* say it says about
living in expensive communities.


I don't have a copy of the book, but you've already alluded to my point
right here when you say about half of millionaires do not live in
so-called high status neighborhoods. That means that half do! Further,
in the book it does describe the type of communities that millionaires
live in who do not live in high-status communities. They are described
as what most of of might call "upper middle class". Finally, there is
quite a difference between a "millionaire" (one worth $1 million) and a
millionaire worth millions of dollars. Those people are not living in
$320,000 homes. Trust me.


Dimitri

In article , (D. Gerasimatos) wrote:
In article ,
Doug Miller wrote:

I wonder how carefully you read the book. This is how it begins:

"Twenty years ago we began studying how people become wealthy. Initially, we
did it just as you might imagine, by surveying people in so-called upscale
neighborhoods across the country. In time, we discovered something odd. Many
people who live in expensive homes and drive luxury cars do not actually have
much wealth. Then, we discovered something even odder: Many people who have a
great deal of wealth do not even live in upscale neighborhoods."

The authors go on to note that millionaires "live in homes currently
[1996] valued at $320,000."

And: "...about half of the millionaires in America today do not live in
so-called high status neighborhoods."

I couldn't find anyplace where the book says what *you* say it says about
living in expensive communities.


I don't have a copy of the book, but you've already alluded to my point
right here when you say about half of millionaires do not live in
so-called high status neighborhoods. That means that half do! Further,
in the book it does describe the type of communities that millionaires
live in who do not live in high-status communities. They are described
as what most of of might call "upper middle class". Finally, there is
quite a difference between a "millionaire" (one worth $1 million) and a
millionaire worth millions of dollars. Those people are not living in
$320,000 homes. Trust me.


Dimitri

This is what you posted:

"I have read this book. It does not say what you think it says. What it
says is that wealthy people tend to have some of the least expensive
homes IN EXPENSIVE COMMUNITIES and that their ratio of wealth to price
of house is high. So they live in affluent communities, but own the
more sensible houses even though they have some of the most money in
those communities. This certainly makes sense. They live below their
means, which is still a very good standard of living compared to most
people. "

That's not what the book says.

--
Regards,
Doug Miller (alphageek-at-milmac-dot-com)

Save the baby humans - stop partial-birth abortion NOW

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

In article ,
Doug Miller wrote:

This is what you posted:

"I have read this book. It does not say what you think it says. What it
says is that wealthy people tend to have some of the least expensive
homes IN EXPENSIVE COMMUNITIES and that their ratio of wealth to price
of house is high. So they live in affluent communities, but own the
more sensible houses even though they have some of the most money in
those communities. This certainly makes sense. They live below their
means, which is still a very good standard of living compared to most
people. "

That's not what the book says.


Yes, it does. What are you taking issue with?


Dimitri

(v) wrote in message



The guy who strains to buy a big big house...

There was nothing in OPs post to suggest he was straining to do
anything. There was something in OPs post indicating that he was NOT
living beyond his means. Rather, he indicated that he was living in a
$200k condo and putting extra payments on the mortgage there.

He was NOT asking if he SHOULD buy the $800k house some day, only
whether he should save up for it where he was, or follow "friend's"
advice to buy a $400k place NOW. I think "friend" is the one you
should be attacking.

What his Friend was telling him was to buy a $400k house, now,
claiming that this would 'help' him to get the $800k house sooner.

I see no indication that he won't be able to carry the $800k house
after he saves up the down payment by paying off his condo. I think
you are unjustifiably projecting someone else's sins on OP.

-v.

Some cats have black spots.
Jax is a cat.
Therefore Jax has black spots.

... Ok, you caught me in a logic error and OP may be immersed in cash
BUT millions upon millions of folks in this country suffer self
imposed grief over money just because our society tells us at every
turn to spend, spend, spend SO MANY DO. Earlier this year my own
dentist told me (while sitting in his chair with interrogation lights
in my eyes) that I need to buy a bigger house. Why??? Our home is
6-bedrm 4-bath 3-car garage 3,300 sq ft with 4-whole people living
here. I looked up this dentist on the county mainframe to learn he
has two mortgages totaling a tad more than his home's value while my
little cottage has been debt free for over 10-years. So when dentists
and almost everyone else is suggesting we all super-size our spending,
perhaps my little squeeky voice calling for a bit of frugality isn't
such a major sin.

Sometimes the greatest financial blessing heaven can grant us, has to
do with not craving more and bigger stuff.

"Man's wants are insatiable but his resources are limited" ~ ECON 101.

Frugality is a survivable comfortable mindset, so what's in your
wallet?

In article , (D. Gerasimatos) wrote:
In article ,
Doug Miller wrote:

This is what you posted:

"I have read this book. It does not say what you think it says. What it
says is that wealthy people tend to have some of the least expensive
homes IN EXPENSIVE COMMUNITIES and that their ratio of wealth to price
of house is high. So they live in affluent communities, but own the
more sensible houses even though they have some of the most money in
those communities. This certainly makes sense. They live below their
means, which is still a very good standard of living compared to most
people. "

That's not what the book says.


