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Hyperinflation: Get out of debt ASAP...

TAEZZAR

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............so why arnt all the mortgages paid off....and for that matter every other loan...?
Loans, mortgages ?? What are those, that you speak of ? :make happy::rotf::rotf::rotf:
 

ttazzman

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They were paid off.
if it would go down that way it would go then it would be a no-brainer......i remember seeing pictures of paper money piled up along side the roads in Zimbabwe ( just go pickup money in the streets and pay your loans off)

the way i would imagine it happening would be a announcement that the us$ is instantly no longer legal tender.....and all digital $ (bank accounts) are immediately converted to the new legal tender.....and physical paper money would need to be converted to the new currency at the set rate in ~30days or be UN-redeamable........( a reset)...........in this instance owning paid for negotiable assets would be the best position to be in to preserve wealth...IE stocks...PMs ...real estate...commodities...etc (would be ingesting to see how they would deal with $ denominated bonds etc)

as i see it the only "winner" in hyperinflation is the government since they DO get to pay off their debts with funny money

if your correct ..the second hurdle is timing both getting in and out...get in to early and your debt service costs will eat you up ......getting out to late and you lose any benefit or you dont even get a chance to get out....
 

Ebie

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In all cases that I have heard of there was time to pay off the mortgages.
But, my Venezuelan friend said that many mortgages had dollar clauses, and other mechanisms (If I understood him correctly)
so maybe the banks were concerned long before hyperinflation came.
So many ordinary citizens did not benefit--as you have suspected.

if it would go down that way it would go then it would be a no-brainer......i remember seeing pictures of paper money piled up along side the roads in Zimbabwe ( just go pickup money in the streets and pay your loans off)

the way i would imagine it happening would be a announcement that the us$ is instantly no longer legal tender.....and all digital $ (bank accounts) are immediately converted to the new legal tender.....and physical paper money would need to be converted to the new currency at the set rate in ~30days or be UN-redeamable........( a reset)...........in this instance owning paid for negotiable assets would be the best position to be in to preserve wealth...IE stocks...PMs ...real estate...commodities...etc (would be ingesting to see how they would deal with $ denominated bonds etc)

as i see it the only "winner" in hyperinflation is the government since they DO get to pay off their debts with funny money

if your correct ..the second hurdle is timing both getting in and out...get in to early and your debt service costs will eat you up ......getting out to late and you lose any benefit or you dont even get a chance to get out....
 

Joe King

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, my Venezuelan friend said that many mortgages had dollar clauses, and other mechanisms (If I understood him correctly)
so maybe the banks were concerned long before hyperinflation came.
So many ordinary citizens did not benefit--as you have suspected.
Which means people typically weren't using those wheelbarrows full of cash to pay off their debts. If anything, it was used for mere survival.
....and yes, in a lot of those types of nations, the contracts have dollar clauses. However, that means if we here in the US ever experience a hyper inflation, there will be more ability for more people to pay off the mortgage with the proceeds of hyper inflated assets.
 

Ebie

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Correct.
And there is precedent for that, such as Weimar Germany, if I recall correctly.
Which means people typically weren't using those wheelbarrows full of cash to pay off their debts. If anything, it was used for mere survival.
....and yes, in a lot of those types of nations, the contracts have dollar clauses. However, that means if we here in the US ever experience a hyper inflation, there will be more ability for more people to pay off the mortgage with the proceeds of hyper inflated assets.
 

Ebie

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I don't know what happened in Europe, when Greece etc went to the Euro. I think that it was good for fixed rate debtors.
(But that is not hyperinflation)
Which means people typically weren't using those wheelbarrows full of cash to pay off their debts. If anything, it was used for mere survival.
....and yes, in a lot of those types of nations, the contracts have dollar clauses. However, that means if we here in the US ever experience a hyper inflation, there will be more ability for more people to pay off the mortgage with the proceeds of hyper inflated assets.
 

Treasure Searcher

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If you can get out of debt by paying off, do it now. Don't gamble with debt.

Why? If you have a mortgage, loan or other debt instrument, you may not be able to obtain clear title. If the lender goes under, the currency goes under, etc., the market system can freeze up.

