24. Xanadu
“Technology . . . is a queer thing. It brings you great gifts with one hand, and it stabs you in the back with the other.” – Carrie Snow
I was fortunate to buy my first house in the summer of 1976. I wouldn’t have to shell out cash anymore for rent and replace that with monthly mortgage payments. They may have been slightly higher buy I realized the tax benefit in addition to the chance to meet those living close by. The home was on a dead end street but I had really great neighbors. I had my first garden, even though the yard was small and shaded by a pair of huge mulberry trees. It didn’t take long – about a month – before I had my first party and no one called the police. It would have been improper for the neighbors to do so since they were at my home.
I mentioned the Ford Motor Company and its car production, which had a great deal to do with the construction of homes. Henry enabled the common man to buy a car, which in turn led to more people owning homes. I also became a slumlord renting that house as well as two condos in later years. I should never have rented my house to the three house wreckers in what came close to being a disaster, but I was a respectable and caring owner of these three places. I was thankful for the tax advantage of renting to others, making a few dollars doing so, but for me it was a break-even venture. I don’t recommend renting places to others as a way of profiting from investments.
Up until now, I have rented over a dozen places and was returned my deposit in each. I have owned three houses, a log cabin in the Poconos and three condominiums, which includes the place I live in now. It’s the only property I own today. All three houses had three bedrooms, with my first house having a waiting room. My present home and the other condos are equipped with two bedrooms. Places I rented had two bedrooms as well. A house for a single person doesn’t need three bedrooms. With two, the spare can be a library or God forbid, a technology room. The latter is where I write and my condo has about 900 square feet, which is enough room. The more space, the more there is to furnish and clean. For some people, 20,000 square feet isn’t sufficient.
As the square footage of a residence increases, more resources are needed for heating, cooling, building materials and furnishings. This only results in the desecration of the earth. Life, liberty and the pursuit of happiness can’t be achieved if people ignore global warming. I talked about materialism earlier, which generates greed, power and control. In the 2010 motion picture, Wall Street: Money Never Sleeps, Jake Moore, played by Shia LaBeouf, asks Bretton James, played by Josh Brolin, what his satisfaction limit on money was; the latter replied, More!
Joe and Frank are both just out of college and Joe tells his friend to open up an individual retirement account (IRA). Frank makes excuses saying he can’t afford it but Joe tells him to take out a loan. He also advises him that he should increase the number of dependents via his W-4 withholding form. Using three rather than one or zero will give Frank more cash in each paycheck, which he should put aside each week to pay off his loan. Frank doesn’t take Joe’s advice and says he’ll start contributing when he’s 28 and keep doing that until he’s 65. Joe starts immediately, doing it for only seven years. Each individual account earns a fixed rate of interest of 10% from year to year.
At age 59, who has more money in his account? Before answering that question, note that Joe stopped investing at age 28 while Frank started later but didn’t stop. This meant that Joe invested a grand total of $14,000 while Frank by the time he was 65 had invested more than $70,000. The numbers reveal that Joe’s investment at age 59 accumulated $364,200 while Frank’s was a bit less at $363,887, despite Frank investing so much more. In my first book about work, published in 2003, I mentioned this IRA issue with Joe and Frank, but a few numbers there were skewed. These have been modified here, but I take the blame for the bad numbers of a decade ago, even though technology may have been a contributor to the error. The table that follows uses a few files, including one with calculation processing. I seriously hope that the combination works.