Yikes: More Than Half of Millennials Have Less Than $1000 in Savings

It’s a good deal for most responsible people with a steady source of income who want to live in an area with reliable property values. If their income goes up, they can easily make additional payments to pay off the mortgage early if they want to save some money on the long term interest payments

If one isn’t good with math, then I agree it can easily become a bad idea.

If real estate values don’t increase, it’s a bad idea.

Why not take a risk living on a mountain top in a cheap trailer, and investing your money in a helicopter for your daily commute to you’re ivory tower job? At least it would be more fun and exciting.

>> If their income goes up <<

And what planet would that be on? We have 90 million Americans not even generating an income, and 47 million on food stamps.

Other than short term fluctuations, real estate values only go down in areas that have obvious economic flaws. If one chooses to live in such a place or buys property at the top of an inflated bubble, then the cost vs. benefits of a mortgage are the least of their concerns.

My income has gone up every year since I turned 16, and it’s grown by an average rate of 7.3% over the past 25 years through promotions and finding higher paying employers working in the public sector. My younger brother is a software engineer whose income has gone up every year by double digit percentages. My older brother is an airline pilot whose income has gone up every year at a higher rate than mine has. These are anecdotal so let me give data:

Average wages for every worker in the US have gone up faster than inflation. https://www.ssa.gov/oact/cola/awidevelop.html

If one is an average worker, then the average wage increase they receive every year is about 3%, the average mortgage interest rate after taxes runs about 3%, so there is zero penalty to buy a house of constant value using a mortgage.

If you factor in the savings on rent (which has been increasing faster than inflation), then a mortgage becomes a much better deal. If the home then ends up appreciating at the conservative rate of inflation only it becomes an almost unbeatable deal. If you buy a house in a rapidly developing area, then it becomes a screaming deal. http://observationsandnotes.blogspot.com/2011/06/us-housing-prices-since-1900.html

My house has gone up only 63% in value since I bought it in 2002. My mortgage payment including principal is now less than what I would pay to rent the exact same house in my neighborhood.

By the way helicopters depreciate in value and upkeep costs grow over time, a perfect example of a poor piece of property to purchase on credit.

I saved $1,000 delivering newspapers - during the 1970s.

I've told this story before but I had a Steve Martin (The Jerk) moment when I first got my paper route in 1976. After nearly a year of bugging the Boston Herald American to let me have a route in my neighborhood, they finally gave me a route of 23 daily papers (and 30 Sunday papers). I was 14 years old.

When I first collected the weekly money from my customers, I assumed that the newspaper made a mistake. I was to collect something like $46 from my customers but only give the newspaper man $37. So when he came around, I gave him the $46 and he immediately handed $9 back to me and told me it was my portion. Now I had already collected about $15 in tips so my first payday was $24.

I couldn't believe it. Not only was I getting tips but I was getting paid by the newspaper as well! And I would get around that amount every single week. Now back in 1976 for a 14-year old, this was big money. I put half of it in the bank each week and had over $1,000 about a year and a half later.

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