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cardiffone

Surely Rent Is The Same A Debt?

43 posts in this topic

Surely paying rent is the same as being in debt?

Some people on this site seam to think they are not in debt when renting, but you are.


What the difference?

if you have a mortgage you have payments to make every month.
If you rent you have payments to make each month.

If you don't pay rent you are kicked out.
If you don't pay mortgage you are kicked out.


cheers Edited by cardiffone

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You are not in debt when you pay for rent any more than if you buy a tank of petrol.

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[quote name='cardiffone' timestamp='1298045852' post='2899851']
Surely paying rent is the same as being in debt?

Some people on this site seam to think they are not in debt when renting, but you are.


What the difference?

if you have a mortgage you have payments to make every month.
If you rent you have payments to make each month.

If you don't pay rent you are kicked out.
If you don't pay mortgage you are kicked out.


cheers
[/quote]


239 posts and you are still at that level?

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[quote name='Sledgehead' timestamp='1298046257' post='2899859']
239 posts and you are still at that level?
[/quote]

explain?

I reality there is no difference, and you know it.

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[quote name='cardiffone' timestamp='1298045852' post='2899851']
Surely paying rent is the same as being in debt?

Some people on this site seam to think they are not in debt when renting, but you are.


What the difference?

if you have a mortgage you have payments to make every month.
If you rent you have payments to make each month.

If you don't pay rent you are kicked out.
If you don't pay mortgage you are kicked out.


cheers
[/quote]

It's all about when you buy...

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[quote name='Harry Monk' timestamp='1298046246' post='2899857']
You are not in debt when you pay for rent any more than if you buy a tank of petrol.
[/quote]

Again the effect is the same, if you must buy petrol, you are in effect "in debt" to the petrol sellers.

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[quote name='cardiffone' timestamp='1298045852' post='2899851']
Surely paying rent is the same as being in debt?

Some people on this site seam to think they are not in debt when renting, but you are.


What the difference?

if you have a mortgage you have payments to make every month.
If you rent you have payments to make each month.

If you don't pay rent you are kicked out.
If you don't pay mortgage you are kicked out.


cheers
[/quote]

rent for 25 years pay 0% interest
buy over 25 years, pay a fluctuating amount of interest depending on the state of the economy.

buy = long term commitment, or be penalised for early exit
rent = short term commitment, feedom, options Edited by Reck B

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[quote name='cardiffone' timestamp='1298046526' post='2899866']
explain?

I reality there is no difference, and you know it.
[/quote]

Just because you're to stupid to know the difference, doesn't mean there's no difference, it just means you're to stupid to know the difference.

Ignorance is no excuse and no one is under any obligation to educate you in this very, very simple matter. Negative proof is not a valid argument.

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[quote name='enrieb' timestamp='1298046943' post='2899874']
Just because you're to stupid to know the difference, doesn't mean there's no difference, it just means you're to stupid to know the difference.

Ignorance is no excuse and no one is under any obligation to educate you in this very, very simple matter. Negative proof is not a valid argument.
[/quote]

I think you're confused, i know the difference in technical definition, i'm asking a deeper question about true differences in practice...

really :lol:

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[quote name='cardiffone' timestamp='1298046526' post='2899866']
explain?

I reality there is no difference, and you know it.
[/quote]

AWOOGA

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[quote name='Reck B' timestamp='1298046847' post='2899872']
rent for 25 years pay 0% interest
buy over 25 years, pay a fluctuating amount of interest depending on the state of the economy.

buy = long term commitment, or be penalised for early exit
rent = short term commitment, feedom, options
[/quote]

Thats ignores inflation

rent for 25 years pay fluctuating and over time increasing amount depending on inflation, and a myriad of other factors.

My point really is, if you have to pay something, you might as well consider yourself to be in debt.

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[quote name='Reck B' timestamp='1298046847' post='2899872']
rent for 25 years pay 0% interest
buy over 25 years, pay a fluctuating amount of interest depending on the state of the economy.

buy = long term commitment, or be penalised for early exit
rent = short term commitment, feedom, options
[/quote]

Buy over 25 years pay price plus at least that again for house, but you'll at least have something at the end of it.

Rent over 25 years, zero liability, or interest paid, but you will of paid off your landlord's mortgage instead of your own. Plus you've got nothing to show for it apart from another rent demand.

Either way they have you screwed......unless you can buy outright of course.

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[quote name='cardiffone' timestamp='1298045852' post='2899851']
Surely paying rent is the same as being in debt?

Some people on this site seam to think they are not in debt when renting, but you are.


What the difference?

if you have a mortgage you have payments to make every month.
If you rent you have payments to make each month.

