Comments on: Weekly Roundup: Teenager Buys House With Cash http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/ Promotional Codes, Coupons & Deals + Money Saving Insights Sat, 26 May 2012 00:58:25 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Josh http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/#comment-41542 Josh Fri, 21 May 2010 18:06:49 +0000 http://frugaldad.com/?p=5443#comment-41542 I disagree Stephan, but in your location (and other expensive areas) renting is almost always the better option than owning, from a strictly financial standpoint. Using your 300k price, if you could save $1000/month, at 5% interest, you could buy a 300k house for cash 195 months (16 years, 3 months). For a $150k house that is more than reasonable in most parts of the country, it would only take 117 months (just under 10 years). Obviously the amount you can save will vary wildly by person, but I think that is a good median point for anyone with an average career and any sense of financial discipline. I used 5% just because that is the average mortgage rate, and I also believe it to be a decent return you could fairly safely expect to get on average. Obviously, your actual rate of return could be significantly higher or lower. On a $300k loan, you would pay $280k interest, for a total of $580k over 30 years. I'd much prefer to let compounding interest work for me than against me. Personally, I would much rather spend my early 20's renting (most likely with roommates) to be able to buy a house for cash in my early 30's than being trapped in debt for my entire life. Student loans are completely other subject. I went to a good public university and came out with less thank $5k in student loan debt, because I went to an affordable college with a good program, and got a degree in a higher paying field. On the opposite end of the spectrum, if you burden yourself with $100k or more in private tuition debt to become a social worker, well then you are pretty much committing financial suicide. Kids should go to college with a plan, not the finance it at any cost mentality that persists today. Also, please note these numbers are based only form a purely financial perspective. I know there are other reasons (emotional) that may make spending that money worth it to you. I disagree Stephan, but in your location (and other expensive areas) renting is almost always the better option than owning, from a strictly financial standpoint.

Using your 300k price, if you could save $1000/month, at 5% interest, you could buy a 300k house for cash 195 months (16 years, 3 months). For a $150k house that is more than reasonable in most parts of the country, it would only take 117 months (just under 10 years). Obviously the amount you can save will vary wildly by person, but I think that is a good median point for anyone with an average career and any sense of financial discipline.

I used 5% just because that is the average mortgage rate, and I also believe it to be a decent return you could fairly safely expect to get on average. Obviously, your actual rate of return could be significantly higher or lower.

On a $300k loan, you would pay $280k interest, for a total of $580k over 30 years. I’d much prefer to let compounding interest work for me than against me.

Personally, I would much rather spend my early 20′s renting (most likely with roommates) to be able to buy a house for cash in my early 30′s than being trapped in debt for my entire life.

Student loans are completely other subject. I went to a good public university and came out with less thank $5k in student loan debt, because I went to an affordable college with a good program, and got a degree in a higher paying field. On the opposite end of the spectrum, if you burden yourself with $100k or more in private tuition debt to become a social worker, well then you are pretty much committing financial suicide. Kids should go to college with a plan, not the finance it at any cost mentality that persists today.

Also, please note these numbers are based only form a purely financial perspective. I know there are other reasons (emotional) that may make spending that money worth it to you.

]]> By: Stephan http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/#comment-41538 Stephan Fri, 21 May 2010 16:00:59 +0000 http://frugaldad.com/?p=5443#comment-41538 josh i disagree, unlesss you live in an area where sub 150k houses are the norm, paying cash for a home before 50 is not realistic. homes in my area average well over 300k, and with student loans to pay off, there is no way i could save 300k in a reasonable amount of time! josh i disagree, unlesss you live in an area where sub 150k houses are the norm, paying cash for a home before 50 is not realistic. homes in my area average well over 300k, and with student loans to pay off, there is no way i could save 300k in a reasonable amount of time!

