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In my conception a house is best used not to live in, nor as rental property, but rather as a symbol for the mind. Here, this is what I’m talking about: “When all your trash cans are full, it’s time to take them out to the curb, before they start flowing over into other areas of the house.”
See what I did there? I swapped the word psyche for house. Fun, words can be. House, here, takes on a similar duty as a word like baggage, relating to the human condition and not a physical item.
Symbolism aside, here’s the gist of today’s post: You could take the remarkably unremarkable route of going out and trying to leverage enough cash for the largest mortgage payment possible – and then spending the next quarter of a century paying it down – or you could keep your mobility and refuse to allow the amount of things you own decide for you how and where you ought to live.
I have a friend who bought a house 2 years ago. Back then I envied her. She impressed me with her ability to make it happen, and I was happy for her for having made what I believed was an all-around solid investment. I’d love to sit down and chat with her more about it but she doesn’t have time. She’s working two jobs to take care of mortgage payments and a running list of repairs and upgrades. She recently got herself a dog and now has to put up a proper fence, over which the trees that shade the neighbour’s yard (horrors!) will legally need trimming. Also vying for her time is her role as landlord to her downstairs tenant when she has an issue.
With no time to make her home “presentable”, she has been too embarassed by it’s condition to receive guests. What does this say about the standards by which she’s willing to live?
The prevailing argument for home-buying is that it is a sound financial investment and renting, on the other hand, is like throwing money out the window. The truth is that there are many costs and fees for homeowners that never go towards ownership: start-up fees, closing costs, property taxes, homeowner association dues, strata fees, home repair costs, appliance replacement costs, utility bills, home security, insurance, yard upkeep, Tylenol…
Buying a home is not exactly the “no-brainer” investment that we’ve all been hypnotized to believe it is. The above laundry list of money-suck would certainly exceed, say, the monthly rental of a small apartment. And much of that money you will never see again, either.
“But Marty, what about the equity built up through my mortgage payments?” Well Lou, in answer to your question, here are three unpopular realities to consider:
- Home equity is based on fair market value. Your home’s value may barely rise above inflation. Worst case scenario, you could become one of many who end up stuck with a house they can’t sell in a once-picturesque, but now deteriorating, neighbourhood.
- The money you could save by not going the home-buying route could instead be better diversified and funnelled into a mutual fund or some other high-interest liquid investment over the 25-30 years it would take to pay down the mortgage.
- Even if you’ve paid off your mortgage and you now “own” your house, stop paying the property taxes for a while and discover the hard way who really owns it.
If you are interested in the principles of minimalism or living a simple lifestyle, which I gather you are if you’re reading this, you probably don’t have, or plan on keeping, a tonne of personal belongings. Once you’ve pared down to the absolutely essential it’s easy to see the squander and exaggeration in buying a house and, conversely, the manifold benefits of being location independent.
By occasionally renting cheap apartments, and keeping your possessions to a minimum, you can achieve the invigorating freedom of being able to pick up and move wherever and whenever you want.
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