query: Why can't house prices be out of tune with salaries

positive: Your friends are overlooking a couple of problems with house prices and salaries being out of whack: Home 'equity' is a paper gain unless you realize it by selling the house. If you don't, but use the 'home ATM', all you're doing is piling up more debt that's secured on an asset that has downside risk. Ask anybody who's refinanced their house to buy a new boat or SUV in 2006/2007. In other words you're remortgaging the chickens before the eggs hatched. Of course they're also forgetting that all this debt will have to be paid back at some point, and that usually takes income, not equity. In a certain sense the housing market is a pyramid scheme that requires an influx of new buyers to maintain prices. Very simply, if you can't sell your house to buy a bigger one because the first time buyer you're trying to sell it to can't afford the down payment or the payment on the mortgage, then you can't sell your house to buy a bigger/better/nicer one and the next person in the chain can't sell his/hers. Cue the domino effect. House prices are only sustainable if people actually can afford to buy houses and if there's a massive disconnect between house prices and salaries, then house prices will fall eventually. It might just take a little longer depending on the amount of creative financing options that will eventually dry up.

positive: "Indefinitely is easy to answer. Assume that the average house currently costs four times the average salary, and that house prices rise 1% faster than salaries indefinitely. Then in only 1,000 years' time, the average house will cost around 84,000 times the average salary. In 10,000 years, it will be 6.5*10E43 times the average salary. That doesn't seem plausible to me. If you want arguments about ""for the foreseeable future"", instead of ""indefinitely"", then that's harder."

positive: Those folks should be introduced to some real estate folks I know, they'd get along famously, being as how they still think it's 2007. The amount of housing out there requires that a large market of consumers is available to purchase them. If housing prices rose infinitely ahead of salaries, the market for potential buyers would continue to shrink until supply would outstrip demand. And then we have the wonderful housing bubble like the one that we just went through (or in some places like China, have the potential to go through). Short version: It violates the relationship between supply and demand.

positive: Here's another way to think about.  Let's assume it is 2011 and we have a married couple who are 25 and make a combined salary of $50,000/yr net.  A suitable first house in their area is $300,000, six times their annual net salary.  Assuming they could scrimp so that 1/2 of take-home went toward saving for their home, they could save enough to buy the house using cash in 12 years, at the age of 37.  Onerous, but they could do it. But now let's allow salaries to increase by 3% a year and homes at 10%/yr, as in your question, and let's run things out for 20 years. Now a 25 year old couple at the same sort of jobs would be making $87,675/yr.  But the houses in that town would be worth not $300k but $1,834,772.  Instead of six times their salary, a house is now nearly 21 times their salary.  This means that if they saved 1/2 of take-home to save up for a house, they could afford to buy the house using cash when they were 67 years old. It gets worse quickly.  If you run it out for just ten more years, to 30 years, a couple would be able to buy the house -- at $4.8 million or 40x a year's salary -- in cash when they were 105 years old.  (Let's hope they ate brown rice). Mortgages can't save them, since even if they could put down ten years' worth of savings on the 2041 house (that'd be 14% down), they'd still carry a $4.1 million mortgage with a $118k annual net salary.

positive: They can't keep rising with respect to people's income because eventually you run out of buyers. If there's roughly one house for every five people, then you'd better make sure that the price you set to sell your house is affordable to people in the upper fifth of income scales, or else you are mathematically guaranteed not to have any customers. Now, it's true that the price of particular houses can get much higher, but they tended to be higher in the first place. Housing isn't exactly an efficient market, but for the most part you have to pay for the house that you get, or else someone else will outbid you. An individual area might, temporarily, buck these trends because it suddenly becomes popular and there are a lot of extra buyers putting money on the table. In the long run, someone is going to build for those buyers, even if it means moving up the chain from enormous rural lots to suburban single-family homes to low-density garden apartments to residential towers.

positive: "The three basic needs are food, clothing, and shelter. Housing falls into the third category. Because it is ""basic,"" housing takes up a large part of one's disposable income. The rule of thumb is that you shouldn't spend more than 25% of your income on rent or mortgages. And that is income BEFORE taxes. Anything much more than that takes up too much of one's budget. You simply CAN'T double housing's share of the budget from 25% to 50%. Whereas, it's easy to go from 1% to 2% for say, a cellphone upgrade. In the long run, housing prices are constrained by the size of people's housing budgets, which in turn are tied to incomes. Nowadays, that includes FOREIGN buyers. So there may be a case where west coast housing prices are driven up by Asian buyers, or Florida housing by buyers from Latin America, driving Americans out of local markets."

