All Forum Posts by: Lucas S.

I echo Tanya S.. There are a lot of blogs dedicated to this so keep looking around. Esentially it boils down to evalutating what is truely important to you, then being open to alternatives to the "traditional american consumption based lifestyle". We find that we are enjoying ourselves and our time much more as we learn to do things other then spending money to try to obtain happiness :-)

If I was underwater I would look to pay down my morgage first rather than looking to jump ship. Moving to a bigger place will have lots of costs in any sense.

In anycase you should run the full numbers as they are a little more complicated in this situation. Start with what Scott W. suggested and also calculate depretiation on the property (1/27.5 of the value of the improvments - ie home not land), and get the total IRS loss for the year. Multiply this by your marginal tax rate - say 25% and see what you your costs would be reduced by tax savings. Note that if you will end up having to pay depretiation recovery of 25% of the amount you depretiate if you end up selling the property for more than the initial value-total depretiation (ie this works better if you are significantly underwater).

The main thing is to communicate with your family about your intentions. I just setup a personal loan with ballon payment after 3 years (but intend to pay it off after 1). Personal loans are really easy to roll over to a new loan as well so you can change terms part way through the 30 years if you want or to some sort of rolling shorter term loan. Main thing is how much you trust your family to be ok with this and how well you communicate.

7.5% is well above the AFR minimum rates, so you wouldn't have an issue, but definitly make sure to understand the Applicable Federal Rates (http://apps.irs.gov/app/picklist/list/federalRates.html). These matter more on the longer term loans as the rates are higher.

In gereral I would say a safe place to think about starting with an interest rate is half way between what they would make on a CD and what a bank would charge you for the loan.

Curtis N. & Tanya S. - thanks for the link. I tagged it and will have to review my schedule. I can't make the expo as I am on business travel (to HI - hence my werid posting times), and will have just gotten back (family needs me for a bit).

David Weiss - I am a Software Engineer by trade, but have had a bunch of different roles around Engineering and Customer support over my time with my company. I am pretty set at the moment, but will consider your offer :-)

David Weiss - I thought twice about putting the age comment in ;-) I think I just getting use to not being the young one anymore. I skipped a couple years of school so was always younger than most of the people I worked with. However the last couple years I have been doing a good bit of training with Junior Enlisted (Navy/Army) who are 18-20, and now have 3 little kids of my own and it is definitly making me feel older. Hopefully wiser too!

Thanks Tanya S. I looked through a couple of those threads and may try to visit a couple of the groups. I am a little out from actually pulling the trigger on any investing, but I definitly have a lot to learn.

Curtis N. - Got it. Yeah i have freinds in FL and TX and every time i hear them talk about looking at a property I get jelous becuase the prices are still so good ;-) Best wishes.

Curtis N. Thanks. I very much understand your strategy (personal home is the cheapest money you are ever going to get), I just figure becuase of my job/cash flow i can reduce my risk a lot and still come out in great shape.

Yeah, I agree with your numbers. The further out you go the better the numbers look, but it also means further to travel to service a property (especially if you plan on rehabing it yourself - which i would). Prices have actually jumped a lot in the last 3 months even in my area (comps on my town house went up almost 15% in 3 months!!!) Crazy!

If you settle on an area that looks like it makes better sence let me know ;-)

Thanks Ned Carey. I have appreciated your posts/blog and look forward to maybe connecting at somepoint! Looks like the pricing isn't so out of whack in Baltimore and my brother is at Johns Hopkins at the moment, so I will certainly be up that way at somepoint.