Pitfalls of Diligent Saving

Mickey666

hazyjo said:

Home ownership isn't for everyone. If saving around £130 a month means you have to live as frugally as you say, I would sadly have to conclude it may not be for you. How would you afford to fix a roof? Call out a plumber? Replace a boiler?  Home ownership can be expensive!

Yes, home ownership can be expensive but, like-for-like, it won't be more expensive than renting because all those maintenance things you mention are already built into the rent.  If they weren't then how would the landlord be able to pay for them?

Sure, there are cashflow considerations and I imagine it's a comfortable feeling for renters to know that they won't have to suddenly pay for a new boiler when their one breaks down, but don't fool yourself by pretending that makes renting a cheaper option than buying.

Mickey666

moneysavinghero said:

Mickey666 said:

zagubov said:

I'm with many other posters here on this. In Europe you can rent good spacious property securely cheaply for your whole life and then so can your children and their children.
We used to have a system like that.
Back then being massively in debt wasn't for everyone (it was shameful).
It was deliberately dismantled to incentivise us to to acquire debt that meant we couldn't unionise our workplaces and employers would have us over a barrel.
This was done so effectively that we see it is the new normal.

 That doesn't make much sense to me.  A very effective way to "have us over a barrel" is to prevent us from being independently wealthy.  Restricting people to rented housing for their whole lives means they are always beholden to someone else for one of the most fundamental human needs - shelter, a home.  It's a very effective means of oppression and forces people to work all their lives, historically until they dropped. 

Home ownership gives people a greater degree of independence, wealth, choice.  If you really wanted to have people "over a barrel" then preventing them from owning their own homes is a very effective way to do so . . .  as it was historically in more feudal times.

If you have a mortgage on a house and by taking part in union action you risk losing your job and there the possibility of losing your home by not being able to pay the mortgage, then you are going to be much more reluctant to take part in such action.

If however your housing is provided by the state then you are not going to be that bothered.

Fair point, although people often talk about 'having a mortgage' as if it's a lifelong thing when the reality is that it need only be for 25 years and many people pay it off quicker than that.  So now re-run your example of union action when you're an outright home owner with no risk of losing your home.

As for state-provided housing, isn't that just another way of reducing people's freedom of choice?  It certainly didn't seem very popular when the rules changed to allow people to buy their own homes.

Mickey666

Crashy_Time said:

Mickey666 said:

zagubov said:

I'm with many other posters here on this. In Europe you can rent good spacious property securely cheaply for your whole life and then so can your children and their children.
We used to have a system like that.
Back then being massively in debt wasn't for everyone (it was shameful).
It was deliberately dismantled to incentivise us to to acquire debt that meant we couldn't unionise our workplaces and employers would have us over a barrel.
This was done so effectively that we see it is the new normal.

 That doesn't make much sense to me.  A very effective way to "have us over a barrel" is to prevent us from being independently wealthy.  Restricting people to rented housing for their whole lives means they are always beholden to someone else for one of the most fundamental human needs - shelter, a home.  It's a very effective means of oppression and forces people to work all their lives, historically until they dropped. 

Home ownership gives people a greater degree of independence, wealth, choice.  If you really wanted to have people "over a barrel" then preventing them from owning their own homes is a very effective way to do so . . .  as it was historically in more feudal times.

I don`t think you get what the term "independently wealthy" really means? It doesn`t mean scraping onto the housing ladder because the Lords and Masters have waived Stamp Duty for a few months with massive debt that will cripple you if interest rates rise. 

Read what I wrote more carefully.  I said nothing about a stamp duty holiday, which is a very transient thing and completely irrelevant to the more general issue of owning your own home.  I agree with you that 'independently wealthy' has nothing to do with stamp duty holidays.

However, I disagree that anyone with a mortgage will be crippled by massive debt if interest rates rise, mainly because I, and millions of others, have experienced high mortgage interest rates and very few were financially crippled by the experience. 

Once again, you focus on the here and now and seem to totally ignore any medium term financial planning, which is what buying your own home is all about.  if it was the disaster you seem to think it is, how come so many people strive to own their own homes?  Are they all completely deluded?    I'll stick my neck out and bet that I'm living in a bigger, better house than you and that my housing costs are lower than yours, even though most of my mortgage-paying years were around the 8% interest mark and many of them were well into double figures.  So how do you think that happened?  Where did I go wrong?

AdrianC

Mickey666 said:

Yes, home ownership can be expensive but, like-for-like, it won't be more expensive than renting because all those maintenance things you mention are already built into the rent.  If they weren't then how would the landlord be able to pay for them?

I think you might be forgetting that many heavily leveraged landlords simply have never bothered working out that they aren't making a profit, but subsidising their tenants...

