Do you own it if it's not 100% paid off?

[smek]

Now i'm not haveing a go at you, just trying to give you another way of looking at things. your thoughts on debts versus assets is very popular, but also very old school.

Just going to be picky and point out that your home, your bike, boat etc are not assets. They are liabilities. They cost you money even after you own them. If you owe money on them they are just even greater liabilities.

An asset makes you money (ie shares, bonds, rental properties)

[Felix]

[quote="diesel"
basic economics, opportunity cost. [/quote]

Opportunity cost is the cost of doing one thing over another, usually referring to doing something safe, like earning interest, but it depends on what the alternatives are.

Think of it this way - you can spend money on rent and save the difference between rent and repayments. Or you can borrow money and buy a house. Lets assume you can afford either.

The opportunity cost with renting, is the expected capital appreciation of the house asset, minus it's associated expenses in maintaining and owning that asset.

The opportunity cost in buying the house over renting, is the interest revenue, or capital appreciation if the money is invested minus any appreciation of the house asset (if you didn't buy it).

I hope that makes sense, I'm v-tired...

[Jonno]

arrhh i am just in the game for the money ffs

I don't care who has the most toys, ya can't take em with ya in the end, I like the access to more credit

But I do appreciate people who work hard to buy these things, but hey it is good feeling when you rock up on the latest bike and people go whoa nice one mate, mind you it only lasts for a few seconds!

[SenNey]

Senney,
this guy sounds like an absolute toss, if he takes so much pleasure in his posessions, that is.

Yes so much that he has to hide them so they can't reposses them yet bags out his younger borther who paid cash

now how do you attribute any debt you have to any one thing.
basic economics, opportunity cost. if i have $500 to spend on either new rearsets or a new helmet and i choose to buy the helmet, the cost of the purchase is not only the $500 i spent, but the opportunity to buy the rearsets as well. to counter this, i borrow another $500 and buy both. (opportunity cost equals every dollar you have ever spent but we won't go further down that path) so i've spent $1000, bought a new helmet and rearsets and i have a $500 debt. assuming i bought both at the same time (so not one came before the other) my question to you senney is which do i "own" and which do i not?

If they both came together, IME there tied together. Hence so is the debt.
You own half the debt associated with the 2 items.
There for you do not own either item out right, as there tied into the one purchase.

Yes im very old school in thinking at the ripe old age of 30

[diesel]

basic economics, opportunity cost.

Opportunity cost is the cost of doing one thing over another, usually referring to doing something safe, like earning interest, but it depends on what the alternatives are.

Think of it this way - you can spend money on rent and save the difference between rent and repayments. Or you can borrow money and buy a house. Lets assume you can afford either.

The opportunity cost with renting, is the expected capital appreciation of the house asset, minus it's associated expenses in maintaining and owning that asset.

The opportunity cost in buying the house over renting, is the interest revenue, or capital appreciation if the money is invested minus any appreciation of the house asset (if you didn't buy it).

I hope that makes sense, I'm v-tired...

makes perfect sense to me i just explained it

your right, opportunity cost is usually associated with something safer, but it never depends on the other options because there is an infinate number of other options whatever you do. opportunity cost, fundamentaly, is absolute and infinite.

If they both came together, IME there tied together. Hence so is the debt.
You own half the debt associated with the 2 items.
There for you do not own either item out right, as there tied into the one purchase.

this is exactly how most businessmen would attribute the debt to the assets (unless one of the two were to earn you money and therefore have it negatively geared, but let's not go down that road).
but basically this situation doesn't require the debt to be attributed to any assets cos by the sound of things, this bloke has more debt than assets anyway.

But to finish off my little thesus on debt v asset, if you keep your debts at no more than 80% of your tangible assets, i.e. property, cash, stocks, etc you'll be in a pretty good position to clear your debts should the shit hit the fan.

[gigksrc]

bricks & mortar's the way to go ... renting sucks

[Neka79]

You give the bikeshop a bank check from Commonwealth bank (for example)

That bike is urs.

??

bullshit....its the commonwealth banks...cos until uve paid for it..they own it...

we install heaters & shit...
if we install ur heater, and u dont pay for it..we still own it, and all the pipework etc...title doesnt pass until paid in full!!

[diesel]

You give the bikeshop a bank check from Commonwealth bank (for example)

That bike is urs.

