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11 million renters spend at least half their income on shelter. They're all foolish?
Quote:
Originally Posted by gentlearts
They are also house poor.
In some instances, when you spend a lot of rent, you save in other ways so it all comes out in the wash.
I spend a lot on rent to live downtown Fort Lauderdale but I hardly ever drive my car. I walk everywhere. My husband and I only have one car because we never drive so we've eliminated a second car payment and insurance.
House poor means that so much of your money is spent on housing (or is sitting in your housing investment) that you're effectively poor from having so little left for other things.
Cash poor is not a thing unless a currency collapses. You are not poor from putting your money in cash.
I call them people on the verge of not being able to pay their rent, which means that landlords will start having to liquidate their holding at the same time; thus, driving the entire housing market into the ground.
Think about one of the main industries currently at risk: Retail
Retail goes under, these goes a large portion of the renter market.
...what is the term for those who spend too much on home rentership?
A house poor is a situation that describes a person who spends a large proportion of his or her total income on home ownership, including mortgage payments, property taxes, maintenance and utilities. House poor individuals are short of cash for discretionary items and tend to have trouble meeting other financial obligations like vehicle payments.
I've noticed people who buy bigger homes than what they can truly afford, didn't consider the higher property taxes, higher utility bills (heating and cooling) that come with a large home. A friend of mine bought a McMansion to impress her friends and boasted about how big her home was, a few month later, in the summer, she was in shock about her air conditioning bill, it was over a thousand dollars. I was thinking, are you really that dumb? You live in a big house. Of course it's going to cost more money to cool and heat more square feet. Duh. I have zero sympathy for these people. They choose to live beyond their means to impress other people, so they can deal with the consequences.
How does that work? Principal is reduced (the equivalent of) one dollar per month over 1200 months?
When I owned a house in Scotland, the mortgage payments only went to interest. Within the escrow was included a life-insurance policy against me, it was to mature after so many years and automatically roll-over to pay-off the principal.
Somehow the UK banking industry had worked out life insurance to be 'better' for the customer than mortgages.
Other cultures do different things.
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