Renting money

I love this quote (from http://patrick.net/housing/crash3.html):

"If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc. Since you can rent a house for 2% of its price, but have to pay 6% to borrow the equivalent amount of money, it is much cheaper to rent the house than to rent the money."

It's true.. you can rent a place to live, or, you can rent money, at a higher cost and alot of risk, to get a place to live.

That's why I sold my pr0perty and now am a happy renter.

Black Friday

Today is Black Friday, that day after Thanksgiving when the American Christmas Shopping season kicks into gear. It is an orgy of consumer consumption. I wonder how much of this stuff that's bought today really matters very much. How much improves a life (how many different ways home food processors chop a carrot, afterall?).

I'm not even leaving the house today. Those shoppers are like hungry packs looking for the best parking place, the best deal and the shortest line. Aggresive, hungry and intent on winning.

Safer to just watch the crappy after Thanksgiving TV, write some, read some, game a bit and relax.

less is more

Sometimes a simple presentation is all you need.

Less is more

view presentation (tags: meditation development sustainable more)

Life, explained.

I know this has been around a few times, but it's a useful little story to read every so often just to keep things in perspective.

A boat docked in a tiny Mexican village. An American tourist complimented the Mexican fisherman on the quality of his fish and asked how long it took him to catch them.

"Not very long," answered the Mexican.

"But then, why didn't you stay out longer and catch more?" asked the American.

The Mexican explained that his small catch was sufficient to meet his needs and those of his family.

The American asked, "But what do you do with the rest of your time?"

"I sleep late, fish a little, play with my children, and take a siesta with my wife. In the evenings, I go into the village to see my friends, have a few drinks, play the guitar, and sing a few songs. I have a full life."

The American interrupted, "I have an MBA from Harvard and I can help you! You should start by fishing longer every day. You can then sell the extra fish you catch. With the extra revenue, you can buy a bigger boat."

"And after that?" asked the Mexican.

"With the extra money the larger boat will bring, you can buy a second one and a third one and so on until you have an entire fleet of trawlers. Instead of selling your fish to a middle man, you can then negotiate directly with the processing plants and maybe even open your own plant. You can then leave this little village and move to Mexico City, Los Angeles, or even New York City! From there you can direct your huge new enterprise."

"How long would that take?" asked the Mexican.

"Twenty, perhaps twenty-five years," replied the American.

"And after that?"

"Afterwards? Well my friend, that's when it gets really interesting," answered the American, laughing. "When your business gets really big, you can start buying and selling stocks and make millions!"

"Millions? Really? And after that?" asked the Mexican.

"After that you'll be able to retire, live in a tiny village near the coast, sleep late, play with your children, catch a few fish, take a siesta with your wife and spend your evenings drinking and enjoying your friends."

And the moral of this story is: ......... Know where you're going in life... you may already be there.

The New Survivalists

OK, this is a bit weird, and I'm not in this camp at all, but I find it interesting that there's a movement of survivalists, a growing group, sort of spontaniously appearing, across the country.

I think it's related to de-materialism, but more extreme.

This article from the Associated Press, titled Energy fears looming, new survivalists prepare outlines it.

An excerpt:

BUSKIRK, N.Y. (AP) — A few years ago, Kathleen Breault was just another suburban grandma, driving countless hours every week, stopping for lunch at McDonald's, buying clothes at the mall, watching TV in the evenings.

That was before Breault heard an author talk about the bleak future of the world's oil supply. Now, she's preparing for the world as we know it to disappear.

Breault cut her driving time in half. She switched to a diet of locally grown foods near her upstate New York home and lost 70 pounds. She sliced up her credit cards, banished her television and swore off plane travel. She began relying on a wood-burning stove.

"I was panic-stricken," the 50-year-old recalled, her voice shaking. "Devastated. Depressed. Afraid. Vulnerable. Weak. Alone. Just terrible."

I get where she's coming from, but I don't have the same belief that society will crumble and fall that a survivalist has. I think we're heading toward a time of less available resources (due to higher costs, not availability; the rich will always be able to get what they want by virtue of being rich). It'll be a slow grind down for the middle class.

