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Author: reikiman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308644  
Subject: Owners, lenders, borrowers and where you live Date: 9/19/2005 2:56 PM
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A couple years ago I wrote up a set of writings inspired by the learnings I've had while inhabiting fool.com. I wrote them up here: http://7gen.com/personal-finance

In 1999 I realized I was near bankrupt with over $35000 in credit card debt and $6000 on a car in addition. The interest cost was enough I would never have been able to pay it off, and I contemplated lots of things including bankruptcy. But I made it out, thanks to what I learned here.

I'm pondering something new today.

A big theme in what I wrote on my web site was contrasting a borrowing versus lending lifestyle. Borrowing is taking credit to buy things, and lending is being on the other side of the coin, earning an income because of the money you have.

But I'm contemplating a change ... namely home ownership.

That has me pondering a third way which I hadn't thought about on my web site. Owners. Rather than participating in the borrow/lend cycle, owners own.

In housing I'm renting, rather than owning, because of a great fear of the huge debt involved with ownership. It seems the gateway to owning is being a borrower, and to borrow in a very big way. The amount of borrowing required to begin the steps to being an "owner" dwarfs the $35,000 in credit card debt I had before. Plus the mortgage game is geared to keep one in debt basically for the rest of their lives.

In a way, mortgages are part of the big banks game to keep us peaons enslaved to them. 30+ years is so long, you're likely to move well before you pay off the mortgage. Oh, and they offer equity loans, and if you take an equity loan that puts you back into debtor land.

So far I've been saying to myself that it's a lot easier to own and lend money, than it is to own a house.

The only advantage I've seen is that when owning a house you can equate the mortgage payment with the rent payment, and mortgage payments are fixed while rent payments only go up as the market goes up. Eventually I'll be priced out of the market, whereas if I "owned" (that is, had a mortgage) my monthly payment is gauranteed to not go up.

I'm just pondering, and wondering what this group thinks.

- David
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