SVT
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Post by SVT on Mar 27, 2011 17:23:44 GMT -5
Sent to everyone who has requested it so far.
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Regis
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Post by Regis on Mar 27, 2011 17:52:35 GMT -5
I wear my WWPD (What Would Phil Do) every single day of the week, starting on Sunday.
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Post by debtheaven on Mar 27, 2011 18:41:31 GMT -5
I know I'm not Phil LOL. I always hesitate to say how we got started with our rentals but here I go (it's not the first time). DH and I each inherited a modest sum from our late parents when we were in our early 40s. Sadly, we lost all four of our parents within less than two years. I lost my two parents in less than 13 months, DH lost his within 22 months, all at the same time.
Would we have preferred to have our parents rather than their inheritances? Absolutely!!! Did anybody ever give us the choice? Sadly, no.
We both sat on our own inheritances for about two years. We have yours-mine-our accounts and we never even discussed the figures.
Then one day I was picking DH up from the train station after an international business trip, he was late, I was bored, I picked up one of those RE mags. By the time he finally arrived I informed him that we were buying a place later that evening LOL. He told me no way, I'm going to bed, I told him fine, then I'll buy it without you. He woke up LOL.
We loved our parents to bits, and they loved us to bits. They were all immigrants / war babies who pinched every single penny. So for us this was a way for us to diversity / make things easier for us (we are both educated but relatively low-income) / pay for education for our two younger kids / help with retirement / leave something to our four kids later on / AND honor our parents who worked so hard for that money.
I like RE, I have a knack for it. We have done MUCH better with RE than we have in the markets. Believe me I have spent HOURS AND HOURS AND HOURS on it over the past 10 years, I guess I should call it my second job.
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hcj
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Post by hcj on Mar 27, 2011 19:18:45 GMT -5
The house we have rented out does not have a positive cash flow, so we have actual losses combined with the depreciation. There are income limits on being able to deduct that $25K. We only have been able to deduct a portion of the losses because of income being above the threshold. With my big 401K contribution, this year we are able to deduct the full loss, but normally it just keeps carrying over. This is why a rental property will not give higher income people a deduction.
It looks like even if I did get my license, I still wouldn't be qualified as a real estate professional. Oh well.
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mesquite77
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Post by mesquite77 on Mar 27, 2011 19:34:02 GMT -5
I first picked up on Phil's advice when we just had 3 units and a long term plan. Reading Phil's posts were like visiting with myself a few decades later when the plan had worked. It was so reassuring to see that someone had actually made it work.
We purchased those 3 units in a 9 month period when we were 25/26 yrs old. We waited 5 yrs to buy the next one. Figuring it all out, having babies etc. took some time. Over the past 2.5 yrs we've added 11 more units. We'll probable digest these purchases, maybe make one a year, before we leverage up again.
We started buying cheap places that cash flowed with borrowing 80% from the bank, 20% seller-financed. We have a solid manager and have made improvements to our properties along the way that increase rents.
The plan was to have RE be 25% of our portfolio at retirement age. We're 20 yrs away from beginning an early retirement and we're at 22-23% of our portfolio in RE.
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SVT
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Post by SVT on Mar 27, 2011 19:43:31 GMT -5
I had real estate license, it expires after a year and it costs to renew it. I went through the classes and took the test, then worked for Long and Foster for a year part time. Very educational.
Then I wisened up, went to college, and now have a good career going.
I've had several people PM their email addresses so far. I've went over some of the information again and there are other bits of good information I've pulled from other people and from other websites as well, such as the bogleheads forum. However, most of it (probably 90%) is from Phil.
There are lots of personal finance information, as well as stock market information/graphs, and real estate advice.
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azphx1972
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Post by azphx1972 on Mar 28, 2011 1:52:41 GMT -5
110 pages? Perhaps Phil should consider writing a book. Or maybe he has one already or in the works. ;D
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Deleted
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Post by Deleted on Mar 28, 2011 8:36:15 GMT -5
Thanks Phil for all the good advice here: - my plan is to pay our credit card off by the end of this year - pay off my car loan - start a plan on paying off our six figure student loans while savings/investing.
