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Author: Richthofen80 CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127262  
Subject: Re: How much house? (long) Date: 6/27/2008 11:28 PM
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CPAScott,

I'm puzzled by this ... our debt (other than mortgage) is just under $37,000. Do you feel that amount is excessive?

Yes, I do. I personally believe in being minimally in debt. Debt adds risk and in the event of an emergency having debt obligations can quickly become crushing. Having debt means you're losing money to debt service. So your investment of $50K, its gains are being offset by interest on the $37K in debt. I also hate being leveraged because it can come down quickly like if you lose two renters and then a job. $37,000 in non-home debt would sink a lot of people. $37K is annual salary for many people in Central and Western Mass.

Very possible, but we're betting that mortgage rates will rise between then and now and that such increases will financially negate any future drop in prices

Well, if that's the case, you still lose because that affordability will erode even further pricing on your condo which is bleeding. All the more reason to take the loss, IMHO.

You've got a great situation right now, and if I were making as much as you I'd pay off my debts and get at least one of these properties sold before I bought a house. I'm also thinking, if you tackle these debts now, it opens up other oppourtunities in the future, such as if you have kids, your wife staying home, or a part-time nanny, instead of daycare. A college fund for the kids. Long term care for any elderly parents. tie up less money in monthly payments to banks, and start paying yourself for the future.

Good luck!
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