brahamfireman Posted June 30 Share Posted June 30 39 minutes ago, Dzldenny said: We've stopped making overpayment on our mortgage. We are at 1.8%. we are putting that extra money in the safe. We will be needing a roof and borrowing money at 15% doesn't make sense while we are overpaying at 1.8. It's hard to do because we are so close to debt free but the numbers don't lie. Excellent plan. I have alot of debt, all land and houses. All but 1 of the loans are fixed rate, low 3's I think. I see no reason to pay extra on those when everything else is going sky high. The way I look at it all my debt is fix rate, and inflation is raising the price, not "value" of my assets. While I agree inflation is rough, if you own tangible assets inflation on those assets will take care of you. Also as the assessment value of my properties goes up, my ability to borrow money against them goes up. All the while my initial loan stays the same. Let's say you buy a 200K house, borrow full amount. 5 years later inflation has pushed its value to 300K. next 5 years that same house is now 400K, but your loan amount is now 150K. So now you have 250K in equity and a debt to asset ratio of 1.6+ pretty dang good. So in theory a guy working at Mcd's paying his house loan and nothing else has more money at his disposal than the guy who bought cheap stuff for cash. I farm my few acres with 100% cash, I fully believe debt free is the way to be. But I also don't want people to think debt is bad, debt is good if you know what to burrow against and how to use it. Just my random ramblings on how I use the banks money vs mine. 4 Quote Link to comment Share on other sites More sharing options...
Dirt_Floor_Poor Posted June 30 Share Posted June 30 I don’t see anything wrong with having some debt. Our farm would not be the size it is if we didn’t max out our credit lines and take huge personal risks. There’s been a lot of stress over the years, but looking back now I think it was worth it. If I waited until I had cash, I don’t think I would own any land until I was too old to enjoy it. I wouldn’t want to have large amounts of unsecured debt, but debt to purchase hard assets is different in my mind. If you don’t bet on yourself, it’s unlikely anyone else will. 3 Quote Link to comment Share on other sites More sharing options...
Big Bud guy Posted June 30 Share Posted June 30 53 minutes ago, Dirt_Floor_Poor said: I don’t see anything wrong with having some debt. Our farm would not be the size it is if we didn’t max out our credit lines and take huge personal risks. There’s been a lot of stress over the years, but looking back now I think it was worth it. If I waited until I had cash, I don’t think I would own any land until I was too old to enjoy it. I wouldn’t want to have large amounts of unsecured debt, but debt to purchase hard assets is different in my mind. If you don’t bet on yourself, it’s unlikely anyone else will. ++++1. There is good debt and bad debt. If we hadn’t borrowed any or little money over the last 80 years to buy land I would be working in town today. Paying cash for land around here more or less ended after the homesteaders got their first 160 or 320 “free” from the government. My great grandpa was only able to enlarge his homestead because he inherited his mother’s homestead. He sold it to buy land closer to his place. 2 Quote Link to comment Share on other sites More sharing options...
Matt Kirsch Posted June 30 Share Posted June 30 3 hours ago, Cattech said: People have been conditioned to purchase by the monthly payment rather than the price of what they're buying. Not conditioned, forced. Wages have not kept up with the costs of even basic things like housing and transportation. The only way to have those things anymore is to borrow and pay over time, unless you are older and were fortunate enough to have started out decades ago, and have everything paid off. Now things are so out of hand that people can't even afford the payments. Quote Link to comment Share on other sites More sharing options...
Jesse in WI Posted June 30 Share Posted June 30 2 hours ago, 12_Guy said: Wife just bought a new car. 0% for 36 mo. We could have paid cash and planned to but figured we would use Ford’s money. You didn't use Ford's money. You are paying the interest in the overall price of the vehicle over 36 months. The 0% interest thing is just just marketing to get you in the door. If you don't believe me, the next time you are in the dealership ask them what the difference in overall price of the vehicle is going to be if you pay cash or if you finance. Every time there is one of these 0% deals there is also a cash discount to the list price structure. If you do the math on it the cash discount value amount is almost always within a couple hundred dollars of the amount of interest you would pay on a normal 4% to 6.5% interest rate over the term length of the loan. The auto manufacturing companies are not in the business of giving out free money. In fact they have entire buildings worth of people making sure they don't lose money. The last two trucks I've ordered all had these great financing options. I opted for getting a loan from our local credit union and took the cash discount at the dealership. I paid off the truck in year 2.5 of a 6 year term and saved that much money in interest on top of the cash discount. 4 Quote Link to comment Share on other sites More sharing options...
