All right, Me Thinks posted another awesome comment on my Our Financial Philosophy post and Lance chimed in as well…the interwebs stole my first attempt at a comment, and then my rewrite of it was long enough to be a blog post, so here it is! It doesn’t have anything to do with relationships, really, except that this is something that I feel REALLY strongly about and if you do too (one way or the other) then it’s a good thing to be aware of while you’re dating.
Owning a home is for suckers.
A home is one of the WORST investments you can possibly make unless 1) you are flipping houses for profit or 2) buying rental properties for profit (neither of which interests the BF and I at this time). The definition of an asset is something that puts money into your bank account every month – something that pays YOU. The home you live in does NOT fall into this category.
Even if you can sell your home when you want to (no guarantee), homes appreciate over time at a rate of 3-4% – barely above inflation. A diversified investment portfolio yields, on average, 8%. Why on earth would anyone tie up a 10-20% down payment – tens of thousands of dollars – on something that, statistically, barely breaks even when you could be MAKING money? Yes, you can deduct the interest on your mortgage, but if you are renting, that meager savings is more than made up for by the fact that you don’t have to pay property tax. You also don’t have to pay for repairs or improvements, which when combined with property tax, end up negating the meagre “profit” that is already negated by inflation anyway.
The BF’s and my number one goal is to get out of debt (no small feat considering we owe about $250K between us). Once we accomplish that, our goal is to NEVER be in debt again. We may need to have car loans at some point (but maybe not, if we move somewhere with really good public transportation), but we will not buy a house unless we can pay for it outright, probably upon retirement when we are ready for a little stability. Right now mobility is more important to us, and that’s something only renting can provide.
Plus we are never having kids, so it’s not like we need to make an investment in their future. FYI, having kids is also a devastating financial decision and the main reason that we have chosen to never have them. As I said in my guest post on 20-forty.com, The Ethics of Having Children, every time I hear someone say “I want my kids to have everything I never had” I just want to say, “Don’t you realize that if you didn’t have kids, you could have the life you never had?“ The BF and I each have life insurance policies with the other listed as beneficiary so that if one of us died the other person wouldn’t have to move, but that’s all we need.
To people who think home ownership is a solid financial idea, you have been lied to. For more information on why home ownership is one of the stupidest ways you can flush money down the toilet, visit http://finance.yahoo.com/real-estate/article/102603/why-your-home-is-not-the-investment-you-think-it-is. Sorry, Me Thinks and Lance – you may have had atypically good experiences, but I’m just not buying.
If this post made you feel like a sucker, you might also enjoy:
- Honey’s Take: The Key to Successful Relationships
- Lance’s Take: The Key to Successful Relationships
- Snowboarding, Sickness, and a Breakdown at the Grocery Store
- How to Make Your Goals Achievable