Running in quicksand

Elizabeth Davies bemoans the difficulties of trying to save for a house while the cost of everything is going up

9th Apr 14, 6:00am by Elizabeth Davies

<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

By Elizabeth Davies

Over the weekend our landlord dropped by for a friendly chat.

As usual this chat was not arranged, he’s convinced himself we are friends and therefore it’s ok to just turn up unexpectedly.

Whilst chatting he casually dropped into the conversation that when our lease is up in a couple of months our rent will once again be increased by another $50 a week, making it an increase of $100 in the last year. A quick chat with our neighbours revealed their rent is being increased by $55.

$50 may not sound like a lot, and for a lot of people it wouldn’t be, but when you are living hand to mouth whilst desperately trying to save a measly $20 a week, it’s the difference between making it work and watching it fall apart.

At this rate it feels like we could save for the next six or seven years and still not be able to afford a deposit on a $500,000 house.

I’m at least grateful that we have started saving now. If I had left it any later it would feel like I had to choose between having kids and buying a house, because doing both at the same time seems completely impossible and unlike houses, kids can’t wait forever.

We like to know exactly where we stand, so, we arranged for a property agent to give us a rent estimate just to make sure our landlord wasn’t taking advantage.

With a sad smile the nice lady informed us of what we already know, we sit smack bang in the middle of a real estate gold mine.

We occupy a small corner of that elusive double grammar zone, the unicorn of the real estate world.

Not surprisingly we were told our landlord could basically charge whatever he wanted for the property because one bedroom wouldn’t stop a family of four paying top rent to secure that golden ticket.

Our immediate instinct was to start trawling Trade Me in the hopes of finding something cheaper.

The logical thing would of course be to move to a less central suburb - and believe me we intend to do so.

The problem is however that my partner doesn’t finish university until the end of the year.

We sat down and worked out how much we could save in rent, but the increased transport costs quickly cancelled out any possible savings. Add on moving costs and letting fees and the stress of finding a new home and it’s honestly just not worth it.

Above anything we are just frustrated. Our plan is to buy a house as soon as possible and so saving is our top priority. But renting takes away all your sense of power because things can change at any time, and there’s very little you can do about it.

It seems like everything is going up except our income.

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Elizabeth Davies is a 23 year old graduate of the Auckland University of Technology post graduate journalism course. She lives with her partner in Epsom and spends her free time refurbishing vintage furniture and attempting to bake while fighting a daily battle against her bank balance. She writes a weekly article for interest.co.nz on money matters and financial struggles from a young person's perspective.

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62 Comments

by Simon | 9th Apr 14, 11:10am 1396998653

Spend 220k on a rental in palmy; lock in for 2-3 years at 6.5-7%. You will be close to neutrally geared (rent covering mortgage, rates, insurance) so can still save; keep 20k floating to allow lump sum payments on mortgage (effective return 6-7% so better than deposit in bank earning interest). Provinces likely to out perform auckland over next few years (refer infometrics recent report), even if they just manage to keep pace the increased equity from rising prices on the rental is as good as money saved as far as bank is concerned (auckland prices would need to rise at 5 times the rate in palmy for this strategy to not work). In 2-3 years I expect your rental will be close to 300k worth (coinciding with price cap of welcome home loan, kiwisaver deposit sub etc), 80k extra equity plus say 20k extra saved = banks happy to lend 500k more for own home in auckland (at 20% dep level, as own home most likely happy to go to 670k at 15% dep level, esp if lvr restrictions removed). You can then proportion lending over both properties to maximise expense against rental and minimise tax paid on rental profit (or maximise income tax rebate if interest rates rise a lot meaning rental returns a loss).

by bob dringle | 9th Apr 14, 11:49am 1397000971

good idea. Or Dunedin, Hamilton, Invercargill.

These towns all have tertiary education institutes, so they will never become complete backwaters.

I think buying a house in a different town, potentially a 1000km away is a good idea. It gets you in the market, is easier to pay off, smaller mortgage. It also gives you the flexibility of taking the rent money gained and using that to pay some of your own rent on the house you live in. Wherever that may be.

by cowboy | 9th Apr 14, 3:26pm 1397014010

tried. doesn't work. tenants can vandalise property too easily, property managers can make stuff ups and not mention it. courts look at you as awol absentee landlord. every small job has massive overheads as all must be organised each time by property manager. decision informstion is to far away and thus often too late to act on

by bob dringle | 9th Apr 14, 5:20pm 1397020855

really? So does that mean if you have a rental property, you have to manage it yourself? Can management companies not do the job?

