Dumping the Banksters

77
Tue, Aug 12, 2014 - 9:43am

I have a close friend since 1977, rooming with him before married life and keeping in touch over the years as our careers have moved us all over the nation. He was attempting to purchase an older home in Ohio using a realtor and a bank, like we are all supposed to do. But things got screwy. After verbally accepting his offer of 52K for a foreclosed home, the seller (a bank) demanded that he use a particular mortgage broker instead of the bank that had pre-approved him (I smell a kickback). After some discussion, my wife and I offered to help him with our real estate business. We cut out one realtor and limited the power of the bank. He got the home for 20% below an already low asking price, has lowered his housing costs by 35%, and paid for the renovation of the house by just cutting the bank out of 50% of this deal.

But perhaps the more significant thing that happened was that we just had a taste of how good life can be without banks. Damn, they run up the costs! Then they front load the credit contract so that the majority of interest is paid up front over the term. If you buy & sell every 3-5 years, you hardly pay down the principal and build equity. But all-y’all know this, so I’ll end the mini-rant. My problem is that I have contractually obligated myself to them by purchasing real estate with their fiat. And the system has not collapsed as I was expecting it to a couple of years ago when I bought my home. Moreover (controversy warning), I am beginning to think it is foolish to count on an economic collapse to get me out of the contract. It has been my plan all along to pay off the home with silver proceeds, putting extra fiat into metals instead of paying down loans. Perhaps that is not the most sure plan either.

And now all this has me thinking... Can I pay off the house I currently live in, regardless of whether silver goes to the moon this year or not? (We have recently sold two of our seven business-owned rental homes—hopefully to be sold out by year’s end).

Now, I am not saying anything here you already did not know, but I seem to need to revisit this issue of the timing of system collapse and bank obligations, and perhaps you do as well.

Banks cost me a lot of money! I live in a modest little home (too small) by American standards. But last year I paid over 10% of my income to the bank in interest. They also required me to buy private mortgage insurance, and to buy title insurance when I bought the home, piling the costs even higher. We could have sold our stack and bought a cheaper home outright, but my fear of imminent collapse caused me to hold onto my stack. With my perfect retrospective vision, I can see that I could have paid for a home outright and rebuilt a respectable stack by this time. I think my fear of immanent collapse has handcuffed my finances and kept me in bank bondage far longer than necessary.

How long will this current system last?--perhaps longer than we think. California Lawyer made a coherent argument last week that it will last until the banksters have their hands on all the retirement funds in the US, which could take a number of years. Click here to read—and give him a hat tip!

I am convinced CA-Law is right! I have suspected for a while now that this system will continue quite a while, but I could not figure out how they would do it. The huge retirement pile of fiat is how—can you see those banksters lustfully slobbering as they gaze at it? Meanwhile, my employer schedules meetings with retirement advisers a couple of time a year where they encourage us to double down in mutual funds to ensure a comfortable retirement. Smells like a trap!

If I could only be free of this bankster contract I have signed, I might feel even more security than my stack provides.

So my wife just started working again after 23 years of raising children. For the first time in our 27 year partnership we have two incomes. Now she is earning nearly what I earn and we must decide what to do with this fiat. We have been debating (politely arguing) whether to pay down our mortgage or buy more metals. I am being persuaded by her arguments to pay off our house more quickly.

Firstly, I want to keep a stable marriage. Helping her feel long-term security keeps her happier, and having a paid off home does that. Secondly, we can pay off this house surprisingly fast if we set our sights on that goal—perhaps within three years! And if I try to earn some extra fiat, we can pay it off even faster. Will this system last until 2017? Good question! If it does, it means metals will continue to be suppressed. If not, we already have a modest stack and a lot where we can build a new self-sustaining life.

At this point, I see risks and rewards to both sides: stacking more vs paying off the bank.

If I stack more, our reward could mean we are filthy rich one day instead of simply rich. But we run a risk that metals go to zero first, that holding metals is “outlawed” at some point, or that it becomes dangerous to sell to the LCS, with people following you home to see if you have more. But really, there is not much risk in stacking more.

If we pay off the home instead of stacking more, our reward would be freedom from banks, solidifying the budget with a paid off home, and a very happy, secure, wife. But we run the risks of home devaluation in another real estate pullback, or that the system collapses and we could have had more metal, but did not.

If Barney Frank and other liberals have their way, as they usually do, banks will start lending to any living person again and we will have another housing bubble.

When I weigh all the data, all these risks and rewards in the scale, given the likelihood that this system continues for more years that I can imagine, the scale tips toward home payoff.