I think these folks are, as noted above, being driven more by a sense of fear and 'how do I protect myself' than anything. I get it, really. I'm just not sure that's the best way to focus things.

De-materializing, for me, is more about freedom than fear. It's also more about doing a tiny bit of good by being aware that one human doesn't really need to be consuming so much space, energy, housing, fuel and food as well as expelling so much waste (carbon, trash and wastewater, as a start).

I have read that we, as Americans, are about 3% of the worlds population, but consume 23% of the worlds resources and expell about 27% of it's carbon waste. (not 100% on those numbers... but I believe they are close).

Think about that. 3% of the worlds population chewing up One Fourth of everything, and spitting out an equivalent pile of waste.

I don't want to disappear, I just want to get more in balance with what a person needs to be happy and comfortable vs. what a person wants (or thinks they want) as taught to us by future generations of rich.

The rich I know from my silicon valley (and to a degree, here in Boulder) technology company days seem to believe in multiple cars, multiple homes, frequent air travel via commercial or even private jets, huge 3rd houses in the form of boats, used, at most, 4 weeks a year... you get the idea). The amount of wasteful use of resources that a tech geek with too much money can create is almost unimaginable.

I just no longer get the value of that way of living. The overhead and cost to the person maintaining it is huge, the return of being owned by all that stuff is questionable and the impact on the planet of consuming the resources of a small village in China, all by yourself is, well, more than a little selfish.

I know this is just my own opinion on this, and I know a fair number of people that live this lifestyle, some I consider good friends. It doesn't make it OK though.

I just wish people would stop more often and think about what they need, really need, to live a happy life.

I doubt all the excess stuff they own really does much to answer that question.

Gadgets

This dematerializing has been going on for me for about 9 months now and going well.

What I'm finding is I really do need alot less than I thought I did. It wasn't just an experiment, it was, and is, a true simplification.

I have one primary weakness: Hardware. in particular, gadgets. I love gadgets and there's always a new one. that means if I'm playing with new stuff all the time, the old stuff accumulates. And I'm loath to get rid of the old stuff because there's a sense of history there (sort of like books), but in a shorter timescale.

So, I'm going to start getting rid of the gadgets as well once I don't use them anymore. I think I'd like to see how few things I can get it down to and still feel like I'm not limiting myself. I just gave my OPLC (the One Laptop Per Child linux PC for kids in poor countries) to an old friend for her kids. I'll be giving (and in some cases selling) things to folks that need them as they flow through my life. Most gadgets are good for 6 months (for me... I've learned all I can in about that time) so, like books, I can pass them on to someone else who can use them for their pure functionality (recording audio, video, media. Creating art. Whatever is is they do with it).

When I was about 20 or so a friend came over to my apartment and checked out my computer room which was full of Apple II's running BBS software and (at the time) advanced graphics software. He said: "What that hell do you need all this gear for?" (he was a gear freak himself, so this was both damning and great praise, at the teim).

I didn't have a good answer then, and I still don't. I really don't need all this gear. Some of it, yes, but not so much all of it.

One of each of the things I regularly use is plenty. For now, I'll still buy the new as it comes out, but I'll recycle the old to places it'll do good.

You have too much STUFF

The genius of George Carlin on 'your stuff'. He pretty much sums it all up here in a little under 4 minutes.

Why Bother?

There's a great article in the New York Times Magazine called "Why Bother?". It's longish (4 web pages) and you can read it here. (warning: login/free signup required).

I get alot of 'wow.. I wish I could do what you're doing' and a few 'seems I read about the downsizing 'trend' alot Scott.. you're ahead of the curve again' type comments. Most are well meant, but a few are a bit condescending.

The reality is, this is reality. It's real kids.

The article talks about all the usual things, but centers on the need to actually do something about climate change (and all the related ills that have created it.. the biggest being cheap energy), even if it's small and may seem like it doesn't matter because my 'evil twin' in China is more than happy to offset any good I do. It lays out why we (all of us) need to do this, if we ever want big change to happen.