]]> By: Josh http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/#comment-41537 Josh Fri, 21 May 2010 15:48:56 +0000 http://frugaldad.com/?p=5443#comment-41537 It really is time people stop thinking it is impossible to buy a house with cash or that a mortgage is a necessity. Start saving/investing while young/renting and most people could actually get a house for cash faster than trying to pay off a mortgage early. Obviously this is situation-dependent but not nearly as impossible as most want you to believe. It really is time people stop thinking it is impossible to buy a house with cash or that a mortgage is a necessity. Start saving/investing while young/renting and most people could actually get a house for cash faster than trying to pay off a mortgage early.

Obviously this is situation-dependent but not nearly as impossible as most want you to believe.

]]> By: Forest http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/#comment-41516 Forest Fri, 21 May 2010 07:30:33 +0000 http://frugaldad.com/?p=5443#comment-41516 This is exactly the kind of story they should be sharing with kids at school... It really is time financial literacy and responsibility becomes a standard class in schools. This is exactly the kind of story they should be sharing with kids at school… It really is time financial literacy and responsibility becomes a standard class in schools.

]]> By: Diane B http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/#comment-41512 Diane B Fri, 21 May 2010 04:50:38 +0000 http://frugaldad.com/?p=5443#comment-41512 It's an auction - the sale is done publicly, so if anyone wants to bid higher than her everyone would know. The auctioneer doesn't set the price or reject bids from interested parties who can pay. I agree it would be a conflict of interest if he had the ability to influence which bidder won. It’s an auction – the sale is done publicly, so if anyone wants to bid higher than her everyone would know. The auctioneer doesn’t set the price or reject bids from interested parties who can pay.

I agree it would be a conflict of interest if he had the ability to influence which bidder won.

]]> By: Stephan http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/#comment-41506 Stephan Thu, 20 May 2010 20:17:51 +0000 http://frugaldad.com/?p=5443#comment-41506 wow great story and good for her. I just wish houses could be bought for 40k where i live, that would be the price of my 10% downpayment in my area=( wow great story and good for her. I just wish houses could be bought for 40k where i live, that would be the price of my 10% downpayment in my area=(

]]> By: Samer Forzley http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/#comment-41505 Samer Forzley Thu, 20 May 2010 18:13:29 +0000 http://frugaldad.com/?p=5443#comment-41505 This is awesome, funny, you can buy a house with cash if you want, but not an iPad This is awesome, funny, you can buy a house with cash if you want, but not an iPad

]]> By: Thisiswhyubroke.com http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/#comment-41504 Thisiswhyubroke.com Thu, 20 May 2010 17:51:42 +0000 http://frugaldad.com/?p=5443#comment-41504 MAaaan this is awesome! This girl will be so set compared to the rest of us that it won't even be funny. I love it! "The dangers of choosing an easy major in college" http://wp.me/pUlp7-n2 MAaaan this is awesome! This girl will be so set compared to the rest of us that it won’t even be funny. I love it!

“The dangers of choosing an easy major in college”
http://wp.me/pUlp7-n2

]]> By: Frugal Dad http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/#comment-41503 Frugal Dad Thu, 20 May 2010 17:27:23 +0000 http://frugaldad.com/?p=5443#comment-41503 I wondered about that side of the story. Seems a conflict of interest for an auction company to allow a family member to purchase a property you represent - not exactly an "arm's length transaction." Then again, I'm sure it was legal or they wouldn't want that aspect of the story publicized. I wondered about that side of the story. Seems a conflict of interest for an auction company to allow a family member to purchase a property you represent – not exactly an “arm’s length transaction.” Then again, I’m sure it was legal or they wouldn’t want that aspect of the story publicized.

]]> By: Mr. Poet http://frugaldad.com/2010/05/20/weekly-roundup-teenager-buys-house-with-cash/#comment-41502 Mr. Poet Thu, 20 May 2010 17:05:08 +0000 http://frugaldad.com/?p=5443#comment-41502 A frugal teen buys a house at an auction run by her dad. Ahem. If I were the beneficiary of that estate sale, that would raise a flag for me. A frugal teen buys a house at an auction run by her dad. Ahem. If I were the beneficiary of that estate sale, that would raise a flag for me.

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