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Another statistic just came through and New Zealanders pay $2m NZD in credit card interest per day. We hate the banking/financial sector but keep throwing money at it. e: I got distracted: 41% of our mortgages are interest only. It's as safe as houses here.
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Jun 28, 2016 05:02
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Huh. I didn't even know interest-only mortgages were a thing. Is that effectively like leasing a house?
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Jun 28, 2016 05:29
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Not a Children posted:Huh. I didn't even know interest-only mortgages were a thing. Is that effectively like leasing a house? Did you sleep through the 2000s?
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Jun 28, 2016 05:36
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I was a teenager, so effectively, yes e: My understanding is that you have a period where you're making only interest payments on the house, and at the end of that period, you're forced to refinance. So... what's the advantage, besides perhaps making only token payments for a while? Does it count against an amortized amount, or is it literally paying into a house for zero equity? Not a Children fucked around with this message at 05:47 on Jun 28, 2016 |
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Jun 28, 2016 05:44
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Not a Children posted:I was a teenager, so effectively, yes It helped a lot of people buy homes they couldn't afford and they would convince themselves that they would somehow be making more money when it came time to refinance (spoiler: that generally did not happen).
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Jun 28, 2016 06:04
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Interest only loans are used when negative gearing in a Australia, and NZ too, I believe. As far I'm aware no one involved is expecting any part of the principal to be paid until the property is sold.
the onion wizard fucked around with this message at 11:48 on Jun 28, 2016 |
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Jun 28, 2016 09:52
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Subjunctive posted:They dream of Gini. I appreciate this post. My dad recently had a small medical issue, thankfully he's ok. However, this meant a closing on a house he was a realtor for got delayed which, in his words, put a "squeeze on my cash flow". I know he's financially sound, so I was surprised when he asked me for $7k for 30 days to pay an upcoming credit card bill. Turns out his emergency fund is tied up in CDs and mutual funds and he doesn't have quick access to it.
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Jun 28, 2016 12:37
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Not a Children posted:Huh. I didn't even know interest-only mortgages were a thing. Is that effectively like leasing a house? Isn't it really common in Sweden?
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Jun 28, 2016 13:10
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Dale Sveum posted:I appreciate this post. That's not much of an emergency fund then, lol.
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Jun 28, 2016 13:35
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One of my Facebook friends is bad with money and bad with politics. He posted a screenshot of his Sallie Mae account with about 5 or 6 loans on it that have "minimum payment not made" and is calling on other people to boycott student loan payments with him. The post is long, but it basically boils down to "student loans are all funny money and not real" and he is convinced that Bernie Sanders is going to either run 3rd party and win or get the nomination at the convention because Clinton will be in jail by then. Once Bernie is President all the student loan debt will be forgiven or the bubble will burst and it will all be written off, so don't pay any at all and you will have it all cleared next year. The more people refuse to pay, the faster your loans will be cleared, so please share and like. Edit: This man will be 30 in 2 months. Leon Trotsky 2012 fucked around with this message at 13:48 on Jun 28, 2016 |
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Jun 28, 2016 13:45
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Well to be fair he's correct when he says his students loans aren't real. Fractional reserve banking is weird like that, none of the money existed until he took out the loan and describing it all as fictional funny money is accurate. But spending your money on weed instead of paying your student loans is pretty bad.
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Jun 28, 2016 13:51
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Leon Trotsky 2012 posted:One of my Facebook friends is bad with money and bad with politics. This fills me with so much joy.
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Jun 28, 2016 13:57
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Devian666 posted:I suspect a lot of people are just saving large quantities of cash instead of investing. That puts them of risk in the event of a bank collapse as there are no Government protections on bank deposits. A lot of people could end up wiped out in a financial crisis. Wait, in NZ if the bank goes bust you can lose your money? There's really nothing like the FDIC that means your money is safe no matter what? Normally it's foreigners gasping at the lack of social safety net in the US, the tables have turned.
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Jun 28, 2016 14:06
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My coworker said if she didn't have credit cards she'd have no money in the bank. At least she's honest?
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Jun 28, 2016 14:26
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Not a Children posted:I was a teenager, so effectively, yes A financially savvy and mature person could use an interest only mortgage to buy a home that would appreciate, pay only interest, wait until it has appreciated, turn around and sell it at a profit and then reap the difference between the annualized appreciation of the house vs the interest rate less the transactional costs. They take the money that would go to the principal of the mortgage and stick it in a higher yield investment vehicle that returns even more than the house, and thus have a place to live, optimal return on their capital, and get to take the mortgage interest tax deduction. In the real world it lets people who can't actually afford to buy a house move in and live there while building no equity in it. Though when you can't make payments for 2 years and eventually get evicted when the bank repossesses it you lose no equity too...
