

Your Bank Balance is at Zero - karjaluoto
http://www.ideasonideas.com/2010/11/your-bank-balance-is-at-zero/

======
klochner
It strikes me that choosing to rent over owning is the antithesis to the theme
of "Zen and the Art of Motorcycle Maintenance" (recommended book). 

The driving metaphor comes from the contrast between (effectively) renting a
BMW motorcycle (since they are hard to repair), and owning a simpler model
that can be maintained by oneself. 

The stated benefit is greater autonomy and satisfaction derived through taking
ownership and solving one's own problems - a more classical approach to life. 
Rather than taking a "fix this for me" attitude, you see the world as
something that you have control over. 

Personally, I've found it very satisfying every time I'm able to repair
something in my car, which I've owned for 8 years. 

~~~
sudont
The parts are sourced from a retailer.  You're just pushing the "fix this for
me" up one level and ignoring the entire inextricable chains of production. 

The sense of control is a false one.  Is there control in the availability of
parts, or their manufacture? 

~~~
klochner
That's a false dilemma - the choice isn't between full-service rentals and
forging my own steel from ore I dig out of the ground. 

Increasing one's autonomy has value, whether or not you ever reach full
autonomy. 

~~~
sudont
Oh, it does, definitely.  But it's more along the lines of being able to deal
with increasingly large daily emergencies.  Being able to forge steel would be
an apocalypse-sized emergency. 

As an ego-booster, I'm not so sure.  Since everything is so connected, why
gloat?  As someone who has actually _built_ a car from scrap metal and a loose
engine, I feel that there isn't much difference between putting a pre-made
part in a car yourself, or having someone else do it.  Everything's a
tinkertoy. 

------
seanc
People buy things for all kinds of reasons that aren't discussed in the
article. 

Convenience! 

For me this is a prime motivator.  I have sufficient demands on my time that
added expense of owning a car is worth the 20 minutes it would take to access
the closest virtu-car, and the 90 minutes I save every day driving in stead of
busing. 

I have enough space in my house for cold storage and a freezer.  This means I
can buy food in bulk and don't have to go to store as often. 

Security! 

Landlords kick tenants out out now and then.  Rents can go up all of a sudden. 
My family rented for a long time when I was a kid, and we got booted out of
several houses when the landlord decided not to renew to lease for one reason
or another; wanted to give the house to a relative, wanted a pile more rent,
et.  cet. 

Agency! 

For some people home improvement and 'puttering around the house' is a big
source of pleasure and recreation.  Many people express themselves with the
work of their hands, and owning tools and infrastructure to build things and
so forth is important too them. 

Finally, NRP's planet money has a great blog about the issue of buying vs.
renting housing: [http://www.npr.org/blogs/money/2010/11/05/131105373/the-
frid...](http://www.npr.org/blogs/money/2010/11/05/131105373/the-friday-
podcast-finally-an-apology#more)

tl;dr: this is about way more than money.  It's about personal value choices

~~~
satishf
A great blog post from Tim Ellis on buying vs renting:
[http://www.getrichslowly.org/blog/2007/07/16/renting-vs-
buyi...](http://www.getrichslowly.org/blog/2007/07/16/renting-vs-buying-the-
realities-of-home-buying/)

~~~
lotharbot
It should be noted that Tim wrote this near the peak of the housing bubble in
Seattle (Kenmore neighborhood).  The house he identified for $425k in that
piece would now sell for about $300k, which puts monthly costs at about 25%
more expensive than renting instead of 78% more expensive. 

In a completely average, non-bubble housing market, buying (counting
insurance, taxes and breaks, maintenance, etc.)  is about 20% more expensive
than renting in the short term, but after 5-10 years of inflation and rent
increases, renting becomes more expensive.  There's a definite tradeoff between
short-term savings with no equity but high flexibility vs. long-term savings
with equity and permanence.  That tradeoff was slanted heavily in favor of
renting in Kenmore, WA in 2007, but as Tim's conclusion notes, it is not
always so; whatever your situation, "run the numbers ... and do what works for
you." 

------
cube
A few months back I realized one main aspect of travel, I tremendously enjoy:
the lack of stuff.  Traveling around with just one suitcase of clothes and my
laptop opened my eyes: Of all the stuff I own, everything I really needed for
my every day life was right there with me.  And it is so easily replaceable...

I never was a big gatherer, but since then I really cut down on buying things. 
In addition to that I'm getting rid of my things, some are easier to lose some
are harder to give away or sell, but in the end it feels great.  I actually
find it liberating to stand in a store and _not_ buy the fancy item which
would inevitably be degraded to be clutter on the shelf in a few weeks.  The
money I spend goes into the few things I really use all the time, like my
iPhone.  I also eat better.  All in all I'd say it made me a happier person. 

