Yes, I’ve been away for a while. It’s one of those oddities of blogging, if you stay away for a bit, you note that other people start covering all the things you might have commented on, and often doing a better job of it than you do. And after a while, you’re just reading instead of writing, and the entire point of the exercise seems to get a little bit lost.
Oh sure, there’s a lot I could comment on– my trip to The Colbert Report, organized by Ms. Lisa, how I ended up coloring Jon Sable Freelance: Bloodtrail #6, how the role-playing game editing is going, the Star Trek proposal that’s driving me nutso, my upcoming trip to Vegas, and so on… but as other deadlines come up, stuff just passes by and it’s too far back in the rear view mirror to go back for.
And too much of what I could have written would have just sounded like gloating at the misfortunes of Bush the younger, no matter how deserved. And sadly, there’s not that much to gloat over, except that people are beginning to wake up and distrust him– five years too late. (Really, he played fast and loose with so many facts and stories starting during the election of 2000, and people are shocked NOW that he lied to you? And are only getting wise to it now? Sheesh, there are a lot of gullible people in this country.)
However, I got two notes today that seem to have gotten me inspired– well, that and a few minutes of free time while waiting for an oil change. Oddly enough, they’re both asking me for financial advice.
From Name Withheld in NJ: Question for you about an investment we’re considering making. Master Replicas makes a $999 special Vader mask, highly detailed and signed by both Hayden Christiansen and James Earl Jones. There are only 500 in the series. Do you think this would be a good investment, either for the long or the short term?
I would tend to say not, unless you know someone’s going to be shooting Hayden soon. (Hey, it could happen. I know some folks who are thinking about it.) It’s not particularly liquid, and you guys are supposed to be saving up for a house. And if you’re buying it with a credit card and not paying it off immediately, forget it– the mask would have to appreciate in value faster than the interest on the card just to break even. At 15% annual interest, the thing would have to go up pretty quickly over time.
From comments, Courtney writes: I’ve managed to save up roughly $88445 in my bank account, but I’m not sure if I should buy a house or not. Do you think the market is stable or do you think that home prices will decrease by a lot?
Courtney, I just don’t know enough about your local market (do houses cost $80,000, $800,000, or $8,000,000?), your family situation, or whether you have any desire in being a landlord in a multi-family home. But here are some quickie guidelines.
First, you only need to care if your house is losing value if you’re going to sell it later or borrow against it. If neither of these are likely in the next decade or so, then you don’t have to worry, you still have a house, presuming you can keep swinging the mortgage. Of course, since most folks move an average of once every seven years, this may not be something you wish to rely on.
The easiest way to avoid losing value in your house, of course, is to avoid overbuying. If that roughly (?) $88445 is 50% of the home value, then even if the house drops in value by 20%, you’ve only lost 10% of your investment– and you still have 40% of the value of the house in equity. If, on the other hand, that’s 5% of a $1.6 million dollar house, if the value of that house drops just 5%, you’ve lost all your equity in the house. Given my druthers, I’d like to have a 20% down payment at least, as 20% equity is the magic number where you can drop payment and mortgage insurance, which will save you a few hundred a month or so.
Another rule of thumb: how much could you rent the house you’re looking at for? If it’s less than the mortgage you’d carry, avoid it. (If it’s multifamily, include all apartments. This is where you can make a great amount of cash– the difference between the apartment you’d keep in the multifamily and the one you’re renting now may save you a lot. But keep that difference as liquid as you can: pay down credit card debt, etc. and then keep it handy to pay off house surprises. There are always surprises. Luckily, in a multi-family dwelling they’re tax-deductible.)
And here’s a biggie: figure out the change in commuting costs. Your dream house is 40 miles from your job? 400 miles a week. Car gets 20 MPG? That’s 20 gallons a week without trying. Gas is $2.50 a gallon? $50 a week, $200 a month, $2500 a year. If gas goes back up to $3 a gallon, that’s $60 a week, $3000 a year. Gas hits $4? Ouch.
Anyway, that’s my two cents. Insert legal disclaimer here; not responsible for advice taken or not taken.
UPDATE: Okay, this is weird. I just got another comment from “Courtney”, same message except for the amount of money saved– going from $80K to $15K (roughly) and from a different IP address. It might be spam, but the motive eludes me.
