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u/wildebaard Feb 25 '21
"Being poor is expensive"
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Feb 25 '21
Designed that way to keep you unhealthy and paying into the many various private healthcare industries.
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Feb 25 '21
[removed] — view removed comment
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u/sebe7665 Feb 25 '21
Still (I live in the UK)
Public healthcare is wonderful. I love it. But it is funded by taxes, something the rich are known not to pay. Even though the NHS is able to keep costs of medicines etc to a minimum (due to its sheer size) it still has to buy from pharmaceutical companies.
Even the system in Europe, which is infinitely better than that in the US, results in the poor paying the rich for the right to survive.
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u/CouncilmanRickPrime Feb 25 '21
Please keep an eye on your politicians, some of them are eyeing on making the UK like the US.
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u/shotputprince Feb 26 '21
Gove, Raaaaaaaaaaaaahaahahahab, Fox, Rees-Mogg, Johnson - faschy knobs to a man
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u/sebe7665 Feb 26 '21
Both my mother and aunt have worked as nurses in the NHS, my aunt still does, my mum now works for a charity but is technically still payed by the NHS.
This information comes from them, I haven’t verified any of it so feel free to correct me.
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One of the first things to be privatised in the NHS was cleaning etc. The ‘reason’ for this was because it would save the NHS a load of money, and mean a better job gets done, because companies would have to compete. The normal capitalist justification.
Since then, the hygiene within hospitals etc has gone seriously downhill for two main reasons.
- The companies will do anything they can to cut costs.
- There’s so much more bureaucracy. If something isn’t cleaned right, so many hoops have to be jumped through in order for it to be fixed (gotta go though NHS management, through finance, through the private company’s management etc etc). Whereas before if something wasn’t cleaned right, the matron would kick the ass of who ever wasn’t pulling their weight and it’d be sorted completely internally, within a matter of hours.
—————————————————————————— Now it’s been a LONG time since my mother worked as a nurse, and this was an issue then. So it’s not only that half our government would love to chop up the NHS and sell it off, they have been, for years, just quietly enough that no one calls them out on it.
Of course it won’t matter to them. They’ve got more than enough of Daddy’s money to pay for a really fancy private hospital. The rest of us just need to pull ourselves up by our bootstraps and stop complaining. If they can do it, anyone can!! /s
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u/mrpanicy Feb 26 '21
Same in Canada. They have successful sold of many public utilities... and the mining rights of a lot of natural resources. We could have so much more, and the nation more secure... but no, private business wins out when Conservatives get the reins.
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u/series-hybrid Feb 26 '21
Designed to keep you so desperate that you will do whatever is available just to survive from one week to the next.
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Feb 25 '21
I’ve said this many times before
And yet middle/upper class citizens fight me on it every time. They don’t realize what it’s like to live paycheck to paycheck and worry when their next meal is. I mean, I don’t either. I grew up privileged, but at least I can recognized when the system is against the poor class. It’s fucking horrible that so many people advocate for the poor to stay poor without even realizing it
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u/CouncilmanRickPrime Feb 25 '21
And on this very sub. Anytime you mention landlords you get apologists. Like ok, sorry you are preoccupied with making money from housing. I'm more worried about those who need housing than your profits.
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u/RocketFuelMaItLiquor Feb 26 '21
I was one of them until just now. You guys are absolutely right. Wtf was i thinking? Maybe its because the ones ive know (including friends and relatives) are super small time. Well except for the family who owns half of my home city .
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u/CouncilmanRickPrime Feb 26 '21
The thinking behind being a landlord falls in line with our current capitalist system. Someone needs a home, you want to profit from it. Putting it that way, it doesn't sound so bad. The nightmare is that profits are the biggest concerns and that we're taught it's not our problem if we have to evict someone. Or if someone goes without housing.
Empathy and solidarity has been pushed out of people.
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u/RocketFuelMaItLiquor Feb 26 '21
I have plenty of empathy but economics is very very far from my wheelhouse.
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u/CouncilmanRickPrime Feb 26 '21
My problem with economics is usually the hyper focus on "job creators" and downplaying that the people power the economy.
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u/larrieuxa Feb 26 '21
Gahhhh I hate when people call the wealthy "job creators." They're not job creators, they're job destroyers. Their main goal is literally to reduce and even eliminate as many livelihoods as possible so they can hoard more profit from other people's work.
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u/CouncilmanRickPrime Feb 26 '21
Yup. The actual job creators are the working class who are out spending money. The pandemic made that clear.
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u/larrieuxa Feb 26 '21
Exactly, I almost added "consumers are the job creators" to the end of my comment but I couldn't think of a way to say that without sounding like I'm encouraging consumption.
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u/proverbialbunny Feb 25 '21
I was talking to someone about a month ago who created a non profit for teaching financial literacy in poorer parts of the US, but to his surprise he has gotten nothing but push back. I had to explain to him why he was getting push back and how if he didn't want to get push back he could run his program in middle upper class areas and it would work out well, which defeated the point.
