patrick.net

Schizlor says

ch_tah says

Why are you guys so picky about words?

Because they have an enormous potential for misinforming, coercing, and decieving, if they are used disingenously. Careless or wilfully-manipulative use of words is one of the contemptible behaviors engaged in by real estate salesmen that this blog seeks to shed light on, so naturally many of us who frequent here would be preoccupied with people being careless with their word choice when they post. And since all of these ideas are being exchanged in text form, word choice is extremely important. Asking us to participate in a written forum but not be so picky about words is like asking us to watch a movie but disregard the quality of the dialogue. It’s hard to separate the two.

I appreciate that you need to focus on words, but you also need to focus on context. You and SO seem to be arguing two different points at each other. While you and Klarek are technically right that your rent payment is not debt, you are either missing or ignoring SO's point that you need to pay to live somewhere. Bottom line of it all, I think edvard2 summed it up very well in his most recent post above.

ch_tah says

While you and Klarek are technically right that your rent payment is not debt

If SubOink had said that in response originally, it would have ended there. Instead the farce was perpetuated by some thin argument about how they are the same thing. They are not. A simple statement to that effect ("Ok, bad choice of words, but you get my point.") would have sufficed. But when someone vociferously defends their statement which is patently untrue, I'm not going to back down just because I think in the back of my head they know they're wrong. There are other people here who never post but are constantly reading this stuff, and if they are doing so to educate themselves or because they find the debate fascinatingly enlightening, it behooves us to peer-review each other if you will, to ensure the reader is getting the best possible information.

Being careless with word choice is one thing. But when people reading this stuff who may have no idea about economic fundamentals or market variables, come on and see things like, 'Paying rent and paying a mortgage are exactly the same thing. They are both debt.' or, 'Living debt free all your life is idiotic', then the debate needs to rage, because statements like that have no business being on a forum as quality as patrick.net. That stuff belongs in the comment section of a USA today article.

I do lament the fact that this thread has been hijacked. (though the title is "slightly OT", so I guess veering off topic like this is apt)

edvard2 says

Buying or renting isn’t a golden ticket to anything.

Words of wisdom, but for the past 10 to 15 years the mentality of an average folk has been that of "buying a house makes me a winner who will get infinite free money because I was smart enough to buy". No logic was exercised, just dumb sheep mentality. Not very different from dotcom bubble.

ch_tah says

While you and Klarek are technically right that your rent payment is not debt, you are either missing or ignoring SO’s point that you need to pay to live somewhere.

Nobody missed the point. That was never an article of contention. That was SubOink changing the subject.

A "Mortgage is debt"

B "So is rent"

A "No it isn't"

B"Yes it is"

A "No it isn't"

B "You have to pay for shelter"

^---- This is not a constructive argument, or a lively debate. It's either an extreme example of how bad American consumers' ignorance has become, or it's trolling.

If you want to argue that renting costs money, nobody will argue with you. That was not what SubOink was saying. He was trying to stretch the definition of what a debt is, and his argument was laughably fallacious.

klarek says

Wrong. It’s an agreement. No money is being loaned. There’s a penalty for early termination in the same way that I am penalized for terminating my cell phone plan too early. I’m not saying that any and all debt is bad, but that is not debt.

OK--it's not really worth too much more discussion. Obviously a lease isn't exactly the same as a loan. Nobody is saying it's exactly the same thing. But it's not like a cell phone contract. There isn't a penalty for termination unless you negotiate it--a standard lease obligates you to pay the entire rental agreement whether you live there or not. Seems closer to an owner financed 2 year loan.

The original point that you seem intent on trying to confuse was that you have to pay for your residence whether you rent or own. The whole debt slave argument is just stupid. You are no more a debt slave then a renter is a lease slave.

Schizlor says

Because they have an enormous potential for misinforming, coercing, and decieving, if they are used disingenously.

Yes, and you are a very guilty party. You misrepresent others comments willfully and purposely.

I'd suggest you not throw stones else you break your glass house. (or rental in your case)

ChrisLA says

edvard2 says

Buying or renting isn’t a golden ticket to anything.

