16 ms·

Your Bank Balance is at Zero

106 points by karjaluoto 16y ago

noonespecial 16y ago
Link is broken, here: http://www.ideasonideas.com/2010/11/your-bank-balance-is-at-zero/ http://www.ideasonideas.com/2010/11/your-bank-balance-is-at-...
niels 16y ago
I recently sold my huge apartment + furnitures, don't have a car anymore. I really felt owning these things were limiting my freedom and having a huge cost both economically as well as mentally. I'm really excited about embarking on a more minimalistic lifestyle, where I think twice about the cost of ownership. I now have more money and more freedom. Great article.
- eru 16y ago
  I have moved to Britain recently and did not take much stuff. Most of what I do have is replaceable. Sometimes I feel more uprooted than liberated by the lack of stuff.
  - tomedme 16y ago
    I have recently offloaded a whole bunch of stuff, streamlining my possessions before going travelling - and it is weird at first. My feelings are definitely a mix of uprooted and liberated, in equal measures.
joshrule 16y ago
While I've spent years reading this message in various places (most recently at http://mnmlist.com http://mnmlist.com and http://farbeyondthestars.com http://farbeyondthestars.com), I'm always refreshed by it. Perhaps it's not the author's main point, but living lightly means we have more time to invest in the things and experiences that interest us, and that is a good thing.
rbranson 16y ago
I feel as though with all things, there is a balance. I know people who are addicted to "stuff" and always keep acquiring huge piles of things. There is an optimistic point of minimalism though. Ownership is a commitment that can pay dividends or it can put you in shackles, a bit like human relationships. So, consider every purchase in this light and you might find the optimal point of "stuff."
- karjaluoto 16y ago
  Precisely. I'm not against owning things; I just question whether we need to own everything.
sosuke 16y ago
What about building a greater than zero balance for your loved ones or children? If you never save and always rent you will never be able to pass anything along to the next generation creating another set of folks that have to start from zero. When I hear these arguments I always figure they already have a great enough balance to counteract these issues or have no loved ones to pass along equity too.
- deleted 16y ago
  [deleted]
- cake 16y ago
  I'm not sure he's saying you shouldn't save. You could leave a good amount of capital to your kids too without owning a house.
  - karjaluoto 16y ago
    Bingo.
  - msquared 16y ago
    Hmm. While this is definitely true, I think you stand to leave more to your children if you own, opposed to renting. If your rent is comparable to mortgage (assumption, I know) you will wind up paying less after the mortgage is over. If you die at 80, and start paying rent at 20, that's 60 years of rent, compared to, say, a 30-year mortgage. That's 30 more years of rent. I know, I know, someone is going to say "well, what about upkeep and maintenance and killing rats and xyz?" The way I'm seeing this (which, by the by, is originating completely from a 3-beer-deep opinionated loudmouth) is that it's negligible compared to the fact that you are investing your money in something that is of material value.
- robryan 16y ago
  I'm more of the mindset that if I have children that they shouldn't expect to receive any type of inheritance. Sure they might end up receiving but just not to rely on it. In turn I don't expect to receive anything from my parents, would much rather they enjoy what they have earned.
cube 16y ago
A few months back I realized one main aspect of travel, I tremendously enjoy: the lack of stuff. Traveling around with just one suitcase of clothes and my laptop opened my eyes: Of all the stuff I own, everything I really needed for my every day life was right there with me. And it is so easily replaceable... I never was a big gatherer, but since then I really cut down on buying things. In addition to that I'm getting rid of my things, some are easier to lose some are harder to give away or sell, but in the end it feels great. I actually find it liberating to stand in a store and _not_ buy the fancy item which would inevitably be degraded to be clutter on the shelf in a few weeks. The money I spend goes into the few things I really use all the time, like my iPhone. I also eat better. All in all I'd say it made me a happier person.
- barrkel 16y ago
  It's funny you say that, as one of the things that bothers me most about travelling is the lack of handy access to the things I appreciate making my life easier. Usually it's simple creature comforts: a nice chair, a good work desk, a supply of hot water, tea and fresh milk; but getting those things from a hotel is tough and frequently overly expensive. Staying in a furnished apartment is better, but next thing you know you want a variety of food, better cooking implements, and various other things that don't have lifetimes that match up well with a typical stay in an apartment or hotel (1 or 2 weeks for me). A some of the bigger upsets in my life come from times I've lost stuff, either through the upheaval of moving, or data from crashed hard drives. Physical and informational tokens can act as triggers for remembrance of past experiences, and it's not nice when you lose those photos, diaries or whatever. On the other hand, going into a store, I am very seldom tempted to buy fancy items. I usually get more joy from my ability to purchase something than actually purchasing it; probably a relic of growing up in poverty. The best purchases have been food, wine, holidays, theatre and art: experiences.
- mrtron 16y ago
