2) Buy your house. Cars are NEVER a good investment, and renting (what I assume you're doing for a place to live now) is a bad financial move. Owning a home is the best single thing you can do to build long-term wealth.
Not always 100% correct. I got into a HUGE argument with a guy at work over a blanket statement he made. He basically said anyone who is renting is an idiot. I told him his statement is not entirely true. Given my personal situation renting makes better sense for me personally.
6 months later the company we were working for went under. The job market in the area was not the best for our field. He had to move. The housing market SUCKS. He ended up renting AND trying to pay his house payments. He had 30,000 or so in equity in his house (years worth of blood, sweat and tears trying to make it worth more). By the time he sold it, he lost every dime and then some. He had the heartache of paying double 6 months, moving twice, and then starting all over on the next house. He was so infatuated with the idea "renting is throwing away money" he immediately bought another house where he moved. Guess what. He doesn't like the job and now he's looking for another one. It'll be truly sad when he yet again must move for a new job.
In the mean time, while I've thrown away money on rent. I've raised my Credit Score after a house foreclosure due to a divorce. I've dug my way out of the divorce itself. I've been able to change jobs and basically follow my daughter around the 4-state area each time my ex tries to move away.
I've found a girl and converted her from a Camaro chic to a Mustang chic. I've helped put her through college. She is now starting her teaching career (making more than I currently do since my cut in pay for my latest new job). I've been able to learn about her, to see if she can stick through the trials of marriage before jumping into another sinking ship. And the whole time I've build one helluva a car and have a new dependable DD to boot. We're currently searching for another Mustang for her to drive. I hope to have another go at this thing called life soon enough and buy a house while the market is down.
Sure I may be a rare case.... sure I may have been able to save up a little along the way or been partially vested in a home by now.... IF things had gone perfectly my way through the entire process of 7 years. But you know what. I have enough stress in my life that I'm willing to gamble a little just to not have any extra.
OK, I'll clarify a little. No slam at all on your situation, Paul, but it sounds like your friend needed to think things through a little more. But for the average, reasonably stable person, that's NOT in a crashing market (like a farm town in Iowa, for instance), buying makes much more financial sense than renting. Caveats exist, ie, don't buy more than you can afford, make an intelligent purchase, with wise financing, etc. That said, even if you don't make a dime on a house at the sale, you reap tax benefits which will result in a higher net income.
Note, I didn't say "get rich quick". I said "build long-term wealth". I'm retired Army, and I bought a house every time we moved. That is THE reason that I'm in good financial shape. I didn't do it haphazardly, but with a lot of research and thought. So, you are correct in that it's not foolproof. The current mortgage crisis is proof enough of that. But, if you approach it wisely, it is the single best investment you can make to build long-term wealth, and certainly a much better financial decision than buying an 04 Cobra, which was my main point.
I'm with you. I just know in my situation I would be smack dab in the middle of the mess the housing industry is in now, if I had the attitude some do about renting. Now that I'm clear of my past mess and my credit scores are back up. It NOW makes sense to buy. I'm still fairly new at my current place of work, but it's a good solid company. I'm just not sure how happy I am with it from a personal point of view.
Good conversation though. I think it helps others to bring up more detailed examples of people's reasonings. As stated, my previous co-worker took it a little to literal as an overall way to live life. There are exceptions to every general rule that must be considered on a personal basis.
A house is rarely a bad long term investment as long as you don't over do yourself and you are realistic about what you can afford. When we bought our house, I was approved for 30% MORE than I knew I could reasonably afford. My girlfriend and I are both paying for it, but we applied for the loan under my own income alone and set a payment that we knew I could cover by myself as if she had no income.
Most people go with as much as they can get, anyway they can. That usually involves combined income. Talk about risky. It's nice to know that the only way my mortgage will increase is becuase of taxes or insurance rate changes, but it's OK becuase I assumed as much when I bought it to begin with. Besides, our mortgage costs about $200/mo more than the apartment we would need to hold all our crap
Houses were never supposed to be a short term investment. The craziness of 04-06 was a fluke. I bough a year ago and have lost value in the house, about 15-20k tops, but I don't really care becuase I can afford to carry it through untill the value replenishes (personaly I think it will be 4-5 years). This is more personal, but we also assumed my income at the time of purchase. I have a lot more income to be had in the near future once I recieve certain things like an engineering license. That's all nice and dandy, but it's not something I can rely on with certainty.
Still, I still have to complain becuase right now, inflation, fuel costs, and truck repairs are starting to eat up my safety margin
Right there with ya on wanting it....ive wanted an 03-04 sonic blue cobra since they came out more than anything!!!!!!!!!!! I see where ur coming from and i am broke as a joke but i hope to have one someday but im with everyone and i would hold off to see if ya could find one a little cheaper.