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zibazinski
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Post by zibazinski on Mar 28, 2011 10:26:20 GMT -5
I got my real estate license so I could pocket most of the commission when I bought and sold them plus I learned a LOT by taking the classes especially what NOT to do. Now I don't sell what I have left so I have let it lapse. I probably will get it again in another state as I want to flip houses and considering how hard DF and I searched for a house, I know what the market is now, at least for people like us. My Mom actually talked me into real estate as that is how she and my Grandma made their money (well, my mom married hers but then parlayed that into a whole lot more) and I am so glad she did because I had it all in stocks after my divorce and got it out JUST in time for one of the first "tanks." My Ex lost most of his-tee-hee!!!! But she scoped out a new 14 house subdivision being built so we bought 10 of them, brand new, just needed fences and ac. I put 20% down and got mortgages for the rest. Made just enough to clear my payments, taxes, and insurance but I was working and didn't need the money anyway. It was for the future. Then another subdivision was being built so we bought 10 more in there. I got out in time because it turned ghetto and used my profit from selling them to pay off the first five mortgages and so now I am F&C. I almost bought another in that first sub as it is for sale and VERY cheap but decided not to as DF was against it and made good reasons. I get excited doing business with my mom because of her I got to quit a job I hated. Thanks, mom, for your business savvy!!!!
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Wisconsin Beth
Distinguished Associate
No, we don't walk away. But when we're holding on to something precious, we run.
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Post by Wisconsin Beth on Mar 28, 2011 16:05:58 GMT -5
I don't think DH and I have the guts to be like Phil or the ability to be a landlord. But I always look for Phil to weigh in on threads.
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2kids10horses
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Post by 2kids10horses on Mar 28, 2011 17:58:05 GMT -5
Phil has guts? I just thought Phil had bucks!
Seriously, it does take some nerve to buy that first rental. When we bought our first two (we didn't buy just one rental, we bought 2 to start) I couldn't sleep for a month! But, once we got one rehabbed and rented, it was like, COOL!
Then we bought two triplexes... and then we started buying a house a month. Or nearly.
It's now no big deal to buy (or sell) a house.
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Post by debtheaven on Mar 28, 2011 18:03:43 GMT -5
Seriously, it does take some nerve to buy that first rental. When we bought our first two (we didn't buy just one rental, we bought 2 to start)Very true! And so did we! I found an ad in one of those RE mags while waiting to pick DH up after a business trip to the US. As soon as he got into the car I announced that we were buying a rental, that evening. He said no way, he was going to sleep. I said I'm buying it with or without you, so come with me. He did. At the first signature (closing happens in two parts here) they insisted on showing us a second place. I said no way, it's too expensive. DH totally turned the tables on me, and said, well, I'm buying it, with or without you. LOL. We stopped at four though!
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txengineer
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Post by txengineer on Mar 28, 2011 21:54:37 GMT -5
Thanks Phil for all the good advice here: - my plan is to pay our credit card off by the end of this year - pay off my car loan - start a plan on paying off our six figure student loans while savings/investing. cawiau, we are in similar boats with the student loans.. : ) I expect my student loans to quickly get up to 6 figures when I'm done with the MBA (half way through), and I'm also planning to pay down as soon as possible while still maxing all retirement savings.
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Deleted
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Post by Deleted on Mar 28, 2011 22:26:55 GMT -5
Thanks Phil for all the good advice here: - my plan is to pay our credit card off by the end of this year - pay off my car loan - start a plan on paying off our six figure student loans while savings/investing. cawiau, we are in similar boats with the student loans.. : ) I expect my student loans to quickly get up to 6 figures when I'm done with the MBA (half way through), and I'm also planning to pay down as soon as possible while still maxing all retirement savings. Yep... since our student loans are at above 6% interest rate there is no advantage to us keeping them around. So around now my plan is to a) put 401K contributions at 25% (done) b) pay down credit card debt (will be done by the end of this year) c) pay off my car (next year) and most important: D) find a balance between paying down our student loans at a faster rate while still savings The only unknown is when we will feel confident enough to not only carry the student loans debts but add on mortgage on a house / rental homes. My goal is for our first house to be a duplex this way to get a taste of being a landlord first before going all the way. If it doesn't work out, can still sell the duplex and move into a single family home.