  I moved to Asia for 5 months and found the same thing. I brought a big suitcase full of items, but probably only used a backpack full. I purchased local clothes (for cheap) that were better suited to the climate and everything else was easily replaceable. I also agree investing heavily into a few key items is important. My Macbook was irreplaceable. I wish I spent more on a better camera, it was a good one but I used it enough to justify getting a great one. Now that I am back I realize I have a lot of stuff that is completely unnecessary. It is surprisingly difficult to get rid of, but I am donating it in chunks.
jtbigwoo 16y ago
Somebody has to own the stuff you're renting. If I'm a renter I'm just passing along the responsibility to someone else. If the vast majority of us are renters rather than owners, who has incentive to do any maintenance or improvement? The landlord and her employees will do the minimum cosmetic fixes to keep rents increasing. The residents have no reason to keep the place nice--they can just move on. This article is not an indictment of our disposable culture. It's an amplification of that culture to encompass our whole lives. Look, I think we fill our lives with too much stuff, but refusing to take an ownership stake in housing, transportation, etc. will lead to worse outcomes, not better.
- cjy 16y ago
  "If the vast majority of us are renters rather than owners, who has incentive to do any maintenance or improvement?" This doesn't make sense. The remaining owners will still compete for renters. If my landlord does a bad job, I will find a better landlord. In fact, you can argue that concentrating ownership makes maintenance more efficient. My landlord has much more experience at plumbing, painting, installing appliances etc. than I ever would.
  - fr0sty 16y ago
    Renting introduces a Principal-Agent problem[1] because the owner's incentives are not entirely in line with yours. Maximum profit is realized by doing the minimum amount of repairs necessary to keep people from moving out. Switching apartments is not free (in time, money or effort) so the bar a landlord has to clear is only 'not bad enough to leave'. I doubt homeowners would choose the same standard. [1] http://en.wikipedia.org/wiki/Principal-agent_problem http://en.wikipedia.org/wiki/Principal-agent_problem
    - potatolicious 16y ago
      Your logic is sound, but my observation in reality does not match. There are slumlords - but that's usually caused by a compression in supply (e.g., when I was in college, any place near school had notorious landlords). When supply is open though, everything works out. You have your uber-cheap rentals where nothing will ever get fixed, and then you have your more premium rentals where they'll turnaround a stove in 24 hours or less. Like all markets, a low-end and high-end are established and work just peachy. Of course, this is not geographically true everywhere - especially when you introduce artificial supply and demand factors (rent control, anyone?).
erikstarck 16y ago
I think this news item from yesterday is related: http://www.calculatedriskblog.com/2010/11/ny-fed-continued-decline-in-consumer.html http://www.calculatedriskblog.com/2010/11/ny-fed-continued-d... "Since its peak in the third quarter of 2008, nearly $1 trillion has been shaved from outstanding consumer debts." "So are consumers becoming more frugal? Yes. Holding aside defaults, they are indeed reducing their debts at a pace not seen over the last ten years." Looks like we're moving from a loan-and-own economy to an age of access, where you only pay for access to stuff (aka "rent"). I can only go as far as to my self. I don't buy CDs anymore, I pay for access to Spotify. I don't buy books anymore, I pay for access to an ebook on my Kindle (although it's a one time fee). I don't buy DVDs, I pay to get access to an online stream. And so forth.
aelaguiz 16y ago
This article mirrors an implicit assumption that I see in a lot of these anti-materialist articles - that being that accumulation is the desired result of the undesired (and presumably unfulfilling), all dreaded, "work." For some of us accumulation of material possessions is a welcome side effect of a highly fulfilling passion which is "work." When I say work I say it with a prideful passion in my voice, not with disdain at the damned capitalists for forcing me into this materialist trap. I love my work first, but the car is nice too. Perhaps the author just needs to find some purpose.
- karjaluoto 16y ago
  I'm quite convinced I have found some purpose. For that matter, I quite like my work. What concerns me is the idea that so many feel they need to own something, in order to enjoy it.
  - aelaguiz 16y ago
    I think that class of people is attempting to fill a void in their life with possessions, but that doesn't imply that all or even most ownership is unhealthy/bad. If you are buying things to find fulfillment you might as well eat the money, but if you are fulfilled and buying things (responsibly) - I applaud you.
klochner 16y ago
It strikes me that choosing to rent over owning is the antithesis to the theme of "Zen and the Art of Motorcycle Maintenance" (recommended book). The driving metaphor comes from the contrast between (effectively) renting a BMW motorcycle (since they are hard to repair), and owning a simpler model that can be maintained by oneself. The stated benefit is greater autonomy and satisfaction derived through taking ownership and solving one's own problems - a more classical approach to life. Rather than taking a "fix this for me" attitude, you see the world as something that you have control over. Personally, I've found it very satisfying every time I'm able to repair something in my car, which I've owned for 8 years.
- mjschultz 16y ago