If they do, then they simply shrug and say that they'll rely on capital growth. Which, as we know, might not happen.

moneysavinghero

Mickey666 said:

moneysavinghero said:

Mickey666 said:

zagubov said:

I'm with many other posters here on this. In Europe you can rent good spacious property securely cheaply for your whole life and then so can your children and their children.
We used to have a system like that.
Back then being massively in debt wasn't for everyone (it was shameful).
It was deliberately dismantled to incentivise us to to acquire debt that meant we couldn't unionise our workplaces and employers would have us over a barrel.
This was done so effectively that we see it is the new normal.

 That doesn't make much sense to me.  A very effective way to "have us over a barrel" is to prevent us from being independently wealthy.  Restricting people to rented housing for their whole lives means they are always beholden to someone else for one of the most fundamental human needs - shelter, a home.  It's a very effective means of oppression and forces people to work all their lives, historically until they dropped. 

Home ownership gives people a greater degree of independence, wealth, choice.  If you really wanted to have people "over a barrel" then preventing them from owning their own homes is a very effective way to do so . . .  as it was historically in more feudal times.

If you have a mortgage on a house and by taking part in union action you risk losing your job and there the possibility of losing your home by not being able to pay the mortgage, then you are going to be much more reluctant to take part in such action.

If however your housing is provided by the state then you are not going to be that bothered.

Fair point, although people often talk about 'having a mortgage' as if it's a lifelong thing when the reality is that it need only be for 25 years and many people pay it off quicker than that.  So now re-run your example of union action when you're an outright home owner with no risk of losing your home.

As for state-provided housing, isn't that just another way of reducing people's freedom of choice?  It certainly didn't seem very popular when the rules changed to allow people to buy their own homes.

Average age for people to buy 1st home is 31. So the average worker will have paid off their mortgage by 56. I would suggest most union action comes from people under that age. Indeed if only the workers over 56 vote for action i doubt the action would even get voted through. So the re-run of my example has the same result.

State provided housing increases choice. You can still buy private housing if that it what you want, but you also have the choice of state housing. Without state housing you don't have the choice. The reason that it wasn't popular was because it would remove social housing from the system.

Mickey666

AdrianC said:

Mickey666 said:

Yes, home ownership can be expensive but, like-for-like, it won't be more expensive than renting because all those maintenance things you mention are already built into the rent.  If they weren't then how would the landlord be able to pay for them?

I think you might be forgetting that many heavily leveraged landlords simply have never bothered working out that they aren't making a profit, but subsidising their tenants...

If they do, then they simply shrug and say that they'll rely on capital growth. Which, as we know, might not happen.

I'd be more inclined to believe that if rents were generally cheaper than a mortgage, whereas on a like-for-like basis the reverse seems to be the case . . . which means there is sufficient 'profit' to pay for new boilers and the like. 

If someone can afford to rent then they can afford a mortgage and if they banked their monthly savings they'd have enough to pay for the rarely needed boiler replacement or new roof that anti-buyers seem to be so fond of quoting. 

But most people already know this, which is why they want to buy and why the deposit requirements are so frustrating - because they are trying desperately to save a deposit while paying more rent than they would if they actually had a mortgage.  This forum is full of such posts and frustration.

AdrianC

moneysavinghero said:

Average age for people to buy 1st home is 31. So the average worker will have paid off their mortgage by 56.

Mmm.

Aren't most FTB mortgages 30yr these days? And, of course, what about remortgaging or moving...?

Crashy_Time

Mickey666 said:

Crashy_Time said:

Mickey666 said:

zagubov said:

I'm with many other posters here on this. In Europe you can rent good spacious property securely cheaply for your whole life and then so can your children and their children.
We used to have a system like that.
Back then being massively in debt wasn't for everyone (it was shameful).
It was deliberately dismantled to incentivise us to to acquire debt that meant we couldn't unionise our workplaces and employers would have us over a barrel.
This was done so effectively that we see it is the new normal.

 That doesn't make much sense to me.  A very effective way to "have us over a barrel" is to prevent us from being independently wealthy.  Restricting people to rented housing for their whole lives means they are always beholden to someone else for one of the most fundamental human needs - shelter, a home.  It's a very effective means of oppression and forces people to work all their lives, historically until they dropped. 

Home ownership gives people a greater degree of independence, wealth, choice.  If you really wanted to have people "over a barrel" then preventing them from owning their own homes is a very effective way to do so . . .  as it was historically in more feudal times.

I don`t think you get what the term "independently wealthy" really means? It doesn`t mean scraping onto the housing ladder because the Lords and Masters have waived Stamp Duty for a few months with massive debt that will cripple you if interest rates rise. 

