海角大神

A while back, I ran across this brilliant quote from Sam Lipsyte鈥檚 2010 novel, :

She was from the people who kept everything. I was from the people who rented some of everything for brief amounts of time. I knew I deserved no pity, would get none from the people who kept everything. They only pitied the people with nothing at all.

Setting aside the political undertones of what he鈥檚 writing here, I thought the analogy of the financially secure 鈥減eople who kept everything鈥� and the financially unstable 鈥減eople who rented some of everything for brief amounts of time鈥� was an interesting comparison.

Think about this in terms of car ownership.

One person buys a late model used car, paying cash. They save a little each month for the next late model used car purchase, and when their current car stops working well, they replace it, buying a new late model used car, paying cash.

Another person also buys late model used cars, but they take out a loan for it, preferably the longest possible term loan so the monthly payments are as small as possible. By the time the loan is over with, there鈥檚 only a year or two before they鈥檙e looking to trade off that late model used car for another one, taking out a loan for it, preferably the longest possible term loan.

One person 鈥渨ho kept everything,鈥� one person 鈥渨ho rented some of everything.鈥�

You can do the same thing in terms of home ownership.

One person buys a very inexpensive home, paying the largest down payment possible. They pay off that home as quickly as possible while dumping time and effort into refurbishing that home. They continue to save, then in a few years, they sell their home and pay cash for the remainder of the cost of a much nicer home.

Another person rents an apartment for years, then makes a small down payment on a much nicer home, also picking up a thirty year mortgage in the process.

One person 鈥渨ho kept everything,鈥� one person 鈥渨ho rented some of everything.鈥�

Are you going to be a person 鈥渨ho kept everything鈥� or a person who 鈥渞ented some of everything鈥�?

The philosophy of ownership versus the philosophy of indebtedness.

The catch, for most people, is that sticking to the philosophy of ownership requires going without some things for now, while the philosophy of indebtedness lets you sacrifice some of the future to have those things now. Over the long run, though, the philosophy of indebtedness drains you. It gives you a pile of monthly bills, restricting your career and personal choices. It ends up depleting your net worth.

The philosophy of ownership, on the other hand, means that interest works in your favor. It means fewer monthly bills and thus more career and personal freedom. It means you have much more control over buying and selling the things in your life, and it means that you have little worry of things being taken away from you if you can鈥檛 pay the bills.

The choice is up to you, and you make it with almost every financial transaction.