  I absolutely agree with the satisfaction of repairing something yourself. In fact, I think even having the choice of either repairing it myself or hiring someone I deem competent to repair it is a worthwhile difference. When I was an apartment dweller, I signed a 1 year contract and they kept telling me that if anything breaks call them. That included windows, pipes, stoves, refrigerators, and light bulbs. I wasn't even supposed to change a light bulb if it burned out on me. Admittedly this is only one experience with what I hope was a very poor renting operation, but they owned all the buildings in the vicinity. I was so happy when I replaced my kitchen sink faucet on my own and in a way that satisfied what I wanted.
  - theBobMcCormick 16y ago
    Wait until you've done it enough times. As someone who's owned his own home for about 16 years, I'd be quite happy if I never had to replace a faucet, fix hail damaged siding, clean a gutter, etc. again. I look at it as one of the "necessary" evils of home ownership.
    - mjschultz 16y ago
      Perhaps, right now I'm in a condo so I still don't have to worry about most of those things. But I still think just having a choice between hiring someone competent and doing it myself is a nice one. I stress competent because my previous landlord(s) were less than able to fix things beyond the superficial problems. Their goal is to strike a balance somewhere between quality and ability to stop complaints. Usually the choice fell one one side of the ability to stop complaints side. (Fix it so it works, not so it works well, i.e. replace broken washing machine with cheap almost broken washing machine.)
icefox 16y ago
I know that there is just _way_ too much profit in the monthly payments, but a car company that somehow forced you to pay in cash woudl quickly create a status symbol for itself.
S_A_P 16y ago
I generally like the idea that we should take some time to assess what is important in life. I dont, however think there is a one size fits all answer to what we should own and what we should rent, or how we should spend our money. I have read posts similar to this before, and they can seem to smack of some sense of condescension. I sense a bit at the end with the Louis Vutton/BMW comments. Like I said, it is great to encourage others to evaluate what is a need vs a want, but I dont necessarily think something should be considered a cage just because it is purchased or unnecessary for life.
jleyank 16y ago
Having lost money on 3 of the 4 houses we've owned, I can confidently state that if you can't see staying in the same house when switching jobs you're better off renting. Houses might be "investments you can live in", but they are a long-term investment. The US favors home ownership, but that is not the case, say, in Canada. Do the math, and see which investment provides the better return for your time window. But invest it somewhere...
theBobMcCormick 16y ago
It's rather interesting and jarring to me to see how many of the reply's in this thread are so aggressively defensive of the very idea that owning more stuff might not always be better than not owning more stuff. I've been watching a marathon of back episodes of "Hoarders" (http://www.aetv.com/hoarders/index.jsp http://www.aetv.com/hoarders/index.jsp) on NetFlix streaming, and it's somewhat startling to me how much some of the replies here sound like the defensive responses of some of the hoarders in the show.
- pyre 16y ago
  I think that these threads always end up being more about ideology than hard facts. There are a lot of people that enjoy not being 'tied down' and being 'free and easy,' which things like 'having kids' or 'owning a house' tend to prevent. It then becomes more of a decision to pursue a particular lifestyle than anything else. That said, the reaction of the people on Hoarders tend to be defensive reactions due to not wanting to deal with the issue at hand (i.e. extreme procrastination). Which is probably why most of them pick up their hoarding habits after the loss of a close loved one (usually a parent). They don't want to deal with the loss, so they are constantly pushing it away, and not dealing with it. {edit} This tends to bleeding into everything else in their lives. They live for the momentary thrill of acquiring things, while not bothering with 'the boring stuff' like cleaning their house, or sorting their acquired items, or even deciding which items are/aren't worthless.
- sliverstorm 16y ago
  These articles go to an extreme; just because I don't want to rent everything I've got, doesn't mean I am a stuff-o-holic. I have a very hefty anchor back home- a ~50lb toolbox. By the wisdom of HN articles, that should be the first thing out my door, but it enables me to maintain my motorcycles. Why do I maintain my own motorcycles? Because an oil change costs $20 and 20 minutes when I do it, but $100 and an hour or three when the dealer does it.
seanc 16y ago
People buy things for all kinds of reasons that aren't discussed in the article. Convenience! For me this is a prime motivator. I have sufficient demands on my time that added expense of owning a car is worth the 20 minutes it would take to access the closest virtu-car, and the 90 minutes I save every day driving in stead of busing. I have enough space in my house for cold storage and a freezer. This means I can buy food in bulk and don't have to go to store as often. Security! Landlords kick tenants out out now and then. Rents can go up all of a sudden. My family rented for a long time when I was a kid, and we got booted out of several houses when the landlord decided not to renew to lease for one reason or another; wanted to give the house to a relative, wanted a pile more rent, et. cet. Agency! For some people home improvement and 'puttering around the house' is a big source of pleasure and recreation. Many people express themselves with the work of their hands, and owning tools and infrastructure to build things and so forth is important too them. Finally, NRP's planet money has a great blog about the issue of buying vs. renting housing: http://www.npr.org/blogs/money/2010/11/05/131105373/the-friday-podcast-finally-an-apology#more http://www.npr.org/blogs/money/2010/11/05/131105373/the-frid... tl;dr: this is about way more than money. It's about personal value choices
