Episode-2- The Coming Financial Collapse of America — 2 Comments

  1. Based on how often I receive e-mails about new podcasts you make, you seem to be a very prolific podcaster. I download all your podcasts but the queue is big and so far I am still listening to the first of second podcasts.

    We all need land to live on. Do you think buying land and going into debt is better or worse than renting land? Or should you initially rent when you are in the system and then when you escape from the system and try to be self-sufficient you buy outright cheap land in the country? Some people claim that debt is bad.

  2. Well it is different for each individual. You have to consider.

    1. The current state of the market (in general I think it is a good time to buy right now). Also the state of your regional market as well. Some markets are remarkably stable or resilient and others are very vulnerable.

    2. Your income level and your cash reserves. I.E. don’t mortgage what you can’t afford no matter how good the deal seems.

    3. Your evac plan and your time to do it. If you know you plan on leaving in 6 months, buying is not a good idea, if your plan is 5 years most times buying will make you a profit.

    4. Your tax status, due to tax breaks my home cost far less then actually renting anything close to what I have in my “city home”.

    5. The impact on buying your escape land that buying vs. renting has. For instance in my situation I can pay the mortgage on my city home and still make extra payments on my country home at the same time. For many that isn’t an option, you basically have to sacrifice what you need to give up to get what you really want.

    6. What your family wants. If I were single trust me this would all be bypassed by now, I would have rented the cheapest thing that would let me be safe and comfortable, saved like mad and jetted out years ago to Montana or Idaho or something like that. As a happily married man with a 19 year old boy in college (second year stating now) I am doing it a bit differently.

    7. The best thing I can tell you is that buying has always worked for me. I have made money on every home I have ever purchased. The key is buying smart, being ruthless in your search and finding something undervalued from day one.

    8. The issue is most undervalued homes are not in bad shape just poorly marketed. For instance the home I own in Arlington listed at 149,900. It in fact is a 3 bed, 2 bath with 2 living areas and home office on 1/3rd of an acre. (huge lot here in Arlington). It was listed as a 3-2 and nothing more. It is at the back of a culdasac and got zero drive by traffic. It was on the market 6 months and I walked in and snagged it for 119,900 the sellers had no clue as to why it would not sell. There are always deals like this, this in fact was my third really great deal on a home.

    So that is long and may not even be the exact simple answer but the question is not simple either. It has so much to do with where you live and how and when you plan to move out. Don’t forget Murphy (as in Murphy’s Law) and build a buffer. There are people we know that think my two homes are “risky” or “extravagant”.

    Consider one home is worth about 155K and I owe about 115K on it, the other is worth about 85K and I owe 65K on it. That in total is 240K in equity and 160K in debt. Now if I went and bought one home for 240K and owed 230K in debt on it these same people who say I am risky and/or extravagant would think that was just fine.

    Not to mention 2 homes defer and reduce risk, sell one, you still have one. One declining in value won’t make the other decline. I have the option to hold and rent. I can drop from “the system”, move to Arkansas and not have to beg for some crap loan when I become fully “self employed”, etc.

    Yet I am a realist, my plan is not feasible for everyone but it is an option. Most people around here in my income bracket own 250-450K houses and many even more then that. I think they are nuts, they think I am nuts, the key is we are both doing what makes the most sense to us as individuals, at least while we still have such a choice in this nation.