Savings&Mortgage or No Savings&No Mortgage

You have $200K in stocks and mutual funds and you are considering buying a $200k condo. Would you:

  • A. Cash everything out and write a check for the condo.

    Votes: 2 14.3%

  • B. Make a minimum down payment, keep everything else invested, and start a mortgage.

    Votes: 6 42.9%

  • C. Somewhere in between. If so, what percent would you keep invested and why?

    Votes: 6 42.9%
  • Total voters
    14
  • Poll closed .
jtrain609 said:
It's just the term. I guess I'm not up on the new age terminology. Financial coach, life coach, career coach, etc. I find the term hokey, is all. And I'm not sure about the financial wherewithal of somebody who needs to pay somebody else to chart them out of financially treacherous waters.
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Oh I agree, it's just a term. I've never charged nor made a dime helping people like that.
 
jtrain609 said:
It's just the term. I guess I'm not up on the new age terminology. Financial coach, life coach, career coach, etc. I find the term hokey, is all. And I'm not sure about the financial wherewithal of somebody who needs to pay somebody else to chart them out of financially treacherous waters.
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I've coached someone. Good friend of mine. Made plenty of money but made bad choices. Had a negative income every month. It's a few years later and he's almost debt free.
 
Ian J said:
I've coached someone. Good friend of mine. Made plenty of money but made bad choices. Had a negative income every month. It's a few years later and he's almost debt free.
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I'm going to refer to you as coach from now on.
 
I agree with ATN here, it's simple math. Interest rates are very low for a mortgage and you should have no problem making more than that rate even with a conservative investment. On another note, it's still amazing how many people I've talked to about personal finance that just don't understand or follow this concept. They will put money in an investment account making 5% or money in their savings account making 1% but will carry $10k worth of credit card debt paying 18%.
 
To the original poster. Do not liquidate all of your assets to buy the condo. Make the minimum down payment needed in order to secure the property. I'm not one to advocate using your house or property as an ATM machine but when loans are so cheap right now it makes sense. I try and stick with the 30% rule. I have 30% cash, 30% investments, 30% real estate. It works for me and I'm by no means an expert in this department. It allows me to be spread out enough though that I can take hits when they come and it won't phase me in the slightest. The other thing you should think about is the availability of cash. I'm sure you do not want to separate yourself from your money and when money is cheap right now use someone else's in the mean time. I wish you the best of luck. I chose number 2 and I'm sad not everyone else did either.
 
amorris311 said:
To the original poster. Do not liquidate all of your assets to buy the condo. Make the minimum down payment needed in order to secure the property. I'm not one to advocate using your house or property as an ATM machine but when loans are so cheap right now it makes sense. I try and stick with the 30% rule. I have 30% cash, 30% investments, 30% real estate. It works for me and I'm by no means an expert in this department. It allows me to be spread out enough though that I can take hits when they come and it won't phase me in the slightest. The other thing you should think about is the availability of cash. I'm sure you do not want to separate yourself from your money and when money is cheap right now use someone else's in the mean time. I wish you the best of luck. I chose number 2 and I'm sad not everyone else did either.
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It makes you sad?

Hm. No one here has near enough information to advise this person on anything. Is this even a real person with a real question? Does this person really have 200k in investments? Their sporadic post history indicates they may be some regional pilot living in an apartment - I don't know though. Do they have any debts? How much? Do they have more assets than the 200k?

Makes you sad. What is this 30/30/30 plan? Is the remaining ten for charity? If you have a net worth of 600,000k you should leave 180k in a savings account while owning only a 180k house? Or is that your monthly cash flow plan?

Sorry for the attitude. I'm just confused by the sad part.
 
Well Ian, the first one is just plain dumb. No matter what your personal financial situation is it does not make sense to put all of your money into one asset. The third one especially with interest rates as low as they are does not make sense. Maybe I'm sad because I care about my future and I think everyone else should as well. It doesn't take more than an hour of plugging away to figure out that the second possible answer makes the most sense for today. Granted things will change and maybe it won't make sense down the road. For now it makes sense. That's why I'm sad.