- lutorm 16y ago
  The "security" aspect goes both ways. Owing money, which the vast majority of us will if we want to buy a house, is one of the principal insecurities of life. Given the current status of the housing market, that should be obvious to everyone. Being forced to move out of your rented home seems a lot less severe than having the bank foreclose on your "owned" home.
  - seanc 16y ago
    Debt is only an insecurity if your income is insecure. A renter with a long term lease holds just as much obligation as a home owner as far as that goes. I would say that the risk of getting the boot from your rented dwelling is much larger than the risk of getting foreclosed. The risks associated with foreclosure can be mitigated to some extent by the homeowner. Management of cash flow, pursuit of income security, adequate savings, all of these things are in the homeowners domain. Many many homeowners have secure incomes and live with extremely small foreclosure risk. A renter can see the building sold out from under him and be out on his ear no matter what he does. The bottom line is that this stuff leaves the realm of objective mathematical truth and enters personal risk profile and values very, very quickly. For some, income will have wide error bars and they need lots of flexibility. Someone else might have union seniority in a government job and be able to predict their income for the next twenty years.
ulysses 16y ago
In SunDog, you'd start out without much cash, but you also started with a spaceship. Now, in order to keep the spaceship you had to fulfill a contract. To fulfill that contract, you had to make money to keep the ship going, and you had to explore a bunch of planets. The spaceship was reasonably roomy, could land on planets, and had a large all-terrain vehicle for exploring the surface and bringing back cargo. I could see not needing an apartment, if I had an FTL spaceship like that.
- teamonkey 16y ago
  The same was true in Elite. In Elite II you inherited (tax free) from a recently-deceased relative 100 credits plus an Eagle starship. Despite the game's apparent freedom, it only gives you one option - to take the ship and go. You can't, for example, sell the expensive space ship, re-invest it into the fish processing plant you work in and use the proceeds to live like a king on the poverty-stricken planet.
mlok 16y ago
There is an interesting video from Khan Academy related to this: "The math of renting vs. buying a home. Challenging the notion that it is always better to buy." http://www.khanacademy.org/video/renting-vs--buying-a-home?playlist=Finance http://www.khanacademy.org/video/renting-vs--buying-a-home?p...
- theBobMcCormick 16y ago
  That's interesting to see it actually analyzed by someone with Mr. Khan's math skills. Not to mention the spreadsheet liked to from the 3rd video in the renting-vs-buying looks like it be a useful tool for running the comparison in your own local market/circumstances.
brc 16y ago
I'd just like to post that I agree with the comment from 'Russ' in the article. This article is a one-sided exploration of the buy-vs-rent debate. It doesn't explore all of the emotional connotations of owning something durable, and overweights certain experiences from the point of view of the author, when this cannot possible apply to a population of people. Finally, as Russ comments - it's wrong to sneer at the purchase of a handbag or BMW - the person might be spending their money on a combination of quality product and brand, but once you start getting into the argument of purchasing x is right, and purchasing y is wrong- you're arguing simply from a relative point of view. As long as the transaction was not done under duress, where is the problem? My neighbour spends all his money on sailing. I find it a waste of money, but he clearly gets enjoyment from it. Who is right? Is it remotely possible for me to suggest that buying a sailboat is wrong? Wrong to who? As compared to what? Free choices are just that. Owning a house in a falling market may seem like a foolish position, and for many, perhaps it is. But that goes to assume that the person owning a house does it for purely financial reasons, which, again, is wrong. Another neighbour of mine is an old lady in her 80's who owns her house and lives by herself. By any object measure she'd be better off selling the house and both investing and spending the considerable cash that would generate. But she enjoys her garden and the memories of a house that once contained her husband and family over the span of 40 years. Is she wrong to hold this position? Financially perhaps, but perhaps the currency aspect means very little to her in comparison with pleasure of her little piece of land with a house on it. She could sell her house, rent a nice retirement apartment and afford a around-the-world cruise. A rental-is-best mindset would recommend this view. How can I tell her she is wrong and someone else is right?
karjaluoto 16y ago
I'd really encourage anyone interested in this discussion to read this comment: http://bit.ly/adXv1l http://bit.ly/adXv1l I believe it gets a little closer to the heart of what I was working to convey--particularly as the discussion seemed to later spiral into a primarily financial one.
henryw 16y ago
my favorite part of the article: Few of us want to die, as evidenced by such statements as, “if I die…” (like there’s some possibility of an alternative). I hate to break it to you, but the only real variables are how and when. Other than that, we’re probably best to accept that you and I are both just toast. I find a kind of liberty in this knowledge. In fact, it suggests that most of the things I fret over are largely inconsequential, and that I shouldn’t squander these moments.