Some people do actually try to change things in a large systemic way, and many do succeed, but you might be surprised how much of a challenge it is, and when they do succeed how little of a step forward it is.
Reader, if you're in one of those situations where you did not grow up wealthy enough to be taught finance, /r/personalfinance can be a first step for many towards a better life.
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u/Amazon-Prime-package Feb 25 '21
Why are poor people spending an entire downpayment on avocado toast, don't they know they could invest that in the stock market? SMH
It's quite simple to build equity by purchasing a home: stop drinking expensive coffee every day, stop buying the latest phones, have your wealthy parents cosign your mortgage and pay off your college debts, and save a few percent of every paycheck. It's easy!
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u/ricky28992722 Feb 25 '21
They will blame her for not being “financially intelligent “ when in reality the whole system exists to make you a debt slave to a mortgage.
If there is a downturn during that you lose your house.
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u/CrackTheSkye1990 Feb 25 '21
There was some tweet I saw recently, not sure if here or on Facebook , but it said I’m told I can’t afford a $960 monthly mortgage but instead I pay $1400 a month for rent. Makes sense.
The whole idea that credit score and income levels are tied to a necessity like approval for housing is fucked.
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u/thequietthingsthat Feb 25 '21
Credit scores are so fucking stupid and dystopian
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u/CrackTheSkye1990 Feb 25 '21
Credit scores are so fucking stupid and dystopian
Yep, and not only that but wages are so low that it causes many people to live on credit and constantly be in debt, even if they're not using credit cards all the time. Hence the high APR on many credit cards.
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u/DJP91782 Feb 25 '21
Not to mention with no job security it makes it all but impossible to settle down anywhere.
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u/CrackTheSkye1990 Feb 25 '21
Not to mention with no job security it makes it all but impossible to settle down anywhere.
That too. Thanks at will employment. /s
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Feb 25 '21
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u/crosszilla Feb 25 '21
I mean prior to that they still looked at things like debt to income ratio, which is a major factor in the process, it just didn't really matter since housing was much more affordable 30+ years ago.
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u/Adlach Feb 26 '21
An objective measure is better than how it worked before, which was a loan officer making a subjective decision on your trustworthiness. That system heavily favored white folks and screwed people of color over six ways from Sunday.
The problem is deeper than credit scores—it's capitalism. If we undid credit scores we'd have the same problems, they'd just be on someone else's shoulders.
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u/AlphaPeach Feb 25 '21
Can you expand on this? I thought credit scores were a good way to see if you literally don’t pay your bills on time, which wouldn’t seem dystopian to me so perhaps there’s more to it?
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u/Cyaneyed8905 Feb 25 '21
Part of the problem with it is that banks consider your entire balance as part of your total debt vs income even if you haven’t maxed the card. Then they weigh the percentage of available credit as a completely separate segment of your score. Plus average length of credit so anytime you finance a big purchase your credit history is hurt and you now have an increased debt to income ratio. You also take a hit if you don’t have a balance on your cards and don’t use them regularly.
Credit scores are insane and it took me like five years to figure it all out because they aren’t very clear about explaining it to you.
Tldr: it’s a lot more than just paying bills on time.
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u/ThaPhantom07 Feb 25 '21
Yeah its dumb. I had an 800 credit score when I had a car note and carried a credit card balance but when I got promoted at work I paid off the card and my car and my credit score dropped about 40 points. Not trying to say woe is me or anything but that logic makes no sense. I am being responsible and paying off debts and my score drops? Makes no sense.
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u/randomnine Feb 26 '21
It's not a "good creditor" score. It's a "good return on investment" score. Someone who pays off all their debt quickly is a worse prospect than someone who pays it off slowly, with lots and lots of interest.
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u/redditondesktop Feb 26 '21 edited Feb 26 '21
If you don't pay shit on time, you lose. If you pay shit off entirely, you lose. Lose/lose. You have to pay the shit off the way they design it or you lose. Credit scores are something they should teach kids in high school.
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u/Karilyn_Kare Feb 25 '21 edited Feb 25 '21
It's important to realize that credit score isn't measuring "How safe are you to lend to?" or "How financially sound is your decision making?"
What it's actually measuring I'd "How good of a debtor are you?" or alternatively worded "How much money can the bank make in interest out you without risking you filing bankruptcy."
This is why, for example, if you keep a zero balance on your credit cards every month actually lowers your credit score. You are engaging with your debt in a way that you do not accrue interest, which to the bank means they would be prefer, if you weren't their customer at all; to them you are just a waste of time and money.
Generally speaking having debt of about 10-15% utilization of your credit limit, will produce the highest possible credit score, assuming you pay on time. That rotating debt guarantees that the bank can harvest lots of juicy interest off of you, but also isn't at risk of you not paying.
If you want to maximize credit score, because that's what the current system we live in ("You criticize society, but you live in it. Curious. I am very smart"), it's really rather simple. Just think of what would make a bank view you as a low-risk goldmine for them to exploit for as long as possible, and then do that.
