Quote:
Originally posted by fantasyman
IMX did you ever hear the expression "the road to hell is paved with good intention"?
That what can happen when you live above your means by using your assets to leverage against.
In a few cases, borrowing money can give you the added cashflow necessary to maximize your ROI. In most instances though,borrowing money is what gets you into trouble.
That said, yes, taking a loan out to purchase a house is how to get started. But you should have a plan to pay down your mortgage faster than the terms of the loan by making additional payments against the principal each month. Otherwise, you will pay twice as much money for the house, just look at a truth in lending paper on any mortgage. If you make the monthly payments for 15 or 30 years the only write off you have is the mortgage interest.
It also depends on your age. If you're young, purchasing a house will be your largest investment and will help you start accumulating wealth thru equity. Once you have equity in your home, you can get an equity line of credit on your home loan so that when you purchase a car, you purchase it by taking additional loan against your house equity. This way you can deduct the interest you pay out for a car. If you just take out a loan on a car, you can't deduct any of that interest.
Be very careful not to borrow money you can't afford to pay back or you will lose all of you assets by defaulting on a loan. This has been the demise of many wealthy people, leveraging everything they have to live a better life style. When they finally can't afford to service their debt, they lose everything and who is the benefactor? The bank or lending institution ends up with all the assets you worked so hard to acheive.
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I couldn't agree with you more.
Most of you should read the book "the Millionaire next door" its a great read.
Most millionaire's I know that are old money that built there own wealth don't have nice cars or expensive watches etc. but they will never have to worry about money again.
like most Ball players or movie stars who make millions but still live beyond there means will be broke as soon as they lose there contract or are washed up in the industry. I see it all the time in LA
Just like most... my Father also came to the states without speaking a word of english with $2 and a suit built a very large construction company in LA from hard work and a dream and invested in real estate in LA,seattle and now florida. He is retired now and living well.
I only hope to accomplish half of what he has.
I have spent alot of my money foolishly but now with a baby on the way. I've got new priorities and have learned to listen to the wiser and make better business decisions like investing in real estate
Once you learn how to make money its easy the hard part is holding onto it.
