I just read this month’s issue of Money Magazine. An article in it (‘Young, in Love and in Too Deep’ – August 2005 page 39) profiles a young couple, both 23, not married or engaged, who have bought a $299,000 home together in Florida. They can’t afford furniture, don’t relate to the neighbors (who are mostly families with kids) and they fight about small amounts of money (He thinks she should pay for the iron she will use to press his shirts). They own a pit bull, and are essentially camped out and unhappy in their cavernous, empty home. Their budget is stretched to the limit and they have no money remaining each month to enjoy being young and in love!
This real-estate-speculator’s lifestyle is justified with the hope and expectation that the home (their Golden Goose) will soon increase substantially in value, providing the young lovebirds with a windfall profit (their Golden Egg) with which they plan to buy something smaller and closer to the beach so they can spend more time surfing. How’s that for a business plan!
What ever happened to working hard and earning the things we want in life? I wish these young investors the best of luck, really I do. But having been married for 14 years and invested in real estate for 11 of those years, I can say to the young couple that if you can’t reconcile your differences over who will pay for the iron, you’re in for a rough time as real estate investment partners.
While I certain would not discourage young people from setting financial goals, living boldly and taking risks, I believe there are more important life skills that need to be taken care of before getting rich. Number one, at least for the couple profiled in this article, would be to spend time developing relationship skills and learning how to share money. If they can’t even decide who will pay for a $20 iron, how do they think they will be able to divide the expected proceeds from the sale of the home, should it in fact appreciate in value? And, can a budding relationship survive the stress and uncertainty of riding a wave of speculation? Well, they are surfers, so maybe they can ride this one in and paddle out for another.