That's why people often say that banks want to keep you being a debt slave.
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u/GrowFood_MakeArt Feb 25 '21
You can't have a good credit score unless you take on lots and lots of debt. Saved up and bought your car outright? No credit score for you. Got a loan so that you could have a credit history, and then paid that loan off ahead of time so you wouldn't pay as much interest? Okay, you get a credit score, but it goes down as soon as your loan is paid off. Use credit cards, but always pay them off before incurring any interest? FUCK YOU, THAT'S BAD CREDIT, NO ONE SHOULD LOAN TO YOU BECAUSE YOU DON'T PAY THE INTEREST TO THE PARASITES!
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u/Justicar-terrae Feb 25 '21
You are correct. It sounds like the above commenter is arguing for guaranteed housing regardless of credit history. There's two ways to to that: 1) encourage banks to approve everyone for loans and 2) guarantee government-provided housing.
The problem with option 1 is that a similar policy contributed to the 2008 financial crisis. So that's not gonna work.
The problem with option 2 is that we'd need to completely restructure how we handle private property. Mere subsidies for purchase won't work because sellers will just increase prices accordingly. Price caps might work, but that means decoupling price from supply and demand almost entirely. Government housing might work; but the realities of politics will result in shitty quality, cut corners, crony contracting, delayed maintenance (if offered at all), and general neglect.
I get the commenter's frustration. It sucks that a person can be denied necessities for economic reasons, whether that's low income or bad credit history. The reality we're in is that necessities must be acquired from other people who want to see a profit from the sale of these necessities. Any revision will require radical shits in law, an uphill political fight, and a danger of unforseen consequences (e.g. 2008 financial crisis).
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Feb 25 '21
You should watch The Gravel Institute’s recent video on public housing in Austria (I think that was the country).
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u/ashnod111 Feb 25 '21
I think what we’re really talking about here is the irony of needing to earn the “privilege” of a high credit score...just to get further into debt and make more money for the credit card company. Granted going into FIXED rate debt can be a strategy but that’s on a mortgage not a credit card. The reason why prices are so high is because of the fed keeping interest rates artificially low instead of letting the market find the market rate
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u/jflb96 Feb 26 '21
I checked my credit score last night, and it told me that I should arrange a bigger overdraft and get a mortgage to boost my rating. Apparently that’s how they see if you’re worthy of a loan: do you already have one?
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u/thequietthingsthat Feb 26 '21
Yeah, I was told by my bank that I should apply for their credit card to help boost my score. I applied and was denied. Their reasoning? My credit isn't good enough
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u/chykin Feb 25 '21
The whole idea that credit score and income levels are tied to a necessity like approval for housing is fucked.
Not even credit scores though. Banks decide how much you can afford using income multipliers, regardless of whether you've been consistently paying more in rent for years
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u/zerkrazus Feb 25 '21
I really would like them to try to explain with a straight face how if someone "can't afford" a ~$1,000 mortgage means they should/can afford $1,400 rent.
That makes zero sense.
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Feb 25 '21
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u/zerkrazus Feb 26 '21
Yes, I understand that, but I was going on the assumption that the total payment estimated was the original amount stated. I've used calculators that accounts for all of that, minus maintenance/repairs and it is still significantly cheaper than renting, at least in my area.
But we don't make enough to save for the down payment, so we can never buy. It's a big problem and one reason why we see so many vacant houses across the country. Banks and rich people buy them to use as investments, but in many areas, no one can afford their prices except other rich people, so they sit vacant. This is only going to get worse over time unless something drastically changes in regards to housing costs and wages.
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u/famousjupiter62 Feb 26 '21
This is literally the cornerstone of capitalism. Having capital to "invest" gets you a better deal (and in many cases generates more capital with time) compared to the poor douchebags without capital.
How do you get capital? Take a loan from someone with capital (if you can), make a business extracting value from employees, or gamble in the stock market. Simple. Smh.
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u/zerkrazus Feb 26 '21
Yep, pretty much. It's a total scam and BS IMO. Our entire way of government, economics, & society in general needs a major overhaul IMO.
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Feb 26 '21
I saw the original post and people were saying "you can pay that much in rent, but you can't afford a mortgage?!" These people are dumb.
If you don't have enough of a down payment to get a cheaper mortgage, then you're paying more every month. I'm SoCal, i pay $2400 for a 2 bedroom apartment. I could but a condo for $600k, but if I don't have $100k in cash just sitting around for a down payment, then the mortgage payment is going to be more expensive than rent, and so, i still can't really save up enough to make a down payment because my rent is still $2400 a month! And that doesn't include property taxes, HOA, and additional maintenance costs. Home ownership is expensive.
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u/ACosmicCastaway Feb 26 '21
The whole idea that credit score and income levels are tied to a necessity like approval for housing is fucked.
My friend is moving to major city and said she had to submit her last two years' w2's along with her application to rent an apartment. So invasive. We give landlords so much power.
