Comments for Pondering Money http://ponderingmoney.com Thinking in different ways about money. Fri, 18 May 2012 22:18:02 +0000 http://wordpress.org/?v=2.2.1 Comment on What Would I Do If my Home Was Underwater? by Rick Francis http://ponderingmoney.com/2012/04/19/what-would-i-do-if-my-home-was-underwater/#comment-10018 Rick Francis Fri, 20 Apr 2012 22:10:21 +0000 http://ponderingmoney.com/2012/04/19/what-would-i-do-if-my-home-was-underwater/#comment-10018 @Luis Both would be pretty bad- but foreclosure should be worse. It is a bit hard to tell because the credit scoring is proprietary. You could (theoretically) do a short sale even if you have never missed a payment, although I suspect banks would be hesitant to accept a short sale unless you had missed several payments and they hought they would have to foreclose. You don't get the hefty Tax bill under current rules- but that exemption won't last forever- it would really suck to struggle paying the mortgage for a few years then be forced into a short sale or foreclosure and get a big tax bill for it as well. Some landlords may not check credit or background, but I wouldn't count on that. -Rick @Luis
Both would be pretty bad- but foreclosure should be worse. It is a bit hard to tell because the credit scoring is proprietary.
You could (theoretically) do a short sale even if you have never missed a payment, although I suspect banks would be hesitant to accept a short sale unless you had missed several payments and they hought they would have to foreclose.
You don’t get the hefty Tax bill under current rules- but that exemption won’t last forever- it would really suck to struggle paying the mortgage for a few years then be forced into a short sale or foreclosure and get a big tax bill for it as well.
Some landlords may not check credit or background, but I wouldn’t count on that.

-Rick

]]> Comment on What Would I Do If my Home Was Underwater? by Luis http://ponderingmoney.com/2012/04/19/what-would-i-do-if-my-home-was-underwater/#comment-10017 Luis Fri, 20 Apr 2012 20:26:31 +0000 http://ponderingmoney.com/2012/04/19/what-would-i-do-if-my-home-was-underwater/#comment-10017 Very well said. It brings a thought to mind. Which one is worse, a short sale or a foreclosure? If one's finances are so bad that they can't imagine bouncing back within 7 years in any form, then what is the use of going for a short sale? If the resultant of a short sale is a hefty IRS tax bill, why take the short sale? On the other hand, could one be approved for an apartment with a wrecked credit score after foreclosure? I bet a lot of folks take advantage of naive landlords to score a place to live after foreclosure. Very well said. It brings a thought to mind. Which one is worse, a short sale or a foreclosure?

If one’s finances are so bad that they can’t imagine bouncing back within 7 years in any form, then what is the use of going for a short sale? If the resultant of a short sale is a hefty IRS tax bill, why take the short sale?

On the other hand, could one be approved for an apartment with a wrecked credit score after foreclosure? I bet a lot of folks take advantage of naive landlords to score a place to live after foreclosure.

]]> Comment on Is Your Home an Investment? Who Cares? by Rick Francis http://ponderingmoney.com/2011/11/24/is-your-home-an-investment-who-cares/#comment-9988 Rick Francis Wed, 18 Apr 2012 20:47:13 +0000 http://ponderingmoney.com/2011/11/24/is-your-home-an-investment-who-cares/#comment-9988 @Christy Thanks for commenting- Being 50% under water on your home is very scary. I can understand that it would depress you but how can you improve your situation without facing reality? It strikes me that if you face it now you will be better off as you will have more time to take action. I would start by researching the options and implications. This is a big enough question that I think it deserves an entire post instead of an insanely long reply. I’ve got a page or so written up with my thought I should be posting soon. -Rick @Christy
Thanks for commenting- Being 50% under water on your home is very scary. I can understand that it would depress you but how can you improve your situation without facing reality? It strikes me that if you face it now you will be better off as you will have more time to take action. I would start by researching the options and implications. This is a big enough question that I think it deserves an entire post instead of an insanely long reply. I’ve got a page or so written up with my thought I should be posting soon.

