http://www.1stMillionAt33.com/2006/06/is-throwing-away-rent-money-stupid/ A site to share my tips, tools, and humble thoughts on the journey to wealth Sun, 14 Mar 2010 05:25:38 -0700 http://wordpress.org/?v=2.8.5 hourly 1 http://www.1stMillionAt33.com/2006/06/is-throwing-away-rent-money-stupid/comment-page-1/#comment-279 frugal Tue, 06 Jun 2006 22:09:01 +0000 http://www.1stMillionAt33.com/2006/06/is-throwing-away-rent-money-stupid/#comment-279 As I have explained, you must compare apple to apple. So in the case of 100% ownership, whether you paid all cash, or you paid down all mortgages after 10 or 30 years, you should calculate the case for rent and the case for home ownership using exactly the SAME TOTAL NETWORTH. So if you own your home 100%, then you must assume that in the case of renting, you also have the same amount of networth available for you to invest, and therefore generating investment returns. The bottom line is for both cases, you MUST start with the same networth number. Otherwise, if you begin with $0 in bank for the case of rent, and $500,000 paid down or in home equity for the case of owning the home, then your starting point of comparison is already off by $500,000. As I have explained, you must compare apple to apple. So in the case of 100% ownership, whether you paid all cash, or you paid down all mortgages after 10 or 30 years, you should calculate the case for rent and the case for home ownership using exactly the SAME TOTAL NETWORTH. So if you own your home 100%, then you must assume that in the case of renting, you also have the same amount of networth available for you to invest, and therefore generating investment returns.
The bottom line is for both cases, you MUST start with the same networth number. Otherwise, if you begin with $0 in bank for the case of rent, and $500,000 paid down or in home equity for the case of owning the home, then your starting point of comparison is already off by $500,000.

]]> http://www.1stMillionAt33.com/2006/06/is-throwing-away-rent-money-stupid/comment-page-1/#comment-277 bacon Tue, 06 Jun 2006 21:16:32 +0000 http://www.1stMillionAt33.com/2006/06/is-throwing-away-rent-money-stupid/#comment-277 What about the monthly payment/rent you are not paying when you have 100% ownership? That's your interest right there. What about the monthly payment/rent you are not paying when you have 100% ownership? That’s your interest right there.

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