Financial Status

[MarbleEyez]

With the federal reserve bumping the interest rates up another .75% again yesterday, how much of a stress do you see it putting on your spending habits?? A lot of toy loans are going to start to get expensive, especially for anyone doing 10yr+ loans on boats and campers!!!

 

[Allen]

Making things more expensive is the whole point of raising the interest rates, because you are absolutely right in that it is going to affect purchases going forward of toys that typically need loans. This will put downward pressure on the pricing of all those expensive toys, homes, vehicles, etc, etc.

I think we all know sales staff who like to push the sale by saying "It's only $399 a month". Now for the same priced toy, it's going to be $450 (I'm taking liberties here with the actual numbers). So in order for someone who only has $399 in their monthly budget for a given item, the asking price is going to have to come down to stay in the same monthly budget.

As to how much this affects the overall market? Good question, but I think we are going to continue to see interest rates rise until the govt tamps down inflation to an acceptable level.

 

[Bfishn]

Yeah its going to be interesting to see what happens in the next couple years. There may finally be some deals to be had for cash buyers, because I'm not sure who will be taking out loans at these rates. I'm sure companies will try and extent loan terms even further and a few idiots will fall for that, but I think most people will start tightening their spending pretty sharply.

 

[Rowdie]

except that the prices are going up as well due to inflation!! Home prices are not going down, trust me on that. Not for a while if ever.

 

[MicLee]

We need a full blown recession to straighten things out and I'm ready for it.

 

[wjschmaltz]

I won't say I'm excited about it, but I've been waiting and preparing for this opportunity for several years now. Our mortgage plus utilities equal about 15% of our income and that's our only payments/debt so we're sitting very cash heavy and luckily both have recession proof jobs. Got 3 freezers full of meat so we're all set there too. I'm on the lookout for someone that needs to get out of a pickup or jetboat fast and swooping in for a cash deal. The one downside is I was hoping to buy/build a couple duplex houses in 2023 and that won't be happening with +8% rates. Maybe they will come down enough that it can even out with enough cash down. I saw this chart the other day and it really speaks volumes to the direction we're heading.

Strictly because of the current economy, I think the republican party comes out of this election with 53-55 senate seats and picks up 30+ house seats. To be honest, I'd be willing to pay a little extra in gas and groceries over the next couple of years until election 2024 if it means that we could get that senate majority close to 60 and house close to 50 along with a decent president. That may be what it takes to right this trainwreck.

I keep a very close eye on the real estate market for deals. At least in our area they are coming down. You can go on realtor.com and almost every house has a down arrow next to it indicating a recent price drop. And very few houses are selling.

The people I feel for are the ones that planned to retire in the next few years. That’s gotta be depressing.

 

[Greenhorn]

 

[dank]

except that the prices are going up as well due to inflation!! Home prices are not going down, trust me on that. Not for a while if ever.

People, this is very bad advice.

 

[Allen]

People, this is very bad advice.

Yep, apply post #2 to this and you will see a quick drop in the prices of homes on the market. Just because everyone shopping for a house has a set monthly amount they are willing to spend, and interest rates are now going to be eating up a MUCH larger share of that monthly budget.

I know a homebuilder and will be keeping up to speed on this as I have a project I'd like to do. I'm in the process of saving for that project, but with current trends in interest I'll likely be putting it off until I can save some more cash to avoid the interest.

Given the lag time in construction, I wouldn't be surprised at all if homebuilders aren't in a world of hurt by this time next year.

 

[wjschmaltz]

Given the lag time in construction, I wouldn't be surprised at all if homebuilders aren't in a world of hurt by this time next year.

A home builder in our area started a new development over that last couple of years and just started putting up houses without buyers lined up. Right now they have 12 houses on the market averaging about $600-$700k each and have another 12 or so that are in the process of building and not on the market yet. I imagine they will go bankrupt. Guy down the street from us listed his house 6 months ago at $900K and dropped it to $700k before finally taking it off the market. Even with 40% down on a $700k house, that's $33,000 just in interest per year! Good luck finding buyers for that type of shit. New houses in that price range were flying off the market in our area last winter.

 

[Retired Educator]

Don't know if I should feel sorry for the younger generation or hope they learn from all this. When I was just starting a family and buying a house my home loan was in the 10% range with a short term note at 18%. Bought a quarter of land at 12.5%. Made it through all that but look back and realize it was a struggle. Luckily both wife and I had steady income and didn't live extravagantly, or at least I didn't think we were.

Look back and a lot of toys didn't take a good share of a years income to buy. As I remember you could buy a good 16' boat with about a 50-60hp motor for around $5000. Back then those were top quality fishing rigs. Depth finders were let out enough line to touch bottom and then reel in a little.