I had a relative that paid off a house, but the bank that originated the loan had merged with another bank, that merged with another bank. etc.
Even though he paid it off, he had difficulty getting title, since the loan moved through so many mergers.

Its best to pay off the loan, mortgage or other debt instrument and get clear title now. In the area where I live, a regional bank went broke around 2008. It was bought out. Another local bank went into FDIC receivership.

I bring up once in a while to locals about the bank that went under. People tell me that it did not go under. I explained to them that the FDIC put them (on public record) as a failed bank and they were bought out. The housing market sank them. Too many loans for overpriced housing. The real estate agents played the game, too.

Having your deed(s), vehicle title(s), etc. in your possession is safer than being in the banks possession, waiting for you to pay it off.
 

Ebie

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Interesting post.
Do you recommend selling PMs to pay off a low interest rate house mortgage?

If you can get out of debt by paying off, do it now. Don't gamble with debt.

Why? If you have a mortgage, loan or other debt instrument, you may not be able to obtain clear title. If the lender goes under, the currency goes under, etc., the market system can freeze up.

I had a relative that paid off a house, but the bank that originated the loan had merged with another bank, that merged with another bank. etc.
Even though he paid it off, he had difficulty getting title, since the loan moved through so many mergers.

Its best to pay off the loan, mortgage or other debt instrument and get clear title now. In the area where I live, a regional bank went broke around 2008. It was bought out. Another local bank went into FDIC receivership.

I bring up once in a while to locals about the bank that went under. People tell me that it did not go under. I explained to them that the FDIC put them (on public record) as a failed bank and they were bought out. The housing market sank them. Too many loans for overpriced housing. The real estate agents played the game, too.

Having your deed(s), vehicle title(s), etc. in your possession is safer than being in the banks possession, waiting for you to pay it off.
 

Thecrensh

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I don't know what happened in Europe, when Greece etc went to the Euro. I think that it was good for fixed rate debtors.
(But that is not hyperinflation)
In Germany, businesses literally just changed the sign in front of prices. They did not convert the Deutscmark to Euro and adjust prices, they just changed the symbol on the price tag....pissed off a lot of Germans and caused hard times for a little while.
 

Ebie

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That would be instant inflation...that did NOT affect fixed mortgages...
Good post.

In Germany, businesses literally just changed the sign in front of prices. They did not convert the Deutscmark to Euro and adjust prices, they just changed the symbol on the price tag....pissed off a lot of Germans and caused hard times for a little while.
 

Merlin

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I have a low interest mortgage. But, since recent tax changes put the standard deduction far from my reach by itemizing, the tax deduction evaporated. We have been adding $400 a month to my mortgage principle payment for years now and over six years have reduced my principal balance from $93,000 to $22,000. It will be gone completely in 18 months and I'll say, "Good riddance."

Our 2014 Chevy Equinox is paid for. But Sammy is a sucker for debt and went out and bought himself a Jeep with $500 monthly payments. Carries big credit card balances, too. He is not, IMHO, a savvy money manager.

Years ago, a manager who worked out of a corner office for Borg-Warner Corporation told me that one should only pay for a car with cash. If you want a $60,000 auto, then save $60,000 and pay cash. I know, I know. Most people would say that it can't be done. Baloney! Most haven't even tried to make the effort. The principle is sound though. Don't live beyond your means. And remember that cars are depreciating assets. They aren't like houses at all.
 
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GOLDBRIX

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Years ago, a manager who worked out of a corner office for Borg-Warner Corporation told me that one should only pay for a car with cash. If you want a $60,000 auto, then save $60,000 and pay cash. I know, I know. Most people would say that it can't be done. Baloney! Most haven't even tried to make the effort. The principle is sound though. Don't live beyond your means. And remember that cars are depreciating assets. They aren't like houses at all.
Most of the Financial Freedom talking heads agree with you Merlin. But if that is not possible find/buy a vehicle that you can pay-off in three years is their alternate choice.
 