Jesse in WI Posted June 30 Share Posted June 30 edit: double post deleted Quote Link to comment Share on other sites More sharing options...
766 Man Posted June 30 Share Posted June 30 I had a college professor at Cornell say more than once in regards to a finance agreement that the debt holder can always call in the debt. Read the fine print. Granted things are different now than the 1980's in that somebody can come on the net screaming about having a six figure note called in versus in 1985 you might as well screamed into the empty hills around the farm. I figure it will be like pay before you pump gas. For the longest time the gas stations held the line in terms of pump then pay but a threshhold came where that came to an end. I figure that the key figures in the banking industry will meet at some point and cry about how they are making less than 3 percent on a 5 percent loan when retail credit is over 10 percent. Nobody wants to be the first guy and demonized in the media but if they all move at once......................... Remember unlike 1985 there is not an independent bank such as a First National or a bank named for the 16th POTUS in each town to provide some competition against coordinated moves. Quote Link to comment Share on other sites More sharing options...
Cattech Posted June 30 Share Posted June 30 There was a good video on YouTube a while back that coached getting the best price on a vehicle.... Never tell the sales rep how you plan to pay for it. Get the price first. They will always ask how much you plan to put down, are you trading in, are you looking to finance, etc. Don't give them a bit of that info until you have something in writing. Never tell them you have cash. Just be cool, say you are interested, and will figure out how it fits your budget once you have some numbers. Also, if replacing a downed car, don't let the urgency contaminate the situation. A cash buyer seldom gets a real discount. There's a lot more money to be made if they get to finance it. There's one of those buy here, pay here, no credit=no problem dealers local to me. They won't even sell you a car for cash.... $2500 beater car is $249 down, $49 a week at whatever ridiculous % interest. 5 days late on payment the tow truck is on its way. 2 Quote Link to comment Share on other sites More sharing options...
iowaboy1965 Posted June 30 Share Posted June 30 1 hour ago, Matt Kirsch said: forced. It's all about choices and living withing your means. My 25 yo son has paid cash for 2 cars now and they were not $2500 beaters either. The first one he was living at home but worked and saved his money. The 2nd he was on his own and making monthly house payments and normal bills. The only reason he may take out a loan this time is he is hunting a very specific make and model, low miles and certain colors. So that adds a bit of difficulty to things. But he has it laid out to pay off what he would owe in a year or less. It's not always easy and yes sometimes a loan is the only choice, but many times it could be avoided as well too with planning and saving. Likewise his sister paid cash for her last vehicle as well. House yes a loan is all but certain for most. 1 Quote Link to comment Share on other sites More sharing options...
Takn4aFool Posted June 30 Share Posted June 30 4 hours ago, Dzldenny said: And the insurance company buildings. World's largest flagpole resides not far from here. Built what amounts to a park around it on the grounds too. How about not raising or even (gasp!) lowering my rates instead of blowing millions on a flagpole. not just the flagpole, also the office building and parking ramp they built a few years ago Quote Link to comment Share on other sites More sharing options...
460 Posted June 30 Share Posted June 30 I don't know what the answer is. We bought our house in 2020 and have a low interest mortgage. Last year we pulled a home equity credit line. It sits a 9.9% currently as it follows prime. Without this home equity I would not be able to build my detached garage. I am trying to piece meal the garage until I get the home equity paid back down. Scott Quote Link to comment Share on other sites More sharing options...
766 Man Posted June 30 Share Posted June 30 58 minutes ago, iowaboy1965 said: It's all about choices and living withing your means. My 25 yo son has paid cash for 2 cars now and they were not $2500 beaters either. The first one he was living at home but worked and saved his money. The 2nd he was on his own and making monthly house payments and normal bills. The only reason he may take out a loan this time is he is hunting a very specific make and model, low miles and certain colors. So that adds a bit of difficulty to things. But he has it laid out to pay off what he would owe in a year or less. It's not always easy and yes sometimes a loan is the only choice, but many times it could be avoided as well too with planning and saving. Likewise his sister paid cash for her last vehicle as well. House yes a loan is all but certain for most. I get what Matt is saying as I too live in New York although closer to Rochester than Buffalo. This area that I live in was like an A bomb went off economically around 1980. Wages stagnated or even declined compared to before. Taxes in terms of income and property are large bites out of every paycheck. We must not be the only ones seeing the effects as over the years the region has had a net decline in terms of new vehicle dealerships and grocery stores. God bless the people who had their mortgages paid off before 1980 but that meant no adjustment in terms of affordability for those just coming into the workforce just after 1980 such as myself. Farm Credit nor FHA did not talk to me in 1985 because I was a very young man with a spending problem but because the general farm economy was in a depression. Because the region was sorting through tens of thousands of layoff and closures along with lenders only wanting to loan to the most promising farms meant a very miserable existence back then. I am a positive person by nature but growing late into middle age has made me kind of bitter the last few years. Living within your means back then meant living with your parents if possible for a number years after graduation from high school or even college if you were not majoring in an advanced field. A lot more mobile homes were set up around here than homes built permanently upon a foundation. Many honorable people have lived in mobile homes but mobile homes sure are not a sign of economic prosperity. Quote Link to comment Share on other sites More sharing options...