I won't go into the article more than that, but I encourage you to take 10 minutes and read it.

Collapsing American Power due to.. too much stuff? hmmm...

Read this today:

The collapse of American power - Would you want to hold the debt of a country whose imports exceed its industrial production?

As of March 17, 2008, one Swiss franc is worth more than $1 dollar. In 1970, the exchange rate was 4.2 Swiss francs to the dollar. In 1970, $1 purchased 360 Japanese yen. Today $1 dollar purchases less than 100 yen.

If you were a creditor, would you want to hold debt in a currency that has such a poor record against the currency of a small island country that was nuked and defeated in WW II, or against a small landlocked European country that clings to its independence and is not a member of the EU?

Would you want to hold the debt of a country whose imports exceed its industrial production? According to the latest US statistics as reported in the February 28 issue of Manufacturing and Technology News, in 2007 imports were 14 percent of US GDP and US manufacturing comprised 12 percent of US GDP. A country whose imports exceed its industrial production cannot close its trade deficit by exporting more.

The dollar has even collapsed in value against the euro, the currency of a make-believe country that does not exist: the European Union. France, Germany, Italy, England and the other members of the EU still exist as sovereign nations. England even retains its own currency. Yet the euro hits new highs daily against the dollar.

Noam Chomsky recently wrote that America thinks that it owns the world. That is definitely the view of the neoconized Bush administration. But the fact of the matter is that the US owes the world. The US “superpower” cannot even finance its own domestic operations, much less its gratuitous wars except via the kindness of foreigners to lend it money that cannot be repaid.

The US will never repay the loans. The American economy has been devastated by offshoring, by foreign competition, and by the importation of foreigners on work visas, while it holds to a free trade ideology that benefits corporate fat cats and shareholders at the expense of American labor. The dollar is failing in its role as reserve currency and will soon be abandoned.

When the dollar ceases to be the reserve currency, the US will no longer be able to pay its bills by borrowing more from foreigners.

I have to ask.. do we really NEED all these imports? Is more stuff really the answer?

More on renting vs. buying

I just found a GREAT website (Patrick.net) that outlines better than anything I've seen in a long time why owning a house is, at best, a questionable idea. It's here. Or...click on the link there at the top right of this page. It's worth spending a hour or two reading as much of it as you can.

Some humor around owning a house:

Lowering interest rates will help the housing and stock market for about as long as peeing your pants will help when you have to go. It will give a warm feeling for a minute.

Everybody hates house-agents because they have everybody at a disadvantage. All other callings have a certain amount of give and take; the house agent simply takes. -- H. G. Wells

Nick Naylor, in Thank You For Smoking: "99% of everything done in the world, good or bad, is done to pay a mortgage. Perhaps the world would be a better place if everyone rented."

Renting vs. buying

Yea.. I bought the whole own vs. rent thing, but this post "rent vs. buy myths" makes some very good updated points about the current housing market. I particularly like this one:

The reality is that housing is not an investment. It's shelter. That is all housing has ever been. Self-serving organizations like the National Association of Realtors like to tell people that buying a home is a good way to build long-term wealth, but this statement couldn't be further from the truth.

Although home prices can go up (and down), the rate of appreciation on housing does not surpass inflation levels over the long-term. Between 1890 and 2004, the real return on housing was a pathetic 0.4 percent per year over the last 100 years, according to Robert Shiller, a housing expert and Yale economist.

Real estate investments aren't that much better over the short-term. The gain in new home prices over the last 20 years has been a mere fraction of the Dow's gain. The average person investing in stocks between 1987 and 2007 would have made more money than the average person who bought a new home in 1987.

Downsizing is good. I've been living a far less material life the last 6 months and loving it. I'm currently renting as well (a 600+ SF place 2 blocks off the Pearl Street Mall here in Boulder). I could buy something like this, starting at around half a million dollars. Rent? $500 a month. No HOA fee's. No taxes. No upkeep.

I'm thinking renting is the way to go; at least for now.