Words of wisdom, but for the past 10 to 15 years the mentality of an average folk has been that of “buying a house makes me a winner who will get infinite free money because I was smart enough to buy”. No logic was exercised, just dumb sheep mentality. Not very different from dotcom bubble.

I could not have said it better. I'd narrow the window to 10 years, but thats about it.

tatupu70 says

or rental in your case

*ZING!*

SF ace says

Like others said, you do live once and you never know what can happen. I would not entertain a frugal lifestyle like my parents did. You can convince yourself that a yosemite vacation is better Maui, but it sure as heck not. You live in a four seasons or ritz carlton hotel and it is not the same as four point and embassy suite. There is a difference, you view it as dumb, I view it as standards. Of course, standards can be expensive, but life is somewhat in your control if you are courageous enough.

I do not disagree. In the past six months, I've been to 4 NBA games, a NHL game, and a couple Dodger games. I tried to get 100 or field level tickets most times. Also went to a few concerts...Tim McGraw, John Mellencamp, etc. And eating out, and other entertainment. And a whole lot of other stuff. Its why I live where I live(downtown LA).

Thats not the point.

Point of the posting was people living above and beyond their means and how that ties into the housing market. And how people still do so even after their individual bubble burst. How people make really horrible decisions based on emotional whims and fancy. Including buying homes they can't really afford.

klarek says

^—- This is not a constructive argument, or a lively debate. It’s either an extreme example of how bad American consumers’ ignorance has become, or it’s trolling.
If you want to argue that renting costs money, nobody will argue with you. That was not what SubOink was saying. He was trying to stretch the definition of what a debt is, and his argument was laughably fallacious.

If anyone was trolling it was your and your buddy Schliz. There is no way any normal person could have read Subs original post and not understood his meaning.

SubOink says

There is no such thing as debt free

False.

SubOink says

If you think you are debt free as a renter because you don’t have a 30 year mortgage than you are lying to yourself because as long as you have to rent…you have the debt of paying rent.

False.

tatupu70 says

There is no way any normal person could have read Subs original post and not understood his meaning.

Color me abnormal then. It reads plain as day. He was trying to morph debt into cost. This is the definition of cost:

"An amount that has to be paid or given up in order to get something."

He wants to argue that since you cannot go through life without paying a cost for something, that you in turn cannot go through life without paying a "debt" on that which has a cost. This is a false statement, the two are not mutually exclusive. I do not have to pay on a debt for something I wish to obtain, unless the debt is going to service the cost. If I find other ways to cover the cost, besides debt, then I've just paid the cost without paying a debt. The fact that this isn't plain as day is mind boggling to me. Call it trolling if you want, but I'm not going to play the, "Oh come on, you know what I meant" game just because someone is so stubborn as to be incapable of saying, "Ok sorry, poor choice of words."

I know he knows this, and I know you know this. But there may be people reading that don't truly know the distinction between cost and debt, and to argue that there is none is inexcuseable.

Schizlor says

Color me abnormal then

Done.

Funny how when you take random sentences out of context they can appear to say something different than the theme of the paragraph is, isn't it?

What you did is misrepresent his post to say what you wanted it to say. Because you didn't really have an answer to his actual post.

tatupu70 says

I’d suggest you not throw stones else you break your glass house. (or rental in your case)

Trolling would be pointing out something just to argue, which has nothing to do with the topic at hand. Like, for instance, if I pointed out how dumb your statement is. People in glass houses should not throw stones lest others throw some back at them and break their house in kind, not because they might accidentally shank one when throwing and break their own house.

See, if I were trolling, even though I got the gist of what you were saying, I would have stopped to point out how you completely fucked it up anyway. Not to mention the hilarious irony of trying to tell me to be humble and not insult others, while in the very same sentence throwing in a backhanded insult at me. (which was well-played btw. Would have been better though if I actually considered being called a renter an insult)

In his case, I was just calling a spade a spade (a falsehood a falsehood)

Get the distinction?

Schizlor says

tatupu70 says

or rental in your case

*ZING!*

Hah, take that, you piece of shit renter. You aren't contributing to your community by paying an assload of interest, you fool! Now go pay your landlord's rent while throwing your money away and living like a peasant.

tatupu70 says

What you did is misrepresent his post to say what you wanted it to say. Because you didn’t really have an answer to his actual post.

