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

Recently 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, “”

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: Why 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.”

I’m 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.

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July 21, 2011