Investing General Discussion

Borzak · Oct 29, 2019

I know guys that make just under or in same cases over 6 figures (which in the south isn't bad) that can't make it a day if the paycheck doesn't get there on Friday. Guys used to ask me all the time to front them some money out of next weeks check. 20% gross pay bonuses come out and the next week some of them asking for a front on next weeks check while at the same time showing up in a brand new truck they bought with part of it.

I'm not a fan of debt. Not because it doesn't make money sense. Grew up in a time of the petrochemical crash when I knew engineers with multi year experience were glad they got a part time job at Winn Dixie bagging groceries. Houston nearly dried up with it before they diversified with the medical center and other things. Always was in the back of my mind have at least enough on hand to get the hell out of town to a job if needed. Also nice to have at least some cash on hand living in hurricane area. Place might have a generator to pump gas but most aren't taking credit cards and same for food and such. Cash is king in those cases.

Sanrith Descartes · Oct 29, 2019

I am one of those "I hate debt" people. I also have a 12 year old daughter. Being a parent has moved me to change some of my philosophies. I'll carry some debt now (at 0% interest) if it means giving her something I never had as a child. I was poor and things like vacations weren't in the cards for us.

At my income level I'm ok dropping 5k at 0 interest for 12 months to take her on a trip (and I will even drag my wife along

) so I dont need to fund it with cash upfront. This way she gets to experience all the shit I didnt get to growing up. My situation allows me access to 0% interest offers (800+ score plus longevity and income).

We have created this debt trap for the poor (and not so poor) people. Part of it is our own fault for feeling we "deserve" a 1100$ cellphone and 70" flat panel in every room. We dont deserve shit if we cant pay for it. It's like the finance version of participation trophies. We have taught our kids they should have everything without showing them they need to pay for it.

I see credit cards with 25% interest and think "if I charged someone 25% interest on a loan I'd be in jail for being a shylock". Its ok though if you are Visa or Mastercard. And of course the ultra-poor are "given" credit cards with 30-35% rates. How the fuck do you expect anyone to properly manage a card like that. And its given to people who absolutely don't have the financial situation (or education) to handle it. And the best part is those same financial illiterates will say they "deserve" that credit card because to not give them one must be racially motivated.

I could rail on this subject for hours.

Sanrith Descartes · Oct 29, 2019

Borzak said:
I know guys that make just under or in same cases over 6 figures (which in the south isn't bad) that can't make it a day if the paycheck doesn't get there on Friday. Guys used to ask me all the time to front them some money out of next weeks check. 20% gross pay bonuses come out and the next week some of them asking for a front on next weeks check while at the same time showing up in a brand new truck they bought with part of it.

I'm not a fan of debt. Not because it doesn't make money sense. Grew up in a time of the petrochemical crash when I knew engineers with multi year experience were glad they got a part time job at Winn Dixie bagging groceries. Houston nearly dried up with it before they diversified with the medical center and other things. Always was in the back of my mind have at least enough on hand to get the hell out of town to a job if needed. Also nice to have at least some cash on hand living in hurricane area. Place might have a generator to pump gas but most aren't taking credit cards and same for food and such. Cash is king in those cases.

My wife's company just downsized her entire operation (moved it overseas I believe). Like you, I make sure I have cash to deal with unplanned events. She is a CPA and MBA so the only concern is the time of year. While the situation does suck, I dont stress it. Worst case to find the right job it might take until after the holidays and we have savings to cover. Like you, I remember the ugly days of past recessions. Keeping cash free and debt low is a survival trait for me.

Borzak · Oct 29, 2019

The low level of debt helped me when I became mostly unable to work mentally and physically. Some ways it sucks, some ways it helps. In the past a large part of my work was contract for companies. I always liked the "Well if the work or who you are contracting for starts to suck I can just say screw it and stop for a while".

Khane · Oct 29, 2019

Debt is marketed and sold as a smart choice here. You'll hear people blindly say things like "never use your own money" or act like buying a home is always a wise investment because "renting is just throwing money away" because that's just what they've heard their whole lives. And they trust that as being a statement of fact in all scenarios without taking the time to think about what it actually means. Many people even act like paying down your debt is stupid. And what ends up happening is otherwise smart people end up using that line of thinking as a justification to spend more than they should and make poor financial choices.