The answer to the other part of your question is both. You should have 30% of your assets tied up in real estate, investments/assets, and cash. I know this is not a perfect science but it will make you rest easy and not stress you to the point of total financial meltdown if you lose one of those bundles.

The final 10% I put away for retirement. Or another thing I want or need to do.
 
amorris311 said:
Well Ian, the first one is just plain dumb. No matter what your personal financial situation is it does not make sense to put all of your money into one asset.
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Who says that's all of his money? What is his monthly income? What if he puts away 200k a year?

amorris311 said:
The third one especially with interest rates as low as they are does not make sense.
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What about ATN's PMI discussion?

amorris311 said:
Maybe I'm sad because I care about my future and I think everyone else should as well.
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What? ATN cares more about himself than anyone cares about themselves and he thinks your 30/30/30/10 idea is ridiculous. Or absurd. Either way, should I listen to you or ATN here? Which would make ME less sad?

amorris311 said:
It doesn't take more than an hour of plugging away to figure out that the second possible answer makes the most sense for today. Granted things will change and maybe it won't make sense down the road. For now it makes sense. That's why I'm sad.
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Wait, I thought you were sad because you care about your future and think everyone else should as well.

amorris311 said:
You should have 30% of your assets tied up in real estate, investments/assets, and cash. I know this is not a perfect science but it will make you rest easy and not stress you to the point of total financial meltdown if you lose one of those bundles. The final 10% I put away for retirement. Or another thing I want or need to do.
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You should? Says who? Because ATN said keeping more than just a few months in cash was absurd and that people who did had mild paranoia.
 
You win. I know what I do lets me sleep sound at night. I don't have a single financial worry and I think it's because of how I do business. Everyone is different but I think planning ahead and having cash on hand is huge. Do what you want. Dissect every sentence and pit me against Todd. He and I are on different playing fields when it comes to this topic.
 
amorris311 said:
You win. I know what I do lets me sleep sound at night. I don't have a single financial worry and I think it's because of how I do business. Everyone is different but I think planning ahead and having cash on hand is huge. Do what you want. Dissect every sentence and pit me against Todd. He and I are on different playing fields when it comes to this topic.
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I understand now. What you're saying is this was your personal plan based off your personal goals and personal financial situation and is not applicable to everyone. That makes a lot more sense man, and planning ahead and being responsible (I can see you are) are certainly keys to success.

Like you, I too do what lets me sleep at night and I do it differently than you and differently than ATN. Like you, I don't have a financial worry either. And if you and I both can avoid $1000 coats, leasing cars, paying lawyers to get out of speeding tickets, and buying overpriced business class seats, I think we'll do just fine. ;)

(Oh, that last bit was just for fun).
 
Ian J said:
. And if you and I both can avoid $1000 coats, leasing cars, paying lawyers to get out of speeding tickets, and buying overpriced business class seats, I think we'll do just fine. ;)

(Oh, that last bit was just for fun).
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Don't forget paying off ex wives..


I'm willing to bet that most of the pilots who are in the "work till I die" retirement plan are there because they didn't stay married to their first wife. It's cheaper to keep her.
 
rframe said:
LOL, the "problem" are people who actually save money, pay off debt, and live within their means?
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Not what I said. At all.

Have you actually ever done financial coaching for anybody?
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No, I have a real job(s).

I thought you were a property manager? I'm now seriously questioning that as well, because if you were you'd see how horrendous the average persons debt, lack of savings, and credit rating are.
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Yes, I do see those things quite regularly, which is exactly why I made the comment that the best thing we could do for kids is to teach them money management in high school. I think you're having a hard time following along, here.

The "problem" in this country is not with people who actually want to pay off debt and save some money, it's with idiots using credit beyond their means and not fulfilling their obligations, then crying to the rest of society for help.
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Credit is not a bad thing. As the Train said, it's a tool. If used effectively, it can create a lot of wealth. If used recklessly, it can send you straight to the poor house.
 
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