Is anyone doing it tough?

Referring to my post of April 2006? That was written a while back, I've since changed my stance on ownership, having read opposing legal opinions. It's hardly a relevant distinction to most owners, but worth noting that ownership apparently does indeed stay with the mortgagor. Only the deeds stay with the bank!

Primarily to learn from others. The wealth of knowledge and experience held collectively by forum members is frequently staggering. When I have a unique view or perspective on a topic I try to contribute something back. Also I view this forum as a way to directly gauge investor sentiment and motivation.

Not at all! My start in investing and capital accumulation came directly from property in its most basic form, land.

Anti-debt theories? You mean the possibility of a debt deflation scenario? Or my belief that the cost of holding debt over the coming decade will generally be higher than the price inflation of held assets? Or just my explanation (above) of my personal situation?

In the case of the first two, I don’t see how exposure to either of these is likely to adversely impact anybody here, so given that they are real theories spoken in polite company by people with an understanding of economics, why should they not be aired here? The last was simply a direct answer to your question, so I don’t see how it can be (mis)construed as "prolific promotion"!

I don’t think I do this… except for when they are clearly wrong. I come here for the reasons noted above. When I have something to contribute, even if it goes along the lines of “I don’t think that’s correct” or “why do you believe that? I think it might be an error to do so”, I do. I don’t frequently go out of my way to put people down or tell them that their strategy is wrong.

Even the strategy of constantly keeping maximum leverage (which I do truly dispute the wisdom of as it seems to be exactly the opposite of dollar cost averaging and more like doubling down in poker) will work well for some, perhaps many, people. So I don’t tell them it’s wrong. Only point out occasionally that the cost of servicing the debt might exceed their returns as it frequently has in the past (and in a low inflation environment is far more likely to do).

My previous post might seem at a careless glance to be my most anti-debt sermonising to date… but it was about me and my strategy (as requested by yourself). It was very personal and not intended to show in any way that all other people are wrong. That is why I wrote “To me, Freedom = Zero debt”, not “Freedom always and only can be achieved through the absence of debt”. This was a deliberate distinction. One you might have missed.

Deride? Deride? No, least not intentionally. ‘Indebted masses’ should have been interpreted literally rather than as an intended slur. We (collectively ‘the masses’) hold far more debt than ever before, thus are relatively indebted.

Really? I’d be surprised if even 10% of people with a job (including investors) would last 6 months, let alone 2 years without a Just-Over-Broke.

The same as anyone else, but with a much larger buffer (measured in days, not $$$).

Do you want the full biological description of how I’d go about it? ;-P

Same as ever. Actually, probably a fair bit bigger by then!

I think you’ve missed something here. We’re not communicating effectively. I said that I don’t need it (or one similar), I could live comfortably though modestly on a very low wage. I couldn’t do so on (the now average) $500pw mortgage…

As for ‘the rest of your natural life’, my property (with no mortgage) should (as I’ve already noted) see me comfortably able to retire (if the doubles every seven to ten years as per various spruiker promises and the common meme* found on this forum) by 45. Or more modestly retire yesterday on somewhere between $38k and $55 per annum. By 45, my capital gains alone should exceed $99k per year at 7% average return or $210k per year at 10% average return. So my bases are pretty well covered I reckon!

Not that I intend to retire then. I’ve got much left to do, things that only my J-O-B allows me access and freedom to do! Meanwhile, if I keep saving, not only do I have ready cash to throw at the right investment opportunity when it comes along, but even if it never did, every 2 to 2.5 years I work equals around 2 years (after compounding returns) fewer that I need to work!

I guess it’s really a different mindset, mine to yours. Yours (not being judgemental here) was illustrated perfectly when you said the following:

This is exactly opposite to the way I think and behave. Sure, I understand Ricardo's theory of comparative advantage (which applies here), however, I can’t get away from the fact that borrowed money is much more expensive than saved money. I also believe that the recent experience of almost any asset appreciating in value faster than the an equivalent debt is unstable and unlikely to continuously be the case between now and whenever I wish to retire (or access my capital).

If I was driving around in a nice car I would prefer to know it was fully owned and paid for, but that my purchase had not greatly diminished the freedom that living debt-free with a sizeable cash buffer enables me to feel. I guess the comparative advantage is a diminishing one?

I guess we just think differently!

Cheers, F. [cowboy2]

* Not mine. I think this is wishful thinking.

Well… if we're going to get into a p_ssing contest…. ;-P

Mine's a 61cm 4:3 Lucky Goldstar cathode ray tube with a curved glass front!

Yuh, okay. You win. I guess I spend too much time reading (learning) and outdoors to make the 'investment' in a bigger tele worthwhile. I might change my mind someday. Until then, I'll keep the dollars invested. And if I buy something in 3 years it ought, on current trends, to be dramatically better quality that what's available today.

BTW, is the money invested by your delayed expenditure going to return better than the 70%+ depreciation on the teev over the 3 years? Just asking.

No actually there is a point. I'm thinking about myself again.

Option 1) I buy a $6k (just an example) tele today, but (thanks Harvey Norman!) still get to invest the money for 3 years: at the end of 3 years I'll have just the investment return and a tele worth $1.5k if I'm lucky.

Option 2) I keep the existing tele, invest $6k for 3 years then buy a $6k tele. I'll then have the investment return and a tele worth $6k (and much better than the 3yo model).

Option 3) Keep the existing tele, invest $6k for 3 years then buy a 3yo $6k RRP tele for $1.5k. I'll have the investment return, a tele worth $3k (but everything I could possibly want in a tele and more), and $4.5k in cash.

I take option 3. I know, the argument will become circular and I'll never end up buying! In fact that's what's happened over the last 5 years or so. But I've not once missed the big screen tele I didn't buy! And if I look at option 2 versus option 1, I realise that 3 years interest free, from an economics point of view is exactly equivalent to renting the tele for $1,500 per year! Given your example of the economics of a car lease, do you think I'd be better off looking at a Radio Rental?*

Just a different approach to life. Yours works for you but not me, mine works for me but not you. That's cool. I'd really love to hear your explanation of how leasing a car works under ordinary circumstances (say 10,000 to 15,000 km/yr) though…

F. [cowboy2]

* Note, hypothetical for illustrative purposes. I'll never rent an appliance. Nor buy on interest-free terms.

Ahh see… there's the kicker – to you  having TV during that 3 years isn't worth anything.  To me that's 3 years of having something that I want & enjoy, something that I share with the person closest to me (GF & I are movie buffs)… so having it now is worth something to me and I'm willing to pay it!  And if we are going to do a financial analysis – don't forget inflation mean's I'm paying less in real dollars buy delaying the purchase (ssshh steve keen). 

The TV's just an example.  Everyone has things that they want.  If they are prepared to pay for it AND they can afford, it go for it I say.  I don't think anyone is here reading these forums because they love property investing per se – it's because PI brings people a way to get the things they want, albeit financially, whatever they may be.

 F.- if you are happy with a basic existence then I am truly envious and I wish you the best.  I admit, I want a lot from this world before I die, many of these things are expensive.  And so I am here.

PS I don't lease a car, I drive a 91 laser with 200 000 kms on the clock   Of course, on a purely financial basis leasing any sort of car does not seem like a good investment… UNLESS you put a value on the joy & satisfaction you get from driving it.  I guess that just depends on your perspective…