HOUSING ECONOMICS

One Economics concept that everyone should be taught is the economics of owning a house and a land. Most experts in the field of economics consider owning a house and land as an investment. It is set apart from consumption expenditures. But, most people who went into the purchase of house and land did not realized this very basic truth. They purchase an investment on a loan, whether short-term or long-term, believing that to have a house of their own means convenience of living. The normal result is that most people suffer foreclosures in the event that they can not pay for several months their mothly premiums, which is inconvenience.

Unlike consumption goods, an investment should be done from out of savings. In case there are no savings, any attempts on purchase of house and land on loans should not be done. Frequently however, people take chances. Housing developers also take chances. But, globally, it has been proven that the attempt does not hold water. In simple terms, those who intend to own a house and land of their own should start with the self-discipline of saving for the project.

WHY DO BANKS FAIL?

Why do banks fail? This was the question ask by many of my friends yesterday. I said, let me ask you one question. Why did you deposit your money in the bank? They said because when we have the money in our bags we feel always spending it away. Money is always hot in the hands. So I said, you have just answered your own question. Because, if you can not trust yourself handling your own money, then, the probability that you make wrong choices on whom to entrust your cash is very high. In parting I said, the banks failed because the depositors also failed in the test for self-trust.