Cattech Posted June 30 Share Posted June 30 I can't say where I'd be had I never used credit. But I'm pretty certain I'd be better off, it's just to easy to spend money you don't have! I just had a good reminder of how crooked these folks are. I wanted a DR Mower, had what looked to be a good deal in an advertisement. 22 hp PRO30xl for $3k. I had the cash in my play fund at a work sponsored credit union. Good/bad thing about that credit union is it takes a few days to get a check. DR advertises a 0% credit card on their website, and you can apply right there. The "sale price" was expiring before I could move funds. I didn't read all the fine print.... and it took less than 30 seconds to be approved for a $10k DR Card over an online form. Got my funds transferred 4 days later.... look at the account, planning to pay it off...... and find a promotional fee, and an account opening fee, and a bimonthly payment fee... all adding up to about the non-sales price of the mower I ordered. Called them up and was able to knock some of the fees off, but still ended up paying a couple hundred more than I could have. What really sucks though, the sale price was back a few days after it expired, had I just waited and paid with my check card I would have bought it for the sale price. The DR mower is pretty good & worth full price so far. But don't let their credit card provider f___^ you! It takes the positive feelings out of owning a decent piece of machinery. Quote Link to comment Share on other sites More sharing options...
Finney Posted June 30 Share Posted June 30 Our bank this year wanted to charge us for our line of credit for our business which has never been used in 15 years. We have been with this bank for 23 years. I told them no and I would change banks if they tried that. So far they have backed off. The guy who handed our accounts retired last year and we think that had something to do with it. On a different note the housing boom in our area doesn't make sense, a $300,000+ dollar house, 2 newer vehicles and both parents work at factories not making over $25.00 per hour. It does not add up to me. The dirty 80"s didn't affect us badly as I was working on the road making good money and the farm was paid for. In 89 it all went south, our son was diagnosed with cancer and passed in 92. Beside the grief it almost bankrupted us due to hospital bills and we had insurance. We were left holding the bag for over $250,000. By 2003 we had paid it off and decided to sell our half of the farm to my sister who owned the other half(I AM NOT A FARMER). We have been dept free ever since. We will not buy if we cannot pay for it. 1 Quote Link to comment Share on other sites More sharing options...
nate Posted June 30 Share Posted June 30 4 hours ago, brahamfireman said: Excellent plan. I have alot of debt, all land and houses. All but 1 of the loans are fixed rate, low 3's I think. I see no reason to pay extra on those when everything else is going sky high. The way I look at it all my debt is fix rate, and inflation is raising the price, not "value" of my assets. While I agree inflation is rough, if you own tangible assets inflation on those assets will take care of you. Also as the assessment value of my properties goes up, my ability to borrow money against them goes up. All the while my initial loan stays the same. Let's say you buy a 200K house, borrow full amount. 5 years later inflation has pushed its value to 300K. next 5 years that same house is now 400K, but your loan amount is now 150K. So now you have 250K in equity and a debt to asset ratio of 1.6+ pretty dang good. So in theory a guy working at Mcd's paying his house loan and nothing else has more money at his disposal than the guy who bought cheap stuff for cash. I farm my few acres with 100% cash, I fully believe debt free is the way to be. But I also don't want people to think debt is bad, debt is good if you know what to burrow against and how to use it. Just my random ramblings on how I use the banks money vs mine. I will agree with you but you left out one key factor. You and I live in the same state. Higher property value = higher taxes. Quote Link to comment Share on other sites More sharing options...