positive: The big problem with your argument is the 10% per year figure, because in the long term (especially if adjusted for inflation) the prices have not been going up nearly that fast. Here is a site with some nice graphs for prices over the last 40 years, and it's pretty clear to see that pretty much just what you were talking about happened, prices outpaced the ability of people to pay, which progressively locked out more and more first time buyers, and eventually that breaks the cycle, pops the bubble, and the prices adjust. There is always of course the choice to NOT buy a house, and just rent, or if you had the feeling that you are near the top of a bubble, SELL and go back to renting.  It's interesting to note that in general, rental rates did not increase at nearly the same pace as the prices in the recent bubble. (which of course made it harder for anyone who bought 'investment' properties in the recent 8 years or so to cover their payments via rental revenue.)

positive: There's a few things going on here. If we fixed rates (and terms) over time we'd expect a pretty tight chart of home prices to income, almost lockstep. Add a layer of growth above that in boom times due to the wealth effect (when stocks are way up, we have extra money to blow on bigger houses) and the opposite when markets are down. Next, the effect of rates. With long term rates dropping from 14% in 1985 to 5% in 2003, the amount that can be bought for the same monthly payment rises dramatically as rates fall. Easy to lose site of that and the fact that the average size house has increased about 1.5% per year over the last 40 years, surely that can't continue.  When you normalize all these factors, houses cost fewer hours-worked almost at the peak of the market than 25 years ago. Mike's logical example of extrapolating out is very clever, I like it. In the short term, we'll see periods that are booms and busts, but actual prices will straddle the line representing the borrowing power of a week's pay.

positive: "I'd suggest changing the subject when your friends talk about real estate to save your sanity and friendship.  There's a difference between ""belief"" and ""knowledge"". Arguing with a believer isn't a very productive course of action, and will ultimately poison the friendship. Reality is a harsh mistress."

negative: The worst part of government induced tuition inflation wasn't even the GI Bill. Although I'm sure that started it a bit. It really took off in the late 1970s / 1980 with the establishment of the Department of Education and the Sallie Mae loan clearing house. There's a massive inflection point in historical inflation adjusted tuition prices right around 1980, when those were established. No coincidence.      Also, you know whats worse than the **government** getting in the housing-price-inflation business? The freaking **central bank** getting in on the housing-price-inflation business.      https://www.federalreserve.gov/monetarypolicy/quarterly-balance-sheet-developments-report.htm      https://www.federalreserve.gov/monetarypolicy/files/quarterly_balance_sheet_developments_report_201708.pdf      The federal reserve holds $4.4 T in total assets. That is the sole source of the entire money supply of the United States Dollar. It does not come from anywhere else. Of course, you get money velocity and money multipliers after that, but this is the origin. Of that $4.4 T, they hold $2.4 T in US Treasury securities. Ok, that's fine. That's the whole point of the federal reserve. They control the money supply through buying / selling (letting mature / redeem) US government securities. But wait, hold up, what the heck happened to the other $2.0 T in assets ... um, where did those go? There are some other assets, but the next largest ... the federal reserve owns $1.7 T in mortgage backed securities.      Holy ... effing ... sheeeeeeeet. What in the actual f*** is the central bank doing buying mortgage backed securities? That absolutely, positively, is **NOT** monetary policy. That shit is fiscal policy, which the federal reserved is **NOT** supposed to be engaging in.      And now you know why housing prices are even more effed up than tuition prices.

negative: In India, in the money options get exercised automatically at the end of the day and is settled at T+1(Where T is expiry day). This means, the clearing house  takes the closing price of the underlying security while calculating the amount that needs to be credited/debited to its members. Source: - http://www.nseindia.com/products/content/derivatives/equities/settlement_mechanism.htm

negative: "I wasn't on minimum wage.  I was finding that housing in the Boston area was increasing in price faster than my $80k/year salary.  And yes, it *is* a fallacy because your statement is essentially tautological: ""if you want a lower price for housing, go to where prices on housing are lower (and don't mind the additional costs of time or money spent commuting)."""

negative: While you are correct, engine tuning isn't as nefarious.  A common issue is someone who has no business buying a sports car will go out and buy a sports car.  And, if they are not tuned to drive like a sedan, they will get brought back the next day.  You will have people that spin out when the light turns green, just because their car has 500+hp and they don't know how to drive it.  So, paying for tuning, sounds more like custom software, than an on/off switch of the batteries.

negative: If you put down 80% of the purchase price for a house, you can very likely get a loan with few problems.  After all, people with credit scores in the mid-500 range can get loans with 20% down.   My question would be this -- if you actually had $400,000 then why not just buy a $400,000 house?  If the goal is to improve your credit then if you buy a house for cash, you can then take out a home equity loan and make the payments, which would greatly improve your credit.

