Credit Card question

[Sean of the Thread]

Bank of America increased our rate from like 9% to 21%.

Anyways they said they sent us some letter and it stated we had until 11/13/08 to call them or respond to stop the increase or some bullshit?


Been on the phone with them for about 2 hours now and not getting much figured out.

Never had a late payment etc.

Anyone have any fucking clue?

[Moist Happenings]

Yeah. After like 6 months if you read the fine print on your cards, they usually bump the interest rate.

"0% APR!!!" usually means "0% APR for 6 months then we bump it up to 20%".

Switch out your credit cards every 6 months, unless you get a card with a fixed rate.

Get a new card, pay off the old one with the new one, and keep your rate low.

It's a pain in the ass, but most credit cards will do that to you.

Edit to add:

Also you have to be really careful. A lot of cards will say "0% APR for 6 months", but if you go 6 months and 1 day, you accrue the interest for 20% APR for that first six months.

I haven't had a real credit card in years, but some examples that come to mind that I know do this are Office Depot and Sears credit cards.

[AestheticDeath]

If you stop the increase, you basically are closing the account, and can't use it anymore.

[The Ponzzz]

I wouldn't switch cards every 6 months. That's going to destroy your credit in the long run. Generally, when they do give you that notice of the increase and you miss the deadline, you can still get them to help you out. Chase tried that with us and we just said ok, well we'll be closing our account with you because I can get 6% with So-and-So. They changed their tune quick. Unless of course, they have you by the balls. Then they can be jerks.

[Sean of the Thread]

Have had this card for like 8 years.

Anyways after talking on the phone they see we made the payment on the 11th that didn't go through because of their fuck up and switched our interest rate back down to 7.9%

Weird shit.

[Moist Happenings]

I dunno if it'd ruin your credit in the long term, though admittedly I don't use credit if I can help it and don't know much about how credit scores work. My understanding is that having debt and running your credit score a lot can hurt. I don't see why it would be bad to run credit once every six months or so to get a new card, just transfer the debt, and close the old account. It's not like you're missing a payment.

Does it actually hurt your credit to do that?

[The Ponzzz]

Your history will show a lot of open accounts, which will hurt. I know someone more knowing can explain better.

[The Ponzzz]

Oh and good work, Sean.

[Moist Happenings]

Your history will show a lot of open accounts, which will hurt. I know someone more knowing can explain better.

Hmm, yeah I guess that could hurt in the long term somewhat. I can understand that. Might not be too bad though if you never have a lot of open accounts at the same time. You're just trading one for another. I guess it's a trade-off if you have an account like that. A few points on the credit score to save yourself X amount of dollars in interest.

Credit sucks anyway. It's almost never a good idea to use it, at least in a consumer capacity. Student loans are great and all, but buying a house, or a car on credit? Bleagh.

If you can't afford food, get government assistance. It's out there for those who'd have it.

If you can't get the car you want? Buy a scooter til you can get the car you want.

[Stretch]

If the company is increasing your rate in response to a negative action on your credit report (i.e. late payment to them or another lender), there's not much you can do about it except call and try to get them to lower it.

If the company is increasing your rate due to economic conditions, you can basically have them lock in your old rate for your existing balance, but you won't be able to use the card anymore.

Every time you apply for credit (card, loan, mortgage, etc.) and the lender pulls your bureau, your score gets dinged. Every negative action (i.e. late payments / charge offs / BKs), your score gets dinged.

Nobody knows exactly how much, and it's proprietary as to what the 'ideal' level of debt is, but the general agreement is that you shouldn't revolve more than 30% of your credit limit. Some people advocate carrying SOME credit card debt to boost your score, but that sounds insane to me.

Also keep in mind that the age of your oldest account has a huge impact on your score. Continuously closing accounts prevents you from building up a trade line with a long history of good payments. It's the only reason I bother keeping my shitty credit card from college open and active.

[Sean of the Thread]

We are looking to dump our chase accounts since they fucked us and since we had a WaMu it's now also chase.

Anyone have any good suggestions on a card to transfer the balance to until we can pay that bitch off? I think it's around 8k

[Moist Happenings]

Good info Stretch. I'd rep you but I can't do it again so soon.

[Tsa`ah]

Bank of America increased our rate from like 9% to 21%.