With the help of a couple good bankers we made it through those times. By good bankers I'm referring to good advice on budgets and paying off loans without write-offs. Good advice on how to keep net worth going up to qualify for better interest rates. Don't have to deal with loans much anymore so hope young people can find good advice as well.

When you're young I understand the need to borrow money for homes, businesses, etc. The key is to keep those loans manageable and don't forget to invest for the future. These rising rates aren't necessarily good for most but don't think it's the end. Things always have improved and they will again. Make sure you're on the plus side when it does. The DOJ is down but still over 30,000, don't remember how long ago it was less than 10,000. Keep working and be careful.

 

[johnr]

Thanks Biden, all we need is another bailout, or cash payout to the "middle and lower" class.

We are in a recession, the media, and president saying we are not, doesn't make it so.

 

[FightingSioux]

With the federal reserve bumping the interest rates up another .75% again yesterday, how much of a stress do you see it putting on your spending habits?? A lot of toy loans are going to start to get expensive, especially for anyone doing 10yr+ loans on boats and campers!!!

Toy and car loans are already expensive!!!! What is the cheapest new car interest rate? 5%? I can tell you I am less motivated than ever to finance a new purchase! ……. People could only afford nice new things because of cheap interest rates……..Recession is coming!!!!!!

 

[1bigfokker]

Let'er ride. with a upcoming impeachment x2 things will straighten out. FJB

 

[Allen]

Toy and car loans are already expensive!!!! What is the cheapest new car interest rate? 5%? I can tell you I am less motivated than ever to finance a new purchase! ……. People could only afford nice new things because of cheap interest rates……..Recession is coming!!!!!!

Not surprisingly, in the past week I have received two fliers from Eide Ford and Cedric Theel Toyota on discounts off of MSRP for new vehicles. I think the Ford one was $4,000 and the Toyota one was for $2,000.

It's been a few years since we've seen widespread discounting of vehicles off of MSRP.

 

[FightingSioux]

except that the prices are going up as well due to inflation!! Home prices are not going down, trust me on that. Not for a while if ever.

There is not much movement into even the high markets. The mass exodus is pretty much over with rates skyrocketing. People are going to struggle to sell their homes unless they drop prices. This is a good opportunity for people to buy a home now once prices drop as long as you can afford the temporary high payments until you can refinance. It’s no longer a sellers market anymore!!!!

 

[FightingSioux]

Not surprisingly, in the past week I have received two fliers from Eide Ford and Cedric Theel Toyota on discounts off of MSRP for new vehicles. I think the Ford one was $4,000 and the Toyota one was for $2,000.

It's been a few years since we've seen widespread discounting of vehicles off of MSRP.

There won’t be a housing crisis but there sure as heck will be a Used car bust! Dealers might go under when they are stuck with overpriced vehicles.

 

[eyexer]

Home prices in the majority of the country are going to take a nasty hit. When that happens people will come unglued.

 

[wjschmaltz]

I don't feel for the generation below me. They will be just fine. They're walking into a world with more opportunity than ever. Gary Vaynerchuk had a good video a while ago about how Gen Z doesn't give a shit about material things. It's part of the labor shortage equation. The younger generation has options and doesn't give a damn about what the Jones' are doing. They're happy with the balance that working 20 hours a week gives them because they don't feel the need for all the material garbage. I think that's pretty awesome. We could learn a lot from them. I came into adulthood on the heels of the 2008 recession. Had some rough years starting out, but doing pretty good now. The best thing to happen to me was my wife dragging me to a Dave Ramsey class 8 years ago. I was very reluctant but dove in head first once I realized how much of our life we were giving away. Sucked watching all my peers hedge their life for fancy stuff and vacations, but its especially going to pay off these next couple of years. You can see who is skinny dipping when the tide goes out. The tide is about to go out very fast.

I don't think the cost of toys has gone up that much. Sure when you're trying to outdo your neighbor and see who can have the most sparkles on your boat. Lots of memories can be made in a reliable $10,000 boat which isn't much more than a $5,000 boat in 2005 once you adjust for inflation. I've talked to two close friends in the last week that both mentioned how bad Bismarck culture is with the "keeping up with the Jones'" mentality. I couldn't agree more. It's part of the reason we are reluctant to move back. I think some serious deals are about to be had in places like Bismarck.

Luckily, I bought my house 3 years ago. To buy my house today with 20% down, it would have to be bought for $150,000 less than I paid to have the same mortgage payment. That a very far cry from the current appraised value! And I have a very modest home. I don't think we're done as far as interest rate hikes. Mortgage rates are headed to double digits. It might be time to finally buy the RV to live in and rent the house for more than my mortgage payment!

 

[KDM]

Being Debt free is the only real insulation from interest rates or inflation IMO. With the real inflation rate that includes energy and food, I think we are in for some rocky times ahead.