Color of Money Live: A hot debate on renting vs owing a home

Feb 08, 2018

Join Washington Post nationally syndicated personal finance columnist Michelle Singletary for an online discussion.

“Knowledge isn’t power. The right knowledge is power.”

Stay informed.

Read & share Michelle Singletary’s Color of Money Column on Wednesdays and Sundays: http://wapo.st/michelle-singletary

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So glad you could join me today. 

Honored to have as my chat guest John Hope Bryant, who is hear to talk about his book "The Memo: Five Rules Fro Your Economic Liberation." 

So welcome him with your questions. Don't you want to know the rules?

Let's get started.

Dear Michelle, Just want to thank you for the inspiration to see our life differently. My husband was recently in a serious car accident which totaled the vehicle. He is okay (thankfully!) but the whole incident has given us an opportunity to reflect on what we need as a family versus what we want. We are going to try living with one car for a while and see if we can get used to it rather than reflexively taking out a loan for a second car. The money we get for the total loss will be the basis of our new emergency and life happens funds after we pay off some nagging credit card debt, as we don’t have any savings outside of our retirement. Thanks for what you do! Longtime reader in Silver Spring, MD

I'm so sorry about the accident. But I'm glad you are using it as an opportunity to reflect. When trouble hits it's always a good time to take a pause. 

And I love that you'll try to get along with one car rather than get a car loan. Let me know how it works.

I'm fairly good with my money (and lucky in my salary) and am able to save from every paycheck. But, after years of reading you, I realized I should take a closer look at my spending. For me, I noticed that I spend a LOT on Amazon on....stuff. Those $10/20 things I buy on spur of the moment really add up. So, I went into my Amazon account and deleted my credit card info. I also turned off one-click purchasing (even for books!) I then bought myself a gift card for what I think is reasonable to spend in a month and put it in my account. When that's up, that's up. Hoping I can really make a dent in the frivolous spending on stuff I don't need this way!

Wow!!!!!!

Love, love, love this plan. It's amazing how much you can save when you sweat the small stuff! 

Good for you. 

Keep those Thursday Testimonies coming!

I think it is a little more sophisticated than some, but still leaves people with no way to predict the need for certain expenses. For example, it asks if you plan to spend more or less or about the same in retirement. Well, if you are going to pay off a house right as you retire, your expenses might go down at first, but health expenses tend to go up as we age, so the answer is really first a bit of one, then the other. I liked that it allowed you to pick your investment strategy to see how that impacts your ability to save. I do wish it had a way to include an employer match in your 401k as savings because at some areas on the income scale, that money is real as savings, but you can't just add it to your salary in the calculator or it will overestimate your Social Security annuity. Also, there doesn't seem to be anyplace to put a pension you expect to receive. I played around with it a bit and it looks like I will be OK, and the small pension will be a bit of a cushion on top of being able to make it on SS and savings. The big difference for me seems to be retirement age. I have a job that I can probably do until I am 70. And if I can pull it off, I will. Two more years to 26 days of vacation per year. Oh, and one more thing, having long term care insurance is a huge factor. My parents are planning to move to an independent/assisted living place soon. Mom isn't doing great and Dad needs some back up. The financial people are so relieved when they say they have it. They are OK for their expected life spans (still hoping to keep them around for a good long while) but more help than they will get just being in a place with 24 hour emergency staff is expensive.

 

Read Michelle's column on the topic here.

There are a lot of retirement calculators. Some are okay, some very good.

But here's the thing. You tried the one I wrote about. And it got you thinking even more about what you have and what to expect. So if nothing else it did the job of engaging you with yourself on your retirement needs. Truly that's half the battle. 

Many people don't face to face the numbers -- any numbers. They just put money in a workplace account OR don't put money in an account and just bury their heads in the sand. 

You have to be an active participant in figuring out what you need for retirement. 

We currently have a very high interest rate 8.99% that may go higher soon. I would like to sale our home NOW go into an affordable apartment for a few years 3-4 max pay off student loan debt (we have no credit cards) invest part of the money we earn from the sale and also put towards our loans . Is this a decent plan or should we just refinance? Thank you Ali

If you can get a MUCH better rate, refinance and take the mortgage interest deduction against your income and get some of your income back! That's powerful. If you rent, keep in mind that you will be throwing away that money for as long as you do it -- zero economic benefit to you. And this is fine -- I rented for a long while coming up, and now I am a substantial landlord and owner of rental single family homes, so obviously I encourage (said with a smile and a wink) -- just know what you are doing.  And investing is always a good idea. The market. A solid business. Real estate with income attached. A home rehab. Your own education. Etc.  Good luck!