106 points by karjaluoto 16y ago

Link is broken, here: http://www.ideasonideas.com/2010/11/your-bank-balance-is-at-zero/ http://www.ideasonideas.com/2010/11/your-bank-balance-is-at-...

niels 16y ago

I recently sold my huge apartment + furnitures, don't have a car anymore. I really felt owning these things were limiting my freedom and having a huge cost both economically as well as mentally. I'm really excited about embarking on a more minimalistic lifestyle, where I think twice about the cost of ownership. I now have more money and more freedom. Great article.

eru 16y ago
I have moved to Britain recently and did not take much stuff. Most of what I do have is replaceable. Sometimes I feel more uprooted than liberated by the lack of stuff.
- tomedme 16y ago
  I have recently offloaded a whole bunch of stuff, streamlining my possessions before going travelling - and it is weird at first. My feelings are definitely a mix of uprooted and liberated, in equal measures.

joshrule 16y ago

While I've spent years reading this message in various places (most recently at http://mnmlist.com http://mnmlist.com and http://farbeyondthestars.com http://farbeyondthestars.com), I'm always refreshed by it. Perhaps it's not the author's main point, but living lightly means we have more time to invest in the things and experiences that interest us, and that is a good thing.

rbranson 16y ago

I feel as though with all things, there is a balance. I know people who are addicted to "stuff" and always keep acquiring huge piles of things. There is an optimistic point of minimalism though. Ownership is a commitment that can pay dividends or it can put you in shackles, a bit like human relationships. So, consider every purchase in this light and you might find the optimal point of "stuff."

karjaluoto 16y ago
Precisely. I'm not against owning things; I just question whether we need to own everything.

sosuke 16y ago

What about building a greater than zero balance for your loved ones or children? If you never save and always rent you will never be able to pass anything along to the next generation creating another set of folks that have to start from zero. When I hear these arguments I always figure they already have a great enough balance to counteract these issues or have no loved ones to pass along equity too.

deleted 16y ago
[deleted]
cake 16y ago
I'm not sure he's saying you shouldn't save. You could leave a good amount of capital to your kids too without owning a house.
- karjaluoto 16y ago
  Bingo.
- msquared 16y ago
  Hmm. While this is definitely true, I think you stand to leave more to your children if you own, opposed to renting. If your rent is comparable to mortgage (assumption, I know) you will wind up paying less after the mortgage is over. If you die at 80, and start paying rent at 20, that's 60 years of rent, compared to, say, a 30-year mortgage. That's 30 more years of rent. I know, I know, someone is going to say "well, what about upkeep and maintenance and killing rats and xyz?" The way I'm seeing this (which, by the by, is originating completely from a 3-beer-deep opinionated loudmouth) is that it's negligible compared to the fact that you are investing your money in something that is of material value.
robryan 16y ago
I'm more of the mindset that if I have children that they shouldn't expect to receive any type of inheritance. Sure they might end up receiving but just not to rely on it. In turn I don't expect to receive anything from my parents, would much rather they enjoy what they have earned.

cube 16y ago

A few months back I realized one main aspect of travel, I tremendously enjoy: the lack of stuff. Traveling around with just one suitcase of clothes and my laptop opened my eyes: Of all the stuff I own, everything I really needed for my every day life was right there with me. And it is so easily replaceable... I never was a big gatherer, but since then I really cut down on buying things. In addition to that I'm getting rid of my things, some are easier to lose some are harder to give away or sell, but in the end it feels great. I actually find it liberating to stand in a store and _not_ buy the fancy item which would inevitably be degraded to be clutter on the shelf in a few weeks. The money I spend goes into the few things I really use all the time, like my iPhone. I also eat better. All in all I'd say it made me a happier person.

barrkel 16y ago
It's funny you say that, as one of the things that bothers me most about travelling is the lack of handy access to the things I appreciate making my life easier. Usually it's simple creature comforts: a nice chair, a good work desk, a supply of hot water, tea and fresh milk; but getting those things from a hotel is tough and frequently overly expensive. Staying in a furnished apartment is better, but next thing you know you want a variety of food, better cooking implements, and various other things that don't have lifetimes that match up well with a typical stay in an apartment or hotel (1 or 2 weeks for me). A some of the bigger upsets in my life come from times I've lost stuff, either through the upheaval of moving, or data from crashed hard drives. Physical and informational tokens can act as triggers for remembrance of past experiences, and it's not nice when you lose those photos, diaries or whatever. On the other hand, going into a store, I am very seldom tempted to buy fancy items. I usually get more joy from my ability to purchase something than actually purchasing it; probably a relic of growing up in poverty. The best purchases have been food, wine, holidays, theatre and art: experiences.
mrtron 16y ago
I moved to Asia for 5 months and found the same thing. I brought a big suitcase full of items, but probably only used a backpack full. I purchased local clothes (for cheap) that were better suited to the climate and everything else was easily replaceable. I also agree investing heavily into a few key items is important. My Macbook was irreplaceable. I wish I spent more on a better camera, it was a good one but I used it enough to justify getting a great one. Now that I am back I realize I have a lot of stuff that is completely unnecessary. It is surprisingly difficult to get rid of, but I am donating it in chunks.

