- Apr 30, 2008
Slow and Steady Wins the Race
Anne and Mary grew up together in Wisconsin. They lived on the same street, went to the same schools, and have been lifelong friends. They are now 39 years old and have only one really important difference in their lives. Anne bought a house when she was 21. Seven years later, she sold this house and bought an even bigger one. Now she is living in a house that is worth $420,000. She still has a $118,000 mortgage, but she could sell her home and walk away with $300,000. Mary never bought a house. She has been paying rent for 18 years and all she has to show for it is hundreds of faded rent receipts.
Over the past 18 years, Mary paid rent and Anne made mortgage payments and it hasn’t been easy for either of them. They spent roughly the same amount on food, shelter, clothing, and entertainment and had roughly the same standard of living. But Anne has built up equity in her home and Mary has collected rent receipts. Now Anne is living in a half–million dollar home that will soon be paid for and Mary will most likely go on paying rent for the rest of her life because she can’t afford to make a down payment on a house at today’s prices.
Anne didn’t inherit a fortune or find a winning lottery ticket. Like millions of people all across this great country, she built her wealth slowly but surely by paying off the mortgage on her home one month at a time.