Staying on the same page with the wife with regard to prepping and the future is invaluable. Her perspectives are different than mine, valuing security over potential wealth and my higher appetite for risk. And I have already noted several comments by some participants of this site of trouble between prepping perspectives of husbands and wives as this delay in the collapse continues. Losing one’s family while being well-prepared doesn’t sound like what anybody would want—avoiding that scene sounds like a good topic for a later post…

If I knew for sure that collapse was immanent, then metals would be the way to go. But I am not so sure anymore. If the system is going to continue another few years, then the payoff option is a no-brainer and I will come out way ahead. We may not even need to touch our stack. My wife will be happy and our marriage strengthened!

Helping my friend provided me with a small taste of life without banksters. It reminded me of how much money they scalp from you in home ownership and purchasing. And I should not even need to discuss credit cards and other credit purchases here…

Of course I don’t write all this just to tell you about my personal life, but because I figure I am a lot like many of you, facing the same challenges and decisions about the future. Some of you may consider giving any money to banks a baaaaad idea, that I should simply stack, pick up another home when housing prices deflate again, and plan to move. Please expound. I spend my time here because I want to know how everyone weighs in on these issues of system longevity and how to best prepare for the future.


About the Author

  77 Comments

sierra skier
Aug 12, 2014 - 11:07am

It is tough to try to beat the system

They are making and changing the rules,,,, in their favor. The House almost always wins in the long run, or so it seems.

We also struggle with finishing off the mortgage vs stacking and holding cash. My wife says when I sell my business we should throw that cash towards the mortgage, but we already hold well over $400k in equity and have a small mortgage in comparison. Currently we are paying extra every month and the principle is dropping by leaps and bounds. Our home is for sale and tying up the business cash in equity seems wrong as when we sell the mortgage will be done with anyway. Our equity will buy up a nice place in our chosen area.

I'm not sure which way we will go at this point but do know we will be well set up shortly after we sell and relocate and doing so without touching the stack and maybe increasing it with the proceeds from the business sale.

mruk
Aug 12, 2014 - 11:29am

Daily London Silver Fix

I might be a little off subject here, but has anybody seen, or heard of what, if anything, is going to transpire after Aug 14th, 2014 cut-off date for the "London Fix"? Thanks in advance!

Mandrake
Aug 12, 2014 - 11:35am

My plan...

Dr. Jerome.. This is what I am doing. I did pay my mortgage off 7 years early this year, & my goal is to use the principle that I’m not spending, on removing the other debt I have. First, vehicle payment, then line of credit that I have for home repairs (new roof that replaced a 20yr one).

That is what woke me up, maintenance, which means that I needed a cash reserve. It has been a relief to know that I have several hundred dollars extra a month to have on hand to use, than credit cards. Not having a reserve of some type will sneak up on you. So, once I have a comfortable amount (goal is 4 months of take home pay), then I can continue stacking. BTW, I decided in 2011 to stack as much as possible for my reserve, & look how that worked out for me…my own fault. But I believe that some day it will pay off, but as the past has shown me, it could take longer than anticipated.

I’m in my mid-forties & own my home. Having that opens a lot of options. If I need to relocate, all I have to worry about is selling it. If not, then my S.O. will stay behind until it’s done. She’s more flexible with her career than I am.

And the other thing, I decided to live. I am able to vacation with my 15yr old son (father/son thing) before school starts & turn around the next month with the S.O. to attend the buffalo round-up for a week in the Black Hills, without have a huge credit card balance this year. I use it to get points but then I'll pay it off the next month since I have saved the money beforehand. Don’t get me wrong, I am frugal, but waiting for the mother-load in order to do the things I want (simple as they may) can be depressing when the timeline keeps getting extended.

IMHO, if you feel comfortable with the reserve you have, and able to pay off your mortgage sooner than contracted, I would do that. Keep purchasing even if it is a small amount, but stay consistent on your course. You might miss the run-up & that extra 100 count you could have purchased would of made it much easier, but that’s the catch 22, what if….I hope this helps… Mandrake

opticsguy
Aug 12, 2014 - 11:46am

Unfortunately, if I paid off my modest house's mortgage

I will still need to come up with $7000/year in property taxes and $3K for homeowner's insurance, $800 a month just to live in a house that I "own". I guess with the house paid off I could self-insure, but with my luck a tornado will hit the day after I let the policy lapse.

