Monday, July 30, 2007

"Every Penny Counts...when you have Ten Million"

News flash...buying a home requires saving money! And you, too, can one day own a New York City apartment all by yourself, if you make "a combined salary of just over $100,000," "less than $100,000," or even just "$85,000"!
Talk about middle class success stories.

2 comments:

Marky Marc said...

Middle class success? Is that what it means to devote all of your money to a debt box?

I would argue strongly that this is not success. This kind of home ownership is not a goal worth pursuing.

It sounds like Janey and Pablo have to sacrifice almost everything for their home. Most alarming was the idea that they spend less time with friends.

Is this really the goal? To go to college, work as hard as possible, just so you can sit in your house in your old clothes, never see friends, never go on vacation, never buy yourself a treat, never go out to eat...just so you can "own" your home? What happened to the pleasures of life?

And let's talk about "ownership" for a second. Janey and Pablo don't "own" a damn thing. The bank owns their home, and the bank is their landlord. Not only that, but did you know that people who have 30-year mortgages build hardly any equity in the first 5 - 10 years?

I did some calculations and discovered that, on a $350k mortgage, after tax deductions and maintenance payments, Janey and Pablo will pay approx $2500 a month. And, again, they will build hardly any equity for the first 5 - 10 years. Oh, and they also won't be able to invest their $90k downpayment either. They could have earned at least 5%, or $4,500 per year, just on that downpayment. So this place may be costing them $3,000 per month. And don't forget all of the fees they must pay to both buy and sell: lawyer, closing costs, co-op fees like flip taxes, bank fees, 6% realtor commission when they sell, etc.

Could you imagine how much more they might enjoy their lives if they could have found a rental for less than the $2500 - $3000 in Hamilton Heights? There's gotta be a similar rental there for $2,000 per month, right??

Don't fall for the "home ownership" brainwash mentality. It's great under certain circumstances, and horrible under others. This is the mentality that caused the bubble we're dealing with now.

Colleen said...

Oy...Don't I know it. Hey, I'm 33 and have like $1,000 saved up! I hope it's enough for the U-Haul when I move out of this super-affordable real estate market in two weeks!
Thanks for commenting. I've been throwing as much cash as I can at my credit card debt for years and it never seems to get much smaller, even when I keep switching to ones with 0% APR. I've been meaning to check out your book.