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Jun 28, 2016 15:01
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Uncle Enzo posted:Wait, in NZ if the bank goes bust you can lose your money? There's really nothing like the FDIC that means your money is safe no matter what? For some context, even Russia has a national system of deposit insurance. New Zealand is so weird. Apparently their argument is that deposit insurance creates moral hazard. So I guess the banks are more careful because there's no financial safety net?
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Jun 28, 2016 15:05
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BadSamaritan posted:My coworker said if she didn't have credit cards she'd have no money in the bank. At least she's honest? I have often heard a statement that if you have zero debt and more than $50 cash you have more net worth than the majority of Americans.
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Jun 28, 2016 15:07
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Krispy Kareem posted:For some context, even Russia has a national system of deposit insurance. Man Good thing there's no precedent of banks ever losing money because of a market downturn. Nope. Never happened in the past. Not once.
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Jun 28, 2016 15:08
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Dwight Eisenhower posted:Though when you can't make payments for 2 years and eventually get evicted when the bank repossesses it you lose no equity too... Or maybe house prices fall and interest rates rise so the interest on your mortgage is pricier than the rent payments it supplants. (This happened in 2008. It was real bad.)
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Jun 28, 2016 15:34
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Devian666 posted:Well if you look on one of the graphs inequality isn't as bad in Greece and the Slovak Republic. I guess we need to move to either of those countries, what could possibly go wrong. You'll always get inequality, I'm just not sure why NZ wants to catch up with the US. I wouldn't trust the numbers coming out of Greece. It's pretty well accepted that they lied about some of their economic indicators in order to get into the EU.
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Jun 28, 2016 16:05
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Krispy Kareem posted:For some context, even Russia has a national system of deposit insurance. But FDIC isn't just "hey banks do whatever with people's savings accounts we got your back" (2008 wasn't really about retail banks), FDIC (actually the Office of Thrift Supervision) has the authority to walk into a bank and say "You are insolvent. You will stop operations and we are selling you to the highest bidder." They did it to Washington Mutual, pretty much walked in the door on September 25th 2008 and shut them down, put them in receivership, and sold them. So are kiwis just supposed to do their own due diligence when deciding on a bank? Like, they have to read the corporate bylaws and see if the place went bust whether their accounts would be privileged or not or if private investors would have first crack at assets and whether the corporate governance was up to snuff and whether the board of directors was honest enough and whether the daily reserve was acceptable and keeping constant check on assets/liabilities and making sure the debt held by the bank was "sufficient quality" and evaluating their bank's compliance with government regulation and making sure the bank covered enough insurance (or had adequate funds set aside for self-insurance) and whether the board was composed of ex-Bain people and Sounds like bitcoin type poo poo to me
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Jun 28, 2016 17:54
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Saeku posted:Or maybe house prices fall and interest rates rise so the interest on your mortgage is pricier than the rent payments it supplants. (This happened in 2008. It was real bad.) Don't get me wrong, interest only mortgages are stupid for 99.9% of people and anyone who isn't financially independent shouldn't get one.
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Jun 28, 2016 19:00
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The dirty secret of the FDIC is that they wouldn't actually be able to insure much of anything if there was a serious run on the banks. It sounds good and all that your deposits are guaranteed by some federal institution but in reality they'd be out of money in a week and dependent on congress acting (lol) to actually insure more than about 0.5% of deposits. Don't freak out about the kiwis too much, the USA is not that much better off in a crisis. Pryor on Fire fucked around with this message at 19:10 on Jun 28, 2016 |
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Jun 28, 2016 19:06
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Pryor on Fire posted:The dirty secret of the FDIC is that they wouldn't actually be able to insure much of anything if there was a serious run on the banks. It sounds good and all that your deposits are guaranteed by some federal institution but in reality they'd be out of money in a week and dependent on congress acting (lol) to actually insure more than about 0.5% of deposits.
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Jun 28, 2016 20:09
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Pryor on Fire posted:Don't freak out about the kiwis too much, the USA is not that much better off in a crisis. It's way better off in the case of non-systemic failure, such as one bank loving up. Consumers have no real way of judging that risk, so without deposit insurance they're just blindly hoping that their bank isn't run by idiots.