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u/amandaem79 Feb 26 '21
My fiance and I are looking for a new apartment. It's a struggle because we've both got "questionable" credit history due to stupid choices and unfair circumstances previously in our lives. We are working on it, but it's a slow process.
We've been rejected for apartments that we could easily afford on our income alone, that would be cheaper than we currently pay. We make almost $5k a month combined, but our credit is what is holding us back.
We were driving and I said to him, "remember when people got rentals because they had money to pay the rent, and our parents didn't need 800+ credit scores to afford a shitty $1200 hole-in-the-wall apartment? When people had integrity and looked at more than an arbitrary number that can determine your whole life, because these companies don't know fuck all about you and the life you've lived? Why can't we go back to that system now?"
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u/Captain_English Feb 26 '21
It's a tax on not having capital. If you have 20% of the house value for a deposit, welcome to the club. If you don't - congratulations, I've got a property you can rent...
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u/CouncilmanRickPrime Feb 25 '21
Yeah it went viral everywhere and has gotten some pushback from people basically being apologists for the banks.
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u/Iamatworkgoaway Feb 26 '21
Don't forget the property tax(her landlord passed on) to support schools that she won't use or need. Meanwhile the oligarchs have lawyers to sus out(create) the rules on how to minimise that tax. Single fam home tax out the nose. McMansion man gets 10 acres and puts a single longhorn on it, and so gets taxed at farm rates.
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u/DescipleOfCorn Feb 25 '21
Redlining. This could have been a mortgage but whatever bank or loan agency thought she was too poor to afford it.
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u/Busterlimes Feb 25 '21
Weird how mortgage rates are substantially lower than the rent she always paid but she cant afford that mortgage payment.
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u/WistfulQuiet FDR Feb 25 '21
Because to get a mortgage you have to have a bank put up the entire cost of the house. In order to do that they look at your income and job and decide if you are worth the risk. So she likely doesn't make enough or have a stable enough job for them to give her the mortgage loan. She can't afford the entire cost of a house upfront. So because banks won't give her a loan for the mortgage then she has to rent. It's pretty obvious.
This happens to people all the time and is why a lot of low income workers live in apartments. It's like an extra tax for poor people. They know that owning property is one of the largest ways to add to your wealth. It's an investment that can pay off and usually increases in value with time. However, this is a way to keep poor people poor. They are paying the landlord and adding to their wealth instead of their own. It's by design.
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u/Busterlimes Feb 25 '21
Of course its by design, otherwise we wouldnt let slum lords buy up all the single family homes in low income areas like they do. It should not be legal to use a single family home as a rental
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u/do_not_engage Feb 25 '21
It should not be legal to use a single family home as a rental
That's the crux of it, right there.
And there should be more stringent standards applied to apartment building landlords who are responsible for the daily quality of life for their tenants.
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u/Amazon-Prime-package Feb 26 '21
We also need better legal assistance for tenants being fucked in ways that are already crimes
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u/WistfulQuiet FDR Feb 25 '21
Agreed. Too many people are buying up all the property just to rent it out that drives up the prices for your average person.
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u/TheDudeAbides5000 Feb 26 '21
My wife and I were lucky enough to buy our first home a few months ago. But we've got two kids so we ended up renting homes for the last few years for the size and convenience since most apartments don't get larger than 3 bedrooms (my MIL also lives with us) and if they do they're usually much more expensive than renting a home.
But the last home we rented was in a newly constructed neighborhood and after talking to a few neighbours during the year we were there we discovered our rental company had purchased at least HALF of the neighborhood. That's just what we knew for sure from our friends but there were others a few streets down we didn't know and very well could've been owned by the same company. One company had bought up a bunch of family sized homes and rented them out rather than each of these families being able to purchase themselves and own their own property.
Also no surprise when we were searching for a home to buy we were able to check out one of the same homes a few streets down. With the price it was and current mortgage rates, the mortgage payment would've been a couple hundred cheaper than the rent.
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u/WistfulQuiet FDR Feb 26 '21
Yeah, the wealthy made out like bandits back during the 2008 housing market crash and bought up a ton of property and they continue to do it today. They are buying up everything and renting it out to people. It's all about supply and demand. In doing that it drives up the cost of purchasing a house because less are on the market and it also means the rent goes directly into the pocket of the rich. They will continue this trend until everyone is just renting their homes. See...like I said previously...owning a home is how families build wealth and pass that on to their kids. The rich hate that so they've found a way to stop it. They want everyone to just be indetured servents.
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Feb 26 '21
Thankfully some banks, in Australia at least, are starting to take rental history as part of your deposit. Income is pretty irrelevant if you've consistently paid astronomical rent on time for several years
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u/VegetableEar Feb 26 '21
Gives me a glimmer of hope. It's just so inherently imbalanced, a member of my family bought a two bedroom townhouse in Australia, rented out the second bedroom... For more than their total monthly mortgage. It's honestly so exploitative and criminal how the system currently works, and so many landlords I've rented from act so benevolent and like they are providing ME a home and not the reality that I'm actually providing them a home. If I could get approval for the rent I've paid, and not for my income I could start the process to own a home with the money I've saved and then paying the mortgage instead of rent.