I'm 32 years old and don't know what I'm supposed to be doing with my money. I make about $90k a year, contribute 11% to retirement (+5% match for a total of 16%) and have around $120k in retirement and $60k in savings. Single, no kids, no debt (I rent and my car is paid off). I know I'm incredibly privileged to be in this position...I travel, I eat out, I'm able to put aside $1k a month in savings...but I'm not sure what I should be doing with my money. I know I shouldn't just let my savings sit in a savings account but I really don't know what to do and I'm embarrassed to admit that.

Wow, you are in an incredibly good position -- particularly to be 32! I don't know what I was doing at 32, but it was not as good as you. :)  I was actually building businesses, but my personal saving profile habits were not as good as yours. Bravo.  You are getting what I call #TheMemo, early. 

I would encourage you to look at what you wear and use everyday, and begin your proper equity investment profile from that place. If you like Nike shoes, but that stock. If you like Apple or Starbucks products, then try those... And move from there. Baby steps.  Also look into fractional investing, right from your mobile devise. Fractions of different shares and companies you love. As your confidence and comfort rises, more options will become obvious.

Your goal -- to get #TheMemo to and for your life aspirations.  Good luck. 

They say the economy is good, unemployment low, people will have more money in their paychecks due to the tax law changes, and then the stock market drops more than 1000 points in one day. The fear seems to be possible inflation. That could be good for people who want to sell a house, but bad for the buyers. What do you think about the stock market and overall economy? Should we be concerned (if we have 10+ years before we retire)?

 

Read Michelle's column on the topic here.

So nobody knows what's going to happen with the market. But right now the economy is strong. Panic breeds panic and I think that's what's happening now. 

I won't tell you not be to concerned. Heck, I'm concerned. From last Friday til Tues. my retirement account was down 6%. 

But it was up 20+ percent for all of 2017. I'm not changing anything right now. My husband and I have a plan. And we try not to let swings derail us. 

And since you have 10+ years to go you should be okay. Just take a look at your holdings and make sure you can tolerate (ie. stomach) the risk you have. 

I'm not the OP, but I just wanted to offer a testimonial on all the ways we benefit from a one car lifestyle. There are benefits beyond just reduced insurance/gas/maintenance/lack of a car payment. We need to live in a walkable area near transit, so we live in a smaller house than we might otherwise have bought. That means less money spent on utilities, upkeep, furnishings, etc. I do the grocery run when I have the car, meaning I plan out meals ahead of time and cook at home (no just popping out for something I'm craving, or drive-thru for dinner). With my own car, I might be tempted to go browse the shops while bored, but now I go for a walk around the neighborhood instead (so I save money and get exercise). Additionally, having to work out with my husband who needs the car and when means we talk about our plans with each other, meaning we're communicating about where we go and therefore how much we spend.

Thank you so much for sharing this! Very, very helpful and inspiring!

What piece of financial advice would you say has helped you most?

Recognizing that I AM (THE FIRST) CAPITAL.  That I am the brand. I am the product. It all starts with and from me, and my mindset.  Get your mindset right, and your life choices will follow. 

Hey Michelle, My wife and I have three young kids, two of whom are in daycare/preschool, we are fortunate enough that my employer lets me use the pre-tax dollars for childcare where I set the money aside and get reimbursed at the end of the year for the expenses. Through some good fortune and watching what we spend, we've been able again in 2017 to take that reimbursement and put it into our emergency fund as a lump sum deposit. It occasionally hurts during the year to say no to take-out or a sit-down breakfast with my spouse, depositing that check and knowing we're preparing for the future makes it worthwhile.

Love it! Creative savings at work. 

Your column about not paying to celebrate other folks' milestones caused a ruckus on a Facebook thread. Most of the people agreeing with you and shouting 'amen' (from the cheap seats, of course). Can you address this new trend of people having birthday fundraisers on Facebook. Several friends are asking for donations to causes such as hospitals or food banks in honor of their birthdays. While the causes are noble, my only gift to these folks is a happy birthday message on Facebook. One friend, who was $250 away from her $500 goal, sent a mass inbox message saying if just 25 of us would give $10 she'd reach the goal. What do you think of this trend? I refuse to give, even though they are good causes, because if 20 of my friends have these birthday fundraisers and I give $5 each, that is $100 I have not budgeted. Am I a grinch or a good steward for refusing to open my pocketbook to this fleecing.

