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Originally Posted by tabs
It is the many that haven't listened that will drag the few down. U generally offer good advice for the past 63 years of history. However as the 500 pound Gorilla that the USA represents in the world economy so follows the rest of the world.
What caused the Great Depression was a crisis of liquidity. In 1929 Stocks could find no buyers and went into price free fall as people were called on their Margins they had to liquidate at any price. The BOND market in 2008 faced the same threat with the Sub-prime Bonds, they were becoming unsaleable at any price. If the Bear Sterns Deal did not take place the Bond market would have seized up, and an ensuing crash would have taken place...(collateral damage from a Bearn Sterns BK).
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Tabby, the 500 pound gorilla is now the EU. Look it up.
As for your mortgage payments Aurel. Did you buy a house to live in or an income property? Did you by in '89 to 95 in So Cal? That is when the property market was last way down in So Cal. That is when you should have bought income property (if you live in a different area, then you should have bought in the last down cycle in that area). If you missed the last down cycle then wait until the next one. You need to judge if your mortgage is a real investment or just a money pit where you live. They aren't the same thing at all.
Milt, as far as the 25% income rule it applies everywhere. I did it in Santa Monica, CA for years (20+yrs). I did it in Manhattan, I did it when I was going to college and working three jobs, I did it in the UK in London, and I did it in Chicago. I feel I can do it anywhere I can earn a living. You do have to be able to earn a living. You cannot do it on welfare or such. But I search high and low for the cheapest place to live and the cheapest way to get to work. I did not live in dives or dirt. For instance, when I wanted to move to CA, I researched the areas with the cheapest rent. I then picked the upper two thirds of the list and checked them out. Guess what? Santa Monica had one of the lowest rent rates around. Why? Rent control. So I lived next to the ocean, in a small apt. with just enough room to swing a cat, saved and invested my money, bought two properties in France, rented them out, bought a small vineyard and rented that out, bought art, worked, traveled, invested, enjoyed several Porsches, cycles, boats and aircraft. Made sure everything I bought was in long-term high demand and always waited until I found a very good deal before buying. It can be done. It just takes a (forward looking) plan and some discipline.