Nothing was distorted or misrepresented. Schizlor is being as objectively accurate as possible here, going out of his way to distinguish between costs versus debt, and you're using your own projections and reinterpretations ("you know what they/I really meant" is the operative backpedaling phrase, utter proof that you know Schizlor isn't making the distortions).

SubOink says

There is no such thing as debt free. Life costs money. You need a place to live and if you cannot afford to buy a house with cash you have 2 choices…rent or buy one. If you think you are debt free as a renter because you don’t have a 30 year mortgage than you are lying to yourself because as long as you have to rent…you have the debt of paying rent. You OWE the landlord a rent check every month. Whether you relocate to another rental or not…you owe a rent check. The sucky part is that rents are subject to change. And rents track inflation. So you are on the hook for more and more rent over the years.

Same in a 30 year mortgage..you owe the mortgage except that payment is going to be the exact same until the house is yours.

This is what SO wrote. If you can't understand his point, apparently it was too nuanced for you. And after looking up "debt" which has a very narrow interpretation and several broader definitions, his use of it seems fine. Beyond the nitpicking of word choice, his point was clear when taken in context.

tatupu70 says

If anyone was trolling it was your and your buddy Schliz. There is no way any normal person could have read Subs original post and not understood his meaning.

At least some people understand what I meant in "the big picture"...

But we can keep arguing about the defintion of the word "debt". If it makes Klarek/Schizl (the same guy, I think) happy I will say...I should have not used the word "debt" in all this. Same point but different words. My Bad. I didn't expect somebody to play wordgames but understand my concept instead.

In the meantime, I pay my mortgage and Klarek pays his rent. I have all this debt and Klarek is debt free. Ok. Nevertheless, Klarek has to keep working to pay his rent and I have to keep working to pay my mortgage.

I guess Klarek sleeps better reminding himself that he is debt free. And when he can't pay his rent and gets evicted from his rental house he can tell the landlord that he is debt free. I believe he still would have to move out because the landlord wants a check regardless.

Schizlor says

Trolling would be pointing out something just to argue, which has nothing to do with the topic at hand. Like, for instance, if I pointed out how dumb your statement is. People in glass houses should not throw stones lest others throw some back at them and break their house in kind, not because they might accidentally shank one when throwing and break their own house.

touche. Now that's funny.

And please don't overanalyze the rental comment. I don't consider renters to be any worse than owners. I rented when I was in CA. because it was loads cheaper than buying. Where I am now, it's not the case so I bought.

klarek says

Nothing was distorted or misrepresented. Schizlor is being as objectively accurate as possible here, going out of his way to distinguish between costs versus debt, and you’re using your own projections and reinterpretations (”you know what they/I really meant” is the operative backpedaling phrase, utter proof that you know Schizlor isn’t making the distortions).

Yes it absolutely was. You guys took one line out of context and tried to imply that it was his overall point. If his entire post had consisted of this line:

Renting is debt.

Then you'd be correct. In reality it was much longer and you guys falsely represented his meaning.

ch_tah says

If you can’t understand his point, apparently it was too nuanced for you.

"Hey man, I thought you said you had sex with Katy last night??"

"I did"

"Well that's not what she says. She's claiming you raped her."

"Same thing."

"What?!?!?! It's totally NOT the same thing!!!"

"Dude, you knew what I meant. If you couldn't understand my point, apparently it was too nuanced for you."

It's funny. Nuance is exactly what you seem to be missing in all of this. The distinction between words is exactly the issue here. Claiming debt is the same as cost is a gross generalization. Saying there is a difference is the nuanced argument, not the other way around.

If you want to continue to contend that the statements:

"I'm $10,000 in debt because of my car purchase"

and

"I just bought a car for $10,000 in cash."

Are even remotely the same thing, fine, be my guest. Just don't ever become a teacher at any school my kids attend.

Schizlor says

Claiming debt is the same as cost is a gross generalization.