jtbigwoo 16y ago

Somebody has to own the stuff you're renting. If I'm a renter I'm just passing along the responsibility to someone else. If the vast majority of us are renters rather than owners, who has incentive to do any maintenance or improvement? The landlord and her employees will do the minimum cosmetic fixes to keep rents increasing. The residents have no reason to keep the place nice--they can just move on. This article is not an indictment of our disposable culture. It's an amplification of that culture to encompass our whole lives. Look, I think we fill our lives with too much stuff, but refusing to take an ownership stake in housing, transportation, etc. will lead to worse outcomes, not better.

cjy 16y ago
"If the vast majority of us are renters rather than owners, who has incentive to do any maintenance or improvement?" This doesn't make sense. The remaining owners will still compete for renters. If my landlord does a bad job, I will find a better landlord. In fact, you can argue that concentrating ownership makes maintenance more efficient. My landlord has much more experience at plumbing, painting, installing appliances etc. than I ever would.
- fr0sty 16y ago
  Renting introduces a Principal-Agent problem[1] because the owner's incentives are not entirely in line with yours. Maximum profit is realized by doing the minimum amount of repairs necessary to keep people from moving out. Switching apartments is not free (in time, money or effort) so the bar a landlord has to clear is only 'not bad enough to leave'. I doubt homeowners would choose the same standard. [1] http://en.wikipedia.org/wiki/Principal-agent_problem http://en.wikipedia.org/wiki/Principal-agent_problem
  - potatolicious 16y ago
    Your logic is sound, but my observation in reality does not match. There are slumlords - but that's usually caused by a compression in supply (e.g., when I was in college, any place near school had notorious landlords). When supply is open though, everything works out. You have your uber-cheap rentals where nothing will ever get fixed, and then you have your more premium rentals where they'll turnaround a stove in 24 hours or less. Like all markets, a low-end and high-end are established and work just peachy. Of course, this is not geographically true everywhere - especially when you introduce artificial supply and demand factors (rent control, anyone?).

erikstarck 16y ago

I think this news item from yesterday is related: http://www.calculatedriskblog.com/2010/11/ny-fed-continued-decline-in-consumer.html http://www.calculatedriskblog.com/2010/11/ny-fed-continued-d... "Since its peak in the third quarter of 2008, nearly $1 trillion has been shaved from outstanding consumer debts." "So are consumers becoming more frugal? Yes. Holding aside defaults, they are indeed reducing their debts at a pace not seen over the last ten years." Looks like we're moving from a loan-and-own economy to an age of access, where you only pay for access to stuff (aka "rent"). I can only go as far as to my self. I don't buy CDs anymore, I pay for access to Spotify. I don't buy books anymore, I pay for access to an ebook on my Kindle (although it's a one time fee). I don't buy DVDs, I pay to get access to an online stream. And so forth.

aelaguiz 16y ago

This article mirrors an implicit assumption that I see in a lot of these anti-materialist articles - that being that accumulation is the desired result of the undesired (and presumably unfulfilling), all dreaded, "work." For some of us accumulation of material possessions is a welcome side effect of a highly fulfilling passion which is "work." When I say work I say it with a prideful passion in my voice, not with disdain at the damned capitalists for forcing me into this materialist trap. I love my work first, but the car is nice too. Perhaps the author just needs to find some purpose.

karjaluoto 16y ago
I'm quite convinced I have found some purpose. For that matter, I quite like my work. What concerns me is the idea that so many feel they need to own something, in order to enjoy it.
- aelaguiz 16y ago
  I think that class of people is attempting to fill a void in their life with possessions, but that doesn't imply that all or even most ownership is unhealthy/bad. If you are buying things to find fulfillment you might as well eat the money, but if you are fulfilled and buying things (responsibly) - I applaud you.

klochner 16y ago

It strikes me that choosing to rent over owning is the antithesis to the theme of "Zen and the Art of Motorcycle Maintenance" (recommended book). The driving metaphor comes from the contrast between (effectively) renting a BMW motorcycle (since they are hard to repair), and owning a simpler model that can be maintained by oneself. The stated benefit is greater autonomy and satisfaction derived through taking ownership and solving one's own problems - a more classical approach to life. Rather than taking a "fix this for me" attitude, you see the world as something that you have control over. Personally, I've found it very satisfying every time I'm able to repair something in my car, which I've owned for 8 years.

