Forget about pension plans. This is a scam that can go sour if we hit a major financial crisis.

There is a website called lendingclub (no affiliation) which allows you to lend your money out just like if you were a bank. This brings an average of 10% yearly. If 10% sounds like a lot to you – you might want to look into it.

If you don’t want to do it – just stack cash and wait till the stock market collapses. And when it does- invest in utilities and telecom. Those companies will never go broke

Russky gave some interesting advice about lending your money out.  You will get ahead on some risk.  Don’t put all of your eggs in one basket.

1. Put some aside for a rainy day first.  You may lose your job and have to find another that requires that you relocate.  Look at your current expenses and projected expenses should you find yourself unemployed and put together a nest egg that will carry you through at least three months.  Five months maximum.

2.  Consider a college fund for your daughter.  I graduated high school in 1985 when you could still get buy on minimum wage and still educate yourself.  Today this is much different.  What will it be like in 12 years when your daughter graduates high school?

3.  Invest.  Consider a financial adviser.  Maybe Russky will give you his phone number?

4.  Want to build a dream house?  Consider where and when.  Is this a retirement goal or a “Before I’m 40 goal”?  The where may dictate your decision.  Look at undeveloped property prices and determine if they are affordable.  Pay Off Property before building.  This give you equity and a real property as collateral to mortgage the construction of a home on this property.  DO NOT EVER use your existing home as collateral.  See number 1 above.  If you ever get the idea to get (re)married, make sure that all property is in your name before this happens so that it is NOT community property.  If you ever get the idea to get (re)married, do not sell your current home and use it to buy another.  In the state of Texas (yes I’m a resident) your current home is not community property.  However, if you sell it and buy another while married, it may be more than likely be considered community property.  Guard your wealth and property.

5.  While trying to build a solid credit rating consider this.  Pay in cash whenever possible.  If it is worth putting on a credit card and is not an emergency then it is worth the wait until you have the cash before purchasing.

6.  While all of this may be good advice, take it from a 47 year old with FIVE kids.  Number 1 above is the first priority.

7.  Lastly, should you ever wake up and choke down a blue pill and decide to get (re)married.  Get a prenuptial agreement that includes any investments, child custody, property, etc that have been accrued since the marriage.  If she is as secure in the knowledge that love conquers all as you may be then a prenup will not phase her.  After all, if you have a good income and own your own home.  How long before the vultures start to circle?

I’ve got a 4,000 sq ft dreamer on 31 acres, that I can’t wait to get rid of. I lost my ass in the stock market and will never buy stocks again. I did OK with precious metals (silver), but the government records those transactions. Buy silver and gold whenever you can without creating a paper trail. I’m looking at copper and zinc 1,000lb ingots when I can afford it and when the market is low, reason being that they’re hard to steal when nobody knows where you buried it. Nobody knows the future with certainty, but history shows that laws change, then people get screwed. Don’t trust everything that’s conventional, think for yourself, trust your gut feeling, It got you this far, it’ll get you the rest of the way….

I figured between the money I invest and the money I get from selling my current house I could at least come very close to paying a house off!

Property…..There are two fundamental ways that I view it.

1.  If property is not readily needed then it could be sold and the revenue banked or used for the purchase of another/more property.

2.  A source of income.  Are you a person interested in the bird in the hand or the two in the bush?  A home owned free and clear can be rented.  A quick check of Zillow.com shows that homes in the Amarillo area rent for between (depending upon location and how nice the home is) for between $600 and $1,400 per month.  In my experience in Austin, TX, houses in decent subdivisions list for anywhere between $1,300 to $1,800 per month.  Okay If you are going to give what I’m about to say any credence what so ever, then you need to engage a tax accountant.  H&R Block works for me.  Here’s what you can do.  Rent the home.  You can either go through the hoops to list it as a HUD home for low income families or put it out there yourself.  Also, if you are going to rent then the possibility of hiring a property management service helps to insulate yourself from the renter.  They do cost but you don’t have to listen to some single mom with three different kids with three dads bull$hit.

What can you get from this?