See that's it. Please post where he said "debt is the same as cost"

You can't? Huh?

tatupu70 says

touche. See now that’s funny.
And please don’t overanalyze the rental comment. I don’t consider renters to be any worse than owners. I rented when I was in CA. because it was loads cheaper than buying. Where I am now, it’s not the case so I bought.

Is this where we kiss and make up?

tatupu70 says

There isn’t a penalty for termination unless you negotiate it–a standard lease obligates you to pay the entire rental agreement whether you live there or not. Seems closer to an owner financed 2 year loan.

Not to interject into the chain because this argument isn't particularly interesting, but this is absolutely not true. If you break a lease, the landlord has a duty to mitigate damages. The contractual remedies are different from debt.

Schizlor, you are just making up stuff at this point. You are doing exactly what you aimed to fight against on this board. Re-read SO's entire post again without picking out small portions. Maybe you'll get it this time.

tatupu70 says

Yes it absolutely was. You guys took one line out of context and tried to imply that it was his overall point. If his entire post had consisted of this line:

Renting is debt.

Then you’d be correct. In reality it was much longer and you guys falsely represented his meaning.

Actually, you pegged yourself to his remark up above:

Actually he’s pretty much correct. If you sign a 1 or 2 year lease, it’s pretty analagous to a 1 or 2 year loan. You’ve agreed to pay x amount over the course of the agreement in monthly payments. The owner has financed you.

You've gone from defending his remark in its original and literal context (conflating debt with cost) to accusing others of taking it out of context.

I am not going to assume that you were originally unaware of the difference between debt and cost, you just made a careless defense of someone else's ignorant statement. You're not dumb, but you stepped in it upthread and are now trying to accuse others of misinterpretation.

ch_tah says

Schizlor, you are just making up stuff at this point.

Quote one thing he said that is "made up".

tatupu70 says

Please post where he said “debt is the same as cost”

He said: "If you think you are debt free as a renter because you don’t have a 30 year mortgage than you are lying to yourself because as long as you have to rent…you have the debt of paying rent."

Rent is a cost. He says "you have the debt of paying rent". You don't. You have the cost of paying rent. Because he continued to argue that essentially they are the same (the, "you know what I meant" game), I had to conclude that he meant having to pay a cost (in this case rent) is equal to owing a debt for that amount on the same thing (in this case the dwelling) It is not the same.

I know what he meant to say. I only objected to his choice of words, because it muddled two VERY distinct things that anyone involved with a large financial transaction needs to know the differences between. I have no problem with the gist of what he said, just the stubborn-headedness that would continue to insist there is no distinction. (Which btw, SubOink is not contending anymore anyway, yet some posters feel the need to continue to harp on. This should have ended 10 posts ago, and would have, were it not for petty personal attacks by those who's ego cannot handle a little lively debate.)

(not you tatupu)

Ok let's get off of this already. We're soiling an otherwise great post by dodgerfanjohn.

klarek says

ch_tah says

Schizlor, you are just making up stuff at this point.

Quote one thing he said that is “made up”.

Since you guys are so anal, and you asked for something "made up," I'll go with the easy route - the Katy Perry story.

ch_tah says

Since you guys are so anal, and you asked for something “made up,” I’ll go with the easy route - the Katy Perry story.

OK, I'll admit, I did make that up. I've never raped Katy Perry.

SubOInk: Buying Milk from Ralphs Grocery Store is not much different than buying it from Trader Joes

Klarek: Complete Bullshit!! You suck!! You do NOT understand the concept of buying milk at a unionized store vs a non-unionized store.

SubOink: But I am talking about buying milk. It's the same difference to me. I don't care if the store uses union workers or not. I pay for the milk either way. Same price.

Klarek: LOL!! That's just ridiculous. You are embarrassing yourself now. Its idiots like you that represent what's wrong with america.

SubOink: ..wait..uh...I meant..I was simply saying that buying milk...

Klarek: My friend Schizlor is gonna get you now...

Schizlor: Damn boy! I can't believe you would even compare buying milk at these different stores. It's NOT the same. When I buy milk for Klarek I go to Vons.

SubOink: ...

