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Do you consider buying a primary residence as investment or consumption or both?
And how do you record the purchase (and the subsequent principal/interest payments) in your household accounting book (asset = liability + net worth)?
I don't own my home, so I'm probably biased. But I consider it consumption. It seems to me most financially successful people do not consider their homes to be investments.
it was always a consumption item if i was consuming it.
if you really think about the whole process , even the money i got from the house is really going for a lifetime of rent now or if we buy a co-op ,housing expenses. the clock on your housing costs does not simply stop because you sold one and bought another or rented.
in fact if you buy a cheaper house that money you pocketed still has to go for a lifetime of expenses associated with that house so you never really get away from the consumption side of things as long as you need housing.
you either live in it consuming it , if you sell it and rent it pays rent going forward forever or buys a smaller house and a lifetime of expenses associated with that house.
in any even it usually results in it costing you money over a lifetime housing you.
the only question is which costs less , as in both cases renting or owning you will spend more in housing than any residual value eventually.
housing costs are a life long expense no matter how you try to cloud it with smoke and mirrors.
folks like to stop the clock when they sell. look how much we made ! but the reality is now set aside that money and use it for rent . it isn't going to last a lifetime i will bet .
did you downsize ? now that extra moiney left goes for maintance ,taxes ,expenses and renovations.
all of us , whether renter or owner will find at the end of a lifetime we are both in the negative numbers with our housing costs..
Last edited by mathjak107; 03-07-2015 at 03:56 AM..
Right now I consider my house a consumption item (and, boy, can it consume!). It will become an investment (probably a poor one) when the day comes that I decide to downsize and sell it.
Do you consider buying a primary residence as investment or consumption or both?
And how do you record the purchase (and the subsequent principal/interest payments) in your household accounting book (asset = liability + net worth)?
I am in the process of buying a home right now but I don't consider it an "investment". Selling in the future isn't even on my radar. As for "consumption"...I realize there will be expenses I haven't had as a renter but I'm prepared for them. That's what my 'emergency fund' and home warranty is for. I expect I will consider it an "asset". Should I not?
If you consider it as a consumption (which I agree), do you treat it like a car in your financial book? To be specific, as an expense (gone asset) rather than an asset?
Your house should definitely be considered an investment, as you never know when you might need to sell. Don't purchase a home based strictly on price, but research things like popular school districts, rental composition in a neighborhood, and average days on market from list to sell.
Do you consider buying a primary residence as investment or consumption or both?
I don't consider my home as an investment because as much as people think they 've made a profit when you consider the upkeep costs + taxes + interest (the sum that remains after you deduct for taxes) makes the home not a stellar investment. I really see the home as being an 'investment' when it becomes an inter-generational property - I'm thinking of multi-generations.
Quote:
Originally Posted by acegolfer
(asset = liability + net worth)?
Did you mean to say net worth = assets - liability
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