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How To Turn Renters Into Savers

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http://www.nytimes.com/2014/05/15/upshot/how-to-turn-renters-into-savers.html?ref=business&_r=0

Some people didn’t like my post on housing-as-food, which illustrated how pro-home ownership policies distorted behavior and the economy. The best pro-housing response I’ve seen (from Megan McArdle, among others) was that homeownership encourages families to save.

This is true. Every month, you write a check to the bank, part of which goes to pay interest, and part of which goes to reduce the balance of your loan. Over time, you own more of the home.

In a country that doesn’t save enough, forced saving is a real virtue of owning a home. But investing in home equity can go very badly when home prices fall. Rather than relying on homeownership as a path to retirement saving, can we find a way to replicate the savings benefits of homeownership for renters?

First, we should be clear on why owning a home is useful for saving. It’s not because homes are especially good investments. Sure, if you bought a house in 1996 and sold it in 2005, it was probably a great vehicle for building savings. But over the long run, home prices have barely outperformed inflation.

Owning a home is "forced" saving. Yet another reason to buy a house.

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Where's the evidence that renters put aside less of their income than homeowners with comparable incomes and comparable capital borrowing (rent/mortgage interest) costs?

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paying interest is saving...brilliant

Saving banks and bank bonuses.

The more you look at it the more it is a scam and the govt. and central bank are at the very heart of it.

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Saving banks and bank bonuses.

The more you look at it the more it is a scam and the govt. and central bank are at the very heart of it.

Give that man a gold star.

The trouble with the government is...they dont have to earn money or turn a profit..they just need to come up with ways of taxing us as much as possible without us revolting. 200,000 police and 150,000 soldiers wont do much when 20 million people say enough is enough...our fine government is expert in extracting money from the sheeple and subduing them. They come up with some great schemes...traffic lights out of phase so we use more petrol..."safety" cameras...airport tax...and the best yet..charging you to buy a house, charging you to live there, charging you to heat it, charging you to be entertained in it and letting the people who give some ex politicians lucrative jobs invent money out of thin air and bump up house prices so we have to pay their mates most of our wages to live in a tiny house which cost 2k to build 40 years previously., and more tax too of course. . WE MUST ALL BE STUPID. THEY MUST BE LAUGHING UP THEIR SLEAVES AT US.

Best course of action...find a new country with a less greedy government...id suggest a republic.

Edited by TheCountOfNowhere

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http://www.nytimes.com/2014/05/15/upshot/how-to-turn-renters-into-savers.html?ref=business&_r=0

Owning a home is "forced" saving. Yet another reason to buy a house.

I suppose you could argue that having to save for a deposit so that you can buy your own place and escape a grotty slumlord rental is also forced saving...

IMO as a renter it is a hell of a lot easier to save while renting - boiler borked, 'Hello letting agent, boiler's borked' £100 saved... roof leaking, 'Hello letting agent, roof's leaking' £500 saved...

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paying interest is saving...brilliant

I know what you're saying, but there is something to be said about changing a person's mindset through debt. Owning a home in a way removes any dreams you have of moving to far of lands or quitting your job and starting to work for something you believe it. It makes you a debt prisoner whilst also locking you in to providing s stable family home and contributing to a stable society. I've known spendthrift people in the middle east who are unable to buy property take out a loan at low interest rates and then pay it back every month to force them to save. It does work.

Ideally, the government should explain to the masses that we live in a nice ponzi pyramid and we need stability through savers and borrowers and in order to pay for the services we supposedly want in old age (although have never been asked) we need to save a substantial amount of our take home pay.

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