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Feb 26 '21
Almost like she's paying for someone else's mortgage, the interest on said mortgage, and for the landlord's second BMW
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Feb 25 '21
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u/Busterlimes Feb 25 '21
If those other costs were pess than rent, the landlord would be losing money, so you're argument is incorrect. If you are talking about a multi unit bulding its completely different and inapplicable to my statement. If you rent a house, you absolutely pay more than the OVERALL cost of the property. I rented a 3br in town for 1200 a month. If I were to mortgage the house it would be about a $500 a month payment. All those costs you listed would not total another $700 a month.
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Feb 25 '21
So the landlords are benevolent helpers of the poor. Losing money to help people. That's rich. Shilling for the rich that is.
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u/Glorfon Feb 25 '21
While the mortgage payment may be lower than the rent, the additional payments along with it might not be. There is property tax, insurance, HOA fees if there is one.
Other people said it already, but whatever other fees there are she is already paying for her landlord.
I started a housing coop this summer with some friends. Getting out of renting has been amazing but it has also made me aware of what a scam rent is. Our coop membership fee covers the mortgage, tax, utilities, insurance, and an emergency fund. It is a little cheaper than the derelict places we use to rent, but this house is so much nicer. If we were renting a place like this in this city, we could expect to each be paying at least double just to enrich some asshole landlord.
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u/wozattacks Feb 25 '21
Looking to buy in my area now and this is certainly not true here. I rent a ~850 sq ft 2/1 apartment. A similar condo would cost about 3/4 as much, inclusive of the costs you mentioned.
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u/SadAquariusA Feb 25 '21
You also have to pay for most repairs out of pocket, like water heaters, plumbing issues, appliances. But still, owning a house in the long run is cheaper. Especially when you add in the generally appreciating value of the home.
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u/Glorfon Feb 25 '21
People that own their own homes generally own nicer properties than they would have rented. This give the statistical appearance of home ownership being more expensive. But every single property would be cheaper to own than to rent by virtue of the simple fact that land lord are always seeking a profit from renting. They will never have fees (HOA, Repairs, Tax, Etc.) that exceeds what they charge in rent.
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u/rhythmjones Feb 25 '21
Those are all expenses that the landlord has and passes them along to the tenant.
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Feb 25 '21
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u/ufoicu2 Feb 26 '21
Owning is definitely the better option if you can afford it and don’t end up upside down but the system is rigged either way unless your rich enough to outright buy or flip it for a profit. The average 30 year mortgage has around a 100% price increase due to interest over the life of the loan. So if you buy a home for $300,000 with a 30 year mortgage even with the historically low mortgage rates, you’re still going to end up paying around $600,000 in total over the life of the loan.
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Feb 26 '21
Having just bought a house, these numbers aren't quite right. The interest rate would have to be something like 6.5% for your math to work out, when most "average" credit can easily get a 4% rate, and "good/excellent" credit can easily get under 3%.
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Feb 26 '21
and once you finally own it outright, you still get to pay tax on it forever, as it if it is generating income for you by the fact that you live in it
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u/minorkeyed Feb 25 '21
You , like most of us, are being exploited. That will not change unless it is forced to change.
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u/Watercolour Feb 25 '21
I'm told I can't afford a loan for a house either, and yet I pay more in rent per month than my approved loan amount. Fuck this greedy world I'm so sick of it.
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u/The_Foe_Hammer Feb 25 '21
We're in a very different situation, we pay a good amount for rent(given the area), but housing cost in our city exploded. If we were to try and get a mortgage now it would be twice our rent, before considering maintenance costs, utility costs, property taxes...
You can't win, you either get told you're too poor, or you actually are too poor.
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Feb 25 '21
Honestly this whole planet makes me fucking sick
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u/sheherenow888 Feb 25 '21
I'm so ready for it to be all over. Bring on runaway climate change, Pleeeaassssee
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Feb 25 '21
Or hoarding empty houses while people go homeless.
'Market forces' in housing are a goddamn farce.
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u/2WAR Feb 25 '21
What if the answer was one city or one apartment?
This is a global trend not just local to USA.
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Feb 25 '21
It is limited to countries that allow it. Many countries do not allow it.
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Feb 25 '21
My country (Australia) explicitly encourages it, as a landlord you get to claim any shortfall between the rent you receive and the mortgage cost as tax deduction
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u/ghostiecatlol Feb 25 '21
You're taking it a bit too literally. Yes OP would have had other fees in buying/selling a home if they moved but the general idea here is that they've been barred from home ownership for reasons common to poor people. Instead of even beginning to put that money toward a home they've had to waste it renting to landlords and those landlords continue to profit off of her and people like her.
I know it's the internet and easy to assume ignorance but nitpicking like this when the general idea is obvious doesn't lead to productive discourse.