Yes, it does. What are you taking issue with?

The book does not say that "wealthy people tend to have some of the least
expensive homes in expensive communities".

It does not say that "they live in affluent communities".

Some do, some don't. But these sweeping generalizations you make are not found
in the book.

--
Regards,
Doug Miller (alphageek-at-milmac-dot-com)

Save the baby humans - stop partial-birth abortion NOW

On 28-Jul-2003, wrote:

Poor people imitating rich people ... yum yum yummy. This is the
exact mindset that keeps the foreclosure business humming.

That's where the "dream" in the American Dream comes from. My advise is, if
you are willing to work hard and be patient you can have it for real. If you
learn how to fill out a credit application you can have it until reality
catches up with you. If you want to get an idea if it's worth the effort,
try it the easy way, lose it all and start over. If you're sure it's worth
the effort do it the right way the first time.

On 28-Jul-2003, (Speednxs) wrote:

I've known so many high living people one missed credit card payment
away from a downward spiral into financial misery

All depends on how you look at it. Screwing with the mind of the collectors
and getting them to settle on five cents on the dollar is just GOOD fun IMO.

In article ,
wrote:

Our home is 6-bedrm 4-bath 3-car garage 3,300 sq ft with 4-whole people living
here.


You are a model of frugality. We should all "make do" with houses like yours.


Dimitri

In article ,
Doug Miller wrote:

The book does not say that "wealthy people tend to have some of the least
expensive homes in expensive communities".


Yes, it does. It specifically mentions that while the communities might be
more expensive, the wealthier homeowners own the smaller houses therein.


It does not say that "they live in affluent communities".


Yes, it does. Does this mean Bel Air? No. It means communities that are
on the rich side of middle class.


Dimitri

On 29-Jul-2003, wrote:

If you happen to
believe in "life after this life" you realize its not about what we
have, its about who we are.

If you know about life after life you realize all you take with you is the
joy you experienced here. The rest just falls away. Live for today. NOW is
the only Reality.

On 29-Jul-2003, (D. Gerasimatos) wrote:

They live below their
means, which is still a very good standard of living compared to most
people.

Why would anyone choose to live below their means? Fear of bad times ahead?
They don't believe they deserve it? Their reward will come in Heaven?

In article ,
wrote:
On 29-Jul-2003, (D. Gerasimatos) wrote:

They live below their
means, which is still a very good standard of living compared to most
people.

Why would anyone choose to live below their means? Fear of bad times ahead?
They don't believe they deserve it? Their reward will come in Heaven?


I think they are either greedy or pessimistic.


Why does Bill Gates play poker with the low rollers?


The people who accumulate money usually do not like to spend it. It's
a personality trait, I guess.


Dimitri

In article ,
wrote:

On 29-Jul-2003, (D. Gerasimatos) wrote:

... bankruptcy is the worst thing
that can happen.

What do you mean by this?


No one is going to die. It's not a big deal. One wants to avoid it, but
at all costs? Hardly.


Dimitri

Buying a big home just for the investment does not make any sense. Buy
what you really need; excess space that you don't need simply becomes
a liability. When weighing a home as an investment, you have to
consider the cost of insurance, interest, utility bills, repairs and
maintenance, all of which will be higher for a larger home. You have
to also factor in the extra furniture to fill the larger house, which
will actually depreciate in value. Also, a million dollar house is
less liquid than a smaller house. That has a definite cost attached to
it, as it may take a long time to sell the property. After considering
all of these, and if you are still making a profit, you have to decide
if that profit is significantly higher than other forms of
low-maintenance investments (such as mutual funds and bonds) to
warrant the extra hassles that come with maintaining a large home. I
really doubt that you can make a case for an expensive home as a
viable investment.

People find all sorts of excuses to justify their expensive purchases.
SUV's and golf club memberships have all been argued as investments.
Bottom line is, buy a big house because you like to live in it. If you
want to invest in real estate, stay in the current home, and buy a
rental property. As long as the rent payments cover the monthly
operating costs of the property, you will end up with a profit when
the property is eventually sold.



(Warren X) wrote in message . com...
Good day,

A friend and I had the following debate when I said that I would one
day like to buy an $800K house, upgrading from my current $200K
condominium apartment, and I would like to hear more opinions on the
matter.

I said that we planned to stay in the condo as long as possible,
putting extra money down on the mortgage.

My friend said that we should move to an intermediate house of, say,
$400K, as it would provide more "financial leverage" that would be
required for the big house.

I argued that selling a home costs a lot of money in real-estate agent
commissions, legal fees, moving fees, renovation costs, etc.

He argued that the value of the houses increases at a rate that more
than compensates for these charges.

This is a possibility, but the market is at a high right now (area:
Toronto, Canada), and could conceivably "correct" in the next few
years once the glut of new homes are bought-up.

I also mentioned that a larger (intermediate) house begets larger P&I
payments, and larger interest payments mean a greater waste of money
that could otherwise have gone towards principal on my current
mortgage.

He then mentioned that the increase in value of property is
proportional to the size of the property (i.e., greater absolute
capital gain on a larger property than on a smaller one), to which I
must agree.

