Homeownership Is Not Always a Blessing

By Elrod, Henry; Forrest, Michael | Journal of the International Academy for Case Studies, February 15, 2015 | Go to article overview

Homeownership Is Not Always a Blessing


Elrod, Henry, Forrest, Michael, Journal of the International Academy for Case Studies


INSTRUCTORS' NOTES

This versatile case is designed for use in Accounting or Finance courses. It is designed (a) to introduce beginning students to some important aspects of financial literacy, including personal budgeting and financial planning and (b) as an entry point for a discussion of real estate law.

Financial Literacy Of The Schmidts.

The Schmidts lacked a basic understanding of planning and budgeting when they decided to buy a house, while car payments, unexpected medical bills, and credit card debt were getting out of control. They did not understand or did not think about the consequences of falling behind or skipping payments on their obligations. Business students contemplating graduation and the beginning of their first real careers and jobs may not appreciate the magnitude of deductions for Federal and state income taxes, social security, group insurance, retirement plan contributions, donations to charities, and so on, on their net pay. Students should consider the benefits in their own lives of simple financial planning steps, including (a) establishing a rainy day fund of roughly six months' net pay, and (b) making a simple budget of net pay compared to known expenses. These two simple steps could alert them to the delaying or foregoing the purchase of new furniture or sports cars until they have provided for their financial security. Buying less expensive cars and living in neighborhoods just below their income level, instead of living just above their means, can make a big difference to couples like Fred and Megan.

First time homeowners may not understand that the costs of home maintenance can be far different from the costs of apartment living. In a bills-paid apartment, Fred and Megan would have been used to paying just rent. As homeowners, they had to purchase hammers, saws, ladders, garden hoses, lawn mowers, shovels, and on and on. Inside the house they would soon learn that their apartment vacuum was too small to be useful, and their small screen television would soon be replaced with a big screen HD set. Large houses are expensive to furnish with the latest Mid Century Modern Furniture and Energy Star appliances.

Beside their mortgage payment, Fred and Megan may not have anticipated the taxes and insurance costs that would be part of their house payment, and they may not have accurately predicted the costs of electricity, water and sewerage, trash pickup, natural gas, water softening, telephone, cable TV, Internet service, and on and on. With apartment living, when the hot water heater leaks one Sunday morning, the tenant just calls the landlord. As a homeowner, Fred and Megan would have to call a plumber (double rates on Sunday), and then maybe have to buy a new water heater, pay a carpenter to replace or paint the wet ceiling, and have the carpet professionally dried. These are among the many "joys" of homeownership. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Homeownership Is Not Always a Blessing
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.