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txengineer
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Post by txengineer on Mar 28, 2011 22:34:10 GMT -5
cawiau, we are in similar boats with the student loans.. : ) I expect my student loans to quickly get up to 6 figures when I'm done with the MBA (half way through), and I'm also planning to pay down as soon as possible while still maxing all retirement savings. Yep... since our student loans are at above 6% interest rate there is no advantage to us keeping them around. So around now my plan is to a) put 401K contributions at 25% (done) b) pay down credit card debt (will be done by the end of this year) c) pay off my car (next year) and most important: D) find a balance between payind down our student loans at a faster rate while still savings cawiau, are you able to deduct your student loan interests? I am not able to due to income phaseout. So, I've been considering a number of ways to repay student loans, such as 0% credit card balance transfer (3% transaction fees), loan from parents, possibility of taking out a loan against my 401k, etc.
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Deleted
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Post by Deleted on Mar 28, 2011 22:38:50 GMT -5
Yep... since our student loans are at above 6% interest rate there is no advantage to us keeping them around. So around now my plan is to a) put 401K contributions at 25% (done) b) pay down credit card debt (will be done by the end of this year) c) pay off my car (next year) and most important: D) find a balance between payind down our student loans at a faster rate while still savings cawiau, are you able to deduct your student loan interests? I am not able to due to income phaseout. So, I've been considering a number of ways to repay student loans, such as 0% credit card balance transfer (3% transaction fees), loan from parents, possibility of taking out a loan against my 401k, etc. We were able to deduct the full $2,500 last year but not sure if we will be able to next year (we paid 6K or so in interest). And yes would be great if we could refinance them to a lower interest loan My wife said everytime I talk or pay her loans I get upset, she can usually tell when I just paid her student loans, and she wanted from now on to pay them. Not going to change my mood since I can still see the money living our accounts and the balance barely going down
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hcj
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Post by hcj on Mar 29, 2011 0:27:15 GMT -5
Wow, it's so inspiring hearing from all of you with the rental properties! I do hope that next year we can pick up an investment property that has a positive cash flow. I thouht it might be in the cards sometime this year, but it's definitely not looking that way. I want something local that we can personally manage. I wish I had about $300K of investment money because that would enable nice flips here, but since I don't, anything we do investment wise will be financed. All cash buyers have opportunities here. With the new rules we have to qualify for the loan without any rental projections, so that limits us to about a $175K property. Around here, that translates to a rare bargain on a 2 bd condo. Actually, I would love to do a 1031 exchange on our Paso property for a duplex up the street, but I know being a short sale and all that they wouldn't take an offer being contingent upon selling the Paso house. Still, an investment property is what I have my sights on next.
All of the landlords out there... what do you think of rentometer.com?
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hcj
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Post by hcj on Mar 29, 2011 0:40:01 GMT -5
Yep... since our student loans are at above 6% interest rate there is no advantage to us keeping them around. So around now my plan is to a) put 401K contributions at 25% (done) b) pay down credit card debt (will be done by the end of this year) c) pay off my car (next year) and most important: D) find a balance between payind down our student loans at a faster rate while still savings cawiau, are you able to deduct your student loan interests? I am not able to due to income phaseout. So, I've been considering a number of ways to repay student loans, such as 0% credit card balance transfer (3% transaction fees), loan from parents, possibility of taking out a loan against my 401k, etc. This is something I really want to understand... what is the interest point on other debt where it makes sense to do the BT offer thing? I have a 0% offer for 12 months with one bank with a 3% fee and a 15 month 0% with a 4% fee from an another. I had been contemplating putting the balance of my 6.25% car loan on one of these, but because you pay the 3% or 4% on the entire amount up front, the APR is much higher. I did the math and figured on the 3% fee, I would only save about $10 in interest if I kept paying per month what I am now. The 4% actually would cost more over 12 months. It's definitely cheaper than margin for stock trades, but I don't do anything on margin. With a 3% fee on the entire amount up front, what kind of return would you have to get or what rate debt would you have to pay in order for this to be a good deal?
