6 ms·

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

by 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.
- sosuke 16y ago
  Expecting to receive inheritance is not something you can do when your born but planning to leave equity is absolutely something that can be done. I'd rather give my children a small boost than nothing at all. Doing something like home ownership can give you something to pass along and something to enjoy too!
  - theBobMcCormick 16y ago
    Now don't get me wrong, if you can leave your kids a payed off house, that's awesome. Even better if you can leave them with something a little more liquid (some stocks, mutual funds, etc). But for me, the most important thing I want to leave my kids with is experiences. I hope they'll have lots of great memories of time we spent together, trips we took together, things we learned together, etc.
fr0sty 16y ago
There are people who have an opposition to 'dynastic wealth' and would very much prefer there to be no inheritances or for them to be massively taxed. I don't agree in the least. I also don't buy the radical minimalism/anti-ownership ethic either. Being so independent of things makes you in turn totally dependent on merchants who provide the things you want or need. I'm with Heinlein: 'specialization is for insects.' edit: formatting
- theBobMcCormick 16y ago
  I'm with Chuck Palahniuk: "The thing you own, end up owning you". :-)
- fr0sty 16y ago
  I can't edit the parent any more, but I wanted to add a citation: One of the 'people' in opposition is Warren Buffet[1]: > "Dynastic wealth, the enemy of a meritocracy, is on the rise. Equality of opportunity has been on the decline," Buffett said. "A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy." [1] http://www.reuters.com/article/idUSN1442383020071114 http://www.reuters.com/article/idUSN1442383020071114
gte910h 16y ago
If your children are dependent or semi dependent, aka, college, you should have term life insurance for the period of your life to make sure the expenses you planned on covering for them are covered. The education you provide your children should start them far from 0. Actual inherited wealth of a vast sum nature is rarely a good thing for character, and often is counterproductive at making good humans. Additionally, if it's actually inherited, they don't get it until their late 40s, 50s, 60s or 70s with modern lifespans of those rich enough to get constant good medical treatment. Additionally the pandering nature that can make relationships in the later years of a parents life who has money is not always the healthiest thing to inject into family life.
- fennecfoxen 16y ago
  Human capital: one of the most effective investments you can make.
karjaluoto 16y ago
I'm not proposing leaving nothing to one's children. Instead, I'm asking readers to consider the merits of both renting and owning and choosing what fits for them. Admittedly, I have positioned my argument strongly from a renter's perspective, as I believe the "default setting" is heavily skewed toward ownership. Fact of the matter is that many of us believe we need to own everything, when many things can be rented more economically and fruitfully (e.g. car co-op versus car ownership).
- potatolicious 16y ago
  +1 on the car co-op vs. car ownership thing. Home ownership is less clear-cut since homes tend to preserve their value well (not as well as we've thought, though!), so it's realistic to leave something of substantial value behind. Cars though, cars are 100% consumable. There's not a lick of persistent value behind them. Personally, I'm avoiding the car ownership pitfall for as long as humanly possible, but in this country that's not indefinitely. It's a gigantic money sink - one that most people I grew up with don't even realize, since they bought their cars along with their first jobs. They've never done a budget without their car being in the mix, to them this $1K+ per month expenditure is perfectly normal and unavoidable. A necessity of life.
  - ekidd 16y ago
    How do you spend $1K+/month on a car? I've known a few people who pay that much, but they were trying to insure a sports car below the age of 25. Buy a simple used car in good shape, with 30K-60K miles on it. This will cost $7-12,000, and last for at least 8 years with a bit of maintenance. Figure $60-150/month for gas, $100/month for car insurance, and you're still in the area of $350/month. Add a few hundred per year for tires and repairs. When the repair bill reaches $100/month, buy another used car. Buying a new car, a fancy car, or a car with poor gas mileage will make these numbers much worse, of course.
    - potatolicious 16y ago
      I pulled that number from my cubemate, who's picking up a used Camry (relatively recent, '07-'08)... because apparently you can't get married unless you own a car. $1K is payment + maint + insurance + gas. Hell, I've gone over my parents' finances and that's roughly in line with how much they shell out for their cars (note: Mazdas and Toyotas, nothing fancy). Around where I grew up, unless you're driving a junker, $1K a month is pretty easy to hit (last I checked, my parents with their perfect driving record are doing ~$250 on insurance alone).
dolinsky 16y ago
> If you never save and always rent I see that as a red herring. The key if you are going to rent is to save the difference between what your rent is and what your mortgage + other costs of ownership would be and put that capital to work for you through other investment vehicles. In America there is this convoluted idea that 'everyone should own a home'. It's a ridiculous premise and should be nothing more than a pipe dream for many people who do currently own a mortgage on a home. http://www.nytimes.com/interactive/business/buy-rent-calculator.html http://www.nytimes.com/interactive/business/buy-rent-calcula...
- fennecfoxen 16y ago
  Yeah. The problem with housing is that people are told "the house is an investment". Houses are lousy places to grow capital. Their primary method of generating a meaningful return on your investment is the imputed rent. But you have to consume the imputed rent immediately. Some spending on housing is inevitable, and some is just consumption. Investing in a house to secure the former is responsible; the latter is luxury and irresponsible if you can't afford it. Also, people underprice issues like maintenance and risks as a matter of routine.
theBobMcCormick 16y ago
If you want to leave them equity, why not leave it to them in stocks, mutual funds, etc. instead of a house?

