Does a house and mortgage really represent security? Or does cash flow represent security?

I just read this article by @tarazkp, in it he talks about how one million Steem costs 130,000 dollars US right now. He could raise the cash by selling his home, and that much Steem would produce $70.00 in upvotes a day, or $35.00 in curation. That produces about $1000.00 USD per month. He calculates he could rent an apartment for that much and thus live rent free based on his earnings from Steem at its current price.

I was particularly struck by two things;
First, it’s a pretty radical idea, but I see the numbers add up. It’s paradoxical how selling your home and buying an income producing asset allows you to live rent free. It’s ironic how giving up your current security; home with mortgage, a non performing asset, (generates no monthly income) for Steem, an performing asset (generates monthly income) “could” be seen as providing you more security. This sentence requires us to pause and consider other ways of providing housing, other ways to achieve a goal and maybe not definitively state one is better then the other but to consider our options.

Second, I had to pause and think about what he said.
We all think that owning our home provides us security, a place to stay or a roof over our head. But does it really? The majority of us don’t really own our home, the bank owns it and we are paying a mortgage. If we get sick, lose our job, or die we stop paying our mortgage and we lose our home and become homeless. How secure is that?

This raises the question of, does home ownership really make you secure?

Ironically, the purchase of a home is one of the biggest purchases most people make in their lifetime and I have purchased my home home 3 times. Each time I was struck by the fact that I didn’t own it, I owned a debt. So buying my home didn’t make me feel more secure. It certainly protects me from annual rent increases and certainly protects me from being evicted at the end of the lease period. But it doesn’t guarantee me a place to live, only paying my mortgage or paying my rent guarantees me a place to live. Which means having a job guarantees me a place to live, as long as I am working. But if I get sick, get fired or die, my ability to pay my rent or my mortgage ends and in a few months I will be homeless.

So is my situation really secure?
Now some will say, that you can only get a mortgage after you have been at your job 2 years and you should have three months worth of monthly expenses in an emergency savings account to pay your living expenses in the event of illness, death or getting fired. But how many people do that? If you believe the experts, it’s a very small percentage of Americans, with almost two thirds of Americans being one missed paycheck away from being homeless.

So my mind comes back to the question: Does it really represent security to own our home and pay a mortgage?

I contrast that to the situation where you sell your home to get your equity out of it. Now buy an income producing asset which pays enough monthly income to pay your rent. Now your rent is essentially guaranteed regardless of whether you lose your job, get sick or die. That income will come and your rent will be paid. Even if you have to move because your landlord sold your home. You just rent another place. Oddly enough I feel more secure in that situation. While it’s true I won’t own my home, which is an appreciating asset. But if I buy an another appreciating asset, which also makes income I am technically financially ahead of the game of life because I have replaced a non-performing asset with a performing one.

We know that there are performing and non performing assets, and in general an asset is something which increases in value every year or appreciates. We know that you don’t get rich or retire purchasing non-income producing assets, but instead you do the opposite, you buy stocks or other assets which produce income. Did you know that experts say that over one third of Americans have no investments other then their home? Yes. One third is the number given for people who don’t have enough money after paying their bills to invest any money in income producing assets. So if a home is a non-income producing or non-performing asset, and we know that purchasing such an asset will not provide us financial security, why do we all do it?
The answer appears to be: Because everyone else is doing it.

Hmmmm🤔
I think we are raised to believe owning a home is a big marker of success, and I think it is....because it is the only investment many Americans have and the only savings account many Americans have, so it’s a very important milestone for large segments of the population who don’t invest.

I realize that I am asking you to look at things from an entirely different viewpoint then we are culturally raised to think. But if you think about it, if you do what everyone else is doing, you get what everyone else has; a house, a mortgage and a lifestyle where you are one missed paycheck away from being homeless. The funny thing is I think the general anxiety we all feel is because we know this to be true. But we ignore it and go with the crowd. Because that’s comfortable. We would rather be financially living month to month and follow the crowd, instead of break off from the pack and build our own success and security.

How many of us connect the dots between the idea that it’s only the ones who do something different from the majority of the people, who achieve things the majority don’t achieve. In America we talk about the top one percent of income earners as the most successful people financially in the country. But when you look at them, they are doing what the 99% aren’t doing, and that has made all the difference.

My point is open your mind to different viewpoints and different thought processes.

Free your mind and the rest of you will follow.

✍🏼Shortsegments

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