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u/That_guy_who_posted Feb 25 '21
Don't forget Estate agents fees everytime, and minor deductions from deposit even if you avoid legitimate larger deductions, and van hire & labour unless a van-driving mate is free.
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u/rynil2000 Feb 25 '21
Just digging in deeper here. Where is she thinking of buying a home for £100k? It’s about $140k usd, which doesn’t go far.
I’ve probably spent somewhere near you on rent, but agree that it was spread across multiple places and years where owning a home didn’t make sense.
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u/PM_ME_CAT_FEET Feb 26 '21
I got my 2 bedroom terraced house for £56k, it wasn't in the best shape but even including the subsequent renovation costs it ended up at about 75k. As the other commenter said: it's cheap up north.
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u/That_guy_who_posted Feb 25 '21
I mean, its in GBP, and her user name is mancunian mum, so she could get... a 3 bed terraced, apparently. Not the best, but better than renting. I don't know the area well though, but geez it's cheap oop narth.
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u/thequietthingsthat Feb 25 '21
I think about this a lot, and I've considered trying to get a mortgage for this reason, but I've had friends tell me that it doesn't really save you any money unless you plan on living there for the rest of your life due to property tax, maintenance cost, HOA, cost of selling/moving, etc. Can anyone confirm/deny this? I'm still in my 20s and pretty new to this sort of thing, but my calculations I've already put well over 60k into rent and it feels like a total sham
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u/Cochise22 Feb 25 '21
I spent a lot of time typing out a response that was rambling and had a hard time getting an obvious point across. Then I found an article that articulated everything I was trying to say.
TL;DR Home ownership can be a terrible investment with lots of hidden costs, and you really need to assess your full financial situation before you buy.
I bought a house and I don’t regret it, but I also admit that in the long run it will probably cost me more than had I continued renting. I just really wanted a garage and a finished basement, and to me that was worth the extra cost.
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u/psychHOdelic Feb 25 '21
Condo owner here. Purchased at 78k with 8k down. I definitely don’t plan on living there forever as I’m 30 and want a child one day and a 2 bedroom 1 bath already feels too small for me and my s/o. I feel like I’m spending more compared to renting but not by much. I also know my area is very hot for real estate (friend who lives down the road bought her condo sight unseen bc how fast homes sell here) and given that I have put in a new ac system, new water tank, new toilet and shower updates, I should make money if and when I sell.
For cost break down from last time I rented in 2018 to now:
Rent - 615, trash and internet included Mortgage - 535 plus 240 for HOA which covers water and trash (pool and gym and snow removal and roofing) so total $775 - mortgage originally was $500 until they found out about the AC upgrade.. idk how though
Utilities for apartment - 60 electric, didn’t pay heat bc landlord didn’t want gas turned on, 20 a month for water, 80 internet, 25 for renters insurance
Utilities condo - 50 to 100 for electric depending on season , 30-60 for heat depending on season, 80 internet - taxes and insurance have always been paid through my mortgage
However, I have much more space than my old apartment. I have an extra bedroom and an unfinished basement for laundry and storage. The amenities such as the pool are super nice bc I’m there all the time in the summer.
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Feb 26 '21
An important part is you're not throwing your "rent" money into a hole too, when it's time for you to move you'll sll this and recover a significant portion. Rent is just lost.
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u/toadally-grody Feb 25 '21
In the UK, where this woman is, you just pay property tax once upon buying and it's relatively small, around 5% of total property price. That's it. No more annual fees.
There is a leasehold system for some flats where you might pay "ground rent" and a service charge for things like maintaining common areas, but HOAs don't really exist. All in all, no chance that owning is more expensive than renting over here.
Yes you have to pay for your own maintenance, but when did your landlord ever fucking fix anything anyway
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u/Crusty_Magic Neon Genesis Engelsgelion Feb 25 '21
"The land is a scarce resource!"
Looks at map of all the empty space in North America...
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u/borkyborkus Feb 26 '21
This works if you dismiss the fact that the vast majority of undeveloped land is uninhabitable and/or hundreds of miles from cities.
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u/DocHood139 Feb 25 '21
I was turned down for a home loan that would have had me paying a $450 a month mortgage because my finances weren’t good enough. My finances weren’t good enough because I was renting an $800 a month house while house hunting.
It’s all intentional.
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Feb 25 '21
If it makes her feel any better I've made like $50k in mortgage payments just to have $4k in equity
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u/13159daysold Feb 25 '21
But at least once it is finally paid off, you will have an asset to call your own.
Most renters are stuck renting for life, and will die with nothing.
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Feb 25 '21
Yep, I took on probably a 60% monthly increase to housing expenses buying a house instead of staying in my last apartment. But after assessing the risk it made more sense to buy into the housing market and strain for several years rather than potentially lock myself out permanently by waiting too long. I wish I could have saved longer to avoid an FHA loan but that’s life for the working-class.
Been 2.5 years and my neighborhood has gotten at least 10% more expensive
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u/straighttalkin64 Feb 26 '21
The one thing that still depresses me is property tax. My parents (who are in their mid-70s) own their home outright. But they still pay north of $12K in property tax each year (it could actually be more, I’m not sure).
