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Old 08-13-2013, 07:58 AM   #81
Thinks s/he gets paid by the post
Join Date: Nov 2009
Posts: 4,119
I remember running the numbers when I was considering buying a co-op apartment versus renting back in 1988-89. I had to compare the after-tax cost of my co-op's maintenance plus my own mortgage versus the non-deductible rent I had been paying. Most of the maintenance were property taxes and the interest on the co-op's underlying mortgage, whle most of my own mortgage was interest (back then, co-op loan interest rates were in the 10-11% range, OUCH!). I did not count the small principal portion of my mortgage payment because I was adding a dollar of home equity for each dollar of principal paid.

And I had far more control over my mortgage because I could refinance it (which I did in 1992 when interest rates thankfully tumbled) and later pay it off entirely (which I did in 1998). This left only my maintenance charges which for 7 years in the 1990s did not change (and in fact declined slightly when New York State introduced its STAR program, reducing local school taxes).

Even with some maintenance increases in the 2000s (and some recent decreases due in part to the STAR program being fully phased in), I am paying less in maintenance today than I was paying in rent in 1989, and that does not take into account the deductibility of some of the maintenance (if I can keep itemizing, not a given any more).

I did have to go through some declines in the value of my apartment in the early-mid 1990s, putting my apartment underwater for a few years. But I did not care because I wasn't going to sell my place. Today, the apartment's value is considerably higher than it was when I bought it.

Buying my place, although had I waited one more year I could have bought a bigger place for the same money, was a big reason why I was able to ER in 2008.

Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
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