patrick.net

Suze is awesome. She called the housing bubble in '01 - '02.

I have followed her advice closely, and it has paid in triple.

I love Suze also, even though I was on her "Can I afford it" segment once and it did not go well at all. She was not very nice (even in the parts where I listened but we weren't recording), and because the question was horse related she didn't approve or deny me, I was just not selected for the show and she hung up!

I do however still watch her religiously, I read her books for there no-nonsense advice, and I have implemented many of her strategies. I will never be rich following her, but I am at least out of all debt outside my mortgage, and I have almost a 6 month emergency fund saved. IMO following her advice will most certainly help one stay out of dire financial trouble.

This was the first time I heard an MSMer suggest present affordability wasn't good enough when considering a purchase. The whole basis for her comments was the position that taxes and insurance were going up significantly in the future. In my mind she was basically waving her hands in the air about safety fund!, safety fund!, safety fund! or you're going to be in the next round of FBs.

Taxes add almost $700 a month to my mortgage, Property taxes in New Jersey are very high. Also another thing people fail to consider is utilities, during the cold winter months, some people pay over $600 a month to heat there house.

Where I am at you normally have to pay utilities in addition to rent in most places. In gereral when one buys a house they should already be considering how much there taxes, insurance and association fees as part of the cost of ownership. If they cannot figure out that these will be part of the cost of ownership, they are not ready to buy in the first place.

Use there when referring to a place, whether concrete ("over there by the building") or more abstract ("it must be difficult to live there").
- There is an antique store on Camden Avenue.
- The science textbooks are over there on the floor.
- There are many documents that are used in investigations

Use their to indicate possession. It is a possessive adjective and indicates that a particular noun belongs to them.
- My friends have lost their tickets.
- Their things were strewn about the office haphazardly.

d3,
I think what Suze is suggesting is there are going to be some BIG jumps beyond the norm. Online I ran across a guy from Skaneateles that said when he first bought his home several years ago he was paying about $12k a year in taxes. Now he's paying over $30k. I don't think anyone would have expected they were signing up for that. Sounds like he's on the water but still.

Spikes in heating costs get the letter writers yelling armageddon so I'd say those matter.

My friend owns a 200 year old, 4000 sq footer. Even with the new wood stove on the first floor they were shelling out over $1000/mo. That's not uncommon w/the larger historic places around here. Can't imagine any spike would make them happy. I've heard them grump as it is for the last two years and we didn't even have particularly cold winters.

Emergency funds get eaten up pretty quickly when those type of price conditions stick around for too long.

How about property taxes?

missgredenko says:

when he first bought his home several years ago he was paying about $12k a year in taxes. Now he’s paying over $30k. I don’t think anyone would have expected they were signing up for that. Sounds like he’s on the water but still.

Doest Prop 13 protect this by placing ceiling in CA?

I know this comment will get lost in rent control states like California, but RENTERS DO PAY TAXES!!!! RENTERS DO PAY INSURANCE!!!!!!

Prop 13 is great for slumlords and Disneyland and everyone else who bought property 20 years ago. But don't kid yourself: People don't rent buildings to lose money. Sooner or later a renter's time will come. Its retarded to think that renting a space insulates someone from rising insurance/taxes. When they go up, so does the rent. Well, at least everywhere else save La La Land.

Wait until interest rates are 10%. Property gets MORE expensive and that means rents will GO UP.

Although I could be wrong, I do not foresee people having to pay much more then what they are currently paying in property tax. What I do foresee is that the property tax % rate may go up to counter the drop in home value. For example if your tax rate was 1% and the average home value according to state records dropped by 50%, they may raise the taxes to as high as 2%.

Basically if in 2005 the state showed that the average home was worth $200k and the tax rate was 1% they would have collected $2k from the average person

If state records now show that the average tax value of a home is $100k, they may raise taxes to as high as 2%.

In the end people would still be paying about the same every year.

My guess is that most states will however try and limit the amount they will allow people to claim that their house has lost in value to minimize having to do any major tax adjustments assuming they can.

Suze is awesome. She called the housing bubble in ‘01 - ‘02.
I have followed her advice closely, and it has paid in triple.