Read Michelle's column on the topic here.

People I had no idea how many fights I was going to start. If you haven't read the column already you must! And share. Love to see what your circle of folks say.

As for asking for donations for birthday in lieu of present, I hate it. Sure, it's for a good cause but it's begging for a gift, which you shouldn't no. Bad etiquette. Miss Manners does not approve (She actually says gift registries are wrong too by the way). 

But to complain is to be labeled a miser. So I just do what I want to do within my budget. I may or may not get a gift off your registry.  I definitely won't be told to give to someone else in your name. So you are not a grinch. You are a good steward who does not need to give into these etiquette breaches. 

Not necessarily. The new tax law means that for a married couple, unless their mortgage interest and other deductions are over $14,000 a year (assuming their state and local taxes are up to maximum $10,000 which might not be true) they will get NO benefit from the mortgage interest. Even then, the benefit is only to the extent that the interest exceeds that amount. Not hard to do in expensive urban areas, but hardly the norm nationwide. People who plug real estate as a huge tax advantage are going to have to find a new song to sing.

I agree with you. And I wasn't singing that song even before tax reform. 

Here's what I think. When you rent you are not throwing money away. You are getting something very useful for your money -- a roof over your head. You are NOT a financial failure if you rent. Anybody and I mean anybody with a home who does regular upkeep will tell you that you don't save with homeownership. Your home can be a money pit. Sure there's a chance you'll have equity. And there's a chance you won't. 

Buy when you can afford to buy and because you want to have a home you can do what you like with. 

I don't see my home as an investment. It's where I live, very comfortably. 

The key to financial freedom I think is staying out of debt and getting out of debt as fast as you can when you borrow other's people's money. Invest to beat inflation. Save for the things in life that happen so you don't have to tap your investments before you need that money (for college, retirement, etc.).

Live below your means. If your means are low, think outside the financial box. Maybe you need shared housing, etc. Train for better skills to get a better job. 

And never plan your finances around tax breaks.

What are the 5 rules and why don't many people get "the memo?"

The 5 rules of The Memo are:

1. We live in a free enterprise system. Embrace it.

2. Your mind set makes or loses money and wealth - you choose. YOU -- are capital (als0).

3. Your relationships are investments - Build relationship capital with yourself first.  This is so very important to success in life. Both parts of this.

4. Don't just get a job. Be entrepreneurial.

5. Spiritual capital is the start of true wealth - OWN your own power.

Bottom line -- no one ever taught you how power, money, wealth, success or acquiring any of these things -- ever works.  There is no curriculum, and it is not outlined anywhere in life. You have to acquire it somehow on your own.  And here is the worse part -- if your family does not know, they can only give you what they have; nothing. 

If you hang around 9 broke people, you will often become the 10th.

When they ask how much you've already saved for retirement, they specify 401Ks, IRAs, etc. But should I also include the value of my post-tax brokerage account, which is substantial?

If the calculator is asking how much you've saved and there's a space for it, include all your savings tax-advantaged or not. I do. Because it all counts. 

This ridiculous practice is a result of people blindly following Facebook's attempts at social engineering. Just because the feature is there, that doesn't mean you have to use it. Use some common sense, sheeple!

Sheeple? Lol! 

 

I have been writing this note in my head for more than a year now! I was *this* close to being 100% out of debt a year ago. Then my mother died, that brought debt, then I got sick (it’s expensive to get sick even with insurance) and more debt. I am thrilled to announce that as of yesterday I have achieved my goal of being 100% out of debt!! Doing the happy dance! I am one of the people out there that lives paycheck to paycheck so it was a long haul. Every extra cent I got I put on debt. Be it tax refunds, mileage checks from work, all of it. With every debt paid off I put the money I was paying on it onto the next one. Switched some debt to 0% interest cards, after doing the math to see if the fee was worth it. It took 5 years to get here. I am now saving money so I can buy a “new to me” car with cash. I could probably save enough for a new car but with research I can get the car I want at just 2 years old and save more than $10,000. I am keeping my 11 year old, 227,000 mile hooptie till it curls up it’s axels and dies so I will have plenty of time to save. I will admit that I did not fund an emergency fund or a life happens fund during this time. My reasoning was that any money sitting in the bank would be money that I would be paying interest on with the student loans and credit cards. So I used my credit cards as my emergency fund, hedging my bets that I “might” have to pay interest on any charges if I had an emergency but I definitely “would” have to pay interest on the amounts I could have paid and didn’t. But now I will have fully funded emergency and life happens funds as well as a growing car account. Thanks for all of your help and keep it up!

