I am a Meatpile in training

as in leasing BMWs?

 

Exactly.

 

Leasing a sports car doesn't sound like "instead of increasing your lifestyle to match the extra cashflow". I want to learn but that sounds like a contradiction.

I realize it's not buying but why not just pay cash for something lesser?

 

Maybe it's all relative. Buying/leasing the BMW may not be "increasing his lifestyle" wherease buying/leasing a Porshe 911 Turbo would be.

 

Are you referring to a house or a car?

And as far as leasing a nice car is concerned, that depends on your cashflow.

I think, but am not certain, that mark was referring more to buying a much larger house than you could afford with the money saved from interest only.

I did INT only for a number of reasons outlined here:

http://www.thisboardrocks.com/forum/showpost.php?p=1316010&postcount=59

 

Has your opinion of it changed since then? It seems the popularity of non-conventional loans has dropped. Or is this type different?

 

You can get 30 or 40 year, fixed rate, IO loans.

 

Nope. It is what it was.

I think the popularity dropped b/c people used them and sold them irresponsibly. After I got it I remember going over the numbers and thinking that it was so good it would soon be illegal.

The product is the product. How it is used is the variable. A 3 year INT only teaser rate in a new Beaser development would still be stupid. But a 10 year rate in Myers Park is still an nice deal.

 

i looked for those quickly online a while ago, couldn't find them... is that IO for the whole 30-40 years?

 

nothing to do with it. I had the cash ready to buy the car, but after working the numbers I saw it was smarter to lease and let my cash work elsewhere, very much like the IO home mortgage.

I hate car debt (I paid cash for the van, own my station wagon too), in fact I hate all debt, but I'm coming to grips with keeping cash invested at a better rate than your interest payments is smarter than paying off that debt. But you have to control yourself - that money saved MUST be invested, not spent to buy a large TV that you couldn't afford otherwise (i.e. if you were doing a traditional mortgage instead of IO, or paying cash for the car instead of leasing). In the case of the house it makes even more sense as the higher interest payments over time increase your deductions, saving a ton on taxes too.