??

bullshit....its the commonwealth banks...cos until uve paid for it..they own it...

we install heaters & shit...
if we install ur heater, and u dont pay for it..we still own it, and all the pipework etc...title doesnt pass until paid in full!!

but neka that's different, the purchaser hasn't completed the transaction.
put it this way, if the bank owned everything they financed, they would have to keep track of the depreciation of all of these assets for tax purposes. when's the last time you heard of someone getting a call from the bank asking how much thei car has depreciated this year????
doesn't happen cos they don't own anything, you do!
for christ sake, be told will you!!

[aardvark]

As far as I can tell, if you borrow money from, say, a bank to buy something, you own the something and the debt.

If you don't pay the debt, the bank will do whatever it can to get the money out of you.

[ZZRCHIKKY]

we have 4 bikes 2 cars and a boat

2 if the bikes are financed and one of the cars

And my bike is just paying dads mate when i get the chance .


But they are OUR things ,


Its like renting a house , is it ur home ????? it can be

[chameleon]

Funny thing is, renting a home is actually the smart thing to do these days, if you don't already own one that is.
Rates are lowish right now, but not so long ago they were 18%. Homes are astronomical in price right now too.

Say you borrowed 320k on a home in the inner burbs of briso, and lets say interest rates go up over the next decade, and we assume an average of 12%

Monthly repayments ... $3500
Total amount repaid ... $848 000

That's $875 a WEEK!

The herd believes that home prices double every 10 years on average and even most real estate agents believe this. The fact is, thay have been doubling in this period. But only since 1970. In the early seventies an average home in a nice burb here sold for $40k, that doubled to 80k, doubled 160k then finally doubled to the current $320 000. 3 doublings in 30 odd years. It wasn't a linear climb but a staggered one.

Wage inflation drove the first to doublings because wages doubled over the period too. In 1970's the "man's" hourly rate was around $4/h. It went up to $8, then in the 1990's to $15 or $16 an hour. Trouble is, wages have stagnated for quite some time, and in many sectors are slipping back ever so slightly? They often slip back in the sense that work-loads are increased and staff are put on as "casuals" and given 20~30 hours a week. Superanuation, another great con game that feeds money into the world's volitile stock markets also bleeds the wage packet but is counted in the total wage. Still, no one aside from contract plumbers and sales engineers are getting over $32/hour. Most people are on 15 or 18 or $20/hour if they are lucky. Take out the super contributions to GMH and HIH "LOL" and you have $15/hour again.

For average home prices to double again in in brisbane we would need either another mad speculator investor driven buy up like in 2002~2005 or we need to see wages go to $40+ an hour. But didn't the federal government just pass it's "slave labor" legislation?

Before 1970 it took 20 years for home prices to double up to $40k. Before that it was an entirely different picture again, with home prices actually flat or going backwards for 30 years. So if you base the near term future on the near term past be prepared for a shock because I can't see any way home prices can go in any direction except down over the next 10 years. And there is going to be a lot of pain if rates go up and wages go down... As they already are it seems.

[diesel]

totally agree with you on this one.
the property balloon has been expanding for quite some time, it will burst soon.

the only other thing i think you need to take into account is that in the 70s, one person in the family worked, now if you want to buy a house, you need two income's. most family's have both parent's working which effectively has doubled the family's wages.

[tailgator]

Nobody really OWNS anything. Try not paying your housing rates - if you don't pay your rates - the council WILL take your house (whether you own it or not) - even for only a small debt. If you are sued by someone for whatever - the bailiffs WILL take your posessions no matter whether you have paid them off or not and they can sell them for ANY low amount - people have lost their houses for less than a $2000 debt and the houses have been sold for that amount (rare but it has happened) - absolutely ridiculous but unfortunately true.

I'm deliberately being hard headed here and I am pointing out worst case senarious that have happened, but when it comes down to it try PROVING that you own a car or vehicle in court (it is not as easy as you think) - the registration sticker does not prove ownershop without the original sales slip...and even that can be contested.

If you muck around on the road or someone reports you - the vehicle can be taken from you - (even if someone else used the vehicle for illegal purposes) no evidence is required in court in
Qld an LEO can just dob you in - end of story unless you are extremely rich and can afford Federal court action.

Unfortunately these things can happen and I admit that these are extreme cases but looking at the rules you never really truly own anything - except your own work!

[Neka79]

unless u have paid for it in full...u dont own it..
no Deisel, the bank dont ask ur the depreciation rate...but try to stop paying for it for say 3 months & see how quick they call u....pelican

[diesel]

yes they'll call you very quickly. to discuss the loan. not the car/bus/truck/bike/boat/whatever