Home Work

Third Pillar of Home Ownership, Part 2

If asset building is good for the wealthy, why not find or encourage policies whereby all Americans can benefit? We've done it before.

Students of history will recall the Homestead Act of 1862, for example, that offered 160 acres of land to all Americans regardless of income if you were willing to occupy it and farm it for five years. Or the GI Bill of 1944, which allowed millions of Americans the ability to get a college education or perhaps buy their first home.

It's true that the Homestead Act was abused by corporate profiteering, and any program today would have to have safeguards built in to protect against that.

But keep in mind the results — wealth increased for all by equalizing its distribution across the economic spectrum. It didn't punish the rich but merely expanded the opportunities for asset ownership for many Americans whose previous access had been minimal.

In today's world, how can we narrow the breach that's expanded over the last decade or two? The first step is very simple — we could make available to all the opportunities available via tax credits, including home and business ownerships, retirement savings and matching deposits for college educations. A more radical and enterprising solution would be a Homestead Act for our age.

When I was born, my father opened up a savings account in my name. Every week for about 16 years or so he religiously deposited $5 in my savings account, which earned 5 percent interest. The account was structured in such a way that eventually it would become mine solely at age 18. Granted, it wasn't a lot of money, but I was fortunate that he had the foresight and the economic capability to do so. It proved to be a invaluable resource, and I held on to that reserve long after I could have spent it.

What if every one of the 4 million babies born each year in this country were to receive an endowment of $6,000 invested in a conservative and safe portfolio that yielded a 7 percent annual return? By the time the child graduated high school, the sum would grow to more than $20,000 and, if it remained untapped, to $45,000 by age 30.

Usage of the funds would be restricted to asset-building activities such as paying for higher education, including vocational training, or buying a first home, starting a business or perhaps starting a nest egg for retirement. Withdrawals could be offset with work and savings, and other family members could add money to the account.

Every child in America would have some help or a start in achieving their life asset needs, especially those who start life in households with no resources available for investment. While not a guarantee to success, it would provide a choice and, best of all, hope.

Economically, the $24 billion it would cost annually is a bargain and is just one-sixth of the total cost of tax breaks given to American corporations.

If started at birth, this investment could yield even more benefit than the Homestead Act and GI Bill did for earlier generations. According to information published by the New America Foundation, nearly 25 percent of all American adults today can trace their legacy of home ownership to the Homestead Act, while the GI Bill has generated returns of up to $12.50 for every $1 invested.

We know from research that owning assets increases the possibilities for attaining higher education and a healthy life and lifestyle, increases the potential for life satisfaction and, unlike pubic assistance, can be passed from one generation to the next.

Some will argue that giving money to those who need it immediately is far more important than asset building and that withholding money when starvation is knocking on your stomach would engender anger and resentment. The "why wait 'til I'm old enough?" argument is valid and addresses other social issues that need answers, which this plan doesn't attempt to provide. The focus with the investment plan is long term on the issue of how to stop passing on poverty from generation to generation.

The point here is to stimulate some conversation and eventually some action regarding the importance of wealth and to re-establish it as a fundamental pillar in everyone's economic house.

It's not been that long since someone figured out that the inequalities in funding from school district to school district in Ohio were inefficient, unfair and resulted in wide disparities. In other words, districts with more wealth provided children with a better public education than districts with less access to resources.

It was an issue and a problem that moved around the perimeter of collective consciousness until we were shocked and awed into doing something. By the time we started to address the issue, a lot more than just collateral damage had occurred — and the repercussions of our inattention continue to stigmatize us.

Perhaps if we'd acted earlier and addressed the issue head on and early on we wouldn't be facing as severe and difficult a situation and decision as we do now. Years of inattention resulted in a problem so severe and complex that any solution will be painful. We scuttled our earlier opportunities to extract a solution without blood or a pound of flesh and now are faced with the potential of being bled from the Statehouse well into the next generation.

So when it comes to the problems of asset inequality and school inequality, the perils of neglect manifest themselves in remarkable congruity. Left unattended and ignored, both escalate in severity and consequence and stymie both growth and progress.

At the core, both problems have at their center the issue of opportunity and the ability for all to access it equally. Success can't be guaranteed — but the opportunity to become successful should be.

Reducing the wealth gap in this generation can go a long way toward stopping its perpetuation in the next.

THIS WEEK'S TIP: Basements
Guess what prompts many of the lawsuits surrounding the sale of a home? Leaky basements.

Today, then, I'm going to give you several tips for preventing leaks in your own basement.

First, if your basement leaks, check your gutters and downspouts for blockages. Train a hose into each downspout in turn and run water through to make sure it's draining properly. Clean debris from your gutters and downspouts twice a year. Late fall cleanings are especially important to clear leaves that have dropped into your gutters from nearby trees.

A second tip regarding downspouts: You might want to extend them farther away from your foundation by using flexible vinyl tubing. In that way, downspouts carry water to a place where it doesn't threaten your basement.

Also check the outside of your foundation for low spots. Soil around your foundation should be built up so it slopes away from the foundation. So fill in any low spots with extra topsoil.

Finally, make sure the trees and other landscaping near your house aren't growing too close to your foundation. Tree roots especially can cause cracks in the foundation that allow water to seep into your basement. Consider removing trees that have grown too close to your house.



Home Work is a weekly column geared toward residential real estate.

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