Money-Saving Tips from Tibs and Shell

[Seraphina]

The question of whether you should pay cash (for those able to) or finance is a complex question that depends on the whole financial picture.

For my situation, rent vs own was a no-brainer, the tax advantages result in a situation where my housing costs are lower than any rental in the region - I could scarcely rent half an apartment for the same - and I have a highly leveraged investment in an are with strong real estate growth.

It's a huge enough decision that consulting a financial planner is advisable.

We intend to talk to a fiduciary about our retirement plan and buying a home.

The real estate industry likes to tout the tax deductions on mortgage interest but the majority of tax filers (68%) take the standard deduction without itemizing.
http://taxfoundation.org/blog/who-itemizes-deductions
I've owned since 2003 and I've never deducted my mortgage interest. I've only used the standard deduction. So buyer beware.

My property is still underwater from the housing crash. I'll sell it when I can. I'm very skeptical about buying again as my state - California - has boom and bust cycles fairly regularly, probably going back to the Gold Rush.

If you're going to buy property, make sure you go in with your eyes wide open.

[Joods]

Tip: by dividing your monthly mortgage payments into biweekly payments, you are essentially paying 13 months instead of 12. The last two payments you make each year, as specified by you, would go directly on the principal of the loan.

If you took out a 15 year loan and did this every year, your house would be paid off seven years sooner, saving you years worth of interest payments.

What you are essentially doing is making 26 payments per year instead of 12. Not only is this keeping more money in your pocket over time, but you are also increasing the equity in your home faster and your credit rating gets a healthy boost as well.

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Also, check out homes for sale due to property tax leins. Many times, the local city, town, borough etc, will post notices of property tax sales. If you pay the past due taxes on the house, and the current owner cannot pay you back within a certain number of days, you become the owner of the house. It's a good way to get a nice house for well below market value. And because the property tax owed is generally less than a few thousand dollars, you can outright own the home typically within three months of paying those taxes off.

The risk is that the current home owner will manage to come up with the money within the 90 days, and get to keep their home, but it's not really that much of a risk to you since you have nothing to lose by getting your money back. If they don't pay in full by the deadline, you keep the house and file to evict the occupants. This is also an interesting way to acquire rental property if you're interested in becoming a landlord.

There are also public auctions, sheriff's sales and federal foreclosure auctions as well that offer up houses well below market value. Many times banks are willing to let a house go cheap because an empty house costs the bank money they have to pay on property taxes and utilities that can't be shut off during the winter.

[Tiberius]

^ Do this with all loans where the interest rates are high (3% or more). If you have extra money and you've paid all your bills and have enough savings to cover emergencies, dump that extra money on the loan that generates the most interest.

[pocaracas]

TIP: make a million, loan some of it at high interest, on the black market. ??? profit!

[Tonus]

More like make a million, invest in the market, reap 4-8% annual returns taxed at 15%. Enjoy your $30,000-65,000 annual stipend while sitting on a six/seven figure nest egg.

[LastPoet]

Personally? Both my wife and my own total liquid wages goes below 15 K euros. Our decision is that I take the brunt of bills, including Net, Gas, elecricity and 100 euros per month for my daughter. She saves better than I and we manage to run on my wage somehow.

We are good at this. We thrive.

[Shell B]

The system has to be customized to the situation, earnings and the strengths of each partner, for sure. I wouldn't say Tibs is better at saving, but we have to move money fewer times if he puts into savings, so I usually deal with all of the bills/expenses we charge every month and he deals with savings/anything we write a check for.

[Jackalope]

If there is one bit of real, non-troll, serious - no really - advice I could give it would be this:

If you sacrifice more when you are younger, you will sacrifice less when you're older. Start saving and investing early, compounding returns FTW.