~~~
mrtron
I moved to Asia for 5 months and found the same thing. 

I brought a big suitcase full of items, but probably only used a backpack
full.  I purchased local clothes (for cheap) that were better suited to the
climate and everything else was easily replaceable. 

I also agree investing heavily into a few key items is important.  My Macbook
was irreplaceable.  I wish I spent more on a better camera, it was a good one
but I used it enough to justify getting a great one. 

Now that I am back I realize I have a lot of stuff that is completely
unnecessary.  It is surprisingly difficult to get rid of, but I am donating it
in chunks. 

------
theBobMcCormick
It's rather interesting and jarring to me to see how many of the reply's in
this thread are so aggressively defensive of the very idea that owning more
stuff might not always be better than _not_ owning more stuff. 

I've been watching a marathon of back episodes of "Hoarders"
(<http://www.aetv.com/hoarders/index.jsp>) on NetFlix streaming, and it's
somewhat startling to me how much some of the replies here sound like the
defensive responses of some of the hoarders in the show. 

~~~
pyre
I think that these threads always end up being more about ideology than hard
facts.  There are a lot of people that enjoy not being 'tied down' and being
'free and easy,' which things like 'having kids' or 'owning a house' tend to
prevent.  It then becomes more of a decision to pursue a particular lifestyle
than anything else. 

That said, the reaction of the people on Hoarders tend to be defensive
reactions due to not wanting to deal with the issue at hand (i.e. extreme
procrastination).  Which is probably why most of them pick up their hoarding
habits after the loss of a close loved one (usually a parent).  They don't want
to deal with the loss, so they are constantly pushing it away, and not dealing
with it. 

{edit} This tends to bleeding into everything else in their lives.  They live
for the momentary thrill of acquiring things, while not bothering with 'the
boring stuff' like cleaning their house, or sorting their acquired items, or
even deciding which items are/aren't worthless. 

------
jtbigwoo
_Somebody_ has to own the stuff you're renting.  If I'm a renter I'm just
passing along the responsibility to someone else.  If the vast majority of us
are renters rather than owners, who has incentive to do any maintenance or
improvement?  The landlord and her employees will do the minimum cosmetic fixes
to keep rents increasing.  The residents have no reason to keep the place nice
--they can just move on.  This article is not an indictment of our disposable
culture.  It's an amplification of that culture to encompass our whole lives. 

Look, I think we fill our lives with too much stuff, but refusing to take an
ownership stake in housing, transportation, etc.  will lead to worse outcomes,
not better. 

~~~
cjy
"If the vast majority of us are renters rather than owners, who has incentive
to do any maintenance or improvement?" 

This doesn't make sense.  The remaining owners will still compete for renters. 
If my landlord does a bad job, I will find a better landlord.  In fact, you can
argue that concentrating ownership makes maintenance more efficient.  My
landlord has much more experience at plumbing, painting, installing appliances
etc.  than I ever would. 

~~~
fr0sty
Renting introduces a Principal-Agent problem[1] because the owner's incentives
are not entirely in line with yours.  Maximum profit is realized by doing the
minimum amount of repairs necessary to keep people from moving out.  Switching
apartments is not free (in time, money or effort) so the bar a landlord has to
clear is only 'not bad enough to leave'.  I doubt homeowners would choose the
same standard. 

[1] <http://en.wikipedia.org/wiki/Principal-agent_problem>

~~~
potatolicious
Your logic is sound, but my observation in reality does not match. 

There are slumlords - but that's usually caused by a compression in supply
(e.g., when I was in college, any place near school had notorious landlords). 
When supply is open though, everything works out. 

You have your uber-cheap rentals where nothing will ever get fixed, and then
you have your more premium rentals where they'll turnaround a stove in 24
hours or less.  Like all markets, a low-end and high-end are established and
work just peachy. 

Of course, this is not geographically true everywhere - especially when you
introduce artificial supply and demand factors (rent control, anyone?). 

------
jleyank
Having lost money on 3 of the 4 houses we've owned, I can confidently state
that if you can't see staying in the same house when switching jobs you're
better off renting.  Houses might be "investments you can live in", but they
are a long-term investment.  The US favors home ownership, but that is not the
case, say, in Canada.  Do the math, and see which investment provides the
better return for your time window.  But invest it somewhere...