Saying that there is a housing bubble in 2001 was NOT a good call. If you bought in 2001, you're actually still doing pretty well in most places. I'd be impressed if someone said to buy in 2001 and then to sell in 2007.

Suze is almost as bad as Jim Cramer. She advocates dollar cost averaging as an investment strategy and was telling people to buy stocks in late 2007. In June 2008 she recommended buying Oil and foreign stocks.

It's worth noting that she makes far more money selling investment advice and appearing on television than she actually makes from her personal investments. She makes an obscenely large income and invests what she earns very conservatively (almost exclusively in municipal bonds and cash equivalents, by her own admission). If most 'ordinary' people with 'ordinary' income followed her investment strategy they would not have enough money to retire on. She's smart enough to recognize this and never preaches what she practices, and as a result she's made far more bad calls than good ones.

I do give her a lot of credit for at least explaining financial planning to the types of people who watch daytime television though (mostly stay at home moms). She does a good job of emphasizing the need to save more, spend less, and generally be more frugal, and that is absolutely sound advice. Just don't listen to her when it comes to actual investments.

On this particular issue, I think she's wrong, at least in most parts of the country. If you pay $1000 a month for rent and the mortgage is also $1000 a month, it will almost certainly be better to buy. Yes, you'll actually be paying more like $1300-1500 a month for the purchase, but you'll get that back in tax deductions. Even a very modest inflation rate would make the purchase decision a no-brainer. If you're only planning on living in a place for a very short time (say, 3-5 years), then it wouldn't make sense, but under just about any other scenario it would be cheaper than renting.

did you just get your RE license Kev? Just askin’.

No. It's pretty dumb to assume that someone pointing out that there are some situations where buying does make sense is a RE agent. If I lived in an area where rents were actually a better deal than buying, I'd be buying right now.

I think the tax advantages get blown out of proportion, especially when the actual cost of ownership is considered (upkeep, sales commision, new drapes and a boatload of tools, hoses, and worries).

I'd say owning vs renting is starting about 20-40k in the hole.

I do give her a lot of credit for at least explaining financial planning to the types of people who watch daytime television though (mostly stay at home moms). She does a good job of emphasizing the need to save more, spend less, and generally be more frugal, and that is absolutely sound advice. Just don’t listen to her when it comes to actual investments.

This is where I followed her advice, and in 2001 I couldn't *really* afford to buy a house anyway, so I didn't.

I am conservative with my money anyway, so I guess I might have gravitated to her for that reason. But there is more to it than that. She advocated not doing something with your money when you dont know what you are doing. Her housing advice in 01 that I refer to is the same advice on Pats front page, and I made my decision to not buy through - out the boom.

I like her dollar cost averaging ideas, as well as her indexing, but I grew beyond that, and I have a recognition that these stragegies are not the best for everyone. Basically I think that she gives good advice to people who need to understand their money better.

One can say they don't believe her but that's her message....skyrocketing taxes and utilities. Kind of like our job benefits getting taxed (now being debated in Congress) and employee provided cell phone use being taxed a base percentage assuming to cover for personal use. (Never collected before but that might be changing in the fall) As citizens she's saying we need to prepare to get nickled and dimed to death. There are huge budget shortfalls at all levels of government and the money is going to have to come from somewhere unless you think the Asians are just going to be shelling out more and more ad nauseum.

I know in CA you have some voter controls over those things. Over here on the other coast, not so much. Our gas/electric utility has also filed for an increase w/the state. Last year there was a spike in hardship cases due to oversized bills. Guess we'll be looking at even more this year.

I do understand Prop 13 and that this is basically a CA housing blog. I understand that CA voters gave an overwhelming no to budget increases. But the smoking nuclear hole in the budget is still there. So now what? What will happen if the government is forced to shut services down?. Remember Yogi Beara's it's not over till it's over. I can't help but think that even after cutting back on fraud and pork in the state there's still not going to be enough. I mean the hole this year is $25 billion, right? And probably worse next year? People carry those mortgages for 10s to 30 years. I hope they don't figure wrong. Or we'll just be looking at FB foreclosure round #2 , and #3, and #4 until we begin to make a decent dent in our sovereign debt burden.