To me, having a wife is a huge benefit even financially. She spends almost no money on herself, makes more money than I do (and I make decent money myself), and is willing to let me quit my job to pursue my passion if I choose too. Her single income can still support the household. More importantly, she thinks I'm the most awesome guy (I'm definitely not) and brings me happiness every freaking day! Marriage can be good or bad. But a good marriage is always good.
This number is meaningless. There is a HUGE difference if you make $50 k in NYC vs in say Mississippi.
am i missing something? i gave you a discount at $760/month outflow for your house. the $1000 PITI you noted makes things worse for you. that's $1000 x 12 months x 30 years = $360,000 in total payments. that would put you in the negative. your return is 273,743.41 (appreciation) - 360,000 (total payment) = -86256.59, not 273,743.41 - 150,000. if you buy a car for $20k, put down $2k, finance $18k for 60 months at 4%, your monthly payment is 331.50. your total cost is $2k+331.50(60) = $21,890, not just $20k. that's why you can't subtract only your principle. i think this is the biggest mistake people make. a 1.5% of price/year is the standard for home repair and maintenance. so that's another 2250/year for 30 years. subtract another 67,500 from your appreciation. this isn't included in your PITI. rent is set by the market. it doesn't always go up. still, at the end of 30 years i have over half a million in cash just by investing the down payment alone while a home owner has a 30+ year old building that hopefully is still in good enough condition to sell, otherwise throw in another $10-15k for improvements. the size of the house is irrelevant. all i'm talking about is real return on principle.
You're confusing things. You act as if my $360,000 in total payments was all lost down the drain like your rent. At 4% interest over 30 years, only $86,243.41 of that is actually interest. The rest is my equity. You don’t have equity. I do. I repeat. My payment is partially to myself. Yours goes down the drain. My home repair might be $2250/year but you have maintenance fees in your condo/townhome too that might actually be more than that. Rent is set by market and we assumed the rent was $1000. And it doesn’t go up every year but some years it goes up a lot. On average it’ll be along with appreciation, which is what I gave you, 3%. How do you keep forgetting the cost of your rent? Your rent will go up each and every year whereas my mortgage is set for 30 years. You will have a half million dollar from the investment but you would have paid a lot more in rent in the meanwhile too. Basically I pay $30k down payment, $120k in principle, $86k in interest, and probably about $100k in property tax for a total payment of $336k. From that I get a house worth $364k. Basically you pay $488k in total rent. From that you get $30k initial investment, $493k earned interest. And that’s assuming you get 10% return. Go check any savings calculator and they’re being generous when they say to use 8% return. If you use 8% return you only make $300k in earned interest. Using those numbers you would have to get 10% savings rate just to equal my small profit. If you use 8% you do much worse. And all I have to do is match inflation for my house appreciation. On top of that, you have to consider what happens after year 30. I will no longer have a mortgage and can invest the extra $7k a year I'll have. Whereas you still have to pay for rent. It’s definitely relevant but I’ll disregard it in this conversation.
we're around the 75% now, up from 25% a year ago. Since I finally decided to settle down and work full-time instead of working part-time and pursuing more education, and my husband was finally able to start working full-time. It's nicer not to always be living on the edge anymore, and not to feel too bad about buying myself small things like take-out food. Still, we're not as loaded as you might thing... almost all of it goes to paying off various debts, bills, cards, and mortgage. I know people complain about how we all used to live on less and our lifestyles have gotten more bloated in the last 50 years; at the same time, it's what some of us live with and what we know. Sure you didn't have to have a cell phone or data plan in the 60's/70's. By now it's sort of a necessity for communication for many people. I guess people cooked from scratch every night (in those tiny kitchens in those old houses, I don't know where they put everything) and that's great, but it doesn't make it any easier to get used to that kind of lifestyle now. Things like that also cost a lot in terms of your time and sometimes stress level. Some individuals, depending on their personal talents and desires and how this economy has treated them (unemployed or underemployed) do well as a stay-at-home partner; for some of us it adds up better for both partners to work. Just bought a house for the first time, which is a bit scary after all the stories I've heard, but at least you get something invested for what you paid for it, unlike when renting. I don't want to end up "house poor" and not able to go on vacation; for us, it's not just about the vacation, but about getting to see our families since we don't live in the same place. On the other hand, that's why I try not to just put in any luxury/upgrade I want inside the house.