That is surprising. I rented last year, and the application process was gruelling. I had to list a lot of information: salary, make and model of the car I drove, work history. It was humiliating. (Yes, because of the little amount of money I make in NZ. returning here was a big mistake. I shouldn't have watched the NZ 100% pure propaganda ads. Great place to go tramping in, terrible place to get ahead in)

by cowboy | 9th Apr 14, 7:22pm 1397028121

as someone who has been there. Yes you have to do some yourself. You have to have oversight etc. blah blah. just timed out again.

The grueling process you went through is to prove to the courts that the management company has done all reasonable research before picking you. that way when the tenant trashes your property the management company isn't liable when you sue them.

Oh...and if there's a tenant problem. the tenant sues the management company - the court rules on your property...and you don't get any say because you didn't have a contract with the tenant the management company did.

any problems the NZ courts consider landlords the worst scum, after all the tenant is social-istly owed a house, if something goes bad then the landlord still has the property (even if it's un-rentable) and the poor tenant has no where to live....

by Simon | 9th Apr 14, 8:27pm 1397032063

I've been there done/doing that too.

I wouldn't trust anyone other than myself to select tenants. Just as I wouldn't let others select an employee for me. They just don't care or have enough to lose to put in the time to make the best decision.

The professions are meant to be the best for p.n property management, but if you select the right tenants in the first place then really no need for them.

by cowboy | 10th Apr 14, 7:08am 1397070514

I've had great property managers, and bd ones. In different companies, and within companies.

In one case the manager was great for 3 years, had martial problems and started drinking.

But it was the owners that paid the price, dozens of them, by the time the company could do anything about the issue (identify a fault, wade through NZ employee protections, attempt to fund assistant/replacement staff, find and contract replacement staff).

Part of the problem was that the manager gets left to their own a lot, so that costs are low (otherwise rent will be even higher and harder for some people to pay) - by the time enough landlords had done personal checkups, damage was well under way. Manager & company had been keeping all complaints in house (it was only when the tenant accidental listed me on the front of on tenancy tribunal action, that I got served, and found the can of worms..... a 6month on going saga!!)

by Value Added | 9th Apr 14, 12:18pm 1397002717

You can't use your Kiwisaver as a deposit unless you live in the house you're purchasing.

by Simon | 9th Apr 14, 2:28pm 1397010509

For a minimum 6 months last time I checked. Boarders for the first 6 months, rent it out after that

by bob | 9th Apr 14, 2:55pm 1397012102

Don't they also need a 20% 44k deposit on the Palmy house?

by dtcarter | 9th Apr 14, 11:11am 1396998718

What a whiner. There are plenty of places as close to the university that aren't DGZ, move to one.

Even better move a fraction further out to save a fraction more on the rent. If your finances are so tight that an extra dollar each way each day on an extra bus stage is going to kill you, then you should have started cycling to work long ago. That'll save you 30-40 bucks a week on bus fares, and then the extra 5 mins cycling further out to e.g. Mt Roskill will do wonders for your health and energy levels. Boom, that's $100/week i've just saved you.

by notaneconomist | 9th Apr 14, 11:12am 1396998747

Can you shift in with parents or other family members?

Not sure if the pair of you have other flat mates, but maybe renting out a spare bedroom or renting with another couple could be cheaper.

If you focus on "cutting costs" vs increasing income" what lists can you come up with? Don't limit what you write on the lists. E.g. living with parents would be on the cutting costs list.

by Weka | 9th Apr 14, 11:49am 1397000974

Unless you are prepared to move and make the necessary changes to your lifestyle then you will probably have to just end up accepting it. On the bright side at least you are young and have some options open to you, there are many people who are not this fortunate. Many years ago (when I was just a spring chicken) working fulltime and attending Uni (after-hours) I had to catch 5 buses a day - 2 to get me to work, another to get me to to Uni and then another 2 to get me home. I moaned about this all the time (to anyone who would listen or was at least vaguely interested) until a blind guy came and asked me when his next bus was coming... Kind of puts things in perspective...

by frazz | 9th Apr 14, 11:54am 1397001264

How much were your UNi fees back then Weka?

by kiwimm | 9th Apr 14, 12:09pm 1397002143

...and the bus trips were uphill both ways

by cowboy | 9th Apr 14, 3:39pm 1397014776

used to think similar until I visited one such disabled person.