Mortgage lending in America is one of the most predatory business practices around. What's being sold is the "American Dream" rather than a physical asset and it gets people into bad situations when the biggest purchase they will ever make in their life is led by their heart instead of their head. The idea of a "starter home" is outrageous to me. As if you can buy a house, live in it for 5 years, and walk away with a hearty profit when you move into a newer, bigger, better house 100% of the time. Sweat equity, it's foolproof! The market is constantly on the rise!

Blazin · Oct 29, 2019

Sanrith Descartes said:
I'll carry some debt now (at 0% interest) if it means giving her something I never had as a child. I was poor and things like vacations weren't in the cards for us.

At my income level I'm ok dropping 5k at 0 interest for 12 months to take her on a trip (and I will even drag my wife along ) so I dont need to fund it with cash upfront. This way she gets to experience all the shit I didnt get to growing up. My situation allows me access to 0% interest offers (800+ score plus longevity and income).

Just not sure I get why you would borrow it though, just pay the 5k and be done with it, but to each his own.

brekk · Oct 29, 2019

Khane said:
Mortgage lending in America is one of the most predatory business practices around. What's being sold is the "American Dream" rather than a physical asset and it gets people into bad situations when the biggest purchase they will ever make in their life is led by their heart instead of their head. The idea of a "starter home" is outrageous to me. As if you can buy a house, live in it for 5 years, and walk away with a hearty profit when you move into a newer, bigger, better house 100% of the time. Sweat equity, it's foolproof! The market is constantly on the rise!

It's insane how bad it is. Girlfriend and I started our research into home ownership earlier this year. We had roughed out a budget of 175k-225k, I was referred to a bank by my credit union to discuss FHA loans and the loan officer made me feel dirty. No concern for actual household expenses, just what debt I had that would show up on a credit report. Told me she could get me a mortgage for 400k which is absolutely insane.

For the record I talked to an actual Mortgage broker my business does IT for after the fact. He still said we could get a 400k mortgage, but recommended against it. He also told us to stay away from FHA loans because of the strings attached, we both have upper 700's credit so we can get any normal mortgage we want.

Fogel · Oct 29, 2019

Even after the sub prime mortgage busted and it does seem like we're trending back down that road. I had zero issues qualifying for a second mortgage - Yes I'll be selling one soon, but I didn't think I'd be rubber stamped the way I was.

Captain Suave · Oct 29, 2019

Khane said:
As if you can buy a house, live in it for 5 years, and walk away with a hearty profit when you move into a newer, bigger, better house 100% of the time. Sweat equity, it's foolproof! The market is constantly on the rise!

I owned a home in which I thought I was going to live indefinitely. Life changed, ended up moving after seven years and lost mid five figures between the maintenance, flat market, and transaction costs. Currently rent. Where I live presently, net of everything it's just flat-out cheaper to rent than own by a significant margin. Plus, the flexibility of being able to move on relatively short notice has enabled some very beneficial career transitions and I've made out like a bandit by being in the market instead of real estate.

Meanwhile, I have friends making $200k living in $2M houses leveraged to their eyeballs and staying up nights worried that they'll be bankrupted by their mortgage if they have a blip in earnings. Doesn't compute for me. We could all just... not do that.

Sanrith Descartes · Oct 29, 2019

Blazin said:
Just not sure I get why you would borrow it though, just pay the 5k and be done with it, but to each his own.

My thinking is 5k over 12 months is like 420 a month. Why front the cash when I spread it out on someone else's dime. If an unforeseen situation occurs I am still holding the cash and have flexibility. Not saying you or anyone should agree, that is just my thought process. The same way my business has net 30 with my vendors. I'm certainly not paying an invoice the day I get it if I have net 30 to pay it.

Blazin · Oct 29, 2019

Sanrith Descartes said:
My thinking is 5k over 12 months is like 420 a month. Why front the cash when I spread it out on someone else's dime. If an unforeseen situation occurs I am still holding the cash and have flexibility. Not saying you or anyone should agree, that is just my thought process. The same way my business has net 30 with my vendors. I'm certainly not paying an invoice the day I get it if I have net 30 to pay it.