Anyways they said they sent us some letter and it stated we had until 11/13/08 to call them or respond to stop the increase or some bullshit?


Been on the phone with them for about 2 hours now and not getting much figured out.

Never had a late payment etc.

Anyone have any fucking clue?

It all sort of depends. If this is a new card ... I suspect the same as others have stated, introductory rates.

The other possibilities are that they were alerted in some fashion (probably investigation) of your employment status. The other possibility is that they're doing what every other lender is doing ... hiking rates and/or cutting the max.

Amex, Discover, Visa and MC have all nuked my max ... which stings ... but they're pretty much going to do it to everyone eventually. Unless of course the market makes a drastic upswing and maintains for a few quarters.

[Stretch]

AMEX used to have a pretty liberal credit limit policy, and really good customer service. Not sure now since they're in a bit of trouble, but I'd recommend them.

If you disliked Chase's policies / customer service, you're not going to like BofA, Citi, or Capital One.

The card industry is bracing for the hammer to drop, and I'm pretty sure everyone's tightened their lending policies.

[Sean of the Thread]

Discover had some offer (it's in my desk somewhere) where it was 0% on life of balance as long as you made two purchases a month at the other APR. Have to read more into that.

Capital city bank sent us a 0% apr with the same fine print as usual for 12 cycles (don't plan on using it anyways) and 5.99% on life of balance transfer. Same fine print that most have. Oh and they don't charge a balance transfer fee like the others.


That's all I can find so far there is waaaay too much card shit on the internet to phish through.

[Moist Happenings]

I'm sure Discover's got good deals. Nobody takes it but Sam's Club.

[Bobmuhthol]

<<Credit sucks anyway. It's almost never a good idea to use it, at least in a consumer capacity. Student loans are great and all, but buying a house, or a car on credit? Bleagh.>>

Not everyone has hundreds of thousands of dollars in liquidity.

Oh, and changing your credit card every 6 months is absolutely not a good idea.

<<Some people advocate carrying SOME credit card debt to boost your score, but that sounds insane to me.>>

The rationale is that if you simply pay off your balances all the time then you have no experience of actually needing credit / being in debt.

[Tolwynn]

Bank of America did the same crap with my card. The frosting was that they wanted the new doubled interest rate to apply to the existing balance as well. I cancelled that card, and have had much better luck with Citibank instead.

[Bobmuhthol]

Citi can suck a huge dick, btw. They're fucking idiots.

[Moist Happenings]

Not everyone has hundreds of thousands of dollars in liquidity.


Unless you're using credit so you can later afford the things you want for something like a student loan, it just isn't smart to live tenuously above your means. I didn't always have money liquid, but my philosophy was always the same. Even when I was flat broke and jobless, I didn't have to worry as much because I didn't have to think about whether or not the bank was going to take my car away.

Sure, maybe you can afford this 4 year car loan with your current job, but what if somehow you lose it? What if the economy takes a downturn somewhere in that four years and you can't afford it anymore? The bank doesn't say "Oh well, don't worry. Just pay us when you have the money.". They say "This is our car now. What's that you say? You paid 95% off it off already? No, you own 0% of it now. Sucks to be you."

I didn't have nice things, but what I had was mine.

[Bobmuhthol]

That still fails to explain how you can buy a house with no credit.

[Moist Happenings]

With cash, liquid. And until I could afford to do that, I rented. Yes, the end result is the same, not being able to pay rent or mortgage, except you take it much worse with the mortgage.

Can't pay rent - Get evicted - Live with friend/mom/etc

Can't pay mortgage - Lose house - File Bankruptcy - Never have a chance to get a loan again for any reason - Live with friend/mom/etc.

Edit to add:

Can you really advocate taking loans and credit right now in the middle of an economic crisis created largely because of lenders giving out too much credit to people who in turn couldn't afford the payments after the economic boom settled?

Somewhere along the line you've gotta say: Hey, living above our means might have been a bad idea.

Credit's a gamble. You're basically saying: "I am 100% sure that I am going to be in a stable financial situation for the next 5 years (car), next 30 years (mortgage). It's a gamble that I'm not willing to make, and I gamble for a living. You can't predict the "WTF" factors in life. They're always going to come at you. That much I can guarantee. You just never know when.

[Keller]

With cash, liquid. And until I could afford to do that, I rented. Yes, the end result is the same, not being able to pay rent or mortgage, except you take it much worse with the mortgage.