The blind guy was probably retired. He could follow his interests. Yes he got a bum deal buit at least he wasn't paying The Man for the 20 yrs for the right to eat.

The folks I have sympathy for is the chap on ACC whose meds had run out, but he had to drive fielding to palmy to get them hospital to sign off on a new perscription. He had no cash to buy petrol and had run out, he hadn't made it to his pharmacy for the pain killers, and when he pulled off the road when he ran out of gas it got stuck on the narrow shoulder. Very had to steer and push with 1.5 arms. Turns out he had worked his ass off at his job, covering for slack employees and employers (something I could relate to) until he'd slipped at lost his hand and part of his arm to the machinery. ACC blamed him for unsafe operation and being fatigued.

The birth disabled person I meet, had the biggest TV, latest stereo, biggest private aquarium, grounds were looked after, house repair and adjustments were paid for, they had to contribute to a car but it was modified for free. Beautiful furniture and carpet. For someone who worked 4 hours a week, for something to do. and rented out the spare room cheap "for company"; she had the most oppulent lifestyle I had seen short of an MP or CEO.

Yeah being blind sucks, so does having to work to hard for a living.

by Gummy Bear Hero | 9th Apr 14, 11:52am 1397001167

... you wonder why no one else has cracked onto the idea of living up in hot air balloons ?

There's an overabundance of free hot air aroundabouts ...

... no rates to pay ... just drift around for a better view ... head over to Herne Bay and look up the Cunliffes ... or rather , get a chance to look down on them ... there's an ironic twist ...

Hot Air Balloons : Uninterrupted views , no neighbours , no rates , no need to flush - just drop the stuff overboard - gone .... Gotta be a winner !

by notaneconomist | 9th Apr 14, 1:53pm 1397008428

Haha Gummy, be careful with the vacuum.

by Henry_Tull | 9th Apr 14, 12:16pm 1397002583

Rachmanism

would appear no friend rather a rogue landlord

a la http://en.wikipedia.org/wiki/Peter_Rachman

by Johnson-9 | 9th Apr 14, 1:03pm 1397005380

These columns are nothing more than a whinge from someone who has made poor life choices. Time for some new content interest, maybe someone a bit more positive

by hauraki | 9th Apr 14, 1:29pm 1397006990

It's getting repetivie and non inspiring.

I wouldn't have dreamed buying a 500k house if I just finished my masters and my partner still in uni. I worked hard for my pay rises, they were not handed to me because the house prices went up.

The sense of entitlement in this column is astonishing.

by cowboy | 9th Apr 14, 2:22pm 1397010158

Are you saying the rest of us didn't work hard ??

by hauraki | 9th Apr 14, 2:55pm 1397012149

Did I say "the rest of you didn't work hard"?

In the column

"It seems like everything is going up except our income."

My income is going up because I worked hard, and smart, and my boss appreicate my works. Not because my rent or mortgage payment is up - otherwise I wouldn't have gotten pay rises when they were flat.

If someone's income isn't going up, that could be - he/she didn't work hard, or smart, or his/her boss didn't appreciate your works, or his/her boss couldn't afford it. I don't know. Do you?

by cowboy | 9th Apr 14, 3:14pm 1397013287

In some cases; yes, I know.

So you worked hard. good for you. you';re a minority. Don't expect others to find it that easy.

Doing 10hr days in Power Board. Didn't get pay rises, got turned down everytime for training (they would only approve 2hrs, not 4 hrs - even though others received up to 8hr a week.) Co-operative, used to be polite, team player.

.... my crime?

My boss had pissed off his boss.

And that is why I got hired ... as revenge. but neither party would admit to the grudge until after the merger.

by hauraki | 9th Apr 14, 3:33pm 1397014437

Definitely not your crime.

And my apologies if I sounded too harsh. Sometimes ppl even if they tried really hard they still couldn't get ahead. I remember seeing my bank balance, week after week there was literally no change. But I'd rather hear how they keep trying, with new ideas and approaches, rathern than moaning after moaning - the last time she wasn't moaning she was commenting on turning down a big brothels opposite skytower is bad for prostitutes. Frankly neither topic is what I'd like to see on a financial website.

by cowboy | 9th Apr 14, 3:43pm 1397015036

It's just the dismissive (and not saying the writer in this was being dismissive) but it is easy for the lucky few to assume "they did things right" and "that the system works if you follow it".

