Comments on: Property Makes People Think Irrationally

By: admin

admin — Thu, 05 Nov 2009 03:08:58 +0000

Jana – You need AT LEAST $1million to buy a 1,500 sqft single family house in a decent part of San Francisco. In the nicer areas, we’re talking $1.5 million – $2.5 million for just a normal 1,700-2,500sqft house. It’s so expensive b/c a lot of people are making a ton of money here.

Condos are fine, and is an efficient way to live. No backyard to mow, low maintenance. To each their own. I live in a house with a small back yard, and I tell ya, it’s a little too big, and the house isn’t big at all!

By: Jana

Jana — Thu, 05 Nov 2009 02:59:18 +0000

If he chooses a less expensive house…he’ll have the full 20% down….a starter house and he’ll meet the 30/30/3 rule. Modesty isn’t fashionable, but it is financially prudent.

While I don’t agree with everything Robert Kiyosaki says, I did like a point he made in “Rich Dad, Poor Dad”: The Rich Dad lived in a very modest home and invested his wealth in money-making small businesses. He told Robert “if your home is your biggest investment, you’re a fool”. In other words, buy a modest home with low mortgage payments, so you have available money to invest in other things….

This may not be specific to San Francisco, but I’ve met several SoCal transplants to my state who look down on condo dwellers. They grew up in towns where the poor kids lived in apartments, and anyone with any money owned a house with a yard. Psychologically it’s ‘moving down’ to buy a reasonably priced condo, instead of buying a McMansion house. Payments be damned!

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By: Lee

Lee — Tue, 15 Sep 2009 01:32:51 +0000

I’m doing a methodical wander into the archives as we speak. :) Thanks for the warm welcome!

By: admin

admin — Tue, 15 Sep 2009 00:02:55 +0000

@Lee Sounds good Lee! Good to hear you share in my car journey of not going overboard. I have a 9 year old car myself. Funny you speak of self-worth and cars. I just finished a small post last night on exactly those topics. You can thumb through the older car posts if you wish. Welcome to Financial Samurai Lee!

By: Lee

Lee — Mon, 14 Sep 2009 23:56:16 +0000

Forgot to say: Yes, this guy is nuts if he’s considering buying a house with 13% down!

By: Lee

Lee — Mon, 14 Sep 2009 23:55:34 +0000

I used to believe (as early as January this year) that if you didn’t own a house, you had not “made it” financially. At the early stages of my financial rebirth, this made even more sense to me. All said though, I’ve learned a lot over the last 9 months, and my attitude is slowly changing. I had for example longed to buy a new car. But I’ve reached the point now that my attitude is thus:

Yes, the car I drive IS 7 years old. But, I’ve owned it from new, know its history, it works flawlessly and likely has at least another 100,000 miles in it. It also gets 67.5 mpg which with our gas prices, is a blessing. I could change it, but the only thing that’d bring is that I can say “Hey! Look at me! I’ve got a new car!”.

My sense of self-worth, my inner feeling of social status is no longer driven by what I own. I actually no longer care what people think of me based on what I own/drive/live in. Providing what I own/drive/live in fits my principles, works well and are efficient, then I will keep owning them/driving them/living in them.

Lee

By: admin

admin — Tue, 08 Sep 2009 21:09:43 +0000

Being “All In” is a great analogy. Do or die. The Writer’s Coin guy would seriously be all in with his “13%” downpayment. That’s a no no, just in case you get bad beat, you want a big enough bankroll to handle the swings.

By: David@DINKS Finance

David@DINKS Finance — Mon, 07 Sep 2009 16:08:32 +0000

People are trained to think that their home will be their biggest and best investment of their life. Unfortunately that will cause irrational investment decisions.

I like what you said about property and how it is like stocks – hit and miss. You might make the greatest purchase ever, but then make an absolutely horrid property investment. Problem is, you are essentially “all in” when you buy your house because people buy the biggest they can get usually. So if that investment does not pan out, you do not have any cash to make that really great purchase.

By: admin

admin — Sat, 05 Sep 2009 17:41:45 +0000

@Geek I love GRS. JD is such a good guy, and also very accessible. A model for us to go by.

By: Geek

Geek — Sat, 05 Sep 2009 16:09:01 +0000

Thanks! Found you via GRS :)

By: admin

admin — Fri, 04 Sep 2009 23:57:05 +0000

@Geek Hey there! Good to hear from you and welcome to Financial Samurai! Keep on saving, and don’t let the irrationality of home buying get the best of you.

Although owning your castle has this priceless feeling, you just don’t want to rush into the biggest purchase of your life like so many did.

Have a great weekend! RB

By: Geek

Geek — Fri, 04 Sep 2009 18:43:55 +0000

! This is totally right. We’ve been saving for a house for a couple of years now, and my guy is getting this terrible burning itch to buy something.
Houses in the neighborhood I want to live in are about 550-600 for something nice, and houses I’d live in are about 400 for something nice. We have about exactly 20% down for a livable (but not most desirable) house, and my guy is so anxious!
“If we don’t buy the house this year, you should just get that car you want”
“We have 20% on this”
Etc.
I’m going to introduce the 30% concept, which is pure genius from sensible people like you to people like me who are still fighting to find out what is sensible.