Can't pay rent - Get evicted - Live with friend/mom/etc

Can't pay mortgage - Lose house - File Bankruptcy - Never have a chance to get a loan again for any reason - Live with friend/mom/etc.

Edit to add:

Can you really advocate taking loans and credit right now in the middle of an economic crisis created largely because of lenders giving out too much credit to people who in turn couldn't afford the payments after the economic boom settled?

Somewhere along the line you've gotta say: Hey, living above our means might have been a bad idea.

Credit's a gamble. You're basically saying: "I am 100% sure that I am going to be in a stable financial situation for the next 5 years (car), next 30 years (mortgage). It's a gamble that I'm not willing to make, and I gamble for a living. You can't predict the "WTF" factors in life. They're always going to come at you. That much I can guarantee. You just never know when.


I support not buying a car with a loan. But I think you're bat-shit crazy to money at rent instead of a house. With rent, you're certain your money is thrown out the window each month. With a house, you've got the potential to be throwing money out the window on interest payments until you start paying on principal. For a lot of people, that turns out to be a good deal. For others, it's no worse than renting.

[Stretch]

Can't pay rent - Get evicted - Live with friend/mom/etc

Can't pay mortgage - Lose house - File Bankruptcy - Never have a chance to get a loan again for any reason - Live with friend/mom/etc.

Edit to add:

Can you really advocate taking loans and credit right now in the middle of an economic crisis created largely because of lenders giving out too much credit to people who in turn couldn't afford the payments after the economic boom settled?



FYI, charge offs and bankruptcies roll off your credit history after 7 - 10 years. And it's not impossible even now for people who filed for Ch 7 BK to get a loan.

And we're in the current crisis because there was a system in place where people were incented to close deals and were able to throw all the risk for those deals over the fence to someone else.

As well, for every victim of predatory lending, there are just as many people who treated their house as an ATM.

[Moist Happenings]

I support not buying a car with a loan. But I think you're bat-shit crazy to money at rent instead of a house. With rent, you're certain your money is thrown out the window each month. With a house, you've got the potential to be throwing money out the window on interest payments until you start paying on principal. For a lot of people, that turns out to be a good deal. For others, it's no worse than renting.

Getting a loan for a house is alright situationally I suppose. And by situationally I mean if you have a pretty significant buffer between your payments and your earnings.

Too many people go out there and get the absolute maximum dollar amount they can possibly afford in a mortgage just so they can buy a house with 4 bedrooms just in case they decide they want to have two more kids.

If you're making a good enough amount to pay your mortgage, your bills, and still be saving, it's a good investment, and worth the gamble.

If you're getting the maximum amount that you can possibly afford, then buying a widescreen TV for the house on your credit cards because if you buy cheaper food you can afford it, there's something that needs to happen.

I guess my issue is more with financial responsibility than with credit itself.

Housing situationally, student loans, and desperate need loans are okay in my book. Using credit to buy something you don't absolutely need though for most other reasons I just don't like.

[Keller]

Can't pay mortgage - Lose house - File Bankruptcy - Never have a chance to get a loan again for any reason - Live with friend/mom/etc.

I call shenanigans.

People declare bankruptcy because of debt not associated with the mortgage.

Mortgages are secured by the underlying home and are therefore (generally) non-recourse to the mortgagee.

Further, w/r/t "never have a chance to get a loan again for any reason," if you're not getting a loan to buy likely the most expensive asset you'll (general person, not you specifically) ever own, why in the world would you get another loan? What I am saying is -- if you're going to save up 250k to buy a house straight up in order to protect your credit rating, what are you protecting your credit rating for? Some sort of business loan?

[Keller]

Getting a loan for a house is alright situationally I suppose. And by situationally I mean if you have a pretty significant buffer between your payments and your earnings.

Too many people go out there and get the absolute maximum dollar amount they can possibly afford in a mortgage just so they can buy a house with 4 bedrooms just in case they decide they want to have two more kids.

If you're making a good enough amount to pay your mortgage, your bills, and still be saving, it's a good investment, and worth the gamble.

If you're getting the maximum amount that you can possibly afford and then buying a widescreen TV for the house on your credit cards, there's something that needs to happen.

I guess my issue is more with financial responsibility than with credit itself.