Can anyone offer any thoughts on this?

Thanks
A. Huahua

"OP" here ...

Wow. I had no idea that my question would generate so many well-formed
answers and so much debate. Thanks to all.

Perhaps I should not have put any numbers, and instead just
percentages. I don't know if there's much of a difference between
going from $200K to $800K as there is from $40K to $160K. I wish it
were 40 to 160, but Toronto is not a cheap place to live.

While I do not feel I should have to justify to anyone my ability to
buy anything, at any price, the usenet is what it is, and people will
(rightly) have their say. FWIW, we are financially responsible,
"well-off" (but not rich, so let's say upper-middle class) people
that, over the long term, elect to spend our money on our home. I am
not into fast cars, frequent expensive restaurant meals, drugs,
sailboats, cottages or other bottomless money pits.

Obviously, an $800K house is not affordable right now (otherwise I
wouldn't have asked the question because I'd be in that house). But I
can dream! And maybe in 10 or 15 years, hard work will pay off.

There is obviously no clear-cut answer, but the information above is
excellent food for thought.

In article ,
Darryl Okahata wrote:
(D. Gerasimatos) writes:

Our home is 6-bedrm 4-bath 3-car garage 3,300 sq ft with 4-whole people
living here.

You are a model of frugality. We should all "make do" with houses like yours.

Responses in this thread seem to be ignoring the reality of
geography. In parts of the country, a house like the above *is* a
"luxury mansion".


That's what my comment was attempting to point out.


Dimitri

In article , (D. Gerasimatos) wrote:
In article ,
Doug Miller wrote:

The book does not say that "wealthy people tend to have some of the least
expensive homes in expensive communities".

Yes, it does. It specifically mentions that while the communities might be
more expensive, the wealthier homeowners own the smaller houses therein.

It does not say that "they live in affluent communities".

Yes, it does. Does this mean Bel Air? No. It means communities that are
on the rich side of middle class.

I quoted the passages that support my view. Can you?

--
Regards,
Doug Miller (alphageek-at-milmac-dot-com)

Save the baby humans - stop partial-birth abortion NOW

In article , wrote:

On 29-Jul-2003, (D. Gerasimatos) wrote:

They live below their
means, which is still a very good standard of living compared to most
people.

Why would anyone choose to live below their means? Fear of bad times ahead?
They don't believe they deserve it? Their reward will come in Heaven?

Prudence, wisdom, good sense, take your pick. The alternative is spending
every dime you earn (or more). Is that a wise way to manage your money?

--
Regards,
Doug Miller (alphageek-at-milmac-dot-com)

Save the baby humans - stop partial-birth abortion NOW

In article , wrote:

On 29-Jul-2003, (D. Gerasimatos) wrote:

Finally, there is
quite a difference between a "millionaire" (one worth $1 million) and a
millionaire worth millions of dollars. Those people are not living in
$320,000 homes. Trust me.

The prick that wrote that book used the wrong definition of a millionaire. A
million in assets does not make one the proverbial millionaire. His book was
honoring the skin flints of the world. Every few hundred years or so there's
a nice little holocaust or market crash that takes care of those types.

Actually, the ones that suffer most from market crashes or other financial
adversity are those like yourself, who believe in spending everything they
can, and have nothing to fall back on if times get hard.

--
Regards,
Doug Miller (alphageek-at-milmac-dot-com)

Save the baby humans - stop partial-birth abortion NOW

On 29 Jul 2003 08:40:59 -0700, (Shorty
Blackwell) posted in misc.invest.real-estate:

wrote in message . ..

Also its no guarantee
houses will go up in value; they can go down in value.

Not if you care for them, and if the neighborhood is sound...right?

All neighborhoods go in cycles. What's a slum today was once an
exclusive address, and what's an upper-class neighborhood today was
once woods.

If you buy the woods a few years before building boom starts you're a
hero. If you buy a townhouse in what's about to become a burst bubble
you're an also-ran.

On Tue, 29 Jul 2003 05:23:43 +0000 (UTC),
(D. Gerasimatos) posted in misc.invest.real-estate:

What is the purpose of money if not to enjoy oneself?

Power?

There's a beauty to
dying owing lots and lots and lots of money! Hence, the saying that "When
I die I want my last check to bounce!".

When I die I want people to say "He'll be missed", not "It's about
time". Bob Hope was wealthy, but I doubt that there are many people
who are glad that he's gone.

In article ,
Doug Miller wrote:

I quoted the passages that support my view. Can you?


Your own quoted passage supports MY view.


Dimitri

In article ,
Al Klein wrote:
On Tue, 29 Jul 2003 17:07:20 +0000 (UTC),
(D. Gerasimatos) posted in misc.invest.real-estate:

As I get older I am learning something interesting:

If the bank gives you money then TAKE IT!

If you know of any banks giving away money, let me know. I haven't
ever heard of one that does.


Right now they are giving money away. I can get a massive loan at x% and
easily find a money market that pays x+%. That's free money.


It's called "Butter or Guns economics".


Tell me something else I know.


Dimitri