A couple of weeks ago, I wrote about my new-found love of alternate transportation, particularly walking. I wish I could convey exactly how much choosing to walk everywhere has changed my life for the better. Because I’m walking 5-8 miles in every day, I’m getting exercise, have time to read (most of my walking is on pedestrian trails or low-traffic streets), and am actually getting more errands done. It’s awesome. I’m a much happier man.
Speaking of happy: Here are some financial articles from around the web that I’ve enjoyed recently:
While I was in London two years ago, Tim from the Seattle Bubble blog provided a guest post discussing renting vs. buying and the realities of home-ownership. On Monday, he shared a follow up on his site in which he explored what he calls the “forced savings plan” myth. It’s true that over the past two years stocks have outperformed real estate — even though they’ve both lost money! Still, I’m one who believes that long-term, home ownership can be (and has been) a reasonable conservative investment. Under most circumstances, your home’s value will roughly keep pace with inflation.
Over at Bargaineering, Jim has posted a video from Stanford student Josh Chan. Using stop-motion animation, Chan has created a little piece on the power of compound interest called Every Penny Counts. It’s nothing revolutionary, but I thought it was fun.
Author Keith Ferrazzi has a blog now. Earlier today, he posted an article describing how to surpass 95% of your competition with one simple gesture. What’s his secret? Follow-up. When you meet somebody, do a brief follow-up within the first day to keep you in their mind — and them in yours. (I think there’s a careful line to be walked here. In general, I agree, but I think it’s important not to be too eager or pushy.) [link via @andrewjparkes]
Mike at Oblivious Investor just shared his framework for deciding whether to pay down debt or to invest. This mirrors conventional wisdom, but it never hurts to review to make sure you’re on track.
Finally, Donna sent me a link to Sally Herigstad’s article at MSN Money about four real-life stories of bankruptcy. “What really happens to you when you file for bankruptcy?” she asks. “What do you have to do? How do you survive afterward?” Her article explores what happened to four people who had no other choice.
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Wait…did I read that correctly? You are reading while walking appx. 5-8 miles a day? How?
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Very carefully.
Actually, I don’t read the entire time. But I do read for a substantial portion of it. Today I read a big chunk of Greg Karp’s 1-2-3 Money Plan. How?
Reading while walking is non-difficult. The biggest worry is motor vehicle traffic. I’m very wary of this, and do not read when cars are a danger.
Most of my walking is on a rails-to-trails pedestrian path. The path crosses roads every quarter or half mile, so I pay attention there. Also, I’ve learned to read while walking on the streets. But I only do this along very low traffic streets.
Anyhow, I’ve read most of The Adventures of Kavalier and Clay over the past two weeks of walking. I’ve also read several magazines and two personal finance books. I’ve had zero close calls.
If you try this, please be safe. I cannot stress how important it is to be wary of cars. If you live in the middle of the city, I’m not sure you could pull this off (maybe in a park?). I’m fortunate to have a few routes where I can do this.
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Does walking and reading at the same time slow you down? I walk quickly and I cannot possibly imagine reading and walking at the same time without slowing myself way down.
Also, your competition already follows up. It’s follow THROUGH that gets you the attention you deserve. Do what you promise and meet the expectations of the other party to build trust and jump ahead of the competition.
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Thanks for including my article.
And thanks for sharing Keith’s blog. I hadn’t encountered it yet, though I really enjoyed Never Eat Alone when I read it a couple years ago.
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You sound far too happy. I have a mental picture of you merrily skipping along with your books.
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It’s amusing to go back and read some of the outright hostile comments on my July 2007 post about renting vs. buying by some of the people that were outright appalled that I suggested that for some people, it might be a better short-term financial strategy to rent.
My favorites:
and
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J.D. just be careful walking while reading! We don’t want you to take a nasty fall!
On a sidenote, when I was growing up an elderly man that lived on my block use to walk to the deli a few blocks away to buy the morning paper. He’d walk all the way home and read as he walked. I was always amazed that he managed to safely walk and read at the same time. Not bad for an 80+ year old man!