Schizlor says

tatupu70 says
Please post where he said “debt is the same as cost”
He said: “If you think you are debt free as a renter because you don’t have a 30 year mortgage than you are lying to yourself because as long as you have to rent…you have the debt of paying rent.”

Exactly. As you like to say--words are important. Please don't mischaracterize his statements.

corntrollio says

Not to interject into the chain because this argument isn’t particularly interesting, but this is absolutely not true. If you break a lease, the landlord has a duty to mitigate damages. The contractual remedies are different from debt.

Sure. He can say he tried to rent it but was unsuccessful. You're on the hook.

Yes, it's different. That's why I said it's "closer", not "exactly the same"

klarek says

You’ve gone from defending his remark in its original and literal context (conflating debt with cost) to accusing others of taking it out of context.

My lord. Nobody conflated debt with cost. Do you really not understand the concept of comparing one thing with another? Or saying something is similar to something else? If I said your love is like a rose, would you go on a rant telling me how your love is MOST DEFINITELY NOT A ROSE?

We get it. It was a thought exercise to get everyone who says housing debt is bad to realize that housing cost exists whether you own or rent.

OK--I agree though. No more posts on this topic.

LOL!!

tatupu70 says

He can say he tried to rent it but was unsuccessful. You’re on the hook.

Not in the same way. If you can show (even through printing out listings on Craigslist) that other places are going for the same price, your landlord can't lie about trying to rent it. The burden is typically higher than you're making out to be, as the law requires the landlord mitigate damages.

tatupu70 says

My lord. Nobody conflated debt with cost.

If you are incapable of relenting with the bullshit, this will never end. Ahem:

If you think you are debt free as a renter because you don’t have a 30 year mortgage than you are lying to yourself

Suboink was saying in no ambiguous terms that renters have debt.

because as long as you have to rent…you have the debt of paying rent.

That was Suboink conflating debt with cost. This has been pointed out a dozen times already.

If you sign a 1 or 2 year lease, it’s pretty analagous to a 1 or 2 year loan. You’ve agreed to pay x amount over the course of the agreement in monthly payments. The owner has financed you.

That was you agreeing with Suboink and reiterating the point that cost = debt.

Because you would rather jump in to defend his stupid remark rather than pausing to consider that a lease or service agreement is NOT a loan, you cannot now claim that neither he nor you were conflating debt and cost. I know that you know this, and you could easily have corrected yourself in the many subsequent posts, but instead decided that it would be better to accuse others of a lack of comprehension.

OK--One last one. I really am done after this one:

klarek says

If you sign a 1 or 2 year lease, it’s pretty analagous to a 1 or 2 year loan. You’ve agreed to pay x amount over the course of the agreement in monthly payments. The owner has financed you.
That was you agreeing with Suboink and reiterating the point that cost = debt.

For the (really) last time. There is a different between saying x is analagous to y and saying x=y. There is a difference between saying x is like y and x=y. There is a difference between saying x resembles y and x=y.

Please stop misrepresenting mine and others' posts.

hi-tops and hi-heels are different, but they are still both forms of a shoe.

a loan to buy a house is financing that takes the form of a liability on one's balance sheet whether you be an individual, corporation, etc.

a lease is a form of financing that takes the form of a liability on one's balance sheet whether you be and individual, corporation, etc.

to determine the present value one will deduct from their assets, simply take the remaining liability and discount it at the appropriate rate- whether it be a loan, lease, or any other type of financing.

for anyone to argue or even insinuate they are different due to how each liability is enforced is being intellectually dishonest at best, or displaying a clear lack of understanding of financial instruments at worst.

understand how each form of financing works and, based on the relative p.v. of your other investment opportunities, choose the one that MAKES THE MOST SENSE FOR YOU.

but, i guess if everyone clearly understood financial instruments, this board wouldn't exist...

tatupu70 says

There is a different between saying x is analagous to y and saying x=y.

To Klarek x is analogous to y is the same as x = y - he will never get it and loves to ride around the terminology more than actually getting the message of what somebody is saying.