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Jun 28, 2016 20:12
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Speaking of terrible ideas and mortgages... I think one of my co-workers is about to make an extremely BWM decision, but I don't know them well enough to feel comfortable telling them it is a terrible idea. She is a recent hire as a personal assistant to my boss. I know exactly how much she makes, it is around 28k a year, and her fiance interns at Hertz Rent-a-Car. I didn't even know you could intern at a car rental place. They are both in their mid-20's and want to have a house in the next few months. The house they want costs $170,000 and they say they only need about $6k for the downpayment (they currently have no savings at all, but her mom will loan it to her), which seems really low. I don't even know if her fiance is paid at his job and she has already decided on a specific house that is her dream house. She said if they don't get approved for a mortgage then her mom will take out the mortgage and they will pay her back monthly as a wedding present. She is also going to take out a loan to pay for her wedding, but wants to wait until after she applies for the mortgage. Leon Trotsky 2012 fucked around with this message at 21:04 on Jun 28, 2016 |
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Jun 28, 2016 21:01
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I know her less than you do and thisLeon Trotsky 2012 posted:She is also going to take out a loan to pay for her wedding, but wants to wait until after she applies for the mortgage. is all I need to know to confirm she is BWM.
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Jun 28, 2016 21:08
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Solice Kirsk posted:I know her less than you do and this I know, but her mom is willing to front her $6k and can take on a second mortgage for her, so maybe it isn't as bad as it seems? Most of my co-workers are women in their 40's and 50's and they were all encouraging her to take out loans and get payment plans for her wedding to "do it right" and to not worry about money, because it's your special day and it only happens once! I was not going to be an rear end in a top hat and jump in to try and crush her dreams or get into an argument with my boss.
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Jun 28, 2016 21:15
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Leon Trotsky 2012 posted:I know, but her mom is willing to front her $6k and can take on a second mortgage for her, so maybe it isn't as bad as it seems? Ah, so the BWM is genetic.
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Jun 28, 2016 21:17
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I may be wrong, but I think it is extremely illegal to take a loan from someone to use as down payment for a mortgage. If the mom is gifting the money to them, then that's OK, but if the intent is to pay it back then they could get in deep deep trouble in the future.
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Jun 28, 2016 21:19
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Celador posted:I may be wrong, but I think it is extremely illegal to take a loan from someone to use as down payment for a mortgage. If the mom is gifting the money to them, then that's OK, but if the intent is to pay it back then they could get in deep deep trouble in the future.
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Jun 28, 2016 21:23
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Celador posted:I may be wrong, but I think it is extremely illegal to take a loan from someone to use as down payment for a mortgage. If the mom is gifting the money to them, then that's OK, but if the intent is to pay it back then they could get in deep deep trouble in the future. It definitely is, but I don't see how they are going to get approved. I'm 99% sure her mom is going to take the mortgage out and they are going to pay her. I have no idea what kind of mortage only requires 6k down on $170k and one income of 28k a year and another of 0-??? a year, but it is probably not a great one.
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Jun 28, 2016 21:24
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Jeffrey of YOSPOS posted:That's not the proposal though - the mom would be taking out the mortgage and isn't borrowing any money. The mom is basically acting like a really nice intermediate bank in this case, it's not the headshot. OK, I misread then. I thought the mom was loaning them the down payment and they were getting a mortgage in their own name.
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Jun 28, 2016 21:27
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Celador posted:I may be wrong, but I think it is extremely illegal to take a loan from someone to use as down payment for a mortgage. If the mom is gifting the money to them, then that's OK, but if the intent is to pay it back then they could get in deep deep trouble in the future. Google "the headshot"
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Jun 28, 2016 21:36
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canyoneer posted:Google "the headshot" I know what you mean by this, but you should try it. You get nothing like what you're actually talking about.
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Jun 28, 2016 21:40
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canyoneer posted:Google "the headshot" "The headshot loan" unless you want to ogle models.
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Jun 28, 2016 21:41
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Just watch The Wire.
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Jun 28, 2016 21:42
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Leon Trotsky 2012 posted:Just watch The Wire. Good advice for any query
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Jun 28, 2016 21:42
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Celador posted:I may be wrong, but I think it is extremely illegal to take a loan from someone to use as down payment for a mortgage. If the mom is gifting the money to them, then that's OK, but if the intent is to pay it back then they could get in deep deep trouble in the future. It's not illegal if it's disclosed. But you won't be getting a mortgage if you're already getting a loan for the down payment.
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Jun 28, 2016 21:42
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canyoneer posted:Google "the headshot"
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Jun 28, 2016 21:47
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