1.  Tax deferment.  The value of the property can be tax depreciated over time (five years I think).  This can be answered by the tax accountant.

2.  Income.  The rental fees go in your pocket minus repair, maintenance, and upkeep.

3.  Again, a house to live on.  I believe in bomb shelters.  Owning a home outright is a hedge against the worst case financial scenario.  Lose your job.  Economy implodes.  Zombie attacks.  Elderly parents that need a place to live who are physically impaired.  Remember a family member gave you a house.  I personally belief that you can’t take without giving back to those that have supported you.

4.  When tax deferments run out, sell the home, buy another, and do it all over again.  If this house was built in 1970 then selling it and purchasing another more recently built home for this endeavor may be the place to start.  The value of your current home may not be as much as you think it is.  Live in the new one, get the new one paid off then get under way.

5.  Check with a tax accountant.  I haven’t run this game in a while (don’t need to) and the laws/rules/regulations may have changed.

Now is paying cash an unrealistic expectation?  Not really but if you already have an income and an additional income from renting then purchasing another home without selling the other one may be a more appealing prospect.  Here’s why.

You stated earlier that you have about $2,000/month in disposable income.  The monthly payments for a $150,000 home with a 6.75%, 30 year fixed rate mortgage will be $972/month.  This is not including escrow.  Escrow is what you have to pay the mortgage company to fund the real estate taxes and homeowner’s insurance.  This is their way of guaranteeing that there are no legal entanglements with back due taxes and if your house burns down the value of the home pays them for the mortgage minus the equity.  So in reality, your monthly payments will more likely be closer to $1,500/month.  This brings your current disposable income down to just $500/month.  Not a lot of flexibility it comes to a major car repair or replacing a home air conditioner.  Remember the rainy day fund is for really bad times and credit cards are another way to the downward spiral.  Now if you rent your current home then your disposable income comes back up to what ever your rental agreement states minus expenses and income tax.

An extra $500/month on the house payment cuts the time of the mortgage from 30 years to just over 12 1/2 years

An extra $750/month on the house payment cuts the time of the mortgage from 30 years to exactly 10 years.

An extra $1,000/month on the house payment cuts the time of the mortgage from 30 years to just over 8 years.

The money gets tighter the closer you get to a $200,000 house.

If you have $2,000 and month in disposable income.  Saving for the purchase for another home for three years at $1,250 per month will leave you with a $45,000 down payment.  <span style=”text-decoration: underline;”>You do the math.</span>  The more you save, the larger the down payment, and the less you pay on a home in interest charges. <span style=”text-decoration: underline;”> I reiterate, your current home was built in 1970.  Pay to have an  inspector come in a check it out before you put it on the market.  You may have a money pit on your hands and getting rid of it may be difficult.  After inspection and repairs have in reinspected and then have in professionally appraised.</span>  Here in Austin, developers are tearing down old homes and building new ones in the less than desired parts of town and are making money doing it.  Gentrification.

One last thing.  You are only 29 years old.  Banks don’t trust people as young as you no matter how much disposable income you have.  Saving for the purchase of another home will give you a big down payment, get you a little older so that your interest rates aren’t that high and give you spare cash should you decide to sell your current home and purchase another.  The real estate market may take a downturn and you could find yourself upside down on the value of the property versus what you paid for it.

If you sell then buy do it in the same calendar year so that you don’t have to pay income tax on the sale before purchasing another.  If this was a <span style=”text-decoration: underline;”>gift</span> then you <span style=”text-decoration: underline;”>may still have to dodge a tax bullet this year</span>.  Again consult a tax accountant.

Finally, check your credit scores with all three credit monitoring companies.  See if there are any discrepancies and get those corrected.  Have a B plus to A minus credit rating.  Consult legitimate sources as to how to build a higher credit rating.

Like is said in my last posting.  You are in a financial position that a lot men twice your age only hope to be in.  Doing something like this is what I have done, and have done quite well for myself.  Investing in the financial markets etc. may be more for you but everyone always needs a place to live.  DO THE RESEARCH.

Good luck.