766 Man Posted June 30 Share Posted June 30 8 minutes ago, Finney said: Our bank this year wanted to charge us for our line of credit for our business which has never been used in 15 years. We have been with this bank for 23 years. I told them no and I would change banks if they tried that. So far they have backed off. The guy who handed our accounts retired last year and we think that had something to do with it. On a different note the housing boom in our area doesn't make sense, a $300,000+ dollar house, 2 newer vehicles and both parents work at factories not making over $25.00 per hour. It does not add up to me. The dirty 80"s didn't affect us badly as I was working on the road making good money and the farm was paid for. In 89 it all went south, our son was diagnosed with cancer and passed in 92. Beside the grief it almost bankrupted us due to hospital bills and we had insurance. We were left holding the bag for over $250,000. By 2003 we had paid it off and decided to sell our half of the farm to my sister who owned the other half(I AM NOT A FARMER). We have been dept free ever since. We will not buy if we cannot pay for it. You sure have faced a lot of difficulty in life. A farmer about 20 miles west of me was not so fortunate when his son faced terminal illness. They lost everything they had so it is not always a matter of economic ruin brought on by poor choices. As to 300,000 dollar houses they are predominant around this area but the wages are not on par with 25.00 dollars per hour. I see many people coming in from out of state who have cashed in on their old property on the East Coast or West Coast and pocketing a very healthy net difference. As to your bank they want to see account activity as it is how they make money. Gonna get worse as we move forward in time. A far cry from the early 1980's when the loan officer chewed me out as a very young adult for looking at a 48 month loan on a used car versus a 30 or 36 month loan. 1 Quote Link to comment Share on other sites More sharing options...
766 Man Posted June 30 Share Posted June 30 3 hours ago, Big Bud guy said: ++++1. There is good debt and bad debt. If we hadn’t borrowed any or little money over the last 80 years to buy land I would be working in town today. Paying cash for land around here more or less ended after the homesteaders got their first 160 or 320 “free” from the government. My great grandpa was only able to enlarge his homestead because he inherited his mother’s homestead. He sold it to buy land closer to his place. Very few have farms so productive that they can work from cash to grow the business. My mother hated debt but hated a miserable life in town worse. Quote Link to comment Share on other sites More sharing options...
CC_Ranger Posted June 30 Share Posted June 30 This is a good topic! Very timely. As I move towards retirement the end of June '24, I am really looking towards getting all my finances sorted out. I would love to have the mortgage paid off, but at 3% it doesn't make sense to take money out of investments to pay it off. This is the only debt we have. I too am looking to build a detached garage; I have been tracking costs and rates and am seeing them moving lower. Material prices have dropped, but not labor. I also do not understand the housing market and the current prices. The other thing that boggles my mind is the number of new pickups and large SUV's driving around. I have been doing some research on a new truck but am nowhere near making a move seeing the prices. I really notice the GM 2500's most with the Denali, AT4, Z71, or High Country package being used as grocery getters since I have priced out the GM trucks. I just don't understand where folks get their money to have these houses and vehicles. I guess that they are mortgaged to the hilt with bank. I have also read that the outstanding credit card balances are nearing a record high. I will be building the new garage, because once I do that, I could sell my property with the pole barn and bring in some cash and lower expenses with only one property. 1 Quote Link to comment Share on other sites More sharing options...
hardtail Posted June 30 Share Posted June 30 3 hours ago, iowaboy1965 said: It's all about choices and living withing your means. My 25 yo son has paid cash for 2 cars now and they were not $2500 beaters either. The first one he was living at home but worked and saved his money. The 2nd he was on his own and making monthly house payments and normal bills. The only reason he may take out a loan this time is he is hunting a very specific make and model, low miles and certain colors. So that adds a bit of difficulty to things. But he has it laid out to pay off what he would owe in a year or less. It's not always easy and yes sometimes a loan is the only choice, but many times it could be avoided as well too with planning and saving. Likewise his sister paid cash for her last vehicle as well. House yes a loan is all but certain for most. I built my house in 2001, was installing the windows when word of 911 hit and we stopped and got to a TV. I had money down but couldn't do it all on my own and was building on a line of credit, while this was happening my initial bank was taken over by a bigger outfit and merged, my original deal was mute and I was almost at the point of I don't care if it takes me a decade to finish this I'll do it on my own, that didn't happen but someone might have muttered something about flying an RC plane into the banks windows 🤬 Quote Link to comment Share on other sites More sharing options...
hobbyfarm Posted July 1 Share Posted July 1 For the most part everyone on this forum is established. I fail to see how any young person fresh out of school can make a go of things. Real estate here has close to doubled in the last few years. Car prices are outrageous. Throw in student loan debt, a baby, and a few other expenses and a young person is strapped for a long long time. Speaking about ourselves we don't have fancy vehicles. For the most part they are end of life vehicles. Any equipment we have is bought with cash and inputs on our little scale are all paid for. I usually try to seperate the wants from the needs. Sometimes that is hard. Farm buildings, equipment, and a pickup truck are all on this wish list. We don't owe money on anything but real estate. Unfortunately we owe plenty. No risk no reward I guess. The real estate has done as well as anything the last few years. Back to the origins of this thread interest rates are squeezing or going to squeezes many in our country. I think everyone got used to cheap money. 1 Quote Link to comment Share on other sites More sharing options...
