four hundred dollars or a mortgage payment of hundreds of dollars more. Suddenly, renting versus buying is no longer apples versus apples. Yes, home ownership still provides a solid investment vehicle fueled by leveragibil-ity and a preferential tax treatment. But it may cost several hundred dollars a month more than renting, even with the tax relief. That's a lot of money. What if Tom rented all his life and added that multi-hundred difference to his ten percent fund? How do you think he would fare?"
Roy's point was a good one. The three of us were by now fully aware of the power of compound interest.
"The hole I see in your argument, Roy, is that you are assuming people will invest the difference between the cost of renting and that of buying. Most won't," James Murray charged.
"I'll grant you that home ownership is the ultimate forced-saving program and that that is one of its other big benefits," Roy conceded. "But I believe that, through paying oneself first, a renter can discipline himself or herself to save some of the difference in cost between renting and owning. I say 'some' because it may not be necessary to save the entire difference to come out ahead."
"Why do you say that?"
"Look at the homeowner for a second. He or she is thrilled that his or her—"
"Its?" I suggested helpfully.
"Good idea, Dave. Its' home value is rising but, in most cases, that increased value does 'it' little good. If 'it' wants to move, all the other houses in 'its' area are up in price as well. And—"
"Enough of this 'it' pronoun," Cathy protested. "'It' really doesn't apply to anyone except Tom."