I live for this time of note. Thank you for sharing. So proud that you patiently went about getting that debt monkey off your back.

Now you know I wouldn't have agree about not having some savings even while you were getting out of debt BUT I will not rain on your parade day. 

 

My wife and I recently watched the PBS American Experience "The Gilded Age" (late 1800s) episode. We were struck with the parallels (or just the continuous) of income inequality and government favoring big business over the people. How does Washington corrupt so many initially well intentioned people?

You are correct that they go there (Washington, DC), most of them, with initially good intentions. 

You are also correct that history often repeats itself.

The short answer to all of this is, to quote a former US President, "it's hard to get someone to agree to the truth, when the lie is paying their paycheck."  People -- good people -- begin to speak increasingly to their INTERESTS when in power. And the more power, the larger the challenge.

But I have hope. And you getting #TheMemo, will insure that you are able to become your own consumer protection agency.

I just started investing literally about a week before it all started going down. Bought apple, FB, amazon. Should I sell them or keep them? I'm regretting I started investing!

DON'T SELL unless you just believe the market is way over valued.  Markets recover. That has been the long history for the stock market. I buy companies I believe in, put the stock aside in my mind and hold like an heirloom or long term keepsake. So I don't get distressed with the short term ebb and flow. I am a long term investor -- and on balance every dip and dive ultimately came back in my favor (there have been a few absolute dogs over this time, but on balance...).

As Warren Buffett says, 'when people are greedy, be afraid. When people are afraid, be greedy (buy more).'  

Hope this helps.

I would add that to help ensure you are well diversified consider putting money in low cost index funds. It's what I've always done (I do not own any individual stocks). Within my low-cost index funds are some large, mid-size and small company stocks. Got some bonds too. 

Have done quite well with this strategy. So well in fact, that paying for all three kids to go to college and graduate school debt-free.

What I hate is not knowing the rules in advance. If a friend says "OK, let's get together and take Daniela to lunch for her birthday - we'll treat Daniela and each pay our own way" - then I know what I am in for. It's the invite that says "Daniela wants you to join her for her birthday celebration!" and arriving to find out Daniela is not actually hosting that makes me nuts. And I am with the other poster - I never give to the facebook request for birthday charitable donations. I have a donation plan in mind at the beginning of the year and I stick to causes I care dearly about.

I will no longer go to events in which the celebrant expects me to pay for their celebration. So I ask in advance. Is this a really party or are you asking me to pay. Okay,  I don't say that exactly. I just inquire. If there is a fee to party, I decline the invitation. I don't make a big deal about it. Just say I an unable to attend. 

#Guestsdontpay 

EVER!

I'm sitting here toasting you (with the free office coffee, of course)!

It's so nice to enjoy others financial success stories. 

If the poster intends to use the post-tax brokerage account for retirement, then include it in the retirement calculations. If that money is earmarked for college, housing, or something else, it is not retirement money.

Yes, of course.

I feel his "Memo" is too one-size-fits-all. "I am the First, the Brand" sounds pretty soul-crushing to someone juggling median wage work, children, activities, forms. Relentless self-promotion is exhausting and can be counter-productive. (A relentless self-promoter just contacted my office yesterday to promote his aims, and my boss and I were agreed in turning him down). "I am the Capital" is only one path and one way of thinking. I want to assure people there are multiple paths to financial stability. If you are not a relentless networker, think about other ways. Maybe you take a more stable job and find economies at home rather than constantly insert your name in various places. My depression era working class parents left a surprising amount of money without ever thinking of themselves as "brands." The point is: Find your own way - which is not the same as saying the possibilities are infinite. But there is more than one.

This is a GREAT comment! I don't believe I made myself clear. You are your own COMPANY.  Meaning, you are Mary Jane, Inc.  Or you are John Doe, Inc.  Think that way -- and then apply it to how you run your household budget, how you buy and/or invest in whatever -- but all of this begins with YOU. Forget self promotion. I am talking about EDUCATION, to start -- and not a 4 year one at a university.  How do you become the best front office manager in your company? How can you become the best clerk assistant at the place you work? All of this leads to your standing out, which produces at least two results -- less of a chance of you being let go (translation - job and income stability), and more of a chance of you getting a raise or promotion. Then take some of that income gain, and set it aside for never-had-money-for-investing. Get it? Dr. King once said, 'if you are going to be a garbage collector, be the best garbage collector that the world has ever seen.' I agree, and that is what I mean. Personal excellence. Reaching for more. Changing your trajectory. Not waiting for someone to come and save you (they won't).

