3 ms·

OP said "nice house," not "any house." One of the trends I see in my millenial-GenX cohorts is the buying of expensive consumer goods the moment a sizable sala

OP said "nice house," not "any house." One of the trends I see in my millenial-GenX cohorts is the buying of expensive consumer goods the moment a sizable salary is conferred. Yes, it's a relief to finally have a job that pays enough to have money left at the end of the month. However, loading up the monthly expenses with a brand new (often oversized) vehicle and a house purchased for 5x annual salary is unwise. It happens quite often. Another thing to consider is that buying reduces mobility. If you buy in the "wrong" spot, you can be stuck there while opportunities in other areas go unfilled by you. If the economy is as truly broken as a lot of people my age think it is, why buy (or buy expensively) when there's a good chance that in two years better pay or a more balanced job will be found elsewhere?

superuser2 11y ago
Consider that if those millennials are buying houses for 5x salary, then they must have been doing something right to save ~1x salary for a down payment. (Unless people are somehow getting mortgages without down payments these days?) I agree that buying reduces mobility - and I plan on renting for the foreseeable future. What I take issue with is the claim that it's possible or desirable for to avoid debt at all costs. Renting is not automatically a better financial decision than mortgaging, and for people who don't need the mobility it can be substantially worse. Consider that the worst case scenario for ownership (your home depreciates to $0) is still better than the best case scenario for renting (your rent stays flat) because a renter wouldn't have an asset to sell anyway, but the owner gets to continue living there without paying for it.
- techsupporter 11y ago
  > they must have been doing something right to save ~1x salary for a down payment. (Unless people are somehow getting mortgages without down payments these days?) I thought it was common knowledge that virtually no mortgage requires 20% down and has not for many years. All of them do for mortgages without mortgage insurance, yes, but not to just get a loan. FHA wants 3.5%, most conventional loans will take 5%, and some large credit unions (NASA FCU, Navy Federal) will do 0% down and a lender credit for closing costs. As to the rest of your comment, I mostly agree. Debt is not a bad four-letter word if used properly. Lots of people, including millenials desperate to have "a real life," don't do that. Rent vs buy is really complicated and even though I own there are many times I'd rather rent (usually when something major fails)...

superuser2 11y ago

Consider that if those millennials are buying houses for 5x salary, then they must have been doing something right to save ~1x salary for a down payment. (Unless people are somehow getting mortgages without down payments these days?) I agree that buying reduces mobility - and I plan on renting for the foreseeable future. What I take issue with is the claim that it's possible or desirable for to avoid debt at all costs. Renting is not automatically a better financial decision than mortgaging, and for people who don't need the mobility it can be substantially worse. Consider that the worst case scenario for ownership (your home depreciates to $0) is still better than the best case scenario for renting (your rent stays flat) because a renter wouldn't have an asset to sell anyway, but the owner gets to continue living there without paying for it.

techsupporter 11y ago
> they must have been doing something right to save ~1x salary for a down payment. (Unless people are somehow getting mortgages without down payments these days?) I thought it was common knowledge that virtually no mortgage requires 20% down and has not for many years. All of them do for mortgages without mortgage insurance, yes, but not to just get a loan. FHA wants 3.5%, most conventional loans will take 5%, and some large credit unions (NASA FCU, Navy Federal) will do 0% down and a lender credit for closing costs. As to the rest of your comment, I mostly agree. Debt is not a bad four-letter word if used properly. Lots of people, including millenials desperate to have "a real life," don't do that. Rent vs buy is really complicated and even though I own there are many times I'd rather rent (usually when something major fails)...