2669: Roots v. Wings: Considering Home Ownership by JL Collins on Embracing the Flexibility of Renting

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[00:00:57] This is Optimal Finance Daily, Episode 2669.

[00:01:05] Roots vs. Wings, considering home ownership by Jail Collins of JailCollinsNH.com

[00:01:12] And I'm your host and personal finance enthusiast, Diana Merriam.

[00:01:16] This is actually one of multiple shows in our network covering different topics like personal

[00:01:21] development, health, relationships, and your work life.

[00:01:25] So if you like narration style podcasts, be sure to search for Optimal Living Daily wherever

[00:01:30] you're hearing this and check out our other shows.

[00:01:33] But for now, let's get right to it and continue optimizing your life.

[00:01:39] Roots vs. Wings, considering home ownership by JailCollins of JailCollinsNH.com

[00:01:50] Sold, now hangs below the real estate sign in front of our house.

[00:01:55] All the contingencies have been cleared and it should be smooth sailing until the closing

[00:01:59] date about a month from now.

[00:02:02] And the next few weeks we'll be going through the myriad of chores involved.

[00:02:06] Packing, finding a mover, switching services, dropping our homeowners insurance, picking up

[00:02:11] renters insurance, selling stuff on Craigslist.

[00:02:15] That last one is an adventure worthy of its own post.

[00:02:18] Maybe with the money we raise, we'll even buy a new mattress.

[00:02:22] The other day, a lovely young couple stopped by to pick up a variety of garden tools

[00:02:26] we're unloading.

[00:02:27] They were very excited as they just bought their first house.

[00:02:31] It is as she described it, a fixer upper and they got it in a short sale.

[00:02:36] They are happy with the deal and busy shopping garage sales and Craigslist for all the stuff

[00:02:41] they'll need.

[00:02:42] She can't wait to put in a garden.

[00:02:44] They are putting down roots.

[00:02:46] I've owned this house we've now sold for 13 years.

[00:02:50] The one before it, for 15 years.

[00:02:52] That's 28 years of home ownership for a guy who really doesn't much like owning houses.

[00:02:58] As houses usually are when you run the numbers, they were lousy investments.

[00:03:04] But I have no regrets.

[00:03:05] They served their purpose both as a place to raise our daughter in a great school district

[00:03:10] and just because we wanted the ownership lifestyle at the time.

[00:03:14] What's making this work was that in both cases we bought far less house than the world of

[00:03:19] real estate agents and lenders told us we could.

[00:03:23] Half to two thirds less.

[00:03:25] Given the reaction of these professionals, we may have been the only people in human history

[00:03:30] not to have bought the absolute maximum house we could afford.

[00:03:35] Now we're on the verge of returning to the blissful carefree unencumbered life of renting.

[00:03:41] Instantly, we'll have far more flexibility and far more mobility.

[00:03:45] We're spreading our wings.

[00:03:47] Roots and wings.

[00:03:50] Many years ago when our daughter was still very young, I read or was told

[00:03:54] that good parenting boiled down to giving kids roots and wings.

[00:03:59] Made sense to me then, still does.

[00:04:01] She's just a couple of weeks shy of her 21st birthday now

[00:04:05] and has already traveled to almost as many countries and continents as I.

[00:04:09] At the moment she's in France completing her junior year of college.

[00:04:14] While there and part of the point of going, she's seen a fair amount of Europe.

[00:04:18] She's just back from a weekend in Geneva and at the end of April

[00:04:22] we'll head over to spend a week with her in Prague.

[00:04:25] Clearly, we've done well on the wings side of things

[00:04:29] and our close family relationships provides the roots

[00:04:32] but she'll never really have the old family homestead sort of roots.

[00:04:37] We're more wing type people.

[00:04:39] The whole rent versus own financial conversation

[00:04:42] leads to generate very strong and very emotional reactions

[00:04:46] that always seems a bit odd to me.

[00:04:49] It is, after all, exceedingly simple to run the numbers

[00:04:52] and see which is the more financially prudent course in any given case.

[00:04:57] From there you'll know if your preference will cost or save you money.

[00:05:01] If it saves, you need only celebrate and do what you want it anyway.

[00:05:05] If it's going to cost, you're able to decide if you want to spend the extra money

[00:05:09] your living preferences require.

[00:05:12] In our case, the numbers always pointed to renting as the better financial path.

[00:05:17] Right now, that's the beautiful thing.

[00:05:19] We get what we want and it costs us less.

[00:05:22] But even when what we wanted was a house that cost more, that was fine.

[00:05:26] What was critical at the time was understanding how much more

[00:05:29] that buying choice would cost.

[00:05:32] It was that understanding that led us to always buy less house

[00:05:35] than we could afford, and that in turn made it a far more comfortable home ownership experience.

[00:05:42] Not being privy to the numbers, I have no way of knowing if the young couple

[00:05:45] who bought my tools have made the best financial choice.

[00:05:49] But what is clear is that they're very excited about putting down roots.

[00:05:53] They certainly have made the best emotional choice.

[00:05:56] That being the case and assuming they've not spread themselves too thin,

[00:06:00] even if the house costs more over time, they will have made the right choice.

[00:06:05] Life choices are not always about the money,

[00:06:07] but you should always be clear about the money choice you're making.

[00:06:11] Anthropologists tell us that we humans,

[00:06:14] homo sapiens, have been running around the planet for just about 200,000 years

[00:06:19] and that we've been behaviorally modern for the last 50,000 or so.

[00:06:24] For the vast majority of that time, we were nomadic hunter-gatherers,

[00:06:28] more wings than roots.

