tag:blogger.com,1999:blog-5465015914589377788.post3911943334201858087..comments2024-02-17T11:07:06.232-05:00Comments on Michael James on Money: It’s Time that Renting Got a Little RespectMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-5465015914589377788.post-51276245604609679392014-01-20T01:28:28.442-05:002014-01-20T01:28:28.442-05:00Good information.Good information.Anonymoushttps://www.blogger.com/profile/18248263754044359720noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-32338466784995047652014-01-14T15:49:45.443-05:002014-01-14T15:49:45.443-05:00@Anonymous: 45% is an impressive saving rate. Eve...@Anonymous: 45% is an impressive saving rate. Even if you weren't single, you might choose to rent a house instead of buying one. Of course, the higher rent would mean that you'd probably save only 30% of your salary :-) Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-56134164985823050062014-01-14T15:32:49.712-05:002014-01-14T15:32:49.712-05:00I'm always so happy to see an article that doe...I'm always so happy to see an article that doesn't glorify home ownership. I think owning a house can be a great thing, but it isn't always.<br /><br />For me, renting has always made more sense financially. I'm single, I now have an elderly parent living with me. The two bedroom apartment is cheaper, and when I need to move to a more accessible place, it's as easy as giving a month's notice. No renovations, no selling an old house to afford a new one. I can just move. If I lose my job, I can move to a cheaper apartment. In an economy where you can become unemployed at any time, that freedom is priceless.<br /><br />(I save 45% of my salary, lest you think I am young and slacking ;) )Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-52451581464081500402014-01-09T22:24:33.223-05:002014-01-09T22:24:33.223-05:00@Richard: I saw Hallam's article. I like it a...@Richard: I saw Hallam's article. I like it a lot. I intend to see if my sons find it convincing. Any return above inflation is free money.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-51366810741695116432014-01-09T21:11:28.073-05:002014-01-09T21:11:28.073-05:00I'm not sure what could make the alternatives ...I'm not sure what could make the alternatives look convincing. Maybe the best way is to explain the long-term benefits of investing in the same way that Andrew Hallam outlined: http://www.theglobeandmail.com/globe-investor/investment-ideas/strategy-lab/index-investing/a-three-step-plan-for-turning-your-child-into-a-saver/article16117603/. Although many people just aren't interested in saving I could see his arguments being very effective.Richardnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-53338245731410650482014-01-09T10:19:23.661-05:002014-01-09T10:19:23.661-05:00@Richard: That's an interesting observation. ...@Richard: That's an interesting observation. My older son is definitely in a hurry to grow up. I'd hate to think that he'd saddle himself with an enormous mortgage just to feel more grown up.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-84912023434011702562014-01-09T10:15:09.110-05:002014-01-09T10:15:09.110-05:00Another new development may be influencing this: t...Another new development may be influencing this: the common effect that's known as "extended adolescence". When many people in their 20s and even 30s have so few external signs of having successfully become independent, they may feel that buying a house is a way to show that they can do it since that is a traditional step to adulthood. Never mind that they didn't save up a 25% down payment, pay an interest rate over 15%, or pay off their mortgage in 5 years like people once expected to do!<br /><br />Just like leasing a BMW or paying for frequent vacations on a credit card, the reality may not be anywhere near the image. That large gap could be an incentive for people to make a decision they can barely afford so they get less pressure to do other things. I've certainly gotten some predictable reactions at times since I do the opposite. Ironically it takes a strong sense of independence to ignore those comments and questions and carry on with my plan to increase long-term wealth.Richardnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-44122287639419048232014-01-07T11:07:37.014-05:002014-01-07T11:07:37.014-05:00The following comment from Greg seemed to get lost...The following comment from Greg seemed to get lost:<br /><br />"Good point, renting is the smarter thing to do these days especially if you are young. I recommend saving the same amount as paid in federal/provincial tax. Thats around 20% up to $50k/year or so, then goes up. Kind of an automatic way to enforce discipline and limit lifestyle creep. "<br /><br />Matching savings to taxes is an interesting idea. By the time you get near the top tax brackets (near 50%), you get almost no additional money to spend from a raise.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-53089849239328958552014-01-07T10:51:13.047-05:002014-01-07T10:51:13.047-05:00@AnatoliN: Owning a house is a combination of an i...@AnatoliN: Owning a house is a combination of an investment and a lifestyle. As I said, the investment side looks poor right now. So people need to decide how much they're willing to pay for the lifestyle. My main point is that you can capture at least some of the desired lifestyle by renting a nice house and investing the saved cash flow.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-91130973420482940022014-01-07T09:55:18.707-05:002014-01-07T09:55:18.707-05:00Good point, renting is the smarter thing to do the...Good point, renting is the smarter thing to do these days especially if you are young. I recommend saving the same amount as paid in federal/provincial tax. Thats around 20% up to $50k/year or so, then goes up. Kind of an automatic way to enforce discipline and limit lifestyle creep. Gregnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-79819442264912690322014-01-07T09:48:37.449-05:002014-01-07T09:48:37.449-05:00Michael, I am very surprised with your subdued con...Michael, I am very surprised with your subdued considerations regarding renting vs owning. Financially, buying a house is just an investment. As such, it makes investment portfolio very inclined towards real estate for majority of Canadians. What makes it even worse is that this particular investment is highly leveraged. Would you recommend to borrow a tremendous amount of money to invest into one security, which comes with very high MER (maintenance, repairs, taxes, car ownership and driving)? I somehow doubt it :)<br />House ownership is an installed social fashion and a lousy investment move, imho. AnatoliNhttps://www.blogger.com/profile/07937984526970646627noreply@blogger.com