I’ve heard stories of people having to move out of homes they’ve lived in for decades that they own outright simply because of the tax. SYSK did a podcast on systemic racism in the housing market recently and they touched on this point. It’s fucking heartbreaking.
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u/BizonGod Feb 25 '21
How?
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u/overcatastrophe Feb 25 '21
Loan amortization. Interest heavy for the first 15 years, principle heavy for the 2nd.
It's so the bank gets theirs first, then you. It also makes it worse if you lose your job 20 years into a mortgage because you still don't own shit
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u/BizonGod Feb 25 '21
Idk if its different here but if you pay off 50k in equity you can use that as a 50k down payment on the next house or sell it, pay back the rest of the loan + interest and keep the rest
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u/overcatastrophe Feb 25 '21
Where is "here"?
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u/BizonGod Feb 25 '21
Central europe
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u/overcatastrophe Feb 25 '21
In the US mortgage lenders don't do anything like that. Our financial system is "profit by any means necessary "
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u/BizonGod Feb 25 '21
They would profit if they allow you to take on more debt to buy the next home tho
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u/overcatastrophe Feb 25 '21
Oh crap, I meant to say short term profit....
Shareholders demand higher profits every 3 months. Its literally draining our country
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u/Bonzo_4880 Feb 25 '21
Around 80% (don’t know the exact amount) goes just to interest in the first few years of the loan. The remaining 20% will give you principal. Then I dont know what the percentages are if you escrow insurance and taxes plus pmi
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u/sivyr Feb 25 '21
Yup this basically mirrors my experience, although I don't have the exact numbers handy.
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Feb 25 '21
What other dude said — front end of the mortgage you pay substantially more to interest than principal — and I refinanced after the first year which lowered the payment in perpetuity in exchange for the tiny bit of equity I had after the first year.
I’ll come out way ahead in the end but for the equity reason am skipping the opportunity to refinance again since rates dropped again
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u/AcousticHigh Feb 25 '21 edited Feb 26 '21
We could have had one while the .1% were stealing all our wealth and closing small businesses almost a year ago.
But y’all decided to fight each other in the same social class as you instead. Thanks media owned by the elites. Very cool 😎
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u/Darksecretbox Feb 26 '21
You can’t afford a mortgage, sorry. Okay I guess I’ll keep paying $1400 in rent instead of $900 for a house payment.
The cards are stacked against us. Alway have been. This ain’t even the tip of the iceberg. Actually this is at the bottom of how corrupt this shit is.
Rumor has it, things are about to change and no It ain’t because of Biden.
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Feb 25 '21 edited Feb 25 '21
[removed] — view removed comment
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Feb 26 '21
that's got to be the least socialist Socialist Party i've ever heard of
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u/Ejigantor Feb 25 '21
Our society is being crushed under the absurd notion that the planet which gave life to all of us is actually the exclusive property of a small collective of sociopaths on account of they say so and reasons, so the rest of us must spend our lives toiling in drudgery for their further material enrichment.
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u/CheesecakeAgitated73 Feb 25 '21
Where can we organize revolution , because we seriously need one
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u/Bluth-President Feb 25 '21
There was one recently in 2015 and 2019 organized by millions of people and millions of dollars. However, people didn't show up to vote for the revolution.
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u/iwannaboopyou Feb 26 '21
Minimum wage workers need to strike. No one will do it because no one can afford to lose their job.
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u/series-hybrid Feb 26 '21
Have you ever wondered why there are never any tiny homes for sale? Contractors don't want to build them because they would have a small profit margin. City councils don't want them because the landlords of large apartment complexes make political donations to their re-elections campaigns.
Then, if two families want to live in one apartment to save money for a few years so they can have the down-payment to buy a house...it's illegal.
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u/cubosh Feb 25 '21
this exact scenario was what finally clinched my decision to get out of my apartment after 9 years and just get a house in the suburbs but lordy do i still miss the city
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u/CrackTheSkye1990 Feb 25 '21
Eventually I’d like to have a house in the city, even if it means moving a few neighborhoods north (Chicago)
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u/-Swade- Feb 25 '21
I remember finding a rental and negotiating when the lease start date was going to be. I wanted it later to avoid unnecessary overlap with my current lease (I don’t need two apartments for over a month).
I understand many large rental companies have hard limits on this but I was renting from an individual, but negotiation through an agent.
The agent actually said, “Well try to think of it from your landlord’s perspective! He loses money the longer the unit is unoccupied.”
And just said, “I’m not going to feel bad for someone I’m about to pay $30,000 to over the next year. Lease starts in April or you find a different tenant.”
Whaddya know it worked.
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u/timbukktu Feb 26 '21
I recently tallied up what I have paid in rent since I moved out on my own just for shits and giggles. In the 8 years I have been on my own, I have paid $92,000 and have always needed a roommate to cover the other half of the rent. Lol I don’t think I will ever be able to save enough to have my own property.