-Rick

]]> Comment on What do you Really Want? by Rick Francis http://ponderingmoney.com/2012/04/18/what-do-you-really-want/#comment-9985 Rick Francis Wed, 18 Apr 2012 15:14:59 +0000 http://ponderingmoney.com/2012/04/18/what-do-you-really-want/#comment-9985 @ashtonfourie Thank you for your comment- that is an interesting idea. We have done something similar for our kids getting them some kind of lessons as a gift instead of toys. It strikes me that it would be best if the gift of time could be made more concrete- perhapse some kind of "cupon" for a date or other specific activity we would do together. Have you done this before, if so how specifically did you do it? -Rick Francis @ashtonfourie

Thank you for your comment- that is an interesting idea. We have done something similar for our kids getting them some kind of lessons as a gift instead of toys. It strikes me that it would be best if the gift of time could be made more concrete- perhapse some kind of “cupon” for a date or other specific activity we would do together. Have you done this before, if so how specifically did you do it?

-Rick Francis

]]> Comment on What do you Really Want? by ashtonfourie http://ponderingmoney.com/2012/04/18/what-do-you-really-want/#comment-9983 ashtonfourie Wed, 18 Apr 2012 14:08:54 +0000 http://ponderingmoney.com/2012/04/18/what-do-you-really-want/#comment-9983 I realized some time ago that the way we can decide whether we should buy something, is to think about what we will actually DO with it, and WHEN we will be doing that. Because that is the only true utilitarian value anything gives us. DOING something (and there I include a beautiful painting that I can LOOK at, but not if it's going to hang in a safe! (I'm not talking about investments here - I'm talking about things like video games, boats, etc.) What most of us want most, is the ultimate luxury - enough time. And funny enough, every time we buy a new thing (or get a new gift) it steals a bit of our time, because now we have to use that thing. Next year, ask your wife for more time together. It will be worth more than any gift you can buy! I realized some time ago that the way we can decide whether we should buy something, is to think about what we will actually DO with it, and WHEN we will be doing that.

Because that is the only true utilitarian value anything gives us. DOING something (and there I include a beautiful painting that I can LOOK at, but not if it’s going to hang in a safe! (I’m not talking about investments here - I’m talking about things like video games, boats, etc.)

What most of us want most, is the ultimate luxury - enough time. And funny enough, every time we buy a new thing (or get a new gift) it steals a bit of our time, because now we have to use that thing.

Next year, ask your wife for more time together.

It will be worth more than any gift you can buy!

]]> Comment on Is Your Home an Investment? Who Cares? by Christy http://ponderingmoney.com/2011/11/24/is-your-home-an-investment-who-cares/#comment-9981 Christy Tue, 17 Apr 2012 23:47:14 +0000 http://ponderingmoney.com/2011/11/24/is-your-home-an-investment-who-cares/#comment-9981 I enjoy your thoughts on this. My husband and I moved into our new house in Sept 2011. We bought the property with a tear down house at the peak of the market in 2007. At this point I think it would need to appriciate 50% to be worth what we've put into it / owe on it. But for us, it is a place to live. We're on over half an acre and have a stream running through the back yard, yet, it's less then 10 miles to where he works and an airport and we can walk to resturants and grocery stores easily. All told, I'm almost ready to know how upside down we are in the house. (I've avoided this number lest I become depressed in the investment.) I enjoy your thoughts on this. My husband and I moved into our new house in Sept 2011. We bought the property with a tear down house at the peak of the market in 2007. At this point I think it would need to appriciate 50% to be worth what we’ve put into it / owe on it.

But for us, it is a place to live. We’re on over half an acre and have a stream running through the back yard, yet, it’s less then 10 miles to where he works and an airport and we can walk to resturants and grocery stores easily. All told, I’m almost ready to know how upside down we are in the house. (I’ve avoided this number lest I become depressed in the investment.)

]]> Comment on What Makes Index Funds Really Great? by Rick Francis http://ponderingmoney.com/2012/04/13/what-makes-index-funds-really-great/#comment-9946 Rick Francis Sat, 14 Apr 2012 15:58:16 +0000 http://ponderingmoney.com/2012/04/13/what-makes-index-funds-really-great/#comment-9946 Thanks for commenting! >why someone would choose an Index fund over a similar ETF. The two are very similar- I would look at it as two slightly different packages of essentially the same thing. As you indicated you may be able to save a bit in costs, it is always better to lower your costs but I wouldn't expect a large cost difference. The more practical reason is that many funds have minimums where ETFs don't- if you don't have the minimum amount to invest in a particular fund you would have to invest in the ETF. ETFs are traded like stocks- i.e. you can buy or sell them at any broker, trade them at any point in the day and or buy with a limit order. There is also a bid-ask spread while not exactly a fee it is a transaction cost. ETFs typically have a commission when buying or selling, however some brokers such as TD Ameritrade and Schwab offer $0 commission trades on select ETFs. Funds trade at the end of the day, and may have transaction fees called loads. A front end load is a fee at purchase and a back end load is a fee at the time of sale. There may also be additional fees so you should read the prospectus very carefully to be sure. -Rick Thanks for commenting!
>why someone would choose an Index fund over a similar ETF.
The two are very similar- I would look at it as two slightly different packages of essentially the same thing. As you indicated you may be able to save a bit in costs, it is always better to lower your costs but I wouldn’t expect a large cost difference. The more practical reason is that many funds have minimums where ETFs don’t- if you don’t have the minimum amount to invest in a particular fund you would have to invest in the ETF.