Yonkers, we'll have to agree to disagree. all equity is to me is cash. home owners pay a premium to live in a house to do whatever they want with it . they can paint, knock down walls, play music as loud as they want, add new wood floors and granite countertops. but they also have to fix everything that breaks, upkeep, lawn care, and taxes. that premium is equity to me as a renter. it's money i don't spend and have access to immediately. if i invest the 30k down payment (for the general public their down payment is their life savings, that is just scary to me) plus the premiums (i go conservative and use the 2250/year) over the next 30 years, even at 8% that takes me over half a million. i dont' have a house but i'm not expecting a return on a house. that's my point. i'm a proponent of home ownership because it keeps rents low. but i'll never buy into the conventional wisdom of a "house is a good investment". wherever i lay my head is home, even if it's rented.
Yes, all of those are benefits. The only negative is none of those benefits are transferable to later years or another generation later on. I'm not saying it's bad to rent. I'm saying it's clearly not bad to own a house (assuming it's one you can afford) because at the end of the day you will have to pay for shelter regardless. Personally, I think all the extra headaches from home ownership are worth it since you will eventually no longer have to pay for shelter (assuming you don't die) and you can pass the asset down. Based on that, it makes a lot of sense from a strictly financial standpoint. Forget using your equity. At the least, you are paying 20 years of rent to live rent free for another 20-30. It depends on how much you save. It seems like you are assuming cost of buying a home >>>>>>>>>>>>>>>>>>>>>>>> cost of renting a home/apt. That isn't always the case. I know plenty of people that live in the same house their parents lived in. heck, plenty that still live in their granny house.
you always have to pay for shelter except it just doesn't come in the form of a monthly mortgage. taxes don't go away (they rise due to inflation along with the appreciation of your home). so i wouldn't call it rent free, but yes it will be less than what i will still be paying in rent. when comparing just monthly mortgage to monthly rent, you are correct. it's not always the case. but if you don't include your hidden costs as a home owner, i think that's irresponsible. let's say you have to replace your roof twice in 30 years for $25,000. you've basically added another $70 ($25k/30 years/12 months) to your monthly outflow. and that's just the roof. lol...well, i don't. so i don't know what to say. btw, my girlfriend owns the house we live in. i've experienced life as a homeowner and it's not fun. the 8 years she's been there she's had to replace the roof, repair broken drain line, replace water heater, replace a/c unit. i've wasted countless hours maintaining the yard, hours i'd rather have been doing something else. every once in a while we'll pay for lawn care, but that's another added expense. been trying to convince her to sell but it's hard to change someone's mind when they invested financially and emotionally. the "investment" is a time and money sink.
Taxes are minimal when compared to what someone pays in monthly rent. Again, I'm not talking about buying tricked out mansions. I agree but think you are overstating home maintenance costs. $25K for a roof? Yeah, include hidden costs in the equation but those costs still aren't soooooooo much more higher. I feel that and I'm not saying owning a home can't be a headache. I'm saying I'll gladly accept that headache for no rent at some point in life. The biggest expense is usually shelter, so once that's done you are sitting pretty.
my home is worth more than three times what i paid for it. i'm no economist but that seems like a good investment to me.
There are tons of people out there who have bought homes and cant say the same. Also... if you're living in it you're living in it. You aren't selling it? You aren't renting it? Its worth 3X as much but you aren't making any money of it are you? If you are then its definitely a good investment. But home owning isn't the end-all-be-all great investment choice people seem to think it is, not for everybody. The satisfaction one gets from being a homeowner has to be the #1 draw, not the "investment" you'll never actually earn income off of.