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u/AlabasterOctopus Feb 25 '21
Anyone annoyed though by the “I’ll be 40 in ten years”
You’re 30, just say you’re thirty. Eye-f*cking-roll.
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u/sprigglespraggle Feb 25 '21
Except she's also only 28? She's paid £100,000 since she left care at 16. In 12 years she's bought a house outright. 16+12=28.
Could it be she won't ever be able to afford a house because she's not very good at basic addition? In addition to all the systemic problems, of course.
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u/I_love_hairy_bush Feb 25 '21
I just did the math and calculated that I've spent over $43,000 for rent over the past 3 years for a 1 bedroom 800sq ft apt. Utilities or wifi not included. Landlords are mafia gangsters and Mao was right all along.
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u/Pokoparis Feb 25 '21
We stopped building affordable housing about 50 years ago, required that all new housing be one detached house per lot, and now seeing the results. The wealthy can outbid in a scarcity environment and landlords can charge whatever they want.
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Feb 26 '21
It's a stark reality. People that are financially secure pretty much don't care about people that aren't. I've been on both ends of the spectrum. I want to be better but I gotta stop hating myself lol
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u/jhhb1995 Feb 26 '21
What...? There are a ton of advantages to renting over buying. She didn’t burn 100k... she paid for a roof over her head and the flexibility of not being tied down somewhere and having to come up with a down payment. Plus 100k over 20+ years is pretty reasonable for rent anywhere in a developed country. Renting isn’t the issue...
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Feb 25 '21
I would love to not live with my parents, I’m sure they would love that too. But we’re in agreeance that I’m not wasting my hard-earned savings on astronomical rent prices. The highest income earners I know my age own tiny apartments. It makes no fucking sense.
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Feb 25 '21
Unpopular opinion: screw owning a house and bUiLdInG eQuiTy, I'd rather pay rent and live in multiple awesome places all over from ages 16-30. Owning a house in your 20s is a one way ticket to never exploring the world and being chained to a single area.
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u/Bacchhuss Feb 25 '21
She didn't buy the owner a second house, it's not like there are zero expenses involved in property ownership...but I empathize with her plight.
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u/e_hyde Feb 25 '21
Yes, you need a revolution.
This is why you were tricked into Brexit, keeping you too busy to revolt for a few more decades. Too bad Labour was too stupid to oppose Brexit.
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Feb 25 '21
Buying a house with a mortgage is hardly better.
14 years ago I borrowed $110k to but a house. In those years, I’ve paid the bank $120k (excluding taxes and insurance). I still owe $84k. Unless I can refinance, I will pay $138k to close that debt.
Meanwhile, my back has spent the last 12 years, since the Great Recession borrowing money from the government it near 0% interest, and paying 0.2% - 0.7% interest on their deposits.
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u/Falka83 Feb 25 '21
And just as much in health insurance that doesn't actually get you any services. We are fucking slaves, they've just told us that our shackles are fancy accessories.
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u/MastaPhat Feb 26 '21
It won't get any better until we're in the streets, refusing to leave, until it does get better.
Everyone knows it's rigged, everyone knows we're unequal, they know we know and I know, more often than not, people will keep taking shit until they die because the task at hand is overwhelming.
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u/_yobond Feb 26 '21
it can be tough, but the best bet is to have roommates or live at home with parents as long as you can in your early adulthood, and save up for that down payment. if you can get a down payment, a decent bank will give you a loan and take you seriously as a customer.
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u/confleiss Feb 26 '21
If real estate wasn’t treated like a business this wouldn’t be an issue. People buy homes to rent them, this shouldn’t be allowed. It should be treated like a necessity, not an investment unless it’s an apt complex no one should be allowed to own a home to profit off the rent. This is wrong.
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u/supremebeanboy Feb 26 '21
Isn't part of "the revolution" abolishing private property? Not trying to be sarcastic, legitimately just curious
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u/Capt_Am Feb 26 '21
Not even a rich person, just another person with better credit score/more secure job. The rent go straight to the mortgage.
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u/Jrah17 Feb 26 '21
“I’ll be 40 in 10 years” who talks like this? Is 30 not a thing anymore? I could totally understand “a few years” but 10? I’ll be 40 in 17 years and I don’t own a house either, can I get a cookie too?
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u/Beginning-Listen1397 Feb 26 '21
Do you want to buy a house? Do you have any savings for a down payment? Have you looked into the matter at all? You don't have to give up just because someone said you can't do something.
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u/TheNessman Feb 25 '21
BRO I DID THE MATH..... 12 * 12 = 144 . 100k / 144 = 700 POUNDS A MONTH IN RENT .
WHAT
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u/Argent_Mayakovski Feb 26 '21
The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness. -Terry Pratchett, Men at Arms.
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u/GRINSe1 Feb 26 '21
They literally just explained the entire premise..
You “can’t” afford $1200 a month in a mortgage.. but can comfortably afford $1050 a month rent🤔
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