ETFs are traded like stocks- i.e. you can buy or sell them at any broker, trade them at any point in the day and or buy with a limit order. There is also a bid-ask spread while not exactly a fee it is a transaction cost. ETFs typically have a commission when buying or selling, however some brokers such as TD Ameritrade and Schwab offer $0 commission trades on select ETFs.

Funds trade at the end of the day, and may have transaction fees called loads. A front end load is a fee at purchase and a back end load is a fee at the time of sale. There may also be additional fees so you should read the prospectus very carefully to be sure.

-Rick

]]> Comment on What Makes Index Funds Really Great? by ETF http://ponderingmoney.com/2012/04/13/what-makes-index-funds-really-great/#comment-9945 ETF Sat, 14 Apr 2012 11:41:05 +0000 http://ponderingmoney.com/2012/04/13/what-makes-index-funds-really-great/#comment-9945 Hi, please give your thoughts on why someone would choose an Index fund over a similar ETF. For example, Vanguard Total Bond Market Index Fund (VBMFX) versus Vanguard Total Bond Market ETF (BND). I've been trying to decide between ETF or Index at Vanguard and am leaning towards the ETF with it's lower expense ratios, no minimum, no commission on trades, and only a $20/year fee. Thanks! Hi, please give your thoughts on why someone would choose an Index fund over a similar ETF. For example, Vanguard Total Bond Market Index Fund (VBMFX) versus Vanguard Total Bond Market ETF (BND). I’ve been trying to decide between ETF or Index at Vanguard and am leaning towards the ETF with it’s lower expense ratios, no minimum, no commission on trades, and only a $20/year fee. Thanks!

]]> Comment on An Educational Mystery by Luis http://ponderingmoney.com/2010/02/18/an-educational-mystery/#comment-8537 Luis Fri, 27 Jan 2012 19:14:48 +0000 http://ponderingmoney.com/2010/02/18/an-educational-mystery/#comment-8537 I am not accepting the ever increasing rise in tuition across America but I do have some food for thought. Getting a degree in the manner spoken in the article will only guarantee few limited skills of those graduates, namely applying knowledge to exams. It cannot match the skills a graduate could learn at a 4 year accredited university in important areas such as teamwork, leadership, pace/timing, organization, hands on training, comprehensive scope of subjects (to include feedback), grammar, socialization, etc. Although higher learning does not "guarantee" a graduate will attain these skills, hiring managers will more likely call on them for interviews to determine if indeed those skills are indeed there. I am not accepting the ever increasing rise in tuition across America but I do have some food for thought. Getting a degree in the manner spoken in the article will only guarantee few limited skills of those graduates, namely applying knowledge to exams. It cannot match the skills a graduate could learn at a 4 year accredited university in important areas such as teamwork, leadership, pace/timing, organization, hands on training, comprehensive scope of subjects (to include feedback), grammar, socialization, etc. Although higher learning does not “guarantee” a graduate will attain these skills, hiring managers will more likely call on them for interviews to determine if indeed those skills are indeed there.

]]> Comment on Financial Goals for 2010 by Lisa http://ponderingmoney.com/2010/01/06/financial-goals-for-2010/#comment-1397 Lisa Mon, 10 Jan 2011 00:33:09 +0000 http://ponderingmoney.com/2010/01/06/financial-goals-for-2010/#comment-1397 Hi there. For a quick guide to setting financial goals (or any goals for that matter) take a look at http://blog.heaps.co.nz/how-to/financial-new-years-resolutions/ I hope it's useful :) Hi there. For a quick guide to setting financial goals (or any goals for that matter) take a look at http://blog.heaps.co.nz/how-to/financial-new-years-resolutions/ I hope it’s useful :)

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