Housing situationally, student loans, and desperate need loans are okay in my book. Using credit to buy something you don't absolutely need though for most other reasons I just don't like.

Oh, I can agree with that.

[Amaron]

we just refinanced our home and had a hard time because they said while our credit was good, we had too many cards and some were too recent (IE we had swaped some higher interest rate ones over to 0 for 12 month plans)

So yeah it does hurt your credit.

[diethx]

FYI, charge offs and bankruptcies roll off your credit history after 7 - 10 years. And it's not impossible even now for people who filed for Ch 7 BK to get a loan.

:yeahthat:

My mom and dad filed bankruptcy 15 years or so ago, before they split. I'm sure my dad's credit is perfect by now because of his wife who makes a crapton and they have no debt.

My mom has a mortgage on her house and tons of credit and she said that this summer she was taking out a home equity loan and someone who was checking her credit for that said that she had near perfect credit (850 or something?) So, yeah, filing bankruptcy doesn't keep you from getting a loan for forever, and it doesn't forever fuck up your credit.

[thefarmer]

Yeah. After like 6 months if you read the fine print on your cards, they usually bump the interest rate.

"0% APR!!!" usually means "0% APR for 6 months then we bump it up to 20%".

Switch out your credit cards every 6 months, unless you get a card with a fixed rate.

Get a new card, pay off the old one with the new one, and keep your rate low.

It's a pain in the ass, but most credit cards will do that to you.

Edit to add:

Also you have to be really careful. A lot of cards will say "0% APR for 6 months", but if you go 6 months and 1 day, you accrue the interest for 20% APR for that first six months.

I haven't had a real credit card in years, but some examples that come to mind that I know do this are Office Depot and Sears credit cards.


Yet again, you give advice when you clearly know nothing.

[Moist Happenings]

Yet again, you give advice when you clearly know nothing.

Never seemed to adversely affect my credit score, and I check it fairly frequently.

And the thing about the 6 month initial APR's is absolutely true.

Edit to add:

Additionally, I still intend to do it like that should I get any credit card debt in the future. It's the only way to keep yourself at 0% interest, even if it does cost you a couple points in the long run. I'd rather save 500 bucks a year than have a credit score 5-10 points higher than it would be otherwise.

Edit again to add:

So just like the last time I gave it and you bitched, it was good advice in my opinion, so hop on my nuts Vivian.

[Bobmuhthol]

<<It's the only way to keep yourself at 0% interest>>

My card has 0% interest on balances under $250.

[Moist Happenings]

Well on a balance of under $250, I wouldn't be worrying about my credit card debt anyway.

I'm talking normal credit card debts, like 5 or 10k

[thefarmer]

Never seemed to adversely affect my credit score, and I check it fairly frequently.

And the thing about the 6 month initial APR's is absolutely true.

Edit to add:

Additionally, I still intend to do it like that should I get any credit card debt in the future. It's the only way to keep yourself at 0% interest, even if it does cost you a couple points in the long run. I'd rather save 500 bucks a year than have a credit score 5-10 points higher than it would be otherwise.

How would you even know if it affected your credit score?


I dunno if it'd ruin your credit in the long term, though admittedly I don't use credit if I can help it and don't know much about how credit scores work.

Does it actually hurt your credit to do that?



Switch out your credit cards every 6 months, unless you get a card with a fixed rate.

I haven't had a real credit card in years....



Can't pay mortgage - Lose house - File Bankruptcy - Never have a chance to get a loan again for any reason -

Yet again, you spout off advice when you know nothing.

The simple fact you don't realize what you do, makes you that much more amusing.

[Moist Happenings]

How would you even know if it affected your credit score?








Yet again, you spout off advice when you know nothing.

The simple fact you don't realize what you do, makes you that much more amusing.

Let me go ahead and clarify for you then. I do have two credit cards. I just don't use them. I do request that whenever someone runs my credit, and it has happened a few times in the past couple years, they give me a copy of my report. I also get my credit report online every now and then just to make sure nobody's using my social security number for anything. I'm not terribly secretive when it comes to personal information, and if somebody really wanted mine they could get it. So to be safe, I check every now and again.

And as I do switch out my credit cards every six months, regardless of whether or not I spend money on them (which I really haven't), my credit score hasn't changed more than 10 points in the last four years or so.

