Image Credit Martin St-Amant – Wikipedia – CC-BY-SA-3.0
Four years into writing this blog, I thought I had seen almost everything when it comes to the most common financial suicides committed by the middle class. But today I was hit in the head by a shocking realization:
When choosing between buying versus renting a house or apartment, people are making much, much worse choices than I would have thought possible.
The implications are so striking that logically, some of the world’s busiest stretches of road should not even exist. We could save millions of lives and trillions of dollars by just helping certain people operate a basic hand calculator at a beginner level. It sounds improbable, until you review the following stories from this Canadian vacation I am currently wrapping up:
Case Study One: North America’s Fourth Largest Miscalculation
The City of Toronto is famous as one of the world’s most happening and expensive places to live. With over six million people in the highly car-oriented metro area, it sprawls on forever and people commute in from an insane zoo of connected cities comprising 31,000 square kilometres, or roughly a quarter of the entire land area of England.
There’s only one real highway across this thing, the 401, which has the dubious distinction as
busiest and most traffic-jammed highway . Rush hour extends roughly from 3:30AM to 11PM, so I don’t even attempt a crossing except in the 4-hour window outside of that range*.
So what has created this incentive to commute? There are great jobs in Toronto – some of the highest paying in the country. Unemployment is low. The city is clean and quite beautiful along the lakeshore and the many ravines and rivers. But unfortunately, as the saying goes, nobody could ever afford a house there. Average price for a detached residence is up to $1.05 million, and even a car-commuter special runs you $730k. If you don’t have that kind of money, you just follow standard Realtor advice and “Drive ’til you Qualify”.
Mr. Money Mustache Moves to Toronto
For years, I have accepted these prices as a given and told people to either get creative with roommates unless you have secured at least a $400,000 salary, or get the hell out of the whole area as I did.
Until I conducted a little experiment in Mustachianism: asking myself “what would I do if I had to move to Toronto myself?”
Let’s assume a worst-case scenario, because if you can prove that it also covers every other situation. Somebody offers me a job in the most expensive and hardest-to reach region right downtown. It’s an a amazing job that I can’t resist and it pays well.
And wanting to maintain my current luxurious lifestyle, I insist on only the best: living in a huge apartment in a brand-new, modern building near the shore with beautiful views, within walking distance of work, the stadium, the train station, and everything else downtown has to offer. No buses or subways for me, and let’s assume I’m not even willing to ride my bike, because hey, it can occasionally get snowy in Toronto and .
So I pull open the useful apartment-hunting site called and set my criteria to unlimited price, insisting on 2 bedrooms and 2 baths, so I can comfortably bring my family along for the ride. I select one of the nicest looking listings at random, because it overlooks a park with floor-to-ceiling windows, has a sweet balcony, granite and stainless kitchen, and heck, there’s even a gym and a rooftop patio on this 40-story building:
This place looks appropriately fancy. A high-end pad in an expensive city’s most desirable district. I brace myself for an astronomical price, because after all, let’s look at the math:
People are commuting 40 minutes from $700,000 houses in the “closer” suburbs. A $700k house costs a minumum of $4,000 per month to operate in this area counting only mortgage interest at today’s amazingly-cheap-but-temporary 2.5%, a 7% opportunity cost of capital in the downpayment, plus property taxes, insurance, heating/cooling and maintenance at 1% annually. Let’s assume you’ve been wise enough to avoid areas with an HOA. 80 daily minutes in a car translates to roughly 900 miles ($450) and 22.5 hours of your time (say, $900) a month, for a grand minimum total of $5350.
All that, just to live near nothing but strip malls and TV-watching suburban commuters. So I’m assuming an apartment like this would list for upwards of ten grand a month. I look at the price.
$2300 per month
Oh, and that includes free heat and an underground parking space
(parking for mere mortal visitors in this area costs about $30/day)
Is this a joke? Are apartments really that cheap? Looking through a few dozen other listings in the prime areas, I realize that yes, they are. And if you’re willing to be really badass and step onto a subway for your morning commute and move down to a less luxurious apartment building, you can find central-Toronto 2/2 apartments for $1200.
Share one of those with a roommate, and you can work a minimum wage job ($11.00/hr) in this city, pay for rent and food, and still save almost 50% of your income, retiring from your job working at Starbucks by age 37.
I repeated the same experiment in Canada’s capital city of Ottawa. Brand new 900 square foot luxury apartment with 9 foot ceilings and two walls of glass overlooking the city’s hottest “Byward Market” district: $1950 per month. And this is in a city where people defy death by driving an hour through a blizzard before paying for parking and heading in to the office. It’s also a city where some people spend $900 per month on their winter heating bills alone (this apartment also includes free heat).
The implication of this is that an amazing majority of the traffic jams, car dealerships and SUV pileups and harried lifestyles and stress-related diseases and obesity that come with a car commuting lifestyle are completely stupid, optional, irrelevant byproducts of our choices. Almost every expensive suburb should not even exist. Every major urban highway should be shut down and converted to gardens and bike paths, with a few solar awnings thrown in – just enough to power the entire city.
So I ran these numbers by a fellow Canadian, expecting full astonished agreement. Instead I got the start of a bizarre set of justifications:
“But people want a back yard. For their kids, or their dogs.”
Are you JOKING?? When you live in a high-end district, ignoring the fact that luxury apartment buildings typically have amazing landscaped common areas, you have literally a multi-billion dollar back yard. The Toronto lakeshore is an endless expanse of beaches, bike paths, fountains, gardens, play structures, volleyball courts, patio restaurants, and of course one of the largest expanses of sparkling blue freshwater in the world. In Ottawa you have a stunning riverfront, forests and parks and bike paths that lead everywhere, and rapid transit that would eliminate any need to ever own a car.