When I ran my business I paid every bill the day I got them. Just different way of looking at things. I pay my CC every month the day I get the statement.

Gurgeh · Oct 29, 2019

Captain Suave said:
I owned a home in which I thought I was going to live indefinitely. Life changed, ended up moving after seven years and lost mid five figures between the maintenance, flat market, and transaction costs. Currently rent. Where I live presently, net of everything it's just flat-out cheaper to rent than own by a significant margin. Plus, the flexibility of being able to move on relatively short notice has enabled some very beneficial career transitions and I've made out like a bandit by being in the market instead of real estate.

Meanwhile, I have friends making $200k living in $2M houses leveraged to their eyeballs and staying up nights worried that they'll be bankrupted by their mortgage if they have a blip in earnings. Doesn't compute for me. We could all just... not do that.

It's the same as the IPhone, most people want the absolutely most fancy house they can(not) afford. Their bank tell them they can buy up to 500k; they're going to buy for 550k after scrapping everything, and possibly learn that leverage cut both ways... And even if the worse doesn't happen, shit like unforeseen repair will force them to go further into debt, and everytime anything out of the ordinary happen they'll be 2 years without a vacation and eating noodles.

Captain Suave · Oct 29, 2019

Gurgeh said:
most people want the absolutely most fancy

Yeah. I'm also the guy driving an 18 year old car because it still works and I don't give a shit about cars.

Looking back, it's pretty clear that my consumption habits were formed growing up during some lean years when my dad's business wasn't doing well. My wife is similar (child of immigrants) and despite objective success we're constantly paranoid about what would happen if our work dried up, industries evolved away from us, economy shits itself, etc. My sister is younger, times were better, and she's a lot less thrifty.

Sanrith Descartes · Oct 30, 2019

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Locnar · Oct 30, 2019

Captain Suave said:
Yeah. I'm also the guy driving an 18 year old car because it still works and I don't give a shit about cars.

Looking back, it's pretty clear that my consumption habits were formed growing up during some lean years when my dad's business wasn't doing well. My wife is similar (child of immigrants) and despite objective success we're constantly paranoid about what would happen if our work dried up, industries evolved away from us, economy shits itself, etc. My sister is younger, times were better, and she's a lot less thrifty.

same, I drove my truck for 18 years before getting a new one (yes a new one (well new to me it was a 2015)). Ill drive that one until it becomes unreliable too.

LachiusTZ · Oct 30, 2019

Sold my 1998 Jeep 2 years ago. Regret it almost every day.

Kk, back to lurking. Lol

Sanrith Descartes · Nov 2, 2019

I had the most amazing grin yesterday when I executed some trades on Fidelity and saw commissions = $0.00

This shit rocks.

Blazin · Nov 2, 2019

Sanrith Descartes said:
I had the most amazing grin yesterday when I executed some trades on Fidelity and saw commissions = $0.00

This shit rocks.

Yeah it's been great. They had just given me 500 free trades when I switched over from Vanguard and I never even got to use them before they went to $0 so I kinda feel like they owe me now. After 20+yrs with Vanguard I'm quite happy with my switch to Fidelity and really wish I had done it a few years ago. I love vanguard but they just aren't a good choice for someone more active.

Sanrith Descartes · Nov 2, 2019

Blazin said:
Yeah it's been great. They had just given me 500 free trades when I switched over from Vanguard and I never even got to use them before they went to $0 so I kinda feel like they owe me now. After 20+yrs with Vanguard I'm quite happy with my switch to Fidelity and really wish I had done it a few years ago. I love vanguard but they just aren't a good choice for someone more active.

I have been with Fidelity for quite a while and I'm happy with them. Happier now that I get free trades

Keystone · Nov 4, 2019

Did they go all free trades or something? I've got small account there and my HSA through them that I've exclusively bought no commission etf's through because I buy in too small of increments to eat a trade fee, would be nice to be able to branch out from that base if thats the case. - maybe take a few flyers in the HSA since i won't have to pay gains on it seems to make the risk a little more appealing

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