Why I Would Rather Shoot Myself in the Head Than Own a Home

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by James Altucher: Do
You Have to Be Rich to Be Honest?



I only had
one friend in MySpace when I joined in 2005. “Tom”. In
fact, all 100 million people who had joined MySpace had one friend.
“Tom”. He welcomed us all to our new cyber home and made
us feel as comfortable as possible there. “Tom” is Tom
Anderson, a cofounder of the MySpace, the first member of the 100
million community and automatic friend to everyone who signed up.

So, through
a strange set of circumstances and coincidences, that very same
Tom just emailed me. A great crime had been committed against me
and Tom Anderson, my first friend on MySpace, wanted me to know
about it.

Somebody had
disagreed with me.

Tom sent me
a link to a site, “realtytrac.com”

He wrote me,
“Btw, saw a rebuttal to your home-ownership article today that
I thought you might be interested in:” Here’s
the article he’s referring to.

Someone named
Rick Sharga wrote a column there arguing against my recent column:
I would Never own a Home Again.

It took
Rick only about four lines to insult me
which shows he doesn’t
read my stuff very closely. He said I would probably recommend that
people buy “stocks” or my “fund of funds”.
In other words, he’s suggesting that the only reason I could
have an opinion is out of complete self-interest.
I guess in
most cases that’s how the world works, which is a shame. I
have no self-interest at all in this opinion. I want to help people.

My theory is
that complete honesty frees me from the shackles that bind me to
stress, anxiety, financial insecurity, spiritual insecurity, and
so on. Most people who read my blog think that I’m almost sabotaging
my self-interest by revealing all that I do. In fact, its the reverse.
My self interest is freedom in my head.

For instance,
in contrast to Mr. Sharga’s opinions on my self-interest, I
recently wrote a column: 10
Reasons You Should Never Buy Stocks Again
. And, I also happen
to think most
hedge funds are scams
and would never run a fund of hedge funds
again. So, all self-interest is out.

I legitimately
believe that people would be happier if they don’t mortgage
their lives away, if they don’t fall into the myth of the white
picket fence leading to happiness. If they pull themselves away
from the American Religion and find their own path to follow.

So Mr. Sharga
starts off already being completely wrong by misrepresenting me
to his readers. But that’s fine. People seem to do that all
the time.

Next he makes
his argument with another highly intelligent point: “

The context
that Mr. Altucher lays out is actually more hysterical than historical.
The notion that homeownership was some sort of deep, dark conspiracy
foisted on innocent rubes by diabolical business owners to keep
them permanently grounded (and therefore, unable to escape their
low wage, dead end jobs) is just pointy-headed nonsense.”

I do not have
a pointy head. Its more block-headed. But, it’s a fact that
many early factories would often provide housing for their employees
and then charge them for the “rent” and deduct it from
their salaries. This was a standard technique only 100 years ago.
Often employees would get in debt to the factories, keeping them,
in fact, “grounded”.

Lets get even
more hysterical. Lets look at the trillion dollar banking industry.
This is the best business in the world, until it isn’t (2008).

How do banks
make money? Very simple. They borrow from you at cheap interest
rates and then lend to you at higher interest rates. What? How do
they do that? Well, when they pay you 0.5% on your checking account
its as if they are borrowing from you at a very cheap interest rate.
When they then turn around and give you a 6% mortgage loan, they
are lending to you. They make money on the difference between the
6% and the 0.5%. It’s a great business and I often advise people
to become the bank when they have that opportunity.

It’s such
a great business, in fact, that banks have spent 200 years drilling
it into us with billions in advertising that the “American
Dream” is to own the white picket fence, the paved driveway,
maybe borrow more to make an extension to the house. Put in a swimming
pool. Tear down some walls. Nobody can ever kick you out. You’re
not flushing your rent down the toilet. You’re owning! You’re
keeping up with the Joneses (the most successful, yet mysterious,
family in American mythology, that we all have to keep up with.
What happens behind closed doors when the beatings occur, when little
Bobby Jones cries himself to sleep, the Joneses will never tell
us) At least, in 30 years you will own. But at least you’ve
fixed in a mortgage rate so inflation won’t kill you. And having
your own home means you now have “roots”.

As Mr. Sharga
says: “Simply going back to the beginnings of the U.S.,
the concepts of “wealth” and “land ownership”
went hand-in-hand.” I guess that’s true. I can’t
find it in the Constitution anywhere but the man knows what he’s
talking about.

He also states:
“going back to medieval times, the feudal lords basically
were land barons; the serfs, the working poor of the age, were allowed
to live on the lands in exchange for paying exorbitant amounts of
money to the lords. However, much the lords decided to collect.
Or you could leave (on your own, or in pieces). Sounds like a renter’s
lot in life to me.”

a serf and always will be.
I’ll never be a “feudal
lord”. Fortunately, because of innovation, entrepreneurship,
and the rise of economic growth throughout most of the world, the
life of a “serf” right now is probably one million times
better than any feudal lord could’ve ever hoped for back then.
Here are some benefits of being a serf right now:

More cash.
You never have to put down a down payment that uses up most of the
cash in your bank account. You’re never going to see that cash
again if you use it as a downpayment. It’s just gone into an
illiquid investment and when you most need it, that’s when
you are most likely not able to get at it.

the rest of the article

21, 2011

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