Opposite - having kids IMHO keeps you young, and in touch with your playful side.
One of the reasons I had kids early was to do that. I didn't want to be one of those old parents who has already "grown up" and lost all touch with fun.
One of the reasons I had kids early was to do that. I didn't want to be one of those old parents who has already "grown up" and lost all touch with fun.
Of course, I'm not sure what's gonna happen with all that as they get older. :-( Maybe I'll really become an old man then.
Agreed, and since I had my kid later, I'm still goofy and playful. I think if he was years gone I'd be guarding my lawn with razor wire and proximity sensors.j
Children give you the chance to appreciate childhood.
I see what you're saying... I didn't mean that old parent wouldn't be fun, but it's likely to be a different type of fun. One that may be alien to kids.
We have several stages of our lives and I thing overlapping with your kids makes it so you can enjoy more of the same things together.
Let me guess, you think having a mortgage keeps you thinking independently and on your toes, too?
It's amazing the conclusions people will arrive at to rationalize their fucked up thinking.
Having a mortgage is pretty much the most efficient way to save money for the future. But I've no idea why that's related to having kids.
And what's fucked up about having kids young in life? It makes a ton of sense when you think about it.
The problem is usually silly people borrowing far more than they can afford, and lenders trying to push people into borrowing more than they can afford. But that's not a problem with mortgages per se.
Renting is ok if you like throwing money away, or need to move often.
PS: The cost of renting tends to balance with the costs of buying a home (including transaction and maintenance costs etc) such that it's rare for one to win out over the other in a healthy housing market. I do spend a lot of money living in this area, but I also invest a lot more money than I could if I was trying to buy in the area even with a long commute. Even with the huge drop in housing costs buying in this area is extremely expensive in large part due to the number of people renting their houses / condo's.
There are a lot of other factors that make a difference though, especially related to personal financial discipline, over-buying and tax incentives. Any of those can push things one way or the other.
If you're paying over 5% for a mortgage you're doing something seriously wrong. Hell - if you're paying more than 2% you've been had.
And the other tiny point is that at the end of your mortgage, you own the house and can cash it in. If you have the option to buy, buying is always the sane choice.
In the long run owning your house may or may not work out to be more profitable than keeping the difference between rent and mortgage payments (plus maintenance plus taxes plus other fees) but it's not always the case.
This is especially true if the gap between the mortgage payment (plus costs and fees) and rent is well invested. At the moment countering the low cost of borrowing is the fact that equities are also very cheap. Every pound invested in the FTSE 250 in mid 2009 was a great buy, more than compensating for the low mortgage rate.
In the end buying vs renting is mostly a personal decision rather than an economic one.
EDIT: Graph of the UK base rate back to '97 - most people pay 2-4% above the interbank rate listed here. http://www.housepricecrash.co.uk/graphs-base-rate-uk.php
Firstly, there often isn't a gap, or it's negative - mortgage payments are less than rental payments.
Secondly, you'd be hard pressed to find a better paying investment than property.
House prices always increase in the long term. It's an investment. You buy a property, then a few years later can sell it for quite a bit more than you paid. As long as it's a property that is attractive people will always want it.
Personally I find the economics extremely clear cut. Mortgage payments here are comparable to rental payments, if not lower. So you can either give the money to a landlord and get nothing in return, or you can give it to a bank, pay off the balance (Long terms savings), and benefit when house prices increase if you sell it. Or of course just wait until mortgage is over and then live there rent free for the rest of your life.
I've never understood why the economics are even debated online like this :/
You are failing to account for the capital built up in the property which is only returning 5% (on average), whilst it could be earning a (historical) average of 12% elsewhere. (The average index fund growth.)
You are also failing to account for maintenance costs, which are not cheap on a property of any size. Specific to the UK market you are also not calculating stamp duty and capital gains tax, which are either property specific or harder to minimize on property.
The reason that the economics are debated on-line is because:
- Rentals have hidden advantages (opportunity cost of invested capital).
- Housing has unhidden advantages (capital growth of the property).
- It's much harder to screw up a family-home-property based investment scheme.
Which means that people invariably don't correctly account for all of the variables.
If property investing were that clear cut then investment capital would buy up property until house prices had risen and rents had been depressed to remove the advantage! Markets seek an equilibrium.
EDIT: I should probably point out that I have in front of me the yield data for four cities at the moment and the average return on capital for all of them is 4.8% - you personally may have found a better deal, but that's just an anomaly. I'd probably buy something if I had children, but it has nothing to do with the value of the investment.
Yes but with a mortgage you're effectively investing someone elses money (the banks). You get to invest a large amount of money into a pretty good return investment, with hardly any outlay from yourself.
If you were renting and putting the (maybe £100 a month max) difference into some investment, you'd make next to nothing on that. But with a mortgage, you're 'investing' the banks money as well as your own.
I've only bought 2 houses in my life (3rd one soon), but both were financially very good. Even in the current market.
(Here's a source for the 12% figure - http://www.finfacts.ie/stockperf.htm )
The money your borrow from a bank can (depending on relative cost) close or open the gap. If average return is 5% and the average cost of borrowing is 2% (over 20 years) then you would make an additional £80k per hundred thousand borrowed. However if the average mortgage rate is 8% then you would lose an additional £80k per hundred thousand borrowed. Capital growth will also add something - over the last 20 years it was about 100k per 100k invested/borrowed.
2% and 8% are both well within the historical mortgage rate trends. Renting helps reduce your exposure to this, whilst increasing your exposure elsewhere.
All calculations are pre-inflation.
Backward rationalizations can be used to change your future ways of thinking. In other words, if you feel that the stress of having a child will be well worth it, then you'll tell yourself that over and over while you're stressed. It will become true to you and the perception and emotions of a stress event changes.
This kind of reverse thinking is how we grow. Touch a hot stove, burn yourself, and cry about it. Next time you won't want to touch the hot stove because it hurt last time. If you did a study of people who touched hot stoves just after the fact, I'm sure you'd find that touching a hot stove reduces happiness and increases stress levels. However if you wait long enough, this lesson of stoves==hot results in decades of NOT touching hot stoves and NOT getting burned by them. A study of that should reveal that by touching a hot stove once, you've gained a lifetime absence (aside from accidents) of the stress and unhappiness associated with touching a hot stove. Suddenly the one time you burned yourself seems to have been worth the pain.
No. Having kids is a strenuous process that takes 18+ years.
Startups also massively increase your stress and likely decrease happiness for most, but we still do them.