Son of Gloin

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I have a low interest mortgage. But, since recent tax changes put the standard deduction far from my reach by itemizing, the tax deduction evaporated. We have been adding $400 a month to my mortgage principle payment for years now and over six years have reduced my principal balance from $93,000 to $22,000. It will be gone completely in 18 months and I'll say, "Good riddance."

Our 2014 Chevy Equinox is paid for. But Sammy is a sucker for debt and went out and bought himself a Jeep with $500 monthly payments. Carries big credit card balances, too. He is not, IMHO, a savvy money manager.

Years ago, a manager who worked out of a corner office for Borg-Warner Corporation told me that one should only pay for a car with cash. If you want a $60,000 auto, then save $60,000 and pay cash. I know, I know. Most people would say that it can't be done. Baloney! Most haven't even tried to make the effort. The principle is sound though. Don't live beyond your means. And remember that cars are depreciating assets. They aren't like houses at all.
If you would add up all the money you’ve ever paid out in interest on debt, it would make you sick. Interest on mortgages, auto loans, home equity loans, credit cards, anything you’ve ever financed. It goes into the hundreds of thousands for most people. Now, imagine you had never financed anything and just saved the money. You could buy a decent home and brand new cars with just the finance charges, never mind the principle, which you could have invested or used to buy that yellow shiny stuff.
 

GOLDBRIX

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If you would add up all the money you’ve ever paid out in interest on debt, it would make you sick. Interest on mortgages, auto loans, home equity loans, credit cards, anything you’ve ever financed. It goes into the hundreds of thousands for most people. Now, imagine you had never financed anything and just saved the money. You could buy a decent home and brand new cars with just the finance charges, never mind the principle, which you could have invested or used to buy that yellow shiny stuff.
SO TRUE ! My very first mortgage back in the early '80s I recieved and Amortization Schedule for the life of that loan. On a 30 year loan @ 12% the 56k house was going to cost me close to a quarter million during that time frame.
I have since re-financed twice the last being at 3% and only a 10 year loan.
They still get a chunk but not near as much as a 30 yr loan provides them.
 

Thecrensh

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I have a low interest mortgage. But, since recent tax changes put the standard deduction far from my reach by itemizing, the tax deduction evaporated. We have been adding $400 a month to my mortgage principle payment for years now and over six years have reduced my principal balance from $93,000 to $22,000. It will be gone completely in 18 months and I'll say, "Good riddance."

Our 2014 Chevy Equinox is paid for. But Sammy is a sucker for debt and went out and bought himself a Jeep with $500 monthly payments. Carries big credit card balances, too. He is not, IMHO, a savvy money manager.

Years ago, a manager who worked out of a corner office for Borg-Warner Corporation told me that one should only pay for a car with cash. If you want a $60,000 auto, then save $60,000 and pay cash. I know, I know. Most people would say that it can't be done. Baloney! Most haven't even tried to make the effort. The principle is sound though. Don't live beyond your means. And remember that cars are depreciating assets. They aren't like houses at all.
That is one of Dave Ramsey's tenets; pay cash for your car. He says buy a clunker w/ cash, invest a "car payment" equivalent and in a few years you can buy a little better car. Keep investing, the car payment, then after a while you will have enough to pay cash.
 

pitw

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If you would add up all the money you’ve ever paid out in interest on debt, it would make you sick. Interest on mortgages, auto loans, home equity loans, credit cards, anything you’ve ever financed. It goes into the hundreds of thousands for most people. Now, imagine you had never financed anything and just saved the money. You could buy a decent home and brand new cars with just the finance charges, never mind the principle, which you could have invested or used to buy that yellow shiny stuff.
I think most who go this route just buy more beer.
 

Son of Gloin

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I think most who go this route just buy more beer.
Well, at least it would have gone in your belly and made you happy and content.
 

Son of Gloin

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What about buying a house?
Actually, if I remember correctly, in his book he says to basically save for a house, too. As I mentioned above, if you figure all the money you’ve ever shelled out in interest, you could afford a very nice house, after some time, having invested the money. But Dave will allow for a loan on a house, if the interest is very reasonable, like it’s been for a number of years now. But, it takes dedication and discipline and the will to not waste the money.
 

