On debt and mortgage: Change my view

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lillo9546
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On debt and mortgage: Change my view

Post by lillo9546 »

Hi there,
some people, myself included, appear to be very anxious when it comes to having to take on the burden of a debt / mortgage, even if this concerns the primary asset, which is our house. I would therefore exclude any loans for 21st century toys such as (smartphones, cars, etc.) and keep the discussion on getting debt for our primary house.


I believe that the main factors that influence this problem are job insecurity, wages, low demand for labour. (Please add others)


How could we improve our outlook and our relationship with a debt, which is perhaps 20/30 years, with a monthly recurring payment, and be able to sleep? Is having a schedule of plans B, C, D in case something goes wrong useful? How to build it? How to see debt correctly and be able to live remaining indifferent/unconcerned about it?

ps: just a very stupid example, what about comparing going rv life vs taking a debt and living in a house?
Last edited by lillo9546 on Mon Jun 05, 2023 2:37 am, edited 5 times in total.

2Birds1Stone
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Re: On debt and mortgage: Change my view

Post by 2Birds1Stone »

Maybe a master thread with all the recent questions?

Scott 2
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Re: On debt and mortgage: Change my view

Post by Scott 2 »

What makes you reluctant? Is there an economic environment that would change those feelings? It's hard to provide an argument without understanding what you value.

chenda
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Re: On debt and mortgage: Change my view

Post by chenda »

Why do you want people to change your view ? You need to provide much more detail before anyone can give you useful advice here.

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unemployable
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Re: On debt and mortgage: Change my view

Post by unemployable »

I've probably erred on the side of taking on not enough debt through life. Lots of missed opportunities to buy properties that have 4-5x'd because I thought my situation and comfort level meant I had to pay cash. Turns out I could get margin loans and the like, plus no one seems to care if you lie about stuff or slack off on paying for awhile, plus home borrowers tend to be the first people to get bailed out in a crisis.

I have other reasons I'm reluctant to buy a house now, but money per se isn't really one of them. I have "too much" money now in the sense that I want to declare income I don't need in order to fill up the entire zero-income-tax bracket.

lillo9546
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Re: On debt and mortgage: Change my view

Post by lillo9546 »

Scott 2 wrote:
Sun Jun 04, 2023 8:45 am
What makes you reluctant? Is there an economic environment that would change those feelings? It's hard to provide an argument without understanding what you value.
well, yes.
chenda wrote:
Sun Jun 04, 2023 9:28 am
Why do you want people to change your view ? You need to provide much more detail before anyone can give you useful advice here.
which in particular?
unemployable wrote:
Sun Jun 04, 2023 11:07 am
I've probably erred on the side of taking on not enough debt through life. Lots of missed opportunities to buy properties that have 4-5x'd because I thought my situation and comfort level meant I had to pay cash. Turns out I could get margin loans and the like, plus no one seems to care if you lie about stuff or slack off on paying for awhile, plus home borrowers tend to be the first people to get bailed out in a crisis.

I have other reasons I'm reluctant to buy a house now, but money per se isn't really one of them. I have "too much" money now in the sense that I want to declare income I don't need in order to fill up the entire zero-income-tax bracket.
which are your B, C, D plans in case of a distaster?

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unemployable
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Re: On debt and mortgage: Change my view

Post by unemployable »

lillo9546 wrote:
Sun Jun 04, 2023 12:20 pm
which are your B, C, D plans in case of a distaster?
You mean like a tornado or forest fire or flood that could destroy the house? Or social unrest or economic decline or effects of climate change that would make its location undesirable? Not owning a house gives me more resiliency. "Just airbnb it out"... jesus fucking christ no, airbnb is a scourge upon the earth.

chenda
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Re: On debt and mortgage: Change my view

Post by chenda »

unemployable wrote:
Sun Jun 04, 2023 12:28 pm
airbnb is a scourge upon the earth.
+1000. It's an abomination which I refuse to use.
lillo9546 wrote:
Sun Jun 04, 2023 12:20 pm
which in particular?
Which what ? Whether you should or should not get a mortgage depends a lot on your circumstances, location, long term plans etc. Are we talking Florida or Northern Italy ? How old are you ? What's your income ? What's your plans ?

lillo9546
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Re: On debt and mortgage: Change my view

Post by lillo9546 »

unemployable wrote:
Sun Jun 04, 2023 12:28 pm
social unrest or economic decline or effects of climate change that would make its location undesirable?
This would be 80% of it
chenda wrote:
Sun Jun 04, 2023 12:49 pm
Which what ? Whether you should or should not get a mortgage depends a lot on your circumstances, location, long term plans etc. Are we talking Florida or Northern Italy ? How old are you ? What's your income ? What's your plans ?
Age: 26
Income: 14k -> 10k after taxes
Location: Italy, Centre, Seacoast side.
Plans: Owining a indipendent house (even small) - Family of 4 - Finding the right career/path - and more to come

chenda
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Re: On debt and mortgage: Change my view