------
sosuke
What about building a greater than zero balance for your loved ones or
children?  If you never save and always rent you will never be able to pass
anything along to the next generation creating another set of folks that have
to start from zero. 

When I hear these arguments I always figure they already have a great enough
balance to counteract these issues or have no loved ones to pass along equity
too. 

~~~
cake
I'm not sure he's saying you shouldn't save.  You could leave a good amount of
capital to your kids too without owning a house. 

~~~
msquared
Hmm.  While this is definitely true, I think you stand to leave more to your
children if you own, opposed to renting.  If your rent is comparable to
mortgage (assumption, I know) you will wind up paying less after the mortgage
is over.  If you die at 80, and start paying rent at 20, that's 60 years of
rent, compared to, say, a 30-year mortgage.  That's 30 more years of rent. 

I know, I know, someone is going to say "well, what about upkeep and
maintenance and killing rats and xyz?"  The way I'm seeing this (which, by the
by, is originating completely from a 3-beer-deep opinionated loudmouth) is
that it's negligible compared to the fact that you are investing your money in
something that is of material value. 

------
erikstarck
I think this news item from yesterday is related:

[http://www.calculatedriskblog.com/2010/11/ny-fed-
continued-d...](http://www.calculatedriskblog.com/2010/11/ny-fed-continued-
decline-in-consumer.html) "Since its peak in the third quarter of 2008, nearly
$1 trillion has been shaved from outstanding consumer debts." " So are
consumers becoming more frugal?  Yes.  Holding aside defaults, they are indeed
reducing their debts at a pace not seen over the last ten years." 

Looks like we're moving from a loan-and-own economy to an age of access, where
you only pay for access to stuff (aka "rent"). 

I can only go as far as to my self. 

I don't buy CDs anymore, I pay for access to Spotify. 

I don't buy books anymore, I pay for access to an ebook on my Kindle (although
it's a one time fee). 

I don't buy DVDs, I pay to get access to an online stream. 

And so forth. 

------
rbranson
I feel as though with all things, there is a balance.  I know people who are
addicted to "stuff" and always keep acquiring huge piles of things.  There is
an optimistic point of minimalism though.  Ownership is a commitment that can
pay dividends or it can put you in shackles, a bit like human relationships. 
So, consider every purchase in this light and you might find the optimal point
of "stuff." 

~~~
karjaluoto
Precisely.  I'm not against owning things; I just question whether we need to
own everything. 

------
niels
I recently sold my huge apartment + furnitures, don't have a car anymore.  I
really felt owning these things were limiting my freedom and having a huge
cost both economically as well as mentally.  I'm really excited about embarking
on a more minimalistic lifestyle, where I think twice about the cost of
ownership.  I now have more money and more freedom.  Great article. 

~~~
eru
I have moved to Britain recently and did not take much stuff.  Most of what I
do have is replaceable. 

Sometimes I feel more uprooted than liberated by the lack of stuff. 

~~~
tomedme
I have recently offloaded a whole bunch of stuff, streamlining my possessions
before going travelling - and it is weird at first.  My feelings are definitely
a mix of uprooted and liberated, in equal measures. 

------
ulysses
In SunDog, you'd start out without much cash, but you also started with a
spaceship.  Now, in order to keep the spaceship you had to fulfill a contract. 
To fulfill that contract, you had to make money to keep the ship going, and
you had to explore a bunch of planets.  The spaceship was reasonably roomy,
could land on planets, and had a large all-terrain vehicle for exploring the
surface and bringing back cargo. 

I could see not needing an apartment, if I had an FTL spaceship like that. 

~~~
teamonkey
The same was true in Elite.  In Elite II you inherited (tax free) from a
recently-deceased relative 100 credits plus an Eagle starship. 

Despite the game's apparent freedom, it only gives you one option - to take
the ship and go.  You can't, for example, sell the expensive space ship, re-
invest it into the fish processing plant you work in and use the proceeds to
live like a king on the poverty-stricken planet. 

------
noonespecial
Link is broken, here:

[http://www.ideasonideas.com/2010/11/your-bank-balance-is-
at-...](http://www.ideasonideas.com/2010/11/your-bank-balance-is-at-zero/)

------
joshrule
While I've spent years reading this message in various places (most recently
at <http://mnmlist.com> and <http://farbeyondthestars.com>), I'm always
refreshed by it. 

Perhaps it's not the author's main point, but living lightly means we have
more time to invest in the things and experiences that interest us, and that
is a good thing. 