-Gen Y Investor
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Walking is wonderful! I walk all the time and sometimes I read, but lately I’ve been doing some other things.
1) I don’t have a dog but many of my neighbors do. I have a few dogs that I borrow. Something about having a buddy along makes it extra fun! (although there is the scooping issue)
2) Our library has audio books available to download and listen to, so I have enjoyed a lot of things this way, for free.
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A reader who’s been in the shadows for a long time finally comes out… Really appreciate your blog J.D. Looking forward to the book release, are you planning on sharing portions of that every now and then?
Just a thought on Keith’s post about renting vs. buying. When adjusted to the inflated home values of the past few years I think his post is very truthful. However, in today’s market I think purchasing a home makes far more sense for most people who know they will be in the same location at least 3 years down the road. (especially with the tax credit)
Real Estate as an investment, just like stocks, depends on your savy and what you choose. Some areas lose value, some have massive growth. Real Estate as an investment is a gamble like most else. The benefit of Real Estate is that it is less prone to inflation than the dollar and dollar based stocks. …all the benefits of gold, but with monthly dividends. (as long as you can keep your property rented out or lived in by you)
If renting was really such a great deal for the renter and so bad for the owner, why would so many be willing to buy a house and rent to others?
If one sells their house it isn’t a great investment, but what if rather than selling one moves and rents in the new location and then rents out their old home. In my opinion the reason real estate can be viewed as a bad investment now is because of how frequently people move.
A 6% of investment sell out is a costly fee to pay if you sell frequently, but if you truly treat real estate as an investment you need to hold on to it. That means being open to buying a house, and then either living in it, or filling it with renters.
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When I was a teen in SF (many years ago), it was a mile to the bus stop each way, walking through mostly park. I often read the whole way there in the AM and back in the afternoon. It’s not fitness walking, but the distance gets covered either way :~).
I am inspired by your story and am thinking about walking the 3 miles or so to the grocery store when I just need a few things as a new habit. Either I’ll get what I need plus some exercise, or I’ll be too lazy to go and I’ll save the money!
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Joshua Wheeler @ 9 said:
Nobody is saying that renting is always a great deal 100% of the time. The gist of the original post back in 2007 was “don’t just rely on clichés, run the numbers for your unique situation.”
The same is true today. In some places it will make more sense financially to buy, in some it will make more sense to rent. My follow-up post this week was just an exercise to clearly demonstrate that it is most certainly not always a better financial decision to buy.
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There’s one aspect of home ownership (which is one of my primary reasons for wanting to buy a home) that *nobody* ever mentions on personal finance sites:
Having a paid off home effectively increases your income by the price you’d otherwise be paying towards your mortgage or rent. For most people, this number is something like a 1/4 to 1/3 increase in available income.
It makes an especially big difference when retired — I don’t plan on paying for housing after I retire. You also don’t need to target 80% of your current income as a goal to maintain after retirement if you’re expenses will drop by 1/3 shortly before you retire.
I have no idea why no one ever talks about this in the renting vs. buying debate.
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Tyler @ 12, perhaps no one ever talks about it because the “debate” is not about whether to rent forever or to buy right now. The debate is whether to rent in the short term delaying a home purchase when home prices are ridiculous and unreasonable, or to buy right away because buying a home is always a good idea no matter what.
That’s the way I look at the discussion, anyway. When I buy a home eventually I intend to pay it off as quickly as possible for the exact reason you describe (and to save tens of thousands in interest payments).
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I can text and walk but I couldn’t read a book – I need to look up regularly to make sure I’m not going to walk into something or trip over! I like listening to podcasts while I walk. There are so many good ones from universities available for free via itunes.
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Reading while walking is so not in my bag of tricks… I can *maybe* text while walking, but I don’t do that very well either. Sadly, there are times when I fail to walk when walking is all I try to do! For me, exercise comes in scooter rides Monday – Friday on my college campus. An intense hate of being late, coupled with classes on opposite sides of campus led me to buy a scooter. For the first time today, I ran into another person using one! (First time! And I used it all last semester, but only twice a week. This semester it’s every day I’ve got class.) My legs *burn* after I’m done, and I’m out of breath, but I have to say it feels great… Or maybe I’m just a speed freak.