If you don't pay rent you are kicked out.
If you don't pay mortgage you are kicked out.


cheers
[/quote]

When you get kicked out and have a mortgage which results in repossession, your financial position is the liquidation value of the house minus the sum still owed on the mortgage. This could be positive or negative.

When you get kicked out because you haven't paid rent, you have no further financial gains or losses.

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[quote name='cardiffone' timestamp='1298045852' post='2899851']
Surely paying rent is the same as being in debt?

Some people on this site seam to think they are not in debt when renting, but you are.


What the difference?

if you have a mortgage you have payments to make every month.
If you rent you have payments to make each month.

If you don't pay rent you are kicked out.
If you don't pay mortgage you are kicked out.


cheers
[/quote]

oh dear.

based on this logic, when you're born you're already in debt. you're in debt because you need to eat. food costs money. hence you need to keep paying to survive. :rolleyes:

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[quote name='LuckyOne' timestamp='1298047609' post='2899888']
When you get kicked out and have a mortgage which results in repossession, your financial position is the liquidation value of the house minus the sum still owed on the mortgage. This could be positive or negative.

When you get kicked out because you haven't paid rent, you have no further financial gains or losses.
[/quote]


Why are you being so helpful? He's either a moron or being deliberately obtuse. Either way, he deserves to be ignored.

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[quote name='Sledgehead' timestamp='1298047858' post='2899895']
Why are you being so helpful? He's either a moron or being deliberately obtuse. Either way, he deserves to be ignored.
[/quote]

Fair enough. The original statement is the flip side of the "rent is dead money" argument.

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At the risk of feeding a troll, I can't resist responding.

Renting is very different to being in debt when your debt is secured on something as illiquid as a house.

Take my own circumstances as an example:

I have a lease which I can terminate on one month's notice and be free of that obligation. If my circumstances change, such as losing my job, I can terminate my lease and, depressingly, move back in with my parents faster than you can say 'yes Mum, I know life is still worth living'. The downside risk is minimal, but obviously with no chance of a gain from HPI.

If I have a mortgage, however, if I lose my job I still have to make repayments until I am able to sell my house (assuming I couldn't get a new job). Given current high prices and low transaction levels, the chances of a price correction are high and the prospects for getting a quick sale at a price which wouldn't see me lose a chunk of my deposit/equity are low. You are also vulnerable to interest rate shocks for which there is no comparable risk when renting.

Assuming nothing goes wrong in your life, the practical realities of being in debt are pretty much the same as those of having rental commitments.

When things go wrong, though, being in debt is far, far worse. Edited by WageslaveX14

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[quote name='theonlywayisdown' timestamp='1298047839' post='2899894']
oh dear.

based on this logic, when you're born you're already in debt. you're in debt because you need to eat. food costs money. hence you need to keep paying to survive. :rolleyes:
[/quote]

yes thats right. great isn't it.

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[quote name='cardiffone' timestamp='1298048156' post='2899902']
yes thats right. great isn't it.
[/quote]

And then this whole thread is about as pointless as the phrase 'there's no such thing as a free lunch'.

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There seems to be a lot of business owners on this site.

Is it not more difficult to aquire start up capital without a house to secure your debt to?

I mean business men/women don't resort to debt to start out their companies, right? I mean debt is wrong etc...

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As mentioned, they are both liabilities. The fact that both have to be paid is no mystery, otherwise they would not be liabilities at all.

Yes, they both have the similarity that they require periodic payment for the use of an asset that has a large capital value. But this makes them no more equivalent than money received from a wage or money received from investment income, even though they too superficially deliver a similar 'user experience'.

The main differences are that debt is a fixed liability of nominal value, based on capital already consumed, whereas rent is a variable real liability where the use of the capital asset is being consumed on a roughly coincident basis.

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Rent is an expense, like paying for gas and electricity. And renting is considerably less risky than buying.
I will give you a simple example:

I have 100k worth of savings and my target house is a 250k.
If I lose my job tomorrow, I can live fairly comfortably (and feed myself) for approximately 8-10yrs in the house I rent.
If I buy my house for 250k, taking on a 150k mortgage, and lose my job, I am f...ed, I lose my house and I lose my 100k pretty much overnight.

How can you say that renting is like a mortgage?

When you rent you pay someone for a service, when you have a mortgage you are in debt and have liabilities. In one case you end up in the street but with no debt, in the other case you also end in in the street but with debts, poor credit ratings...

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[quote name='Princeofpounds' timestamp='1298048509' post='2899913']


The main differences are that debt is a fixed liability of nominal value, based on capital already consumed, whereas rent is a variable real liability where the use of the capital asset is being consumed on a roughly coincident basis.
[/quote]

In what sense is the capital consumed with a mortgage debt?

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