by sosuke 16y ago

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.

sosuke 16y ago
Expecting to receive inheritance is not something you can do when your born but planning to leave equity is absolutely something that can be done. I'd rather give my children a small boost than nothing at all. Doing something like home ownership can give you something to pass along and something to enjoy too!
- theBobMcCormick 16y ago
  Now don't get me wrong, if you can leave your kids a payed off house, that's awesome. Even better if you can leave them with something a little more liquid (some stocks, mutual funds, etc). But for me, the most important thing I want to leave my kids with is experiences. I hope they'll have lots of great memories of time we spent together, trips we took together, things we learned together, etc.

fr0sty 16y ago

There are people who have an opposition to 'dynastic wealth' and would very much prefer there to be no inheritances or for them to be massively taxed. I don't agree in the least. I also don't buy the radical minimalism/anti-ownership ethic either. Being so independent of things makes you in turn totally dependent on merchants who provide the things you want or need. I'm with Heinlein: 'specialization is for insects.' edit: formatting

theBobMcCormick 16y ago
I'm with Chuck Palahniuk: "The thing you own, end up owning you". :-)
fr0sty 16y ago
I can't edit the parent any more, but I wanted to add a citation: One of the 'people' in opposition is Warren Buffet[1]: > "Dynastic wealth, the enemy of a meritocracy, is on the rise. Equality of opportunity has been on the decline," Buffett said. "A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy." [1] http://www.reuters.com/article/idUSN1442383020071114 http://www.reuters.com/article/idUSN1442383020071114

gte910h 16y ago

If your children are dependent or semi dependent, aka, college, you should have term life insurance for the period of your life to make sure the expenses you planned on covering for them are covered. The education you provide your children should start them far from 0. Actual inherited wealth of a vast sum nature is rarely a good thing for character, and often is counterproductive at making good humans. Additionally, if it's actually inherited, they don't get it until their late 40s, 50s, 60s or 70s with modern lifespans of those rich enough to get constant good medical treatment. Additionally the pandering nature that can make relationships in the later years of a parents life who has money is not always the healthiest thing to inject into family life.

fennecfoxen 16y ago
Human capital: one of the most effective investments you can make.

karjaluoto 16y ago

I'm not proposing leaving nothing to one's children. Instead, I'm asking readers to consider the merits of both renting and owning and choosing what fits for them. Admittedly, I have positioned my argument strongly from a renter's perspective, as I believe the "default setting" is heavily skewed toward ownership. Fact of the matter is that many of us believe we need to own everything, when many things can be rented more economically and fruitfully (e.g. car co-op versus car ownership).

potatolicious 16y ago
+1 on the car co-op vs. car ownership thing. Home ownership is less clear-cut since homes tend to preserve their value well (not as well as we've thought, though!), so it's realistic to leave something of substantial value behind. Cars though, cars are 100% consumable. There's not a lick of persistent value behind them. Personally, I'm avoiding the car ownership pitfall for as long as humanly possible, but in this country that's not indefinitely. It's a gigantic money sink - one that most people I grew up with don't even realize, since they bought their cars along with their first jobs. They've never done a budget without their car being in the mix, to them this $1K+ per month expenditure is perfectly normal and unavoidable. A necessity of life.
- ekidd 16y ago
  How do you spend $1K+/month on a car? I've known a few people who pay that much, but they were trying to insure a sports car below the age of 25. Buy a simple used car in good shape, with 30K-60K miles on it. This will cost $7-12,000, and last for at least 8 years with a bit of maintenance. Figure $60-150/month for gas, $100/month for car insurance, and you're still in the area of $350/month. Add a few hundred per year for tires and repairs. When the repair bill reaches $100/month, buy another used car. Buying a new car, a fancy car, or a car with poor gas mileage will make these numbers much worse, of course.
  - potatolicious 16y ago
    I pulled that number from my cubemate, who's picking up a used Camry (relatively recent, '07-'08)... because apparently you can't get married unless you own a car. $1K is payment + maint + insurance + gas. Hell, I've gone over my parents' finances and that's roughly in line with how much they shell out for their cars (note: Mazdas and Toyotas, nothing fancy). Around where I grew up, unless you're driving a junker, $1K a month is pretty easy to hit (last I checked, my parents with their perfect driving record are doing ~$250 on insurance alone).

dolinsky 16y ago

> If you never save and always rent I see that as a red herring. The key if you are going to rent is to save the difference between what your rent is and what your mortgage + other costs of ownership would be and put that capital to work for you through other investment vehicles. In America there is this convoluted idea that 'everyone should own a home'. It's a ridiculous premise and should be nothing more than a pipe dream for many people who do currently own a mortgage on a home. http://www.nytimes.com/interactive/business/buy-rent-calculator.html http://www.nytimes.com/interactive/business/buy-rent-calcula...

fennecfoxen 16y ago
Yeah. The problem with housing is that people are told "the house is an investment". Houses are lousy places to grow capital. Their primary method of generating a meaningful return on your investment is the imputed rent. But you have to consume the imputed rent immediately. Some spending on housing is inevitable, and some is just consumption. Investing in a house to secure the former is responsible; the latter is luxury and irresponsible if you can't afford it. Also, people underprice issues like maintenance and risks as a matter of routine.

theBobMcCormick 16y ago

If you want to leave them equity, why not leave it to them in stocks, mutual funds, etc. instead of a house?