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"What we need to be encouraging isn't equity, home ownership, or income in any traditional sense. We spend too much time chasing silly things like SBA loans and
by pmorici 16y ago
"What we need to be encouraging isn't equity, home ownership, or income in any traditional sense. We spend too much time chasing silly things like SBA loans and home ownership/net worth pumping.
Social welfare isn't necessarily the answer, instead we need to encourage savings and stop incentivizing actions that increase their risk profile."
I think he is missing his own point. He says people are to fixated on "net worth pumping" but then advocates "savings" as the appropriate metric. Increasing savings is equal to increasing net worth by definition.
What he is really arguing against is crappy investment advice, which is what buying a house with an interest only loan is. It's speculating on housing prices and probably the only way a poor person could invest with such extreme leverage. In other words this post could be boiled down to saving, not gambling is the surest way to increase ones net worth.
- alnayyir 16y agoHome ownership doesn't assist in establishing fiscal stability. It's a symptom of financial health, not a cause. At best, it's an affectation in the absence of investment properties. Savings for the purpose of establishing flexibility and stability is more important. The fact that it happens to increase net worth is immaterial. Giving them a CD they couldn't touch would increase their net worth without improving their circumstances. You can't leap to telling people that buying a house is gambling. They won't understand it and they'll reject the statement out of hand because you didn't build them up to that conclusion. That's what my post was doing. You write/live/travel/socialize/eat/drive/ride/swim/bike/code/dream/learn/read/play for the journey, not for the pithy conclusion.