Home Sweet Home

 

"Home ownership, I'm surprised that Roy hasn't mentioned, is also one of the best forced-saving methods around. You have to make your mortgage payment or else the bank gets very annoyed. Roy once said that he feels this may be one of the most important attributes of buying over renting: the building of equity through compulsory monthly payments."

It's not hard to see why James Murray does so well in business. He believes in what he's selling.

"Leveragibility, tax incentives, forced savings, and the joys of owning your own home—why would anybody rent? Here's an even better question: Why am I renting?" Tom wondered aloud.

"Despite everything we've said, there are some legiti-mate reasons for renting, Tom," Roy assured him. "For some people, it may occasionally be better to rent than to own.

"There was one iffy assumption in our previous exam-ples, but none of you picked up on it. When I was speaking of your parents' monthly mortgage payment, I said that it would have been approximately the same as the cost to rent a similar home. James and I maintained that assumption of equality between a mortgage payment and rent throughout our discussion. The prob—"

"I see it," Tom leapt in. "I definitely see it! You've as-sumed that the place you choose to rent will be similar to the residence you choose not to buy. That may not be the case. In fact, it rarely is the case. Look at me. I'm not about to rent a two-bedroom house. My apartment is more than sufficient."

"You seem to be developing an excellent financial mind, Tom," Roy said sincerely. "Do you two understand the