Read what I wrote more carefully.  I said nothing about a stamp duty holiday, which is a very transient thing and completely irrelevant to the more general issue of owning your own home.  I agree with you that 'independently wealthy' has nothing to do with stamp duty holidays.

However, I disagree that anyone with a mortgage will be crippled by massive debt if interest rates rise, mainly because I, and millions of others, have experienced high mortgage interest rates and very few were financially crippled by the experience. 

Once again, you focus on the here and now and seem to totally ignore any medium term financial planning, which is what buying your own home is all about.  if it was the disaster you seem to think it is, how come so many people strive to own their own homes?  Are they all completely deluded?    I'll stick my neck out and bet that I'm living in a bigger, better house than you and that my housing costs are lower than yours, even though most of my mortgage-paying years were around the 8% interest mark and many of them were well into double figures.  So how do you think that happened?  Where did I go wrong?

"Independently Wealthy" means you don`t have to work for money, trying to tag that description onto the notion that people need to get into this property bubble or they are somehow not doing their financial planning properly I find distasteful actually.

Crashy_Time

Mickey666 said:

hazyjo said:

Home ownership isn't for everyone. If saving around £130 a month means you have to live as frugally as you say, I would sadly have to conclude it may not be for you. How would you afford to fix a roof? Call out a plumber? Replace a boiler?  Home ownership can be expensive!

Yes, home ownership can be expensive but, like-for-like, it won't be more expensive than renting because all those maintenance things you mention are already built into the rent.  If they weren't then how would the landlord be able to pay for them?

Sure, there are cashflow considerations and I imagine it's a comfortable feeling for renters to know that they won't have to suddenly pay for a new boiler when their one breaks down, but don't fool yourself by pretending that makes renting a cheaper option than buying.

Maybe they have savings, maybe they have other property providing an income, maybe they have insurance, maybe they don`t have mortgage payments because like you they bought in the early 80`s, maybe they don`t have a plan for how to pay for these repairs? Rent isn`t set by a landlord`s potential future repair costs, it is set by wages and employment levels, so anyone trying to "build in" potential future repairs into the rent is likely going to be looking at lots of voids and lots of extra council tax.

Mickey666

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

zagubov said:

I'm with many other posters here on this. In Europe you can rent good spacious property securely cheaply for your whole life and then so can your children and their children.
We used to have a system like that.
Back then being massively in debt wasn't for everyone (it was shameful).
It was deliberately dismantled to incentivise us to to acquire debt that meant we couldn't unionise our workplaces and employers would have us over a barrel.
This was done so effectively that we see it is the new normal.

 That doesn't make much sense to me.  A very effective way to "have us over a barrel" is to prevent us from being independently wealthy.  Restricting people to rented housing for their whole lives means they are always beholden to someone else for one of the most fundamental human needs - shelter, a home.  It's a very effective means of oppression and forces people to work all their lives, historically until they dropped. 

Home ownership gives people a greater degree of independence, wealth, choice.  If you really wanted to have people "over a barrel" then preventing them from owning their own homes is a very effective way to do so . . .  as it was historically in more feudal times.

I don`t think you get what the term "independently wealthy" really means? It doesn`t mean scraping onto the housing ladder because the Lords and Masters have waived Stamp Duty for a few months with massive debt that will cripple you if interest rates rise. 

Read what I wrote more carefully.  I said nothing about a stamp duty holiday, which is a very transient thing and completely irrelevant to the more general issue of owning your own home.  I agree with you that 'independently wealthy' has nothing to do with stamp duty holidays.

However, I disagree that anyone with a mortgage will be crippled by massive debt if interest rates rise, mainly because I, and millions of others, have experienced high mortgage interest rates and very few were financially crippled by the experience. 

Once again, you focus on the here and now and seem to totally ignore any medium term financial planning, which is what buying your own home is all about.  if it was the disaster you seem to think it is, how come so many people strive to own their own homes?  Are they all completely deluded?    I'll stick my neck out and bet that I'm living in a bigger, better house than you and that my housing costs are lower than yours, even though most of my mortgage-paying years were around the 8% interest mark and many of them were well into double figures.  So how do you think that happened?  Where did I go wrong?

"Independently Wealthy" means you don`t have to work for money, trying to tag that description onto the notion that people need to get into this property bubble or they are somehow not doing their financial planning properly I find distasteful actually.

By that definition, anyone who is retired must be 'independently wealthy'.  Fair enough.

I'm in no way suggesting that you 'need' to buy a house if you prefer not to for all sort of reasons.  However, I am suggesting that paying for a home (rent or buy) is a major part of everyone's lifetime financial planning in the same way that pension planning is, and that buying a home will always be less expensive than renting a home, over a lifetime. 

Given that this website and forum is dedicated to money-saving I think it's a perfectly reasonable thing to point out.