Oh, liked the bankruptcy article too. Always interesting to see how some people end up that way… While some put themselves there, it’s awful that most who end up there tried so hard to not be there. It’s enough to keep in the back of my mind that taking on too much debt isn’t a good idea, or to be careful in business ventures.
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Tyler, one point is that your housing payments won’t just disappear once your mortgage is paid off; you’ll still have property taxes and insurance to pay, which can be significant costs. In the neighborhood I plan to buy in, the two are currently about $700-800 a month. Lower than the rent and the mortgages in the area, for sure, but it’s not zero.
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I can tell you, back in 2007 — the number of pro-homebuying commenters on personal finance blogs was off the charts. Anytime, anybody replied “run the numbers”, 25 others would continually shout “renting is throwing your money away!” Sorta like today’s health care town hall meetings — people come with preconceptions and just try to shout down the other side. So yes, Tim’s latest entry elicits a bit of schadenfreude pleasure for me. Sorry if that makes me bad person.
Tyler @ 12. Who says nobody ever discusses it? I’ve seen plenty of people post in detail about “investing the difference”. If you can rent at 85% of total PITI (assuming 20% down, 5% mortgage, 35% marginal tax, etc, etc, etc) — it takes roughly a 3% real return to beat the homeowner for all eternity even after paying rent until you die. 3% real is not hard to do — multiple times in the past few years, TIPS were being sold at 3-3.5% real rate. 3% real is also roughly what Vanguard Total Bond Index did the past 40 years. Again, just bonds — plain vanilla bonds.
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I learned to love audiobooks as listening to an audiobook is definitely something you can do while walking, and unlike music, you can listen to the book with one ear while leaving the other open for traffic etc, as most are in mono.
Lots of free audiobooks can be got from librivox.org although they are restricted to books that are out of copyright. Still there’s good books to be had at no cost – including all the classics you could ever want.
Keep up the good work!
Euan
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Wow, do people actually pick up after their dogs where you walk? I’d never try reading while walking here, though I’ll read on the bus.
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As a fan of walking and reading myself, I suggest audio books. I borrow from the library, copy on my pc, put on my MP3 and away I go. I erase from PC and MP3 when done.
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The Tim, I really liked your article and the follow-up. Home ownership really is a case-by-case decision, and not a rule of thumb. But it has been sold as The American Dream for so long now that people rush into it without thinking it through.
We recently looked into selling our home because the area we are in had very low inventory for houses (not condos) and the few houses up for sale were selling for outrageous prcies. But when I compared the rent for places the same size, the rents were way more expensive than our total costs. It seemed very strange to be in that position though, when it seems that the rest of the house prices across North America were so much lower than they were last year. Our house has actually appreciated in value about $50K since last year.
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I prefer running, but I also like to read magazines at the YMCA during my cool-down walks. I have trouble walking farther than a couple miles to get somewhere because I feel like I am wasting time. Maybe that will change eventually, but that’s just how I feel at this point in my life.
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I can read and walk, but it’s really more of a stroll. You sound like you’re in the third stage of walking!
My car was dead for 10 days and I wound up using my bike to get around a lot. It was 100% awesome. Even though my car’s fine, I’m that much more committed to biking around town when possible – I got some blinky lights so I feel a bit safer doing so.
And “walking on sunshine” is possibly my all-time favorite song from the 80s.
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Riding my bike this summer has really saved my anemic budget. Doing my routine errands to the library, post office, bank, ice cream stand, and the like by biking has kept almost a thousand mile off my car. I have an advantage in that I have almost no shared roadway due to the off-road trail.
I could walk the same route but riding is faster (I have gotten awesome on hills), but I would not read I would take my binoculars as the trail skirts a nature reserve. (It tough to use binoculars on a bike.)
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I used to read while walking all the time when I was a kid. But I also read while in school (not the school’s materials), read while at home, read during lunch, read during dinner, read late into the night. There was just not enough hours for me to get my reading in so reading while walking was the only place left to get reading time.
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