------
mlok
There is an interesting video from Khan Academy related to this: "The math of
renting vs. buying a home.  Challenging the notion that it is always better to
buy." [ http://www.khanacademy.org/video/renting-vs--buying-a-
home?p...](http://www.khanacademy.org/video/renting-vs--buying-a-
home?playlist=Finance)

~~~
theBobMcCormick
That's interesting to see it actually analyzed by someone with Mr. Khan's math
skills.  Not to mention the spreadsheet liked to from the 3rd video in the
renting-vs-buying looks like it be a useful tool for running the comparison in
your own local market/circumstances. 

------
brc
I'd just like to post that I agree with the comment from 'Russ' in the
article. 

This article is a one-sided exploration of the buy-vs-rent debate.  It doesn't
explore all of the emotional connotations of owning something durable, and
overweights certain experiences from the point of view of the author, when
this cannot possible apply to a population of people. 

Finally, as Russ comments - it's wrong to sneer at the purchase of a handbag
or BMW - the person might be spending their money on a combination of quality
product and brand, but once you start getting into the argument of purchasing
x is right, and purchasing y is wrong- you're arguing simply from a relative
point of view.  As long as the transaction was not done under duress, where is
the problem?  My neighbour spends all his money on sailing.  I find it a waste
of money, but he clearly gets enjoyment from it.  Who is right?  Is it remotely
possible for me to suggest that buying a sailboat is wrong?  Wrong to who?  As
compared to what?  Free choices are just that. 

Owning a house in a falling market may seem like a foolish position, and for
many, perhaps it is.  But that goes to assume that the person owning a house
does it for purely financial reasons, which, again, is wrong.  Another
neighbour of mine is an old lady in her 80's who owns her house and lives by
herself.  By any object measure she'd be better off selling the house and both
investing and spending the considerable cash that would generate.  But she
enjoys her garden and the memories of a house that once contained her husband
and family over the span of 40 years.  Is she wrong to hold this position? 
Financially perhaps, but perhaps the currency aspect means very little to her
in comparison with pleasure of her little piece of land with a house on it. 
She could sell her house, rent a nice retirement apartment and afford a
around-the-world cruise.  A rental-is-best mindset would recommend this view. 
How can I tell her she is wrong and someone else is right? 

------
S_A_P
I generally like the idea that we should take some time to assess what is
important in life.  I dont, however think there is a one size fits all answer
to what we should own and what we should rent, or how we should spend our
money.  I have read posts similar to this before, and they can seem to smack of
some sense of condescension.  I sense a bit at the end with the Louis
Vutton/BMW comments. 

Like I said, it is great to encourage others to evaluate what is a need vs a
want, but I dont necessarily think something should be considered a cage just
because it is purchased or unnecessary for life. 

------
aelaguiz
This article mirrors an implicit assumption that I see in a lot of these anti-
materialist articles - that being that accumulation is the desired result of
the undesired (and presumably unfulfilling), all dreaded, "work."  For some of
us accumulation of material possessions is a welcome side effect of a highly
fulfilling passion which is "work."  When I say work I say it with a prideful
passion in my voice, not with disdain at the damned capitalists for forcing me
into this materialist trap.  I love my work first, but the car is nice too. 
Perhaps the author just needs to find some purpose. 

~~~
karjaluoto
I'm quite convinced I have found some purpose.  For that matter, I quite like
my work. 

What concerns me is the idea that so many feel they need to own something, in
order to enjoy it. 

~~~
aelaguiz
I think that class of people is attempting to fill a void in their life with
possessions, but that doesn't imply that all or even most ownership is
unhealthy/bad.  If you are buying things to find fulfillment you might as well
eat the money, but if you are fulfilled and buying things (responsibly) - I
applaud you. 

------
icefox
I know that there is just _way_ too much profit in the monthly payments, but a
car company that somehow forced you to pay in cash woudl quickly create a
status symbol for itself. 

------
karjaluoto
I'd really encourage anyone interested in this discussion to read this
comment: <http://bit.ly/adXv1l>

I believe it gets a little closer to the heart of what I was working to convey
--particularly as the discussion seemed to later spiral into a primarily
financial one. 

------
henryw
my favorite part of the article:

Few of us want to die, as evidenced by such statements as, “if I die…” (like
there’s some possibility of an alternative).  I hate to break it to you, but
the only real variables are how and when.  Other than that, we’re probably best
to accept that you and I are both just toast.  I find a kind of liberty in this
knowledge.  In fact, it suggests that most of the things I fret over are
largely inconsequential, and that I shouldn’t squander these moments.