For many it doesn't, so what options do they have?

Saw a documentary last week about escorts and prostitution in Scotland/UK. One online escort, who did occasional prostitution jobs, made 4000-7000 quid on a reasonable month.

Like the strip club owner said...it's not the workers who are being exploited, its definately the johns. But they were happy to pay and just kept coming... (no pun intended...)

by rjf | 9th Apr 14, 3:27pm 1397014038

She's not demanding a house now. Her complaint is that after paying rent, there's simply not enough left to save the sort of deposit you need to buy a house in Auckland, Wellington or Christchurch.

The only real hope for people like this is to quit New Zealand, which doesn't bode well for our future.

by hauraki | 9th Apr 14, 3:51pm 1397015486

Yes, the rent is too high. Or the income is too low. Maybe both.

So would be my mortgage if I buy a bigger house in auckland central right now. But instead I got a smaller house further away so my mortgage payment is comfortably below the 28% DTI ratio. It's still a 20 min trip each way offpeak with flexible worktime

My approach is simple, live below my means. If the rent/mortgage is too high, I'd move to somewhere cheaper, or increase my income stream. a 2nd job, or learning a new job. it might be hard, but I don't think anyone in NZ has starved to death lately.

If too many ppl cann't afford the rent and quit NZ, guess what will happen? The rent will drop.

by cowboy | 9th Apr 14, 7:40pm 1397029250

Manahttan wages = manhattan prices.

the real problem is that there isn't much competition for labour market.

the high wages and sweet careers are in those big centers (with all the nice services from rates and corporate targetting)

because NZ has been anti-small business for over 40 years there are few reasons to chase top careers outside the main centers. Smaller centers are suffering the same "rich get richer" gap that the population does, this means city demand is more self focused, and growth (and thus profits) higher in those centers ... the higher the disposable...the higher the investment rate..the more premium sales. Cities create a suction effort or resources, including people and investment. NZ government and bureaucrats inability to understand this and its effects is making the situation worse. Our luck with Fonterra, has been the only stick in the drain stopping small NZ plummeting down the drain. "Fortunately" competition is being encouraged and assets are being sold to foreigners to remedy that "stick" situation.

encourage small business and more local spending, manufacture, process, services. jobs outside the main cities would prosper, and sprawl/concentration issues wouldn't be so bad. Prices of property would stabilise across the country, as decent wages would be able to support small communities, and ease pressure in cities.

by cowboy | 9th Apr 14, 7:29pm 1397028543

that's why people buy houses, because the rent is so high.

that is what makes owning houses worthwhile, as people wanting to live in those locations have to pay well because of the level of competition.

Of course you can't save a deposit.... do the maths.

On start out wage.... you have low income.

properties are brought by people with above average income.

they are rented to people who can't afford or don't want to buy houses.

if they could buy the houses, they would pay more...pushing the house prices up.

that would create a positive expected value, which is a good investment.

this is value add on the value of the property as a convenient home.

that compounds slightly.

so who expects to save, on a low income, for an asset priced for a medium income, that has two rounds of value add??

That's _why_ if you think you want to stay (your capital/equity stuck in the one town) it makes sense to borrow for as much house as you can afford, to start capitalising that rental expense. .... and that adds more demand & competition which is another value add.......

by rjf | 9th Apr 14, 1:30pm 1397007007

It's sad that New Zealand has inflicted this situation upon itself. If we built enough homes, people with a modest income could afford to have children and own their own home.

by dtcarter | 9th Apr 14, 1:37pm 1397007477

But she want's a home in double grammer zone. Building out in flat bush ain't going to help her there.

by rjf | 9th Apr 14, 1:57pm 1397008624

She rents a home in a double grammar zone, because savings from renting further out are spent on additional transport costs.

Straw man argument dtcarter?

by Gummy Bear Hero | 9th Apr 14, 3:07pm 1397012848

... we could get a job lot of old shipping containers , convert them to 1 or 2 brm units , and suspend them under the Auckland harbour bridge by wire cables ... Alot of empty space currently under that bridge ...

