US Home Ownership

US citizens are allowed to own their homes and the land it sits on. Typically, young US citizens may rent until they realize that monthly home mortgage payments are less than their rent payments.

Home ownership allows us to avoid paying rent. We can pay off our mortgages in 15 to 30 years and lower our expense for shelter after that.  This is critical to becoming self-supporting, especially after retirement and accumulating assets that appreciate in value to establish our net worth. See below.

US Net Worth of Homeowners v Renters

Age      Homeowner   Renter

-35         $10,200       $5,044

35-44     $68,400     $25,080

45-54   $110,600     $39,740

55-64   $168,500     $65,100

65-69   $233,300     $86,630

70-74   $211,700     $58,370

65+      $209,300     $64,370

75+      $200,700     $50,840

https://wallethacks.com/average-net-worth-by-age-americans/

Inflation Beating Strategies

Buying a single-family home allows home owners to buy an asset that will appreciate in value and can be paid off in 15 years. The mortgage interest paid is off-set by the mortgage tax deduction and the appreciation in value.

In Periods of Low Inflation, the best 401k investments are in the Vanguard 500 Index.

In Periods of High Inflation the best 401K investments are in fixed income tied to inflation.

My strategy for beating inflation from 1965 to 1975 was to buy a single-family home in the growing exurbs and work multiple jobs. In 1971, I elected a fixed interest investment account. This account appreciated during high inflation years from 1965 to 1975 and continued to rise to 2015.  I changed jobs 3 times for bigger jobs at higher salaries.

In 1975, I moved out-of-state and bought a larger single-family home and was eligible for a profit-sharing plan that generated 10% of salary per year. I changed jobs 1 time for a higher salary.

In 1983, I moved out-of-state and bought an even larger single-family home and was eligible for stock. When inflation got under control after 1985, I invested in a 401K. I changed jobs 1 time for a better job.

In 1993 I was recruited by 6 electronics companies to open a Private Consulting Practice. I transferred my 401K to a Vanguard 500 Index SEP and went to all stocks. I ran this consulting practice until 2017 and retired at age 74.

My financial plan was to keep my income ahead of inflation and my spending low. To build net worth I bought homes that appreciated in value and invested in fixed interest during high inflation years from to and in stocks during the lower inflation years after 1993.

I bought my first 2000 square foot home on a 1 acre lot in 1966 for $16,000 and sold it in 1975 for $36,000. I had paid $1800 per year in mortgage payments for 10 years that totaled $18,000. My house appreciated by $20,000. It was a savings plan. Owning my house ended up costing nothing. I recovered all of my house payments using asset appreciation.

I bought my second 3000 square foot home in 1975 for $55,000 and sold it in 1983 for $85,000. I had paid $3600 per year in mortgage payments for 8 years that totaled $28,800. My house appreciated by $30,000, covering my $20,000 down-payment.

I bought my third 4000 square foot home in 1983 for $135,000 and paid it off in 2000. I had paid $16,800 per year in mortgage payments for 17 years that totaled $285,600. I spent another $100,000 on upgrades and with a $30,000 down-payment I have $415,600 invested. I still live in this house and comparable homes in this subdivision are selling for $700,000.

My job changes were actually based on my quest to become a “hands-on” expert and leader. I was “accomplishment motivated”, productivity oriented and process focused. I was an “impact player”, internal consultant and turnaround manager. It typically took 3 to 4 years to accomplish what I came to these companies to do. When I was done, I moved on to learn more. I worked 28 years for 7 manufacturing corporations and 1 university from 1965 to 1993. I was self-employed 24 years in my private consulting practice to serve 40 electronics manufacturing companies in Atlanta.  I retired at age 74 in 2017.

My wife had been a “stay at home” mom from 1965 to 1986, but got her Dental Hygiene degree in 1986, worked 21 years and retired in 2017. Her added income allowed us to accomplish our financial goals. We had 6 children and have 14 grandchildren and 4 great grandchildren and continue to have a really good time.

Norb Leahy, Dunwoody GA Tea Party Leader