How To Decide Whether To Buy Or Rent A Home

Squaw, Lake Tahoe

The rain thrashed our office windows hard one February Friday in San Francisco.  The weatherman encouraged us to stay in and avoid the roads if we could.  Most people would be glum, but not my friends and I.  Rain during the winter in SF means lots and lots of snow in Lake Tahoe!  My buddies and I decided to take a 2.5 hour drive up to Sugar Bowl and hit the slopes that Saturday.  A total of 2 feet of fluffy powder fell overnight and we were in snowboarding heaven!

When we returned that evening, our legs were sore but our faces beamed with smiles as we reminisced our daring jumps off of several of the steepest slopes.  We had no fear because the landing zone was soft.  The very next day in SF, the sun was beaming down a warm 76 degrees and we decided to play some tennis at the local park.  It was that exact moment when I knew that San Francisco was the place I wanted to live for as long as possible.  Months later I bought my first place.

BUYING A HOME IS NOT ABOUT THE MONEY

How Insurance Companies And Appraisers Scam Their Customers

House On Golf Course In HawaiiI’ve always trusted my insurance company, which I’ll call TRICKY DICK in this article, to do the right thing. After all, I’ve been a client of theirs for almost 20 years. They’ve benefited from my growth in assets and I now have auto insurance, homeowner’s insurance, valuable personal property insurance and an umbrella policy with them.  Furthermore, I’ve got a relatively large chunk of change in CDs deposited with them as well.

I had a unwelcomed change in my credit card the other day and had to call Tricky Dick to cancel my existing card on file and add a new one. Imagine my surprise when looking over my previous statement that they were billing me 45% more a month in premiums!  What the hell, I thought to myself.  Clearly there must be a mistake.  Oh how wrong I was.

HOW I GOT SCAMMED

Mortgage Interest Deduction Limit and Income Phaseout

According to the IRS, the maximum mortgage amount you can claim interest on is $1,000,000 on first or second homes if the loan was taken after Oct 13, 1987. You can also deduct interest on $100,000 for a second mortgage loan used for anything other the purchase of your first or second home. More specifically, home equity debt means “any loan whose purpose is not to acquire, to construct, or substantially to improve a qualified home“.  Interesting right?  In other words, you can take a $100,000 home equity line of credit to buy a Porsche 911, an incredible home theater system, and do a little landscaping and all the interest is deductible!  No wonder why everybody took out so many Home Equity Lines Of Credit (HELOC)!

You already know that the government is sexist because the maximum mortgage interest deduction limit stays at $1,000,000 even though both people could have $1,000,000 mortgages. It’s beyond me why the government thinks two people who want to marry with $1,000,000 mortgages each, don’t deserve to keep their deductions. But at any rate, just be aware that if you can afford such a mortgage, you might want to think of this crucial loss of deduction before you get married. With rates averaging 5%-6%,  you could literally lose out on tens of thousands in interest deductions!

DON’T FORGET THE INCOME PHASEOUT KILLER TOO

The State of the Timeshare Industry

Timeshares are often thought of as very luxurious and accommodating vacations that can even end up costing you less than traditional hotel vacations. Despite how wonderful these extremely luxurious vacations are, due to the recent recession many timeshare owners are in need of a way out of their timeshares.

Because of this huge demand from existing timeshare owners to sell their timeshares, a few troubling problems have surfaced. The main problem is that with all of this supply of used timeshares there is little to no demand to purchase a used timeshare on the resale market. This has resulted in many timeshares being listed on popular e-commerce sites such as eBay and Amazon for as little as $1. These listings are basically a last ditch effort to get out of the timeshare contract.

SO CLOSE TO TAKING THE PLUNGE

Why I Won’t Pay Off My Mortgage Until I Retire

Having a mortgage is a wonderful thing.  In fact, I owe much of my work longevity to my mortgage. When I was 24, I came across a lot of cash due to a couple good stock picks.  I was just lucky, because goodness knows I can’t pick stocks for doodoo.  I never really told anybody how much I had, but it was enough to put 25% down on a median priced home in San Francisco and still have several years of mortgage payments left over.

By my mid 20s I began questioning the meaning of work. Perhaps I was simply suffering the lesser known “quarter life crisis.”  Because I had arrived at what I considered to be too much money too quickly, working to make more money lost its appeal.  It didn’t matter if I added another thousand or ten thousand to my savings, making money was so uninspiring.  I was demotivated because of a couple chance trades that required very little skill, just a lot of balls.  The great irony is that I don’t need much of anything to live a comfortable life.  Give me some clean clothes and a place overlooking the beach with a hot tub off the bedroom balcony and everything will be OK!

RENTING JUST FEELS WRONG AFTER A CERTAIN POINT