mjschultz 16y ago
I absolutely agree with the satisfaction of repairing something yourself. In fact, I think even having the choice of either repairing it myself or hiring someone I deem competent to repair it is a worthwhile difference. When I was an apartment dweller, I signed a 1 year contract and they kept telling me that if anything breaks call them. That included windows, pipes, stoves, refrigerators, and light bulbs. I wasn't even supposed to change a light bulb if it burned out on me. Admittedly this is only one experience with what I hope was a very poor renting operation, but they owned all the buildings in the vicinity. I was so happy when I replaced my kitchen sink faucet on my own and in a way that satisfied what I wanted.
- theBobMcCormick 16y ago
  Wait until you've done it enough times. As someone who's owned his own home for about 16 years, I'd be quite happy if I never had to replace a faucet, fix hail damaged siding, clean a gutter, etc. again. I look at it as one of the "necessary" evils of home ownership.
  - mjschultz 16y ago
    Perhaps, right now I'm in a condo so I still don't have to worry about most of those things. But I still think just having a choice between hiring someone competent and doing it myself is a nice one. I stress competent because my previous landlord(s) were less than able to fix things beyond the superficial problems. Their goal is to strike a balance somewhere between quality and ability to stop complaints. Usually the choice fell one one side of the ability to stop complaints side. (Fix it so it works, not so it works well, i.e. replace broken washing machine with cheap almost broken washing machine.)

icefox 16y ago

I know that there is just _way_ too much profit in the monthly payments, but a car company that somehow forced you to pay in cash woudl quickly create a status symbol for itself.

S_A_P 16y ago

I generally like the idea that we should take some time to assess what is important in life. I dont, however think there is a one size fits all answer to what we should own and what we should rent, or how we should spend our money. I have read posts similar to this before, and they can seem to smack of some sense of condescension. I sense a bit at the end with the Louis Vutton/BMW comments. Like I said, it is great to encourage others to evaluate what is a need vs a want, but I dont necessarily think something should be considered a cage just because it is purchased or unnecessary for life.

jleyank 16y ago

Having lost money on 3 of the 4 houses we've owned, I can confidently state that if you can't see staying in the same house when switching jobs you're better off renting. Houses might be "investments you can live in", but they are a long-term investment. The US favors home ownership, but that is not the case, say, in Canada. Do the math, and see which investment provides the better return for your time window. But invest it somewhere...

theBobMcCormick 16y ago

It's rather interesting and jarring to me to see how many of the reply's in this thread are so aggressively defensive of the very idea that owning more stuff might not always be better than not owning more stuff. I've been watching a marathon of back episodes of "Hoarders" (http://www.aetv.com/hoarders/index.jsp http://www.aetv.com/hoarders/index.jsp) on NetFlix streaming, and it's somewhat startling to me how much some of the replies here sound like the defensive responses of some of the hoarders in the show.

pyre 16y ago
I think that these threads always end up being more about ideology than hard facts. There are a lot of people that enjoy not being 'tied down' and being 'free and easy,' which things like 'having kids' or 'owning a house' tend to prevent. It then becomes more of a decision to pursue a particular lifestyle than anything else. That said, the reaction of the people on Hoarders tend to be defensive reactions due to not wanting to deal with the issue at hand (i.e. extreme procrastination). Which is probably why most of them pick up their hoarding habits after the loss of a close loved one (usually a parent). They don't want to deal with the loss, so they are constantly pushing it away, and not dealing with it. {edit} This tends to bleeding into everything else in their lives. They live for the momentary thrill of acquiring things, while not bothering with 'the boring stuff' like cleaning their house, or sorting their acquired items, or even deciding which items are/aren't worthless.
sliverstorm 16y ago
These articles go to an extreme; just because I don't want to rent everything I've got, doesn't mean I am a stuff-o-holic. I have a very hefty anchor back home- a ~50lb toolbox. By the wisdom of HN articles, that should be the first thing out my door, but it enables me to maintain my motorcycles. Why do I maintain my own motorcycles? Because an oil change costs $20 and 20 minutes when I do it, but $100 and an hour or three when the dealer does it.

seanc 16y ago

People buy things for all kinds of reasons that aren't discussed in the article. Convenience! For me this is a prime motivator. I have sufficient demands on my time that added expense of owning a car is worth the 20 minutes it would take to access the closest virtu-car, and the 90 minutes I save every day driving in stead of busing. I have enough space in my house for cold storage and a freezer. This means I can buy food in bulk and don't have to go to store as often. Security! Landlords kick tenants out out now and then. Rents can go up all of a sudden. My family rented for a long time when I was a kid, and we got booted out of several houses when the landlord decided not to renew to lease for one reason or another; wanted to give the house to a relative, wanted a pile more rent, et. cet. Agency! For some people home improvement and 'puttering around the house' is a big source of pleasure and recreation. Many people express themselves with the work of their hands, and owning tools and infrastructure to build things and so forth is important too them. Finally, NRP's planet money has a great blog about the issue of buying vs. renting housing: http://www.npr.org/blogs/money/2010/11/05/131105373/the-friday-podcast-finally-an-apology#more http://www.npr.org/blogs/money/2010/11/05/131105373/the-frid... tl;dr: this is about way more than money. It's about personal value choices