Lazy WP Posted July 1 Author Share Posted July 1 I learned in 1983, that if a bank wants to loan you money, don’t!! If they won’t even talk to you, find a way to get the money and do it, within reason. Dad broke his back in 1983, by the time I got the cows sold in 84, I had bleeding ulcers! I signed a $150,000 operating note at 19, the bank told me I couldn’t farm with that little money. To this day, I can’t borrow money I can’t sell something and clean up my debt. The notice that started this thread was brought to the attention of my loan officer. She called this afternoon and explained that the 15 percent interest was just on any unpaid/outstanding left on that loan. (it was paid off 8 months ago) She also said that we could negotiate a lower rate if I wanted/needed another line of credit. That wasn’t how the notice reads, but it has served as a great wake up call. I have been lazy and have bought WAY too many wants instead of stashing it away. 2 Quote Link to comment Share on other sites More sharing options...
766 Man Posted July 1 Share Posted July 1 58 minutes ago, hobbyfarm said: For the most part everyone on this forum is established. I fail to see how any young person fresh out of school can make a go of things. Real estate here has close to doubled in the last few years. Car prices are outrageous. Throw in student loan debt, a baby, and a few other expenses and a young person is strapped for a long long time. Speaking about ourselves we don't have fancy vehicles. For the most part they are end of life vehicles. Any equipment we have is bought with cash and inputs on our little scale are all paid for. I usually try to seperate the wants from the needs. Sometimes that is hard. Farm buildings, equipment, and a pickup truck are all on this wish list. We don't owe money on anything but real estate. Unfortunately we owe plenty. No risk no reward I guess. The real estate has done as well as anything the last few years. Back to the origins of this thread interest rates are squeezing or going to squeezes many in our country. I think everyone got used to cheap money. Honest and well said. 1 Quote Link to comment Share on other sites More sharing options...
Lars (midessa) Posted July 1 Share Posted July 1 10 hours ago, Cattech said: And that is why as soon as my mortgage is paid, I am going debt free for the rest of my life. Debt has been so normalized in our society that a person is shunned when they criticize the use of it. People have been conditioned to purchase by the monthly payment rather than the price of what they're buying. It really hit me one day, I admit after listening to Dave Ramsey.... I bought my house 20+ yrs ago for $150k. Over the years, I have sent off well over $200k to the mortgage companies (that's not including escrow)... and I still owe $50k in principle. Drive through any given town, look at the buildings. Find the newest, fanciest, most elaborate structure.... most likely will be the bank. About the only industry that has a nicer facilities - casinos. Tough part is breaking the cycle. The banks hook you when you're young and dumb. You get bogged down paying their interest to the point of never getting ahead. Once you figure the game out, it takes another 10 years to clean up the mess. Sorry to hear about your rate hike, that sucks and I wish you the best of pulling through. Hope I didn't derail the thread too far, but thanks for the chance to vent on the subject. On the same vein of the nicest houses in town, usually the Superintendent of the local public schools will live in a McMansion. Quote Link to comment Share on other sites More sharing options...
Matt Kirsch Posted July 1 Share Posted July 1 5 hours ago, 460 said: Last year we pulled a home equity credit line. How did you get equity in 3 years? I've been paying my mortgage since 2005, refinanced down to a 15 year in 2014, paid down to about 1/3 of the principal amount, and they tell me I have no equity to borrow against. Quote Link to comment Share on other sites More sharing options...
Matt Kirsch Posted July 1 Share Posted July 1 4 hours ago, 766 Man said: I get what Matt is saying as I too live in New York although closer to Rochester than Buffalo. It's not just here in Western NY though. It's everywhere. House values skyrocketed. Rents skyrocketed. Used car prices skyrocketed. Anyone starting out now can't pay cash even for a "$2500 beater" because everyone is asking $6000 for a $2500 beater, and a car that's priced at $2500 is not roadworthy. Quote Link to comment Share on other sites More sharing options...
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