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I will return to school as soon as I can afford it. Unfortunately, schools insist on cash up front. I can barely afford to eat, paying for school is out of the question.
What sort of job could you do that pays somewhat better than minimum wage? Figure that out, then do it. It is easier to eat and save money when you are making an additional $2 an hour.
You don't have to take one giant step from where you are now to where you ultimately want to be. Take a small step in the right direction. Then, take another one.
Well, this is simply not true in many markets. When house prices are sufficiently high relative to rent, you never break even buying, even if you lived to be 300 years old you'd still be behind.
Consider the case in many areas of Seattle, or in some areas of Bentonville, Arkansas. The average price of a house is over $300,000 and yet the rent is often just a hair over $1000 per month.
The owner has to shell out an enormous sum - first $60k for down payment, and then $1493 a month on mortgage (4.25%, 30 year, 1.25% property tax). In addition at a 2% rate the maintenance and repair (incl. the cost of homeowner's own time) costs $6k/year, or another $500/month.
If the renter pays $1300/month, this leaves $60k for the renter to invest initially, and then almost $700/month on an ongoing basis.
In 10 years, the renter will have a stock portfolio worth $270,000 if paying a tax rate of 15% on dividends and capital gains and getting a 10% return.
At this point, the renter's portfolio will throw off so much passive income that all of the rent will be covered by it, so the renter gets to live for free, in effect, even with 2-3% annual rent inflation.
The owner, by contrast, has ZERO liquid assets and still has to shell out enormous sums every month for the roof over his/her head.
Of course this is an unusual example since it is for areas with anomalous price:rent ratios. But it suffices to show the point that it is FAR too premature of a conclusion to say "buying is better".
There is no way you have that high a discrepancy between renting and owning. Nobody would buy if that's the case, house prices would drop due to diminishing demand and renters would buy or rent would go up due to rising demand. I have never seen such discrepancy.
mortgage was not listed. of course i dont thik mortgage are what they appear people borrow from their home equity like they do credit cards and with even less caution. in a word ameicans have too much credit too easy to obtain and really dont think about the amount of debt they accumulate. if they actually had to pay for stuff instead of sign for stuff they would spend much less.
"The survey indicates in the past 15 years, the net worth of the typical home owner has ranged between 31 and 46 times that of the net worth of the typical renter. Home owners had nearly $200,000 in net worth compared to the average $5,000 net worth of renters."
Hmmm...which net worth would you rather have... $200k..or $5,000? Tough decision right?
the flaw in the logic is it is viewed backwards. homeowners are homeowners because they are wealthier and earn more as a group before they buy the home..
renters are a mixed group. you have some very wealthy renters but they are mixed in with very poor renters diluting the group.
being a home owner did not make them wealthier ,they have the home because they were wealthier and could buy ..
it is like saying folks who take world cruises are wealhier than folks who don't so if you want to be wealthy take a world cruise.
Last edited by mathjak107; 12-01-2014 at 02:12 AM..
Don't forget the thousands of dollars you will get back on your income taxes when you itemize your deductions.like (for starters) mortgage interest, property taxes and state taxes. Those deductions will be greatest in the first years of your mortgage.
and you get to pay out 3 to 4x what you get back and that is over and above the price of the house. deductions are no bargain, if you could have gotten ride rid of the expenses giving you that deduction you would be ahead by 3 to 4x what you deducted.
in fact 1/2 of homeowners according to the irs can not even clear the standard deduction so they get zip back.
Most renters have an income deficit not an overspending problem; median renter income is HALF median homeowner income.
duh! that is why they are renters. they have noooooo money to buy. as a group homeowners are wealthier and earn more because renters are a mixed group of poor and rich.
there is little difference if you have the money to buy but don't and instead invest that money in other assets instead of a house and just rent. .
i have been successful growing my money just because renting allowed me to take the money i would have had tied up in the house and enter into some very high profile real estate deals here in nyc with my ex partner mogul bernard spitzer ,
had i owned a home i never would have had the money to do the deals as i would never have been able to pay an equity loan while waiting for the ship to come in and pay off.
Last edited by mathjak107; 12-01-2014 at 03:27 AM..
and you get to pay out 3 to 4x what you get back and that is over and above the price of the house. deductions are no bargain, if you could have gotten ride rid of the expenses giving you that deduction you would be ahead by 3 to 4x what you deducted.
in fact 1/2 of homeowners according to the irs can not even clear the standard deduction so they get zip back.
Which beats the pants off paying the same number of dollars for rent while getting zero back, zero equity, zero appreciation and another rent increase.
The big jackpot comes when you sell for a $500K untaxed capital gain, or when you hold the property until death and your heirs happily enjoy a million-dollar pass on capital gain taxes thanks to a magical basis step-up.
read the above. homeownership is a by product of being wealther and having a higher income. investing elsewhere and renting has far surpassed what i would have had if i owned all these years and had that money tied up in the house . in fact even an investment in the s&p 500 would have blown away the returns on residential real estate.
it is not the home ownership creating the wealth , that wealth can be created in a number of other ways IF YOU HAVE THE MONEY TO AFFORD TO BUY,
You are putting the cart before the horse.
owning a home can be a great cost cutter down the road once the mortgage is paid off and that is where its value is. it can improve cash flow but it may or may not even be less of an expense than renting .
a renter going from a 3 bedroom apartment when the family is living together that goes to a 1 bedroom after the kids are out can see better cash flow than someone paying the expenses on a much larger house that they own if they do not downsize .
a renter living in a cheaper area may again have better cash flow than an owner in a more expensive area. you can not compare usually as it is never apples to apples.
it all boils down to what it means to your own pocket and no one elses. if you had the money to buy ,depending on how much you may be better off investing elsewhere and renting and that could make you wealthier . it has zero to do with you would be wealthier if you owned, no you would be wealthier if you had the money and then had the options that go with the money,.
Last edited by mathjak107; 12-01-2014 at 02:36 AM..
the flaw in the logic is it is viewed backwards. homeowners are homeowners because they are wealthier and earn more as a group before they buy the home..
renters are a mixed group. you have some very wealthy renters but they are mixed in with very poor renters diluting the group.
being a home owner did not make them wealthier ,they have the home because they were wealthier and could buy ..
it is like saying folks who take world cruises are wealhier than folks who don't so if you want to be wealthy take a world cruise.
Hoomeowners build equity every month when they make an amortizing mortgage payment plus every month their home value appreciates. Try doing that with your rent. (And yes I know you can but the average paycheck-to-paycheck renter cannot.)
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