[00:06:30] But then some 10,000 years ago something very profound changed.

[00:06:35] After 190,000 years of roaming around, we began farming,

[00:06:40] we began settling down,

[00:06:42] we began building cities,

[00:06:44] we began to go to war over territory,

[00:06:47] we began to put down roots.

[00:06:50] Why this occurred is the subject of much debate and research,

[00:06:53] but nobody really knows,

[00:06:55] but occur it clearly did.

[00:06:58] It's become hardwired into our historical myths and stories.

[00:07:02] Abel versus Cain,

[00:07:04] Hunters versus Farmers,

[00:07:06] Nomads versus Settlers,

[00:07:08] Own versus Rent.

[00:07:10] Abel versus Cain.

[00:07:12] Did Abel versus Cain sound odd in your ear just now?

[00:07:16] It does to mine.

[00:07:17] Cain versus Abel is how I've always heard it.

[00:07:20] The farmer is named first.

[00:07:23] The farmer survived and reproduced.

[00:07:26] The hunter is killed off.

[00:07:28] The West is settled.

[00:07:30] The nomads exterminated or rounded up.

[00:07:33] Hunter-gatherers teeter on the brink of extinction.

[00:07:36] No wonder this debate is so emotionally charged.

[00:07:39] Our biases are showing.

[00:07:42] They're even written into our tax code.

[00:07:44] Mortgage interest and real estate taxes are deductible.

[00:07:48] Home ownership is a national good,

[00:07:50] and as such is rewarded.

[00:07:52] It's worth noting that both of these deductions

[00:07:55] and the very concept of mortgages being widely available

[00:07:58] grow out of the Great Depression.

[00:08:00] It was a time of dangerous unrest.

[00:08:03] The fact that a settled population is more docile

[00:08:06] was not lost on the policymakers of the day.

[00:08:09] We might also look at this as

[00:08:13] expansiveness versus efficiency.

[00:08:16] Personally, we fall on the side of efficiency.

[00:08:19] We like owning exactly what we want,

[00:08:21] need and value, and not a single thing else.

[00:08:25] The apartment will be moving to you

[00:08:26] as a bit more than a third the space we're leaving.

[00:08:30] It's exactly what we need and not a square foot more.

[00:08:33] Maybe even a few square feet less,

[00:08:36] but I'd rather pare down to fit.

[00:08:38] The problem with houses is that even for people like us

[00:08:41] there's a relentless tendency to expand to fill them.

[00:08:45] For those who value expansiveness,

[00:08:47] that's just one of their charms.

[00:08:49] The far side of expansiveness can be found

[00:08:52] on the TV show American Pickers.

[00:08:55] If you haven't seen it,

[00:08:56] the program follows two guys who drive around the country

[00:08:58] looking for old things they can buy and resell

[00:09:01] at a profit in their stores.

[00:09:03] They seek out places filled to the rafters

[00:09:05] and across the fields with junk that owners have collected,

[00:09:09] most often for decades.

[00:09:11] The people who own these places

[00:09:13] and all this cruff are the pinnacles

[00:09:15] of the expansiveness motif.

[00:09:18] Once the house is filled, the barn is next.

[00:09:21] Then the outbuildings, fields and trailers

[00:09:23] they've hauled onto their land to hold still more.

[00:09:27] It's hard to imagine a more different mindset than my own

[00:09:30] and that's likely what makes it endlessly fascinating to me.

[00:09:34] While that and the idea of buying low and selling high,

[00:09:36] of course, the beauty of our lives

[00:09:39] is the endless variety of how we can choose to live them.

[00:09:43] The point of this blog is fundamentally

[00:09:45] to discuss how and why to accumulate FU money

[00:09:48] and the freedom it provides in making those choices.

[00:09:52] Roots or wings.

[00:09:54] The choice is yours,

[00:09:55] but as with everything you choose to buy,

[00:09:57] be sure you take the time to know what it will cost.

[00:10:04] You just listen to the post titled

[00:10:06] Roots vs. Wings,

[00:10:08] considering homeownership by J.O. Collins of J.O. Collins NH.com

[00:10:14] and I'll be right back with my commentary.

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[00:11:31] I think there are compelling arguments

[00:11:33] on both sides of the rent versus buy debate.

[00:11:36] There isn't a black and white answer for which is better

[00:11:39] because there are endless options of what you could buy or rent

[00:11:43] and everyone's circumstances are different.

[00:11:45] I know people who buy duplexes,

[00:11:47] rent out the other side and make money on their home.

[00:11:51] That could be a more financially advantageous decision

[00:11:54] than renting, assuming that you know what you're doing

[00:11:57] as a landlord and your maintenance costs aren't unreasonable.

[00:12:00] I also know people who travel the world

[00:12:02] and get paid to house it.

[00:12:04] That's another example of being resourceful around housing

[00:12:07] in a way that fits your circumstances and preferences.

[00:12:11] I think the point is to be thoughtful and resourceful

[00:12:14] in getting your need for housing met.

[00:12:17] According to the 2023 State of the Nations Housing Report

[00:12:21] from Harvard University's Joint Center for Housing Studies,

[00:12:24] in total, 31.8% of all households were cost burdened in 2021,

[00:12:31] meaning that over 30% of their income is going to housing

[00:12:35] and over 20 million US households paid over half of their income on housing.

[00:12:41] Those are some pretty different statistics

[00:12:43] and a great reason to take the cost of housing seriously.

[00:12:47] But that should do it for today, have a happy rest of your day

[00:12:50] and I'll see you tomorrow on the Wednesday show

[00:12:53] where your optimal life awaits.