Therefore, I have not noticed a change in my credit score, even though I am opening and closing accounts. Additionally, if those 10 points were to come from opening and closing accounts (It's gone 10 points up, not down by the way), it wouldn't make a difference to me either way. The value of saving money from a lower APR is greater than a few points on the score.

Edit to add:

So I apologize for not giving you the entirety of my financial background before giving advice, good advice for his situation as it may be if he was actually in an introductory APR thing. I would think to Sean at this point, with very little or no money to work with, that it would be more important for him to save actual dollars than save credit points.

[thefarmer]

Let me go ahead and clarify for you then. I do have two credit cards. I just don't use them.


I haven't had a real credit card in years, ....

You're very talented at backpeddling.

[Moist Happenings]

You're very talented at backpeddling.

Did you have something to say about whether my advice was good or bad, or did you just want to nitpick about how I said it?

Edit to add:

And no, I don't consider the credit cards I have real credit cards. Real credit cards are cards that you actually use to pay things and then have to worry about the interest, and paying it off. I keep mine as "Oh shit I don't have any cash and I need something right now" cards. I haven't had the need to use them yet, but I still upkeep them just in case.

[thefarmer]

Did you have something to say about whether my advice was good or bad, or did you just want to nitpick about how I said it?

When you're knowledgeable about a subject enough to give 'advice', I will. In this thread, like others, you're just typing text under the assumption you know something. Then when corrected, you backpeddle, then whine about people 'nitpicking'.

[Moist Happenings]

When you're knowledgeable about a subject enough to give 'advice', I will. In this thread, like others, you're just typing text under the assumption you know something. Then when corrected, you backpeddle, then whine about people 'nitpicking'.

'People' being you in the only other case that came up. It was good advice in the other case, and it's good advice in this case. Unless you have some reason to say it's bad advice, fuck off.

[thefarmer]

'People' being you in the only other case that came up. It was good advice in the other case, and it's good advice in this case. Unless you have some reason to say it's bad advice, fuck off.

You have a severe case of seeing what you want to see.

This entire thread is filled with people disagreeing with you.

[Sean of the Thread]

Well we've been forced to use ours to pay some bills and fund my daughter's last birthday party the last few months.

Also maxed one out when our first daughter was born.. we were just second year college students and had no health insurance or money laying around to do a baby room/baby proof/hospital bills and shit.

Still owe about 5k on that one.. it's the one in question atm that I'm looking to swap on. One with about 8k on it.. fucking chase and a WaMu with like 4k on it. Circuit City is closed account but it's almost paid off.

[Moist Happenings]

When you're knowledgeable about a subject enough to give 'advice', I will. In this thread, like others, you're just typing text under the assumption you know something. Then when corrected, you backpeddle, then whine about people 'nitpicking'.

The difference between the few people who had something opposite to say about my advice and you?

They contribute something useful. I had a completely sensible constructive conversation with them.

You just like being a douchebag. I think you're playing the wrong game. Maybe you should go and try Counterstrike.

And to Sean:

Switch the thing out with one of those introductory things. 6 months from now you won't likely have paid the whole thing off, but you'll have saved yourself $200 bucks even compared to that 8% you've got right now. I really highly doubt that it's going to cost you some significant amount of points on your credit score. Money's what you need right now.

[Inspire]

Having open accounts is not a bad thing.

What you should do is note how much available credit you have between all of your credit cards and how much of that credit you use. IE.

Credit Card A -- Limit -- 5000 -- Used 2500 ---- Usage 50%
Credit Card B -- Limit -- 5000 -- Used 0 ---- Usage 0%
So you have available -- 10000 and you've used 2500 -- So you're using 25% of your credit.

Try to have less than 30% of your available credit used.


I think they actually just changed the way credit reporting works as well. As long as you make your payment on time every month, your credit will get better.

[The Ponzzz]

I haven't read through this whole thread yet. But what Keller said is dead on about getting a house via a mortgage than renting. With the house, at least you are investing money. If the economy and real estate ever flips back to normal, property normally goes up about 4% in value every year after the first two years of owning it. Essentially by making wize improvements on the house, you can always make your money back in time/theory even with the loss on interest.

Filing bankruptcy is horrible, but you can recover from it, if worse case scenario ever happens.