Would you really waste an extra $3,000 per month just so your kids could play on your personal fenced-in postage stamp overlooked by vinyl-clad suburban houses in every direction while you are out stuck in traffic? No.
But what about the dogs?
$3,000 per month, plus the $400 it costs to feed and treat and house and transport and occasionally kennel the a dog, compounds to roughly $588,200 every decade if you invest the money instead. That’s every decade, and they live longer than that. Are you really rich enough to spend a million dollars, and clean up warm squishing chunks of excrement daily with only your bare hand and a plastic bag, just so you can have this extra bit of companionship during your sparse time outside of work? No.
And we haven’t even mentioned one of the biggest joys of renting: unlimited mobility. On a whim you can jump to a new place anywhere in the world. Never be subject to the pain of fighting with buyers in a hot real estate market, or begging for sellers in an icy-cold one.
The lesson? If you live in an area where houses cost more than $300,000, take a close look at the rent prices around the areas you currently drive. Budget your driving costs at at least a dollar per mile (80 cents/km in Canada to account for higher costs) because you absolutely must
to get ahead in life. Doing the math on life decisions like this was by far the biggest factor in my own early financial independence.
Buying a house is a great thing to do when you’re settling down in a beautiful, affordable spot right near everything you need to do for the next ten years. And if your schedule and temperament allow some time for a good several hours a week of maintenance work. But for the rest of us, it’s worth having another look at Rent vs. Buy.
Further Reading: The New York Times has a pretty great
that covers many bases and includes some nice conservative default assumptions (except I’d personally assume higher than 4% investment returns and less than 3% property price appreciation in expensive markets where the price-to-rent ratio is out of whack, such as those in this article). Also, many areas have property taxes higher than the default.
The biggest difference between NYT and MMM is just the focus on location. Rentals often dominate the market in the most expensive and walkable areas, so if you want to work and live in such a place, it might make sense to go straight to the apartment buildings.
*Luckily we have now switched to taking the VIA –
I took out the window of the train traveling at 150 km/hr past a line of car commuters stuck in the usual jam leaving Toronto. This train is both faster and (usually) cheaper than driving a car the 450km from Toronto to Ottawa, which reveals a few hundred million more dollars of savings available, since thousands of people make this drive in any given week.
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1.75亿学生的选择
Do you compare prices at different stores when you shop?当别人提问你这个问题时..你怎么用英语说2分钟你的观点..
老虎丶223N7
Yes!As is known to all,sometimes the same things can be at different prices in different stores.The reasons are that goods'price may vary with time and some shop owners may attempt to cheat you.So every time I go shopping,I will compare prices at different stores carefully so that I can buy it at the most reasonable price,which can help me save a lot of money.And to do so can also help us develop a good attitude towards money .As a result,I usually choose to buy things in this way.希望能帮上忙.
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yes,I do.in this way,I can choose the best thing at a reasonable price.as a wise and rational customer,everyone should accept this way as long as you have enough time.if you are busy,just buy your fav...
yes,i will beacuse I want to save my money as much as possible.We know a little about market so we need to investigate.Maybe we will go back to the one which we went to but it worth while
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1.He r_____his voice to make himself heard.2.The boy fell off the high tree but l_____he wasn't badly hurt.3.You'd better c____prices in another store before you want to buy something expensive.
1 raised2 luckily3 consult/compare
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1、raised他提高了音量来让别人听见自己的声音。2、luckily男孩儿从高高的树上掉了下来，幸运的是没有受重伤。3、compare你最好在买一样比较贵重的东西前先到别的店比较一下。
raise guessed compete
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英语9.-Come in ,Peter.I want to show you something.9.-Come in ,Peter.I want to show you something.-Oh,how nice of you!I _______ you _______ to bring me a gift.a.are going b.not as better c.didn’were going d.hadn’were going为什么为什么didn't think不对，
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b，根据I want to show you something判断，something是现在已经存在的，never thought表示没想到，过去式，回到就是没想到你会……如果是didn't think，前后时态不一致。
选C 在本句对话里明显的是表明在刚刚你进来那会我没想到你会带礼物来,"刚刚"就意味着发生在过去,所以用一般过去时,所以后面的空也是后者刚刚以为他不会带礼物来,所以前后时态保持一致,第二个空是过去将来时,因此本题选A.
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急求高手代谢一片250到300字的英语作文 Describe a time when you did something you did not want to do,b急求250到300字的英语作文 Describe a time when you did something you did not want to do,but it helped make you a better person.
Small story:many years ago,a father and a mother wants to leave,so they decided to go to the town to night.They called the most trust a person to look after the baby.When the baby-sitter,their children have even sleep in bed.So just looked at the children babysitter whether sleep well,sit down.Late at night,nurse feel boring wanted to go downstairs watching TV.But she can't see,because no downstairs television (because of the child's parents don't want their children to watch too much garbage).She will call the parents of the children,asked whether can in their bedroom watching TV,of course the child's parents agreed.But nurse and want to last request.She asked whether,with blankets or clothes cover the clown statues,because that made her feel very frightened.Telephone was silent for a moment.(right now dad in and nanny on phone) He said:take children to leave the room...We will call the police...We never had any clown statue.The clown is likely to be a escaped from the prison of the murderer.The phone was silent for a moment.(is of the conversation with nanny,the father of the child) said,take the children,leave the house.We will inform the police...We don't have a clown statues...The children and the nanny was a clown murder.As a result,the clown is a escaped from prison the murderer.
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