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Deleted
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Post by Deleted on Mar 29, 2011 0:48:09 GMT -5
All of the landlords out there... what do you think of rentometer.com? Pretty cool! Re-affirmed our decision to move since for our current apartment it is saying: $1,670 - 2 bed Your rent may be way too high unless your apartment is in top condition and has more amenities than most. My apartment does have some nice amenities (pool, tennis court, washer/dryer in unit, granit counter tops, great appliances, etc) but still. But the only thing is that the reasonable price for my area for 1 bedroom is anything that under $975 which is near impossible to find unless we are talking living in someone basement or live in a total . We are looking to moving into a bedroom for $1,163 in June and are ok with that (even if it is $200 over reasonable )
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hcj
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Post by hcj on Mar 29, 2011 0:59:29 GMT -5
The reason I ask is that I think the rent we are charging for the Paso house is way under market. I thought this based on looking at Craig's list and other rental sites for several years, but our property manager keeps telling us that rents have gone down so much and that if we had to find another tenant we would have to lower the rent again. Rentometer says our current rent is in that very bottom tier, one tick away ($50/mo) from being in the green lower priced range that means 20% below the median. I want to raise it and the amount I'm saying is still below the median, but the property manager is fighting me on this.
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TrixAre4Kids
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'Not all those who wander are lost' - J. R. R. Tolkien
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Post by TrixAre4Kids on Mar 29, 2011 2:22:53 GMT -5
All of the landlords out there... what do you think of rentometer.com? Thanks for asking, I'd never seen that site before. My rental is 'reasonable for the area'. Looks like I'm just about in the middle of the range, so I'd say it's pretty accurate.
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ezorn33
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Post by ezorn33 on Mar 29, 2011 6:56:32 GMT -5
All of the landlords out there... what do you think of rentometer.com? I found it pretty useless. You can get much better data just by scanning craigslist for a couple of days. In my case, the problem is that it's comparing the rent you input to properties in too wide an area. For example, the home I rent as a tenant is in the middle of town, walking distance to restaurants and bars. However, a mile in either direction would be out of easy walking distance, and a little farther would be in a pretty rural area. Rentals right in town are higher-priced, accordingly. But rentometer.com was comparing my rent to 1000 properties within a 15-mile radius! 15 miles away isn't anywhere near the same neighborhood.
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Wisconsin Beth
Distinguished Associate
No, we don't walk away. But when we're holding on to something precious, we run.
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Post by Wisconsin Beth on Mar 29, 2011 9:25:46 GMT -5
Sorry, dup post removed.
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dianartemis
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God made me and started laughing
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Post by dianartemis on Mar 29, 2011 11:29:08 GMT -5
What would your recommend for someone who isn't cut out to be a landlord?
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Wisconsin Beth
Distinguished Associate
No, we don't walk away. But when we're holding on to something precious, we run.
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Post by Wisconsin Beth on Mar 29, 2011 11:42:32 GMT -5
Do you have a house with equity? I'm thinking Phil would recommend doing a cash our refi and invest the cash in the stock market. He'd follow up with an example of $X of today dollars = X amount in 30, based on a return of around 10%.
Or if you have a large e-fund, he'd recommend taking everything over $5K and investing that in the stock market too.
Or both, actually...
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dianartemis
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God made me and started laughing
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Post by dianartemis on Mar 29, 2011 11:47:48 GMT -5
I don't have a house, and I am investing outside of my 401(k). And I'm still building up my EF as I had to drain it just over a year due to a series of emergencies and Murphy. So I'm back to plugging away.
