Patience is a virtue

homelessskilledworker

Thats my outlook on life right now, and has been for a while.

It will nearly always be better to wait for the right moment rather than load up with debt, and for so many decades it has been the British way.

I just felt compelled to post this after reading yet another post from a 24/7 multi thousand poster, basically just trying to come up with more clever nonsence on why its good to overload with debt, you hear it all the time on here.

Borrowing of course can be ok at times, but it will always be better to have as little debt as is possible.

What we have on this board is those that could not wait and overloaded on debt and who are now worried.



They should have been patient:):)

DpchMd

I assume you're talking about buying a house and you're a young guy without a family, so if you feel house prices will fall enough to offset rent then go for it.

If you're waiting to buy a long-term family home then you should probably stop waiting and buy now.

Or is it that you think you need a house price fall so that you can afford to buy?

macaque_2

homelessskilledworker wrote: »

Thats my outlook on life right now, and has been for a while.

It will nearly always be better to wait for the right moment rather than load up with debt, and for so many decades it has been the British way.

I just felt compelled to post this after reading yet another post from a 24/7 multi thousand poster, basically just trying to come up with more clever nonsence on why its good to overload with debt, you hear it all the time on here.

Borrowing of course can be ok at times, but it will always be better to have as little debt as is possible.

What we have on this board is those that could not wait and overloaded on debt and who are now worried.

They should have been patient

This is Warren Buffet's approach to investment and he has done extremely well. He is now quite bullish on US property (so would I be if I was in the US).

http://www.youtube.com/watch?v=kGb0e-WwNqs

The fundamentals for property as an investment in the UK are not good at all. Rental yields barely cover interest charges (based on market values) and that is not what you want to see when base rates are at a 300 year low and the risk to capital values are threatened by job losses, inflation and more stringent lending rules.

I agree with DpchMd about buying family homes. There are other (and better) reasons for buying a house than profit.

Loughton_Monkey

homelessskilledworker wrote: »

......Borrowing of course can be ok at times, but it will always be better to have as little debt as is possible.....

Generally agreed, but with one or two exceptions:

1. My average credit card spending is in the order of £30K a year. I pay in full by Direct Debit. This allows a reasonable amount of extra cash to be earning a bit of interest. I get Cashback and Airmiles on top. Lovely Jubbly

2. My Offset mortgage used to be fully offset. Until the rate dropped to 1½%, when I immediately withdrew the whole shooting match, earning around 4% (less 20% tax). Hence I have been (and still are) receiving a "free" 1.7% on the whole of my original mortgage.

3. Despite having bought my house in 1973 at a sort of 'high' in prices, I have enjoyed 40 years of significant real growth in equity. I have frequently upsized. At the same time, I have coughed up the interest, but watched the capital value erode significantly away by inflation. To my benefit, I never paid a penny capital back (always interest-only mortgages) and unltimately was able to pay it all off [offset it] out of savings without hurting (since when, as above, I have taken it all out again). The amount of equity I now have is brilliant, but of even more importance, the thought of having to pay rent for the next 30 years would have been excrutiating!

So don't believe credit is always bad.

chucky

Loughton_Monkey wrote: »

3. Despite having bought my house in 1973 at a sort of 'high' in prices, I have enjoyed 40 years of significant real growth in equity. I have frequently upsized. At the same time, I have coughed up the interest, but watched the capital value erode significantly away by inflation. To my benefit, I never paid a penny capital back (always interest-only mortgages) and unltimately was able to pay it all off [offset it] out of savings without hurting (since when, as above, I have taken it all out again). The amount of equity I now have is brilliant, but of even more importance, the though of having to pay rent for the next 30 years would have been excrutiating!

Just proves the fact that despite the usual suspects telling people not to take on debt and it is such a bad thing, it's actually a very positive experience for the large majority of the population.

homelessskilledworker

chucky wrote: »

Just proves the fact that despite the usual suspects telling people not to take on debt and it is such a bad thing, it's actually a very positive experience for the large majority of the population.

I have not told anyone not to take on debt!!
And I am not sure if there is one "usual suspect" who has said that either.

It all depends on the circumstances of that debt, example.....

1. Debt of 3 x value of property when you/couple have reliable job/jobs, and it is a house you want to live in as opposed to one you are making do with.

2, A pay day loan where the APR is near 2000%

There has always been a time when debt in some form has been exceptable, it has and always will be a way of getting something the easy way and struggle even more later, rather than working and saving for something.

I am not suggesting you save for a whole property, but we need to go back in that direction again, big deposits to buy a home that we need today are a good start.

2

DpchMd

homelessskilledworker wrote: »

I am not suggesting you save for a whole property, but we need to go back in that direction again, big deposits to buy a home that we need today are a good start.

Why's that then?

chucky

homelessskilledworker wrote: »

And I am not sure if there is one "usual suspect" who has said that either.

You wouldn't be one of the usual suspects, you don't have that bitterness about you.

Good post btw.

armour

Patience is a virtue but it could cause one to miss out on the (inevitable) next upswing in the property market.
I believe that there are many people who have been patient, saving up sizable deposits (earning next to nothing in interest), paying high rents whose patience is running out and will be jumping into the property market before too long.

oldvicar

Patience is a virtue.

He who hesitates is lost.

Look before you leap.

You've got to speculate to accumulate.

Don't put all your eggs in one basket.

MonkeyMad

I wouldn't advocate no credit - credit certainly can be a good thing if used wisely. Like Loughton Monkey I habitually use a credit card to defer payment and earn cashback. I have never paid interest on a CC in 15 years, so I probably would never be able to get another card!

I too have offset mortgage, which has been run down to put the offset into longer term income generating investments. My mortgage rate is less than a cash ISA so may as well fill that up too as soon as possible. The possibilities are wide. But that is taking cash for investment in the hope of a return not to supplement spending.

Trouble is a lot of personal credit has been used as a means of just getting stuff NOW. No thought of the value, cost or anything else, I can just get it now for one small monthly payment!

Even a mortgage can be seen as a good debt for an income generating asset since you 'earn' the rent you are not paying once you own it. The problem comes when you take on a mortgage at a rate far higher than the imputed rent and you regard your home either as a cash machine or an pure investment. It's not, for the most part it's where you and your family live.