[Kranar]

But what Keller said is dead on about getting a house via a mortgage than renting. With the house, at least you are investing money. If the economy and real estate ever flips back to normal, property normally goes up about 4% in value every year after the first two years of owning it.


I have to disagree. I personally think mortgages are way overrated and in many cases sub-optimal.

You argue that housing prices during normal times increase 4% in value, for one this is just slightly more than the rate of inflation and secondly the interest rate on a mortgage is likely to be higher than 4% to begin with.

While I certainly don't agree with most of what Neff has said, I think steering clear of debt is usually the better option or only taking on debt for short periods of time. Rent a cheap apartment/house that is well within your means, and instead of paying interest on a mortgage which results in your house costing an average of 35% more over a 13 year period, put your money in a GIC, or invest it or have your money work for you for 10-15 years.

This myth that by renting you're wasting money just isn't true. Renting is significantly cheaper than a mortgage, take the money you save from renting for 10-15 years and have that money work for you rather than pay interest, then buy your house debt free or take out a small 3-5 year mortgage.

I can't comment for people who are like in their 40s and have established their life etc... but if you're like me, young, in your 20s, beginning your life and haven't gotten into the mess of having debt here and there on your car, house, and God knows what else... then I strongly recommend trying to live a life as debt free as possible.

[thefarmer]

They contribute something useful by pointing out how I'm repeatedly wrong just like you do

Fixed.

[The Ponzzz]

I have to disagree. I personally think mortgages are way overrated and in many cases sub-optimal.

You argue that housing prices during normal times increase 4% in value, for one this is just slightly more than the rate of inflation and secondly the interest rate on a mortgage is likely to be higher than 4% to begin with.

While I certainly don't agree with most of what Neff has said, I think steering clear of debt is usually the better option or only taking on debt for short periods of time. Rent a cheap apartment/house that is well within your means, and instead of paying interest on a mortgage which results in your house costing an average of 35% more over a 13 year period, put your money in a GIC, or invest it or have your money work for you for 10-15 years.

This myth that by renting you're wasting money just isn't true. Renting is significantly cheaper than a mortgage, take the money you save from renting for 10-15 years and have that money work for you rather than pay interest, then buy your house debt free or take out a small 3-5 year mortgage.

I can't comment for people who are like in their 40s and have established their life etc... but if you're like me, young, in your 20s, beginning your life and haven't gotten into the mess of having debt here and there on your car, house, and God knows what else... then I strongly recommend trying to live a life as debt free as possible.

I dunno Kranar... At least with buying you have a ROI, where renting the money is completely thrown away. As I said, if you make smart improvements, you can increase your home value but 10s of thousands on much smaller costs.

Most people don't have what you have in their mid 20s. We'll have our mortgage paid off in roughly 5-8 years if we decide to stick with this house.

[BigWorm]

I agree partially with both Keller and Kranar. On one hand, using a mortgage to fund a home purchase is one of the best ways to increase your net worth. On the other hand, I've known more than a few people who became "house poor" and couldn't afford anything except the costs required to to keep themselves in their home. I think people tend to underestimate the incidentals of home ownership and don't realize everything they are getting themselves into. Although I make a good salary for a young single professional in my area, I decided the opportunity cost of buying my own house isn't worth it yet.

[Moist Happenings]

Fixed.

Ohhh okay, so you disagree with something I said then. Now we're getting somewhere.

Let's start from here. What advice did I give that you thought was bad?

Sean's question was whether or not anyone had any idea why his bank would raise his interest rate on his credit card. It included nothing about whether switching credit cards would lower his credit score, which the posters in this thread seem divided on somewhat.

Nor does it ask the question of what is more important, a few points on his credit score, or a few hundred dollars in interest.

Some people say switching out cards every six months can cause some damage to your credit score, but nobody knows how much. Another says that it causes no damage. I know personally I haven't seen any significant change in my score doing it, but that doesn't mean it's true or false.

Unless we have someone who actually works for one of the credit bureaus here I doubt we'll ever know for sure.

Either way, even if it costs him ten points to his credit score, I stand by the my first post, and the advice I gave in it to minimize his payments.

Now what exactly do you disagree with Vivian? Or do you just want to keep saying "You're wrong" without giving something specific in argument?