 

Here is an easy one, about adding your OWN value. If you make less than 53K a year, the federal government owes you a check for WORKING. It is called the EITC, and if you make say 35K with two children, and have never filed, that could mean upwards of 10K in your pockets!  But you cannot think outside the box about things like this until you decide that YOU are capital.

Capital comes from the Latin root word of 'capitas,' or knowledge in the head. It has nothing to do -- with money.

 

Hi Michelle - I live in one of the high SALT (State and Local Taxes) states (MN) and pre-paid my 2018 property taxes to **hopefully** deduct them on my '17 tax return, before the $10K cap kicks in for 2018. There was a lot of news about this potential opportunity at the end of December, but since then, nothing. I strongly believe that I should be able to do my own taxes without "consulting with my tax professional" and for this issue, I'm not sure how they would know something more than the general public. I would think either the IRS or local tax offices would be obligated to give us the definitive answer, but I can't find it anywhere. Seems like no one is willing to commit. I don't want to deduct them if they are not allowed but also don't want to pay more than I am obligated. Do you have any thoughts on how we can get a firm and clear answer? Why isn't the press all over this now that it's tax season? Thank you!

Actually the Post and others did a number of stories about folks prepaying property taxes. Do another search. I just did. Whether you can will depend on your state. 

John, I get your point but renting is not "throwing away your money". You are getting a place to live for your money. There are benefits to renting versus owning.

I agree with you.

 

My youngest, age 27 has approximately $75,000 in student loan debt. No private loans. She is on an income-based repayment plan (she says for the rest of her life). The loans are a result of her putting herself through grad school, and one year of out-of-state tuition at a public university. She says her monthly payment just touches the interest, not including any principal. It's depressing and she doesn't see how she can get ahead. Her dad and I are still paying our parent loan. What do you think of student loan consolidation? She is frugal and smart with her money; of course works full time and is self-supporting. Thank you. Enjoy your column!!!

Consolidation won't do anything about the $75,000 other than to put it into one loan. 

If at all possible, I would suggest your daughter come home if she's not already living with you. Or find a friend or relative who will allow her to live rent free while she takes 80%  to 90% of her net pay and dump it onto the debt. 

If she is away and can't live with you or relatives, get shared housing and still put as much of her income as she can on getting rid of the student loans. 

 

Hi Michelle, My partner and I are 30, just bought a house, and are looking for someone to talk to about our savings strategies and plans. We both have 401ks and are good about saving money there (just over $200,000 saved between the two of us so far). I have a 401K from a previous employer that I could roll into an IRA, but I'm not sure if that's the best option. Also not sure what to do with our other savings -- how much to leave in liquid savings accounts and what other savings tools can we use to save and maximize returns within our risk tolerance. Would it make sense to set up a meeting with a fee-only planner to get some advice? I feel silly doing that as it's not like I need someone to actively manage investments or anything, but I would like some advice and opinion as to if we are on the right track. There's just so much information out there on the internet that I get overwhelmed and prefer to talk to things out!

I think a fee-only planner is just what you need. You just need good advice and be pointed in the right direction. My husband and I did that. 

If you're just starting to invest, individual stocks are more of an advanced thing. I only did that after building up a retirement portfolio and feeling like I had enough to play with a little bit of it. You should look into index funds, the expenses on those are as low as you can get, and the stock market index is the measure that every fund tries to beat! For an excellent explanation of why fees of even 0.1% are important in long-term retirement investing, I highly recommend <a href="http://www.pbs.org/video/frontline-retirement-gamble/">Frontline's "The Retirement Gamble"</a>.

Good advice.

Hey, don't get scared if your investment dips! A year or five or ten years from now, people would probably kill to have bought when you did! The one lesson I've learned from investing is that, once I've done my research and made my calculated decision, any hesitation after that is purely insecurity and will almost always cost me money!

Love this point!

This kind of panic is what leads to the losses not the stock market going down. If you have invested in solid companies they will still be there and going strong when the market goes back up. Husband and I have never sold anything in a panic. In fact we have almost all of our original investments and have watched the market go up and down for 30 years.