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Wisconsin Beth
Distinguished Associate
No, we don't walk away. But when we're holding on to something precious, we run.
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Post by Wisconsin Beth on Mar 29, 2011 12:20:29 GMT -5
I don't have a house, and I am investing outside of my 401(k). And I'm still building up my EF as I had to drain it just over a year due to a series of emergencies and Murphy. So I'm back to plugging away. then I'll stop doing my Phil impression since I don't know/have a guess as to what he'd tell you.
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txengineer
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Post by txengineer on Mar 29, 2011 20:58:37 GMT -5
cawiau, are you able to deduct your student loan interests? I am not able to due to income phaseout. So, I've been considering a number of ways to repay student loans, such as 0% credit card balance transfer (3% transaction fees), loan from parents, possibility of taking out a loan against my 401k, etc. This is something I really want to understand... what is the interest point on other debt where it makes sense to do the BT offer thing? I have a 0% offer for 12 months with one bank with a 3% fee and a 15 month 0% with a 4% fee from an another. I had been contemplating putting the balance of my 6.25% car loan on one of these, but because you pay the 3% or 4% on the entire amount up front, the APR is much higher. I did the math and figured on the 3% fee, I would only save about $10 in interest if I kept paying per month what I am now. The 4% actually would cost more over 12 months. It's definitely cheaper than margin for stock trades, but I don't do anything on margin. With a 3% fee on the entire amount up front, what kind of return would you have to get or what rate debt would you have to pay in order for this to be a good deal? So, using an online calculator for APR, 3% transaction fees for 12 month at 0% interest is equivalent to about 5.49% APR. My student loans are at 7.9%. Also keep in mind that the online APR calculators assume that you will be making monthly payments until the balance transfer is paid off. You don't have to divide the payment into equal installments. You can pay the minimum payment each month and keep money in savings and pay it all off at the end of the 12 months. It really depends on your personal circumstances and the amount too. In my case, I'm talking about $20k, so it's quite a bit of interest savings.
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Deleted
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Post by Deleted on Mar 29, 2011 21:07:58 GMT -5
Txengineer, if you get the 20k and saving close to 2% I would say go for it.
That is where we are lost, we know anything over 6% is not worth keeping but paying off 130k student loans will take some time.
So should we just focus on paying down all our debts then go buy a house or will it be ok as long as we can juggle all the loans.
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hcj
New Member
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Post by hcj on Mar 29, 2011 21:55:53 GMT -5
This is something I really want to understand... what is the interest point on other debt where it makes sense to do the BT offer thing? I have a 0% offer for 12 months with one bank with a 3% fee and a 15 month 0% with a 4% fee from an another. I had been contemplating putting the balance of my 6.25% car loan on one of these, but because you pay the 3% or 4% on the entire amount up front, the APR is much higher. I did the math and figured on the 3% fee, I would only save about $10 in interest if I kept paying per month what I am now. The 4% actually would cost more over 12 months. It's definitely cheaper than margin for stock trades, but I don't do anything on margin. With a 3% fee on the entire amount up front, what kind of return would you have to get or what rate debt would you have to pay in order for this to be a good deal? So, using an online calculator for APR, 3% transaction fees for 12 month at 0% interest is equivalent to about 5.49% APR. My student loans are at 7.9%. Also keep in mind that the online APR calculators assume that you will be making monthly payments until the balance transfer is paid off. You don't have to divide the payment into equal installments. You can pay the minimum payment each month and keep money in savings and pay it all off at the end of the 12 months. It really depends on your personal circumstances and the amount too. In my case, I'm talking about $20k, so it's quite a bit of interest savings. Thanks so much for that TX. For me, I can't see paying a 5.49% APR. If I put my 6.25 car loan balance on one of these offers, I'm not saving enough to make it worth the trouble. For you, if you put $5,000 of the SL on one of these, you'd save $100 in interest. If you do that new Chase Freedom offer, you'd get the extra $100 too, so that might be worth it.
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