For homesick Cantabrians or retired sea captains we could use bungy cords instead of wire , to create that homely " wobble " effect they miss ...

by KH | 9th Apr 14, 1:55pm 1397008535

Get a second job. Evening cleaning for about 3 hours say. Any income from that is pure saving. I did not, but my wife to be did. (I am assuming you have a full time job and income already)

by cowboy | 9th Apr 14, 2:33pm 1397010824

nice if you can do it and in an area where its feasible

by KH | 9th Apr 14, 3:46pm 1397015169

Lived in Epsom like Elizabeth. Second job was in Gillies Ave.

by cowboy | 9th Apr 14, 8:16pm 1397031390

Lived in Woodville....

Worked in IT...8am to 11pm

by frazz | 9th Apr 14, 1:57pm 1397008641

Listen to the bayboomers roar...lounging around on their boats, Gold card in hand, telling us how hard they had it.

by rjf | 9th Apr 14, 3:19pm 1397013568

18% interest *chortle chortle* doer-upper *chortle chortle* no roof *chortle chortle* iphones & sky *chortle chortle*

by hauraki | 9th Apr 14, 3:33pm 1397014414

wrong pos

by Machiavelli | 9th Apr 14, 3:53pm 1397015586

I was in your shoes at 23 Elizabeth. That wasn't that long ago. We only had to save a 5% deposit to get on the housing ladder though. It was achievable. What's your partner studying? I hope it's a higher paid field than journalism!

by Kakapo | 9th Apr 14, 6:36pm 1397025405

Have you considered turning to organised crime? The financial, real estate and political powers that be will bend over backwards to accommodate wealthy money-launderers. Be sure to donate to the campaign funds, though.

by BigDaddy | 9th Apr 14, 9:52pm 1397037120

Elizabeth is just a big cry baby wanting to start where her parents left off.

Instead if whinging she could move her lazy self and see that there are 1700 properties for sale on Trademe alone in Auckland that are priced under $300,000, well under the average.

Tough luck if she is not in the area she likes. Her landlord should be praised and get a medal for having the gumption to buy a spare house and allowing someone else to live in it on the cheap.

Rents have a long way to yet. They should be double what they are now.

by Kakapo | 9th Apr 14, 10:25pm 1397039146

And you're an arrogant bully who deliberately ignored the actual point and content of the article just so you could get a kick in. So I suppose it evens out.

Actually, I've sometimes wondered - did you choose the name Big Daddy out of admiration for Idi Amin?

by Your Landlord | 9th Apr 14, 10:56pm 1397040986

Kakapo... it's noticeable that Elizabeth is often complaining about things in her articles.

by PeakEverything | 10th Apr 14, 2:20pm 1397096423

Perhaps because she has a point. Not only is housing affordability an issue but we get to pay your pensions even though we won't get one ourselves. Things will come to a head within the next ten years.

by PeakEverything | 10th Apr 14, 2:16pm 1397096200

Bid daddy, they should be double should they? Either that or the value of the property should be half.

by Zombie ponzi | 10th Apr 14, 6:34am 1397068496

Elizabeth, seriously, once your partner has finished uni, leave New Zealand. Move to somewhere you can make real money. Save up, and then move back. Australia, Dubai, Canada, wherever...

Do you really want to scrimp and save for 8 years just for the privilege of becoming a slave to a bank for another 25 years? The whole "start in the middle of nowhere and upgrade later" used to be a trueism of property ownership but if you buy into a massive bubble now, don't expect your income to grow fast enough to upgrade in your 30's or 40's to the Mt Eden villa.

Let me put it to you this way, when we lived in Auckland we could save about $10k per year, we've moved overseas and now we save around $100k per year. Similar living costs, much higher wages, worth considering.

by BigDaddy | 10th Apr 14, 7:14am 1397070889

For the benefit of Kakapo, the writer Elizabeth Davies has written 39 articles on this site, the majority of which are whining, whinging, complaints about how hard or how unfair this or that is in life, especially for her.

She immediatey gets the donkey vote of sympathy vote from the Feminists (who no doubt are all devoted Green supporters) because she is a women and likely a very pretty one at that.