Edit to add:

It really speaks to your desire to be a troll when you just end up resorting to fabricating quotes to try to make yourself look better. If you actually have some legitimate concern, voice it, and I'll be more than happy to have a healthy, constructive discussion with you on the issue which may or may not sway my opinion. That's how debates work.

[Kranar]

I dunno Kranar... At least with buying you have a ROI, where renting the money is completely thrown away. As I said, if you make smart improvements, you can increase your home value but 10s of thousands on much smaller costs.


The point isn't to rent as much as you'd pay in mortgage. Obviously if it's a choice to rent $1700 vs. mortgage of $1700, then take the mortgage.

The point though is, and I just took g++'s budget from the other thread as an example but many other examples of people paying rent are similar... if you have $1700 a month to spare after your non-housing related bills/expenses are paid, is it better to put that $1700 into a mortgage, or to rent for $700 a month a smaller apartment/house, and save $1000 a month into a house fund.

Rough calculations... over a 10 year period comparing a mortgage of $1700 a month at 6% you can purchase a house worth $153,636. This is ignoring all other fees that you have to pay with a mortgage, like property taxes and incidental fees/repairs, utilities etc... who knows how much more in payments that adds up to, but for simplicity and for the sake of argument I'll leave those out.

With the $700 a month in rent and saving $1000 a month at 6%, over 10 years you would have saved $164,698.

Your strategy when renting is to put the money you save by renting away into a savings account, and having your money work for you instead of paying interest on the mortgage.

[Moist Happenings]

Very astute observation and calculation, Kranar.

[Sean of the Thread]

My 81 year old pal bought his condo for 80k in 1988 and it's now worth 500k. And it's just basically a normal apartment but with an awesome view of the gulf.

Dipshit just did a reverse mortgage on it too.

[Bobmuhthol]

<<Rough calculations... over a 10 year period comparing a mortgage of $1700 a month at 6% you can purchase a house worth $153,636.>>

That's great and all, except you'd probably have a 30 year mortgage so $1700 a month would give you a much better house. And I'd rather pay off a house in 30 years or less than accumulate the amount of money to buy it by renting for decades, not to mention the fact that the housing market is going to look a lot different then. The numbers look awesome until you weigh in living an apartment vs. owning a home for a good part of your life.

[The Ponzzz]

Ah, now I see where you're going with it, Kranar. And then yeah, I agree when you plug it in that way.

As long as you steer clear of a metro area or some of the far more expensive places to live, buying a home for 100-150k is about normal for a house that is about 1300-2000 sq ft. And as long as you can put 20% down and avoid PMI with a conventional loan (or you vets), your mortgage is going to be somewhere between 500-650 a month before taxes and home owner's insurance.

Those of you making 80-100k a year could put a lot towards the principle and have something small paid off in less than 5 years at the same cost of a 700 sq ft. apartment.

[Keller]

The point isn't to rent as much as you'd pay in mortgage. Obviously if it's a choice to rent $1700 vs. mortgage of $1700, then take the mortgage.

The point though is, and I just took g++'s budget from the other thread as an example but many other examples of people paying rent are similar... if you have $1700 a month to spare after your non-housing related bills/expenses are paid, is it better to put that $1700 into a mortgage, or to rent for $700 a month a smaller apartment/house, and save $1000 a month into a house fund.

Rough calculations... over a 10 year period comparing a mortgage of $1700 a month at 6% you can purchase a house worth $153,636. This is ignoring all other fees that you have to pay with a mortgage, like property taxes and incidental fees/repairs, utilities etc... who knows how much more in payments that adds up to, but for simplicity and for the sake of argument I'll leave those out.

With the $700 a month in rent and saving $1000 a month at 6%, over 10 years you would have saved $164,698.

Your strategy when renting is to put the money you save by renting away into a savings account, and having your money work for you instead of paying interest on the mortgage.

It's been my experience that renting is no cheaper per square foot than a mortgage.

Renting a 2500 sq. foot house in Georgetown will run you $2800/month. A mortgage might be $3000.

I think most people who post here have roommates. Splitting that 3 bedroom house in Georgetown with 3 roommates would make it $933, which is more in-line with what you're posting.

[Faent]

My credit line was just dropped $500 for no good reason (unless opening a store credit card for a 10% discount on a large clothing purchase is a good reason). I use Amex, as they seem to be the most responsible company around. Sometimes I'm even suspicious that they want *you* to be responsible.