lutorm 16y ago
The "security" aspect goes both ways. Owing money, which the vast majority of us will if we want to buy a house, is one of the principal insecurities of life. Given the current status of the housing market, that should be obvious to everyone. Being forced to move out of your rented home seems a lot less severe than having the bank foreclose on your "owned" home.
- seanc 16y ago
  Debt is only an insecurity if your income is insecure. A renter with a long term lease holds just as much obligation as a home owner as far as that goes. I would say that the risk of getting the boot from your rented dwelling is much larger than the risk of getting foreclosed. The risks associated with foreclosure can be mitigated to some extent by the homeowner. Management of cash flow, pursuit of income security, adequate savings, all of these things are in the homeowners domain. Many many homeowners have secure incomes and live with extremely small foreclosure risk. A renter can see the building sold out from under him and be out on his ear no matter what he does. The bottom line is that this stuff leaves the realm of objective mathematical truth and enters personal risk profile and values very, very quickly. For some, income will have wide error bars and they need lots of flexibility. Someone else might have union seniority in a government job and be able to predict their income for the next twenty years.

ulysses 16y ago

In SunDog, you'd start out without much cash, but you also started with a spaceship. Now, in order to keep the spaceship you had to fulfill a contract. To fulfill that contract, you had to make money to keep the ship going, and you had to explore a bunch of planets. The spaceship was reasonably roomy, could land on planets, and had a large all-terrain vehicle for exploring the surface and bringing back cargo. I could see not needing an apartment, if I had an FTL spaceship like that.

teamonkey 16y ago
The same was true in Elite. In Elite II you inherited (tax free) from a recently-deceased relative 100 credits plus an Eagle starship. Despite the game's apparent freedom, it only gives you one option - to take the ship and go. You can't, for example, sell the expensive space ship, re-invest it into the fish processing plant you work in and use the proceeds to live like a king on the poverty-stricken planet.

mlok 16y ago

There is an interesting video from Khan Academy related to this: "The math of renting vs. buying a home. Challenging the notion that it is always better to buy." http://www.khanacademy.org/video/renting-vs--buying-a-home?playlist=Finance http://www.khanacademy.org/video/renting-vs--buying-a-home?p...

theBobMcCormick 16y ago
That's interesting to see it actually analyzed by someone with Mr. Khan's math skills. Not to mention the spreadsheet liked to from the 3rd video in the renting-vs-buying looks like it be a useful tool for running the comparison in your own local market/circumstances.

brc 16y ago

I'd just like to post that I agree with the comment from 'Russ' in the article. This article is a one-sided exploration of the buy-vs-rent debate. It doesn't explore all of the emotional connotations of owning something durable, and overweights certain experiences from the point of view of the author, when this cannot possible apply to a population of people. Finally, as Russ comments - it's wrong to sneer at the purchase of a handbag or BMW - the person might be spending their money on a combination of quality product and brand, but once you start getting into the argument of purchasing x is right, and purchasing y is wrong- you're arguing simply from a relative point of view. As long as the transaction was not done under duress, where is the problem? My neighbour spends all his money on sailing. I find it a waste of money, but he clearly gets enjoyment from it. Who is right? Is it remotely possible for me to suggest that buying a sailboat is wrong? Wrong to who? As compared to what? Free choices are just that. Owning a house in a falling market may seem like a foolish position, and for many, perhaps it is. But that goes to assume that the person owning a house does it for purely financial reasons, which, again, is wrong. Another neighbour of mine is an old lady in her 80's who owns her house and lives by herself. By any object measure she'd be better off selling the house and both investing and spending the considerable cash that would generate. But she enjoys her garden and the memories of a house that once contained her husband and family over the span of 40 years. Is she wrong to hold this position? Financially perhaps, but perhaps the currency aspect means very little to her in comparison with pleasure of her little piece of land with a house on it. She could sell her house, rent a nice retirement apartment and afford a around-the-world cruise. A rental-is-best mindset would recommend this view. How can I tell her she is wrong and someone else is right?

karjaluoto 16y ago

I'd really encourage anyone interested in this discussion to read this comment: http://bit.ly/adXv1l http://bit.ly/adXv1l I believe it gets a little closer to the heart of what I was working to convey--particularly as the discussion seemed to later spiral into a primarily financial one.

henryw 16y ago

my favorite part of the article: Few of us want to die, as evidenced by such statements as, “if I die…” (like there’s some possibility of an alternative). I hate to break it to you, but the only real variables are how and when. Other than that, we’re probably best to accept that you and I are both just toast. I find a kind of liberty in this knowledge. In fact, it suggests that most of the things I fret over are largely inconsequential, and that I shouldn’t squander these moments.