Sorry, had to chime in one more time...sitting on a plane and very bored...

bjones says

but, i guess if everyone clearly understood financial instruments, this board wouldn’t exist…

You know, if you're going to be that snarky, you better get your wisecracking right.

bjones says

a loan to buy a house is financing that takes the form of a liability on one’s balance sheet whether you be an individual, corporation, etc.

a lease is a form of financing that takes the form of a liability on one’s balance sheet whether you be and individual, corporation, etc.

Buying a house would be a capital expenditure, so it shows up as an asset on your balance sheet with the balance due on the loan as a liability.

A lease could either be an operating lease or a capital lease. The typical residential lease is an operating lease, so it would not go on the balance sheet as an asset and a liability -- rather, you treat it as an expense. Commercial leases could be either an operating lease or a capital lease, but residential leases will almost never be a capital lease. When you have a capital lease, you typically recognize depreciation, but you don't for an operating lease.

In addition, what is done from an accounting standpoint may not account for the substance of the transaction, the risks, and any applicable law. As I mentioned, the contractual remedies for each arrangement are quite different, and the risk profile is quite different.

dodgerfanjohn says

In the past six months, I’ve been to 4 NBA games, a NHL game, and a couple Dodger games. I tried to get 100 or field level tickets most times. Also went to a few concerts…Tim McGraw, John Mellencamp, etc. And eating out, and other entertainment. And a whole lot of other stuff. Its why I live where I live(downtown LA).

In the past six months, I've been to six high school swim meets, two high school waterpolo matches, a high school musical and two high school concert band performances.

Oh yeah, the SF Giants, the Curran Theater, and last summer a UB40 concert, and dropped off my partner at Pier 41 (a hr drive from home) for a cruise to the Pacific Northwest with a relative. Four symphonies by three different companies, including the one in Oakland where the guest artist was Carlos Santana. Saw with my own eyes (behind glass) original copy of the Magna Carta, on loan last month from its permanent home in Britain.

As the years have gone by, the memories of the kinds of stuff in the first set of stuff are way more precious, the times way more good, than the good times in the second list.

That is the point. A good place for everyday life beats the hell out of a Cool and Hip Place. The Cool and Hip place is cool and it is hip, but that's about it.

ha. look at the big brain on brad (pulp fiction, anyone?). anyway, i can see how an argument like this could drag on into infinity. it reminds me of every conversation i've had with the many libertarians i once worked with:

me --the concept sounds absolutely fantastic.
me --now, let's apply to the real world.
me --oh, doesn't work so well.
me --huh? and that's still not enough for you to change your opinion??

corntrollio, your information is absolutely, 100% correct. what's funny is, when applied to the real world, you basically bolstered my and quite a few other people's argument- debt and leases ARE TREATED THE SAME.

yes, a house and the loan would go on both side of the balance sheet; so would the "operating lease" that a GOOD ANALYST LIKE YOURSELF would put on the b.s. when analyzing the credit worthiness of the person or entity.

corntrollio, you know better than anyone on this board that a company may have their lease off the b.s. to improve their risk profile. so, you being the fly-ass analyst that you are would do the wise thing and TREAT IT JUST LIKE THE CAPITAL LEASE by putting it on!

Thanks for making my argument that they should be treated the same.

now, semantics. yes, you're right in saying that their is a different amount of risk one would absorb when taking on different type of liabilities - for large companies with complex debt structures!

how many regular joe's do you know sit at home and say, "geez honey, i know we owe your brother $50 bucks and we owe visa $75, but those are unsecured forms of debt. not that big of a deal. now, a mortgage is an entirely different animal. we need to really put a lot more thought into whether we take on that form of liability".

and if you say more than one, you're being disingenuous.

the bottom line is, most people make decisions based on the entire debt profile rather than separating secured vs unsecured vs rent vs etc. which, for an individual, is the appropriate way to look at this subject because a default on any of their "liabilities" will have a significant impact on their ability to continue to have access to reasonable lines of credit, INCLUDING A LEASE at some point in the future!

regular joe's need to focus on their assets vs liabilities (including moving the off b.s. op. lease back on) and cash flow and less on how the specific contracts may get resolved. the bottom line is, breaching one of the contracts will eventually have the same effect- an eff'd up credit report. and isn't that what drives most regular people's decisions in regard to which liabilities they are and aren't going to pay?