Thecrensh

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Actually, if I remember correctly, in his book he says to basically save for a house, too. As I mentioned above, if you figure all the money you’ve ever shelled out in interest, you could afford a very nice house, after some time, having invested the money. But Dave will allow for a loan on a house, if the interest is very reasonable, like it’s been for a number of years now. But, it takes dedication and discipline and the will to not waste the money.
In 2012, I did a refinance to save .5% on my mortgage rate. My monthly payment went down by a certain amount and I did the calculations; if I kept paying the same pre-refi payment, it would cut 7 years off my mortgage.
 

Merlin

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What about buying a house?
As I recall from the little reading I've done, that's how houses used to be bought. Banks were not handing out mortgages. People walked up with $100 bills (or, perhaps, gold coins?) in their hands and bought houses. Am I mistaken about this? Somehow I doubt it.
 

Son of Gloin

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As I recall from the little reading I've done, that's how houses used to be bought. Banks were not handing out mortgages. People walked up with $100 bills (or, perhaps, gold coins?) in their hands and bought houses. Am I mistaken about this? Somehow I doubt it.
They lend people any amount of money to go to school. The price of education rises faster than the general cost of living. They lend people money to buy houses. The price of houses goes up faster than the general cost of living. They lend people money to buy automobiles. The cost of cars and trucks go up past what it used to cost to buy a house. There seems to be a pattern. It all sucks your wealth away.
 

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Interesting reading through this thread. We recently paid off our mortgage. Previously we had paid off all credit card debt and loans except one auto loan. And now even that has been paid off. It's a whole new mindset I am in now. My credit score has dropped recently from excellent (769) to now good 748. But as I look at it and snicker. I can't help but think WHO CARES. I know the reason it dropped,..... I have removed myself from the need to have a good credit score. Until you have experienced TRUE and complete financial freedom it's really hard to explain. It truly changes your psychology. We talk about "owning" a home but when your home is just another debt and suddenly it becomes an asset it changes how you think. It gives me that same feeling of owning PMs. I've never bought PMs with anything but cash. But it's strange. Take a pre-1965 Washington quarter in good condition in one hand a 2019 quarter in the other. They look almost identical. But just the metal composition makes one close to worthless and the other something that can purchase real value. Debt changed to asset give you that same feeling.
 

vichris

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Interesting post.
Do you recommend selling PMs to pay off a low interest rate house mortgage?
It depends. How old are you? Will you be able to rebuild you metals portfolio in short order after you become debt free?

If you sell the PMs can you completely pay off your mortgage? In most cases I'd recommend yes. Of course you will have lots of expendable income after you're debt free to quickly rebuild

Are your PMs worth more than what you paid for them? If you are upside down on your metals value this may change everything.

Last .....Are you still working with a regular income or retired with a pension, Social Security, IRA, Disability income? Being debt free means none of your income is being used to service debt/interest. It's all yours to spend/save as you please or invest in your choice of manners.
 

the_shootist

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One never really owns their home. Stop paying RE taxes and see how quickly the house you thought you owned free and clear will be taken from you and sold off. Today my RE taxes cost more per month than my first monthly mortgage payments on my first house, including principal, interest, taxes and insurance!

What I own is simply equity for as long as I can maintain it
 

GOLDBRIX

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One never really owns their home. Stop paying RE taxes and see how quickly the house you thought you owned free and clear will be taken from you and sold off. Today my RE taxes cost more per month than my first monthly mortgage payments on my first house, including principal, interest, taxes and insurance!

What I own is simply equity for as long as I can maintain it
Still beats paying RENT or Leasing a place to live. In real hard times you can "cash-out" your ownership.
Try that as a Renter.
 

the_shootist

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Still beats paying RENT or Leasing a place to live. In real hard times you can "cash-out" your ownership.
Try that as a Renter.
True, renters have no equity. The last time I paid rent was in 1979 I believe!
 

vichris

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One never really owns their home. Stop paying RE taxes and see how quickly the house you thought you owned free and clear will be taken from you and sold off.
You're kidding me right. My yearly taxes and insurance is just over $2k. My yearly house payment was just over $20k. You do the math. In addition when I paid my house off only 40% of it was going to principle. The way I figured it I saved myself over $177k over the long run and many many more years of of being indentured to the mortgage company. Between the tax man and the mortgage man I'll choose the tax man every time.
And why in the hell would one STOP paying taxes. Just as an invitation for trouble??? To draw attention to ones self???? Or just as a silly example of " what not to do"?
 
