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Many out there argue that a mortgage has the advantage of 'forcing' the holder to save. Is this an admission that they would not otherwise do so or that they would dip into it periodically?
If 'forced savings' is a good thing, why not argue that the USA should have a superannuation plan like Australia? Otherwise the 'forced savings' only benefits people who stay in one geographical location for a long time and is not available to people who must move around frequently for their career, etc.
On a related note, car dealers could offer a 'forced savings' plan whereby you sign up to continue making your car payment after you have paid your car off, and they will in the future give you a small discount for using the money to buy one of their cars with cash in the future. This would benefit everyone, since the dealer would sell two cars rather than just one, and the customer would have a 'forced savings' plan. While they do profit from financing, that likely wouldn't be enough to offset the effect of selling 2 cars to their customer rather than just one, and the fact that they could 'borrow' the customer's money interest-free.
For that matter, banks could offer 'forced savings' plans where you sign up to continue to make your mortgage payment for a few years after your house is paid off, the bank offers a slightly above-market interest rate on the deposits, and which your kids could use as down payments on their own house(s) if they get their mortgage through the same bank but surrender penalties if they don't, and student loan lenders could offer 'forced savings' plans where you continue paying student loans even after they are paid off, and your kids could use the money for their education. If there are really so many people out there that buy a house for the 'forced savings' aspect, then couldn't institutions benefit from offering 'forced savings' in other ways, given that customers would actually believe that they should sign up for a 'forced savings' plan of some sort ?
most people are horrible at anything that requires discipline long term.
left to their own devices not only are most americans poor savers but unless it is something they have to do odds are they will never do it.
while a house is rarely a great investment compared to other asset classes at least the homeowner gets a consolation prize which is the residual value of the home.
of course being house rich and cash poor sucks as well.
if it wasn't for our forced social security plan much of america would have zero saved for retirement
Many out there argue that a mortgage has the advantage of 'forcing' the holder to save. Is this an admission that they would not otherwise do so or that they would dip into it periodically?
By my definition that isn't savings because I have to pay interest to someone else to do it. To me real savings is when you put money away and earn interest doing it, so someone pays you to use your money, not the other way around.
Not that a mortgage is necessarily bad debt, but it's not savings either.
Usually it's very poor financial advise that's only of any benefit to the financial idiots of the world. You have to be very ignorant of finances to think saving at .25% interest to buy a brand-new car with cash is a good financial move rather than borrowing at 0-2%. The general premise of forced savings is that people need to have someone force them not to waste their money, hard to imagine a bigger waste of money for most people than new cars.
Many out there argue that a mortgage has the advantage of 'forcing' the holder to save. Is this an admission that they would not otherwise do so or that they would dip into it periodically?
What?
A mortgage is not savings... it is debt.
Social Security is the forced savings you want... it already exists!
Australian superannuation is not at all related to mortgages. Additionally, Australians are free to relocate for a new job/career within the country without any effect to superannuation. As others posted, superannuation is essentially equivalent to Social Security in the U.S.
Why do you think that they have to put all those annoying electronic warning signals in cars to force people to put their seat belts on. People in general are just plain lazy and a large percentage aren't too bright either.
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