All Forum Posts by: Account Closed

There was a "divorced guy" comedian from the 1970s with the line: Why get married again? Just find a woman you don't like and buy her a house.

Brandon Turner explains how people can develop a plan to retire in three years using real estate. For purposes of discussion, he uses $150 per month per door for his planning number.

According to General Eisenhower during World War II (as taught in business schools): Plans are useless as soon as they are made, but the act of planning is invaluable because it forces you to think through the issues.

DISCLAIMER. I'm not a financial adviser nor am I license to manage money for other people.

Emergency Cash Reserves

https://www.thebalance.com/how-much-should-i-have-in-my-emergency-fund-2388353

I agree with this recommendation and want to share my experience and decision logic when I faced this choice earlier in my life.

When I bought my house in the 1980s, I had to go with a 15 year product because that is all the banks were offering at the time (the risks were high with inflation above ten percent). I refinanced a few years later with a 30 year product and with the reduced principal and a lower interest rate, my new monthly payment was only 40% of my previous monthly payment.

I took the opportunity to build up a cash cushion of two years by making the lower new monthly payment. Then I went back to the higher old monthly payment because I don't like debt and wanted to get rid of it as soon as I could (my household budget allowed for the higher old monthly payment). If I sound like I'm economically paranoid, I am. The nature of the industry I worked in before I retired (tech) is a boom and bust industry. Also, the types of engineers who make the big bucks change over time as technology advances.

Right now, for example, artificial intelligence researchers at a non-profit in San Francisco make million dollar salaries. In a few years when these types of engineers either become plentiful or become obsoleted by the next generation of experts (perhaps robots), AI salaries will decline. Ideally, these researchers today have enough financial literacy to know to invest a good part of their income in income-producing assets so they can survive the harder times that historically are sure to arrive for them.

It's important to set expectations before you sign the marriage license. No flowers. No jewelry. No problem.

In the large apartment complex where I live, an optional reserve parking space costs $20 per month. Otherwise, you park where you can find a valid spot.

I'm not a lawyer, but a financially sophisticated woman will understand that an engagement ring worth less than $14,000 probably avoids any question over whether the ring is subject to the gift tax. Less money to Uncle Sam means more money to purchase income producing assets. 

I can't predict the future of laws, but if wealthy foreign investors are using expensive condo purchases to launder money and other investors are walking away from vacant properties and tax bills in poorer neighborhoods, I suspect the anonymity laws regarding property ownership with be changed. The Supreme Court has said sunlight is the best disinfectant. 

In the years running up to the 2008 meltdown, some instructors were advocating the regular refinancing of appreciated real estate to raise the down payment needed to buy more real estate. Spreadsheets showed how thousands could be converted into millions in a few years. As long as real estate kept appreciating aggressively (which it did during the NINJA lending era), the approach worked.

These same instructors would complain about how stupid their own relatives were for taking the buy, hold, pay off, buy another, hold, pay off approach to real estate. The ability to survive financial storms is in my opinion a factor that should never be overlooked.

How does one handle the tax-free income situation?

Banks, for example, have a "know thy customer" mandate to make sure they offer products and services that are appropriate for their customers. They always ask me for my taxable income and nontaxable (Roth withdrawal) income amounts to get an idea of what they should be promoting to me. Some banks offer an affiliated brokerage or wealth management service. Banks have told me it doesn't matter if I'm retired or not. Getting a loan depends only on debt and income ratios regardless of where that income comes from. As incomes go, I prefer tax-free income to taxable income.