Not following you on the first part--- and doesn't the 2nd part describe debt?
Not following you on the first part--- and doesn't the 2nd part describe debt?
How could you possibly even know that?
That's complete and utter ********.
Oh boy, it's not that black and white at all.
From a strictly long-term, bottom line dollar financial perspective, yes they are horrible ideas. Problem is, by definition, we are human and mortal and thus NOT long-term. We're gonna die.
So for some older-elderly folks, they can be and are, at times, in some circumstances, a *good* idea, even though you get raped on the fees generally. But there is competition, so the raping is not just wretched if you shop around.
But lookit, if you're 77 years old, have NO kids and no favorite charity to leave the house to (so you don't give a crap what happens to the house when you die), you're a widow whose income is $750 / month social security, and you can barely make ends meet, let alone enjoy any frills during your final days on earth, and you can do a RM deal that gives you an income of $1,500 / month, based on a 20 year reverse mortgage, then the only way it's a bad idea is if you live past 97 - now if your life expectancy is 84, based on your health, lifestyle, medical care availability, and all the other factors, then the chance of living another 13 years past that is virtually nil, so why on earth would you NOT double your income to enjoy yourself your last few years on the planet? You just don't need your house when you're dead, folks - if you have no kids and no charity you want/need to leave the house equity to. And you cannot qualify for an ordinary mortgage, by the way, because you don't have the income to start re-paying it.
So they're not *necessarily* bad ideas - yes they *usually* are, but not always - highly dependent upon facts and circumstances - most notably whether you have any kids that you actually like and want to leave some equity to.
Gawdsakes, Dave Ramsey is not a deity, folks - he's not all-knowing, and his black and white world is often misleading and wrong - he's generally right and wise, but like all black-and-white strict philosophies, sometimes gets it wrong by not accounting for gray areas / unusual situations.
From a strictly long-term, bottom line dollar financial perspective, yes they are horrible ideas. Problem is, by definition, we are human and mortal and thus NOT long-term. We're gonna die.
So for some older-elderly folks, they can be and are, at times, in some circumstances, a *good* idea, even though you get raped on the fees generally. But there is competition, so the raping is not just wretched if you shop around.
But lookit, if you're 77 years old, have NO kids and no favorite charity to leave the house to (so you don't give a crap what happens to the house when you die), you're a widow whose income is $750 / month social security, and you can barely make ends meet, let alone enjoy any frills during your final days on earth, and you can do a RM deal that gives you an income of $1,500 / month, based on a 20 year reverse mortgage, then the only way it's a bad idea is if you live past 97 - now if your life expectancy is 84, based on your health, lifestyle, medical care availability, and all the other factors, then the chance of living another 13 years past that is virtually nil, so why on earth would you NOT double your income to enjoy yourself your last few years on the planet? You just don't need your house when you're dead, folks - if you have no kids and no charity you want/need to leave the house equity to. And you cannot qualify for an ordinary mortgage, by the way, because you don't have the income to start re-paying it.
So they're not *necessarily* bad ideas - yes they *usually* are, but not always - highly dependent upon facts and circumstances - most notably whether you have any kids that you actually like and want to leave some equity to.
Gawdsakes, Dave Ramsey is not a deity, folks - he's not all-knowing, and his black and white world is often misleading and wrong - he's generally right and wise, but like all black-and-white strict philosophies, sometimes gets it wrong by not accounting for gray areas / unusual situations.
What temperature is it below????
I agree with this.
I actually don't like the idea of giving an inheritance to my kids when I die. I would much rather pay their college tuition and give them the down payment for a house rather than give them a lump sum when they're already established. More like the biblical inheritance, which was given when the child left home to start their own. That's when they need it most. :rant off:
Randy, keep us posted. i'm very curious about his/her answers. My MIL's home is worth about $150k in this market also. i don't see how or why it would be a good idea to get more than the value of the home.
There's a difference between debt and credit. I think more people going cash only would be good. Too many people don't recognize how to live within their means due to abuse of credit (debt). Credit was never meant to be used that way, but the lenders figured out they could make more profit off our misery if they kept us shackled in debt. Same for retail business. To say otherwise would defy logic.
I only use credit to magnify the power of my dollar. My cash goes in interest bearing accounts with no monthly fees. I use credit to buy as many things as possible, using their 25 day interest free grace period to let my money bear interest. I pay off all credit accounts before interest accrues and carry a zero balance. Further, my credit card company gives rewards points. I haven't paid for an airline flight in years. That's more free money.
If I return something for a refund, I try to get cash instead of a charge back on my card. That way I keep the reward points, put my money back in my interest bearing account and accrue more interest. Same for my new car loan. I could pay off the note right now, but why should I? The note is for 1.9% interest. My money can make more money than the financial company is charging me on the loan. That's more free money for me.
I don't use the power of credit to buy anything I don't need though. That's the trap of free money, buying crap you don't need. I'm also a stickler about value. Even if I need something, I will not buy it if I feel it's overpriced. I'll look for an alternative source (ebay, etc.), an alternative product, or just see if I can do without.
What's really cool is how I feel when I purchase something I need. Instead of the angst of waiting for the bill I can't pay off and accruing more interest charges and penalties, I get to enjoy using the lender's free money for a while. It actually improves how I feel when I buy something, even gas for the car.
Where I've had to take on true debt (home loan), I've tried to mitigate the damage. I buy points on the loan up front to reduce the amount paid in interest. I set up bi-monthly payments to further cut back on interest charges. Finally, I make principal only payments at the front end of the note whenever I can to cut the term on the note. At the current rate, my 30 yr note will be paid off in 18 years, yet I'm not saddled with a 15 year note and higher monthly payments than I can comfortably afford. I even use credit card and debit account auto pay wherever possible to save on stamps.
If you understand money and how it works, you can make it work for you instead of you working for it.
That's one of the reasons I'm don't care much for Dave Ramsey. I'm not into the whole "If you don't do it exactly the way I say, you're doing it wrong" kind of instruction.
Also, "Living within your means" is extremely relative, and has changed over the years. What may be an acceptable amount of debt to you may be "living beyond your means" to someone else. There are also cases where a person was quite obviously living beyond their means. For instance, just barely scraping by on huge 30-year mortgage payment each month.
Debt can be a useful tool to get what you want, and it can also be a terribly addictive drug that can sink you. There is no black and white X amount of debt is good, but X+Y amount is wrong, which is why people get in trouble. You can literally ooch your way to bankruptcy if you don't keep it under control.
Personally, we don't use the credit cards because we wouldn't use them enough to make it worthwhile. And the whole let the plastic in my wallet lead me not into temptation thing...
But along the same lines, that's kind of what we do with our PayPal cards. Our checking account earns interest as long as we use the bank's debit cards 12 times in a month. That's easy to do: a coke here, can of Altoids there, etc. PayPal gives 1.5% cash back, and it draws from your bank account if you don't maintain a balance. We put everything we can on the PayPal card and usually get more than a tank of gas for the Mini in the cash-back amount. We've filled up the truck when the big annual stuff like taxes were due.
That's subjective. A lot of people would say a person with little to no income going into massive debt is complete and utter ********.
Do the smart thing. Sell everything, cash out and go down in a week long whirlwind of Viagra, cocaine and hookers, rather than donate thousands of dollars to a bank.