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Silver

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One never really owns their home. Stop paying RE taxes and see how quickly the house you thought you owned free and clear will be taken from you and sold off.
It appears the majority of people are happy with property tax, when N. Dakota had a referendum to eliminate property tax, they voted to keep it. May your chains rest lightly.
 

vichris

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It appears the majority of people are happy with property tax, when N. Dakota had a referendum to eliminate property tax, they voted to keep it. May your chains rest lightly.
Don't get me wrong I don't enjoy paying taxes. But its not really an either or proposition. Your taxes in most cases are being paid by the mortgage company as insurance to them so that they are sure to protect their investment. I also pay my taxes for the same reason......to protect MY INVESTMENT/ASSETS
 

the_shootist

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You're kidding me right. My yearly taxes and insurance is just over $2k. My yearly house payment was just over $20k. You do the math. In addition when I paid my house off only 40% of it was going to principle. The way I figured it I saved myself over $177k over the long run and many many more years of of being indentured to the mortgage company. Between the tax man and the mortgage man I'll choose the tax man every time.
And why in the hell would one STOP paying taxes. Just as an invitation for trouble??? To draw attention to ones self???? Or just as a silly example of " what not to do"?
No, I'm not kidding. Annual RE taxes for me are $9K
You can position the math any way you like. I could pay my relatively small (by today's standards) mortgage off today but I choose to keep that wealth in other places, away the bank's hungry hands and pay the relatively small interest. I don't plan on staying in my house after I retire in a year or two. I'll sell it and pay cash for the retirement abode. We all have different plans. One size doesn't fit all.

Taxes are theft. I'm happy that you enjoy paying the tax man. I'd enjoy a $2K annual tax bill too.
 
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ttazzman

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It appears the majority of people are happy with property tax, when N. Dakota had a referendum to eliminate property tax, they voted to keep it. May your chains rest lightly.
I imagine that vote would have gone differently if only those taxed had standing to vote.....this the inherent problem with property taxes a significant if not a majority of voters are not property owners
 

the_shootist

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I imagine that vote would have gone differently if only those taxed had standing to vote.....this the inherent problem with property taxes a significant if not a majority of voters are not property owners
CORRECT!!!!! You stole my thunder.

The game is rigged!!
 

TAEZZAR

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One never really owns their home. Stop paying RE taxes and see how quickly the house you thought you owned free and clear will be taken from you and sold off. Today my RE taxes cost more per month than my first monthly mortgage payments on my first house, including principal, interest, taxes and insurance!

What I own is simply equity for as long as I can maintain it
Isn't that a sad commentary ! Fucking government is worse than the mafia !
 

TAEZZAR

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Between the tax man and the mortgage man I'll choose the tax man every time.
And why in the hell would one STOP paying taxes. Just as an invitation for trouble??? To draw attention to ones self???? Or just as a silly example of " what not to do"?
You just don't understand the THEFT THRU COERCION of property taxes. Property tax is the most immoral tax ever conceived.

Your taxes in most cases are being paid by the mortgage company as insurance to them so that they are sure to protect their investment
YOU pay the taxes, thru your payment to the mortgage holder.
I ALWAYS went with a conventional loan, you pay your taxes & insurance directly.

Last but not least, in 18 years my property tax has tripled, while my property value has slightly less than doubled & my income has increased very slightly (Soc. Sec).
Fucking Oregon raises property taxes 3% EVERY year REGARDLESS of property value.
These people are fucking thieves.
WE have retired college ball coaches retired at $90,000 PER MONTH !!!! Our PERS is breaking our state & our taxes are going into PERS accounts, instead of where they should go. this is MISAPPROPRIATION OF FUNDS.