Post by chenda »

lillo9546 wrote:
Mon Jun 05, 2023 3:33 am
Age: 26
Income: 14k -> 10k after taxes
Location: Italy, Centre, Seacoast side.
Plans: Owining a indipendent house (even small) - Family of 4 - Finding the right career/path - and more to come
I'd recommend reading @Jean and @Seppia's journals.
I'd also consider purchasing some cheap rural property for cash and refurbishing it.

lillo9546
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Re: On debt and mortgage: Change my view

Post by lillo9546 »

chenda wrote:
Mon Jun 05, 2023 4:34 am
I'd recommend reading @Jean and @Seppia's journals.
The tag didn't worked. Do you remember which is the topic title?
chenda wrote:
Mon Jun 05, 2023 4:34 am
I'd also consider purchasing some cheap rural property for cash and refurbishing it.
When? Where?

chenda
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Re: On debt and mortgage: Change my view

Post by chenda »

lillo9546 wrote:
Mon Jun 05, 2023 8:49 am
When? Where?
Northern Italy, once you have cash and income.

viewtopic.php?p=64930&hilit=Swiss#p64930

viewtopic.php?p=157395&hilit=Seppia#p157395

lillo9546
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Re: On debt and mortgage: Change my view

Post by lillo9546 »

chenda wrote:
Mon Jun 05, 2023 8:55 am
Northern Italy, once you have cash and income.

viewtopic.php?p=64930&hilit=Swiss#p64930

viewtopic.php?p=157395&hilit=Seppia#p157395
Thanks!
Interesting, which are the reasons to buy a cheap property in northen italy?

chenda
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Re: On debt and mortgage: Change my view

Post by chenda »

Northern Italy is a good location, central in Europe, good climate, well connected, affordable.

Did
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Re: On debt and mortgage: Change my view

Post by Did »

Think your relationship with debt would be better if you earned more. Perhaps focus on acquiring useful skills to do that.

lillo9546
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Re: On debt and mortgage: Change my view

Post by lillo9546 »

Did wrote:
Thu Jun 08, 2023 3:39 pm
Think your relationship with debt would be better if you earned more. Perhaps focus on acquiring useful skills to do that.
earn more = 12h a day of office job.
I could do it, 50k net a year, but I feel like it's not in my vein. Do you ever felt like it?

zbigi
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Re: On debt and mortgage: Change my view

Post by zbigi »

chenda wrote:
Thu Jun 08, 2023 3:11 pm
Northern Italy is a good location, central in Europe, good climate, well connected, affordable.
The contry seems to be a mess though? Incredibly inefficient bureucracy, terrible demographics, wealth tax (particularly relevant to FIRE/ERE).

chenda
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Re: On debt and mortgage: Change my view

Post by chenda »

zbigi wrote:
Fri Jun 09, 2023 3:48 am
The contry seems to be a mess though? Incredibly inefficient bureucracy, terrible demographics, wealth tax (particularly relevant to FIRE/ERE).
It certainly has it's problems but I think there's a lot of positive sides to it as well, especially in the more prosperous north.

ducknald_don
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Re: On debt and mortgage: Change my view

Post by ducknald_don »

zbigi wrote:
Fri Jun 09, 2023 3:48 am
wealth tax (particularly relevant to FIRE/ERE).
I'll be surprised if there is any developed country without a wealth tax in ten years.

lillo9546
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Re: On debt and mortgage: Change my view

Post by lillo9546 »

I was thinking of something, correct me if I'm wrong.
It is not worth buying a house with cash, as that cash could be invested in obtaining a net annual ROI of at least 3%, then using this ROI to pay off the mortgage. This is very simple, even a child gets there, but since we had focused on the "mental stress" factor, and being able to "sleep at night", this strategy would allow us to face the mortgage with a different mindset.
In practice, we have only given a small down payment for a house, the rest we have made a mortgage, which we repay with the interest generated by the cash we have invested. Which means, if we fail to pay the mortgage payment, for various reasons, and therefore we would be forced to leave the house, we could simply decide to sell it and repay the remaining portion of the mortgage, or simply leave it to the bank. In this case, we have lost our house, but our cash remains. Which bodes well for us, since with that money we could start doing the same cycle again. Then we have the option to try again.

Is this right? What did I miss? Other strategies?

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