abguy4
Aug 12, 2014 - 11:57am

feedback on a rainy day

Dr J., thanks for all you share. This is the type of discourse we need here. Let me share along these lines, from my personal experience. To wit; my brother-in-law, and real estate. When he was 20 he had a construction job injury. He spent idle recovery hours visiting a local coin and stamp store. Eventually the owner offered him a part-time job, and soon a minor partnership. When he turned 45 he retired, set for life. Yah, no kidding. But, what to do with this cash? Wise beyond his years he does NOT trust Wall St with one stinkin penny. So for giggles he starts buying rental properties. I visited him one time in mid December and he was in a foul mood. It seems not one of his renters had yet paid their Dec rent. He said; ”I’ve gotta find a better way, this is B.S.” Well, what he did was sell all the rentals, and then – Here’s the magic – he held the mortgage. Yah, he played the Bank. If you can’t beat ‘em – join ‘em~! Here’s his formula; He buys Bank foreclosure houses at auction, he fixes them up, (he still enjoys the construction and he has nothing better to do anyways), and then sells the house, and HE holds the mortgage. Eg. Bank foreclosure $40K. Fix-up $40K. Selling price $100K. He collects between $6K and $8K per year (depending on terms of the mortgage – you know the game~!), for an investment return of 6 - 8%. Sometimes he takes a small down payment, sometimes not. The ‘renters’ pay the taxes, do the up-keep and maintenance, and if they re-nig on the payments he gets the house back. Wash, rinse, repeat, same as your Banker overlords. So far he hasn’t had one foreclosure, whereas with the rentals he was sometimes batting minus a thousand, paid the taxes, and did all the maintenance - which with renters is always excessively beyond normal levels. Now, I have two very nice Bank foreclosures near me. Asking $69 and $79 each, and situated in a $130 - $150 neighborhood. My problem, I’m 100% in PMs and underwater, and the formula does NOT work if you have to go to the Bank for start money and the fixer money. Now, here’s the kicker. Brother-in-law barely made it out of high school, does not know who is president, or where the hell Iraq is, etc. Whereas yours truly , with multiple degrees…………………………………ain’t this life a Hoot?

Katie Rose
Aug 12, 2014 - 12:53pm

Make your wife happy....

I am a proponent of free and clear housing, just as I am a proponent of free and clear autos. I do not like debt. It makes me a slave to the lender.

Having sold real estate for years I learned a lot from watching investors. It was always the greedy ones who crashed and burned.

My second real estate broker took me aside when I first went to work for him. I have never forgotten his advice.

"Most real estate agents see their home as an investment. They use their personal homes to make more money. They are always buying and selling and moving about. Don't do that. Your home is your home. It is not an investment. It takes just 17 years to pay off your home if you make one extra payment a year. Do that. Pay it off as soon as you can. Use other properties to make money. Let your home be your home."

That was very wise advice. Real estate goes up and down, but when the home is paid for, it really doesn't matter.

My stack is for keeping the property taxes paid when it all goes to Hell. According to Lindsey Williams, the criminal elite intend to own all the property in the USA. The loss of manufacturing jobs has been purposeful. He has warned repeatedly that the banksters intent is to collapse the economy, then take away the free and clear homes via property tax foreclosure sales.

As I have shared before, I am presently not stacking. My money goes for more greenhouses. I grow my food in these greenhouses. They give me at least another two- three months of growing time, and make it very easy to have fresh produce every day. I find that there is nothing that quite equals the ecstasy of a warm greenhouse on a frigid spring day.

To be honest, I have fallen in love with my 12 x 24 foot greenhouses. I presently have five and the makings for another one. I simply lack the time to get it built at the moment. Having a greenhouse bursting with life gives me a whole lot more pleasure than a stack of coins.

I have been buying grow tents and grow lights. I will be able to have fresh veggies all year long that I personally grow. Amazon has great prices on grow tents. Everyone who has seen one of my tents has asked how to get one for themselves. They really are a fabulous invention.

https://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Daps&field-keywords=grow%20tents

I use T-5 Florissant lights to light them.

https://www.ebay.com/itm/Apollo-Horticulture-4-ft-T5-Grow-Light-Commercial-Fixture-Kit-for-Plant-Growing-/171350761749?pt=US_Hydroponics&var=&hash=item27e54d2115#ht_2422wt_974

E Bay has these at fantastic prices. (It is interesting that eBay’s selection has changed over the last year. Most of what they now offer is high output lights for growing marijuana indoors.)

Dr. J, when everything is said and done, I think having a free and clear house with the ability to raise food is a great first priority. Make your wife happy. Pay off the mortgage. Watch what happens to your body when the mortgage is paid off. There is really nothing quite like that feeling.

There is a peace that comes from knowing that your little piece of dirt is paid for, and the plants in the greenhouses are fresh and free from contaminants.