Agreed. Those people who had a panic attack in 2008 and sold missed the upswing we've been seeing up til now. They locked in their losses and didn't need that money at the time. 

I stayed the course and got back my losses and then some. And I was down 30% at the height of the crisis. 

John, I am in the process of creating my own company, just waiting for the approval to come back from the IRS on my 501(c)3 application. I am also a single parent to 3 children so I work a full-time job AND a part time job during the weekends to assist with paying off my credit card debt. My 2018 goal is to get that much closer to financial freedom. I understand building my brand and my company will require much more of my invested time, than the minutes between each job, to see it grow the way I need and envision. Any suggestions on how to balance working for another company while trying to grow my own, networking, and being available for resources and opportunities that will assist in the investment of myself and that of my children?

First of all, I commend you -- highly. Small businesses and entrepreneurs in part built this country.  They drive the majority of job growth and overall jobs today. So with every step, you are not only helping yourself, and becoming a great role model for your children, you are also helping the country.

Short answer - this will be a grind, period. There are no short cuts. Only in the dictionary does the word success come before the word work. It does not sound like you are looking for an easy way out so I will not offer you one. Here are two points:

1. An entrepreneur works 18 hours a day to keep from getting a job.

2. The fact that you currently HAVE a decent job is brilliant, not a problem. Let your 9 to 5 finance your 5 to 9 vision. Let them pay your livelihood, healthcare, etc. And when you can transition.....

Make sure you get some new shoes before you get rid of your old ones, and make sure that the new ones fit (well).

Good luck

Hi Michelle: I’m a big fan of your column and advice. I’m trying to overhaul my family budget and finances and tackle my husband’s and my credit card debt. But I have a question related to my employer’s 403(b) retirement plan, based on discovering a recent mistake in my organization’s administration of it. I’ve been at my job for several years, at a small non-profit organization. I opted to contribute 5% of my salary to the plan at the start of my employment. At my six-month employment anniversary, an employer contribution of an amount equal to 5% of my salary kicked in. Due to cash flow issues at the organization, that amount was reduced in 2017 to 2%. I recently discovered that money was not paid into my retirement account from my personal election until a year and a half after my hire date, and at a rate less than 5%. I’m not certain when my employer began contributing, but based on an account statement, it was sometime in month 5-6 of my employment. I have a document (a computer printout confirmation page) that shows my personal enrollment in the plan, the 5% election, and the date of enrollment (one week after my hire date). I’m assuming someone in HR or accounting did not appropriately file and administer my request with our third-party retirement account administrator. I’m not sure the best plan of action here – especially because the money “owed” to me is my own money that, I’m assuming, was already paid to me in my paycheck. Looking back, it was nice having that money to help with household and living expenses, but with how well the market has been doing lately, I’m concerned that I’m missing out on some substantial retirement fund growth. I have an upcoming meeting with my employer to discuss and research more into this error. What redress am I owed from my employer? How can I make sure all of my employer contributions were done correctly, to ensure I have the money owed to me? I realize some of the onus is on me, not discovering this years ago on my paystub, but with direct deposit, who looks closely anymore? Thank you very much!

Lots to unpack. But from what I'm reading, you wanted done to go into your retirement plan -- your own money. It wasn't being taken out. But you did get it in your paycheck. 

So really I don't think you have a claim. It's not like the company took the money out and didn't put it toward your retirement plan. It's that you didn't notice it wasn't being invested per your instructions. 

And I can understand how you may not have noticed. Often people invest and don't really check their statements. 

Just going forward make sure your elections are now being applied. 

Can we all let out a collective scream of anguish over the stock market activities these last few days? I know I shouldn't, but I checked on my portfolio every day since last Friday. I must keep reminding myself that I am in this for the long haul and those "gains" I made on paper are just that. If nothing, it will lower my 2018 tax bill. Glass half full, I suppose. :-)

Feel what you need to feel. But don't act in a panic. So I agree with you.

Hi Michelle, From your chats, it seems that you have financially helped many friends and family. So here's my question. Two years ago, after a divorce, my 40 year old son moved back home. We welcomed him back home. The one stipulation was that he was to keep a spreadsheet to keep track of his expenses and we would all meet regularly to track progress toward getting back on his feet financially. That fell through when he was laid off and had no income. Now he's back working at least part time. But at what point do we keep beating the horse? He's in his forties. I'm not sure it's healthy for his mom to still be involved in his finances. We love having him around and he's very helpful and such a kind person. Thanks for your help.