If the same articles had been written by a hard knuckled, knock kneed, hairy chested man, no doubt Kakapo and others would be telling him to "harden up" and get on with it.

by fat pat | 10th Apr 14, 7:27am 1397071668

BD that's a pretty selfish attitude. All "non-asset owning" kiwis want is the same opportunity to buy assets that you had when you were younger. I was talking to a relative who bought a lovely house on Mountain road (next to Auckland Grammar) in 1978 for $100,000. In todays terms according to the RBNZ inflation calculator that would be worth 623K. Most of my friends have combined incomes over $150K and would buy at that price in a heartbeat but we can't because it now costs upwards of 1.2M. We're being turned into debt slaves with foreign masters. We'll retire substantially poorer having rented well into our 30s or early 40s. All I can say is don't expect any help from us in 10-20 years time.

by Kakapo | 10th Apr 14, 7:45am 1397072739

Nurse! Nurse!! He's woken up again. Needs his pills and to be reassured that the nasty feminists aren't menacing him from under the bed.

by BigDaddy | 10th Apr 14, 8:13am 1397074417

The only selfish person around here is Elizebeth and her supporters -no doubt women with no make up and mustaches- who want everything given to them so long as someone else pays for it.

Most of the problems in today's society go back to giving women the vote- a collosal blunder - which set in motion the decline in morals and the slow collapse of Western culture.

by Kakapo | 10th Apr 14, 8:32am 1397075545

Must be tough having to live in a world where there's competition and you can't rely on incoherent bluster to carry you through. Poor old man.

I think I've got you pegged. From your postings here, I see a semi-adequate old fart, knows he couldn't cut it on an even playing field, and was lucky to bumble through in easier times, might be able to do a passable imitation of blokey bonhomie, but the essential small-mindedness, hostility, jealousy and pettiness show through. Likes bullying young women, and gets a semi-stiffy if they cry, but wilts if they stand up to him and retreats back into ineffectual bluster. Blames feminists for young women having the confidence not to put up with bullying, and by extension the wilted stiffy.

Bit of a sad case, really.

by scarfie | 10th Apr 14, 8:32am 1397075571

Interest will always cause a redistribution of wealth.

Make that unearned wealth.

You have been a beneficiary of that at Elizabeths expense. That is the intergenerational theft and I remind you a thief is a criminal, usually something that thinks there is nothing wrong with their behaviour. So a bit rich to be pulling out the name calling when your actions amount to a net deficit on a healthy society. A parasite if you like.

by BigDaddy | 10th Apr 14, 9:04am 1397077467

scarfie, your grasp of the law leave one breathless.

"intergenerational theft is criminal" ??

When you graduate from Law school - last week maybe - or in the stone age?

Kakapo- vulgarity is a sign of a uneducated mind. If you must argue try to using plain English.

By the way I am in my early forties so why all the ageist stuff?

by Basel Brush III | 10th Apr 14, 9:12am 1397077965

It is about time landlords like BD had to own their investments outright so they cannot rely for their greed satisfaction on the backs of the interest paid out by the rest of us.

Disclosure: Not a borrower since 1999 so don't blame me.

by Kakapo | 10th Apr 14, 12:15pm 1397088957

Vulgarity? Oh you poor sensitive blossom. Must the the malign influence of the feminazi illuminati again.

Grow a spine.

There's nothing more contemptible than idiot blowhard bullies who feel entitled to dish it out then bleat and whine if it bounces back at them.

by Your Landlord | 10th Apr 14, 1:43pm 1397094217

Kakapo... your comments portray you as being a man bitter about some events in your life.

by Kakapo | 10th Apr 14, 5:22pm 1397107341

Oh bless. Thank-you for your sincere concern, but all's groovy in Kakapo-world. I just happen to despise bullies and the creepy suck-ups who egg them on.

by scarfie | 10th Apr 14, 6:54pm 1397112883

Thank you for your assessment of my legal knowledge Big Daddy, there are a few on here that know me personally and know you just made a total dick of yourself for that comment.

Of course it is quite apparent that you are beyond an intelligent reasoning of legal principles. Ask yourself, if a thief steals your car in the belief that you are able to afford the loss innocent because he believes he his gain at your expense is prefectly acceptable?

Perhaps you should crawl away and do some homework on the matter, include an understanding of unearned income while you are there.

individuals who subsist on unearned income are characterized as being in an exploitative relationship, because the unearned income is not generated by their effort or contribution (hence why their income is "unearned"). The existence of unearned income received on the basis of property ownership forms the basis for the Marxist class analysis of capitalism , where unearned income and exploitation are viewed as inherent to capitalist production.

http://www.investorwords.com/5141/unearned_income.html

http://en.wikipedia.org/wiki/Actus_reus

http://en.wikipedia.org/wiki/Mens_rea

by BigDaddy | 10th Apr 14, 8:56am 1397077015