I took care of a patient the other day. He was lamenting the fact that he had worked the same job in retail for many years. He wished he had gone out on his own and started his own retail business. If only he had made that decision years ago, he felt, he would be so much better off. He would have great healthcare and be able to travel when he wanted to. He was living his life as a renter.
That’s not to say living this way is bad. But, I do believe that this patient had never considered the risks, and that led him to his current predicament.
Life as a Renter
Renters aren’t bad. They are good. They keep landlords in business. Landlords provide a home. It’s a good synergy. But let’s face it – long term we see the benefits of being an owner so much more. The benefits of being a renter are real:
- It’s easy to pick up and move on
- Many tasks are done for you
- Removes a lot of risk
A lot of people see those three benefits right away and its easy to get started doing it, but they get stuck, like my patient. Coming out of college, it’s much, much easier to go to work at Radio Shack, as I did, than to start your own electronics retail business. And, if you don’t like it, you just quit and apply at the shoe store down the street. The only difference is that these renters are collecting a paycheck and are ‘renting’ that job.The ‘rent’ is their time and energy.
It’s the same way as a renter of a house. They can pick up and leave pretty quickly, except the notice is usually one month instead of 2 weeks. The renter doesn’t treat the place with the same level of care as the owner – they usually don’t see the downside to deferring maintenance.
The employee doesn’t have to do the books or pay the property tax. They don’t have to decide on how to advertise or when to order new product. Of course, the employee may be hired to do any one of those tasks, but the owner has the ultimate responsibility, and is the one paying the price if it doesn’t get done.
In the house, it is similar. Much of the work of owning a house is the owner’s responsibility, such as property tax, insurance, and repairs. The owner essentially takes on these tasks of home ownership for the renter. In a sense, the owner is providing convenience for a fee.
Risk is taken on by the employer or owner as well. The employer takes on the risk of the store burning down or of having no customers. The owner of a house has the same risk. The employee or tenant doesn’t have to worry about this, except for having to find a new job or a new home (which isn’t a small risk, by any means).
The major downside is that the employee or renter never builds any equity. They aren’t investing in anything. They will continue to depend on their job or rental home without a way of moving except horizontally – to another job or another house. To some, that is OK, to my patient, it wasn’t.
Life as an Owner
Owners put in extra time. They have no notion of the 40 hour workweek. They are working on their business at any hour of the day, always on call, always responsible. They invest their money into the business not knowing if it will come back. They end up working with employees and tenants, depending on them for the business.
The owner puts off pleasure (income) now in the hopes that it will come later. In the short term, this might seem like a terrible idea, and that’s why most people keep the renter mentality in their lives.
The owner is working for the future. This person has a vision and is willing to take a risk. And that’s the hardest part of becoming an owner – managing risk. It’s what keeps renters being renters.
Other Types of Renters in Life
People who don’t pay attention to their health. They look at the short term pleasure of eating fast food and avoiding exercise. They don’t spend the money to see the doctor, while spending it instead on cigarettes, alcohol, and fast food. They depend on insurance or charity when they become ill. These are renters of their body and like other renters, will have nothing to show for it in the future.
People who refuse to learn. This type of person doesn’t want to educate themselves or get an education. They are ‘stuck in their ways’, usually dogmatic, and never willing to change. Their future is one of continued ignorance.
So, are you a renter or an owner? If you are still young, now is the time to make this decision. Clearly I believe it is better to be an owner. Consider becoming one yourself.