I think you stay the course in making sure he's living up to his financial end. It's not his mommy keeping check. It's an adult wanting to make sure he's on track to perhaps one day be back on his own.

Every single adult my husband and I take in to help financially has to agree to regular budget meetings and showing us al their finances. We follow this mantra: Trust but verify. 

No, rent is paying for a place to live. It is often cheaper than buying and permits flexibility which can be very important for some living or job situations. Saying it is throwing money away is like saying that you are throwing money away on food because you didn't buy the farm. Who is this guy?

I am a builder. 40 companies/organizations I run today. But I was homeless for 6 months of my life when I was 18 years old. Came from nothing in Compton, Ca. 100% of the 'capital' my mother and father used to get in business, and to help me and my siblings -- came from that modest home equity they patiently built over time. And they did not make much when they started this.  I used real estate equity as a game changer, for me.  From -- nothing.  And even when it does not appreciate in value, the mortgage deduction is magic, when you are spending the same for a mortgage as you would to pay rent. Often, the mortgage payment will be LESS than rent, for the same place.

Now, let me say that renting is GREAT for many people, and I actually ENCOURAGE it as a step ladder move.  I actually own 500 single family residential RENTAL homes in Atlanta, but I even encourage folks who rent from my company to stair-step up, and in 5 years try to buy that home from me, or someone else (we help them do it, etc).

But here is the reality -- if you are paying 2500.00 a month for rent, you are spending 25K a year, possibly your largest single outlay, and you have to ask -- say 150K spent later -- what did you get for that.

I tell you one thing, you are helping ME -- pay off my investment properties.

Just saying... This is also, part of getting #Thememo.

Much respect. #DoYou.

Love this debate on rent vs. own. 

It's an individual decision. 

But I don't want anyone who can't buy a home or who doesn't want to buy a home feeling they are failing financially somehow. 

I know people who have homes and investment property whose net worth is less than someone renting. 

Look at the entire picture. The end game for all of us is to have financial security. 

For the budding entrepreneur - I am a small business owner with a full time job and a single parent. My business is seasonal and will never replace my 9-5 but it is fully funding my retirement and college goals. As you work and build a business just know that your business is like your kids - it will grow with what you put in. BUT it will never become self-sufficient and you'll never be as happy with how the babysitter takes care of it. Just know you're in for constant attention and loving care for the business and that eventually, managers - like babysitters - are an absolute necessity to success.

Thanks for sharing.

Owning doesn't mean trading a rent check for a mortgage check. Owning often brings more expenses than renting: HOA fees, higher utilities, repairs, maintenance, etc.

True that!

 

I have always wanted to jump into the investment property market but don’t know where or how to get started. Should I “go in” with someone who is already doing this to learn the ropes first?

That is smart thinking. Don't be fancy when you start -- find the worst home on the best block near you or in a working class neighborhood you can easily travel to. I even try to find what I call 'a shack' somewhere in a growing urban city. We have several around Atlanta, where I live. You can buy them often for little to nothing, and either work with a contractor you trust, or join in with family or friends you trust (make sure they are folks you are very comfortable with), and do it yourself with the help of Home depot, Lowes, etc on weekends.

 

Think;

Buy, rehab and rent.

Buy, rehab and sale.

Buy, rehab and hold.

As noted in another thread on rentals and renters, there will always be a market of people who want affordable rent in a city or area -- particularly near job centers.

Do this three times, and you have created a Hedge Fund Against Poverty. 1) Asset growth for your brand -- you. 2) Residual income while you sleep (the real way to build wealth).

Might become your retirement strategy in time.

Blessings,

Looked up and it was 1:20. Could do this all day but unfortunately I can't. 

Thanks to John Hope Bryant for joining me today and for engaging in a very lively debate on renting vs. owning.

The way I see it we were all talking about money -- stock market, retirement, paying off debt, renting vs. own. And we are all better off for engaging in a dialogue about our dough. 

Take care and see you next week. 

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Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Wednesday and Sunday and is carried in more than 120 newspapers.

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John Hope Bryant
John Hope Bryant is the author of The Memo; founder, chairman, and CEO of Operation HOPE, Inc.; CEO of Bryant Group Ventures and The Promise Home Company; and cofounder of Global Dignity.
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