Here are a few statistics.

According to the 2005 census (https://www.census.gov/hhes/www/housing/ahs/ahs05/tab3-15.pdf), about 33% of owner-occupied homes are owned free and clear.

********

The research starts out by pointing out that nearly 30 percent of Americans own their homes free and clear. Okay. But that isn’t something new. In fact, in 2000 the rate was 30 percent and in 1990 and 1980 it was at 35 percent, in 1970 it was 39 percent, and in 1960 it was up to 42 percent. Of course none of this is listed in the analysis because hey, everyone owns their home free and clear right? In fact, the official figure is 29.3 percent so it actually is at the lowest on record when looking at data going back to 1960.

https://www.doctorhousingbubble.com/americans-that-own-home-with-no-mortgage-free-and-clear/

El Gordo
Aug 12, 2014 - 1:14pm

Who am I working for?

When I'm working, who am I really working for? Or who is benefiting from my work? If all earnings go to the bank or the car lender, etc. am I really accomplishing anything for myself? If I would like to keep a little of what I earn, then I need to be paying myself; so I always "pay me first." Whether it's a small amount or a larger amount, I always rat-hole a little of the fruits of my labor before paying anyone else. If I don't have to pay the bank or other lenders, then I have more for my own discretion. So I decided to get debt free first. No more debt for me ever again if I can avoid it.

ancientmoney
Aug 12, 2014 - 1:38pm

Dumping the banksters . . .

I have come to look at the financial system as a matrix, or a web, designed to entrap everyone, or at least as many as possible. Modern real estate and the finances involved with it is a part of that matrix. Of course, everyone needs a home--a place to live. Buy or rent? There are advantages to each. It seems to me that keeping as many options in front of you as possible is quite important, even possibly existential. "Owning" real estate is a misnomer in some ways. You do not own the land. The governmental units in which you live own the land, and you rent it via property taxes. But you do have the obligation to follow local ordinances, restrictions, requirements, etc. And, while you might be able to sell, can you do it quickly? Likely not as quickly as one would wish--if at all, when things get sticky. If the real estate you inhabit is somewhat defensible, and you can use it to grow some foodstuffs, get water, etc., it has extra value. Owning that sort of real estate seems better than purely residential, assuming TEOTGKE is within 3 years. I was very close to cashing in enough silver in early 2011 to pay off my mortgage, and then retire. I got fooled; I was holding out for $50 but it didn't stay there long enough for me to pull the trigger. I felt that the silver supplies were low enough that $50 would again be reached, well before now. Wrong again. My wife chastises me for not selling when it got to $45, but I was greedy--woulda, coulda, shoulda. So, I continued working, paying off my bills and mortgage with earned fiat. I kept my stack for another day, except for that which I gifted away in the interim. It does seem to me that the next generation will need it more than we will.

Aug 12, 2014 - 1:50pm

making fiat in real estate

agguy4, I hold your brother-in-law as my secret idol. I'd love to be in a position with enough fiat (about 120K in my neck of the woods) to engage in real estate as he does. There is fiat to be earned there, regardless of the market levels.

Katie, Good advice from you and your former colleague. Your home is your home--a thought that hardens my resolve.

boomer sooner
Aug 12, 2014 - 2:02pm

Perfect GC

Thanks again Dr J! I am a firm believer of no debt. Matter of fact, makes me anxious to owe anyone, but after the last few years, I am becoming more content letting the banking establishments hold some of my liabilities. I also have rental property and did the reverse, paid cash for them and continued the note on personal residence. I did this because I could step to the front of the line when purchasing rentals, with a discount. My thought was to then bundle the properties a get a loan, then pay off home. Being self employed, small time, getting a loan today is a pain in the arse, so sitting still. Interest on mortgage is less than $4k per year and I look at it as insurance I pay incase I need to blow town when TSHTF. I maintain all the properties and pay myself in pm's, that way wifey had no clue how much is saved. Right now all I hear is how we need a new house, arggg. Two in high school, one graduates this year and college next, yea pay up pops! My hope was if everything held together and pm's increased in fiat, I could use them as a backstop for colleges. Today, may happen, may not. Stacking cash now (could pay off house soon), but will need for schooling. Sorry for the ramble, on phone between jobs. Bottom line for me, if a deal comes by, take it, if not, stack it, whether pms, cash, lead or lead delivery mechanisms, or JEEPS, but only if bought at a discount. I can flip a jeep deal once a year and make 30-50% with nothing special added, just a little minor mechanical or body. YouTube is great for this, and forums. Hey CL, how is your Jeep project?

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