negative: "This is way too long for a comment, so I am posting this as an answer. My bet is that you're buying a new piano. It is the only instrument that makes sense. The rest of this answer are going to assume this, but this should apply well if you're going after a violin or marimba for example. For those readers that do not know, a piano is a very delicate and expensive music instrument. My piano is literally more expensive than my car. There are a lot of similarities in sales negotiation between buying a piano and buying a car. You may be surprised to know that the cost for the dealer to acquire a piano is only around half the listed price. Therefore, the salesperson has a lot of room to negotiate a sale price to you. This explains why he was able to make a good offer for the model you are not intending to buy. You are best by comparing the final sale price with other similar models in your region, or the exact model around your region, which you have already did. Those indicate the standard price in your negotiation. You described the dealer had the exact model you desire, only in different appearance. I assume you want a black color while they have a white or wood-pattern one in their showroom. Note, every piano is different. Even with the exact same model, there will be very slight differences in the tune and touch, since some processes are hand finished. (If you're buying a Steinway, treat each of them as an individual hand crafted art.) Play the exact instrument you will be buying before closing the deal. If they do not have your desired model in the showroom, ask for a visit to their inventory facility. Again, play the exact instrument, not a showroom model. Some dishonest dealers will have their showroom pianos regulated and tuned differently than the ""standard"" pianos from shipping. If you get an extremely good offer, proceed with caution. There may be defects in that particular instrument. Look for rust or oxidized layers on the strings. Look for groves in the hammers. Listen to clicking noises when playing the keys. These are signs that the instrument has been around for quite a while and they cannot sell it. You can also copy down the serial number and look up the manufacturing date online. Before you close the deal, ask for after-sale services. How many free tunings will they provide? Will they polish your piano after delivery? These are bargain chips you can use for final adjustment of the price."

negative: According to Active Equity Management by Zhou and Jain: When a stock pays dividend, the adjusted price in Yahoo makes the following adjustment: Let T be the ex-dividend date (the first date that the buyers of a stock will not receive the dividend) and T-1 be the last trading day before T. All prices before T are adjusted by a multiplier (C_{T-1} - d_T)/C_{T-1}, where C_{T-1} is the close price at T-1 and d_T is the dividend per share. This, of course means that the price before T decreases.

negative: Moshammer Porsche Tuning Company is a reputed name in the field of tuning Porsches for a long time. People trust them immensely and they have never failed their customers. They are great at tuning not just Porsches but other cars as well. So give them a chance to get your Porsche tuned.

negative: "> Also, if accounting suddenlly decides to hire a bunch of new employees why should the cost for the computers come out of IT's budget?   What does it even mean for something ""to come out of IT's budget?"" As far as I can tell, what it means is that you don't understand the difference between a planning tool and a t-account.  > As long as IT's budget is subserviant to the whims of other departments you can't really call it a budget at all. Rather, it is just a pool of money that anyone can dip in to.  Budgets aren't pools of money at all, they're planning tools. Actual pools of money are t-accounts. I am nearly 100% certain that your IT department doesn't not have its own t-account, though once the distinction between budgets and t-accounts are so thoroughly confused that you are commonly saying things ""come out of our budget,"" the next logical step can appear to be inter-departmental charge-backs.  The reality is that business expenses are driven by growth and constrained by cash flow. Managers must learn how to produce budgets that anticipate growth, so that cash flow can be managed by the accountants, and so that executives can make decisions about priorities.  Doing inter-department charge-backs is a way of doing this in an organization whose relationships are so fucked up that you can't do it by actually talking to each other. Have fun with that."

negative: "I assume you've no debt - if you do then pay that off. I'd be tempted to put the money into property.  If you look at property prices over the past 20 years or so, you can see returns can be very good.  I bought a house in 1998 and sold it in 2003 for about 110% of the purchase price.  Disclaimer, past performance is no guarantee of future returns! It's a fairly low risk option, property prices appear to be rising currently and it's always good to get your foot on the housing ladder as quickly as you can as prices can rise to the stage where even those earning quite a good salary cannot afford to buy. Of course you don't have to live in the house, a rental income can be very handy without tying you down too much. There are plenty of places in the UK where £60k will buy you a reasonable property with a rental income of £400-£500, it doens't have to be near where you live currently. Just to put a few more figures in - if you get a house for £50k and rent it for £400 a month (perfectly feasible where I live) then that's very close to a 10% return year on year.  Plus any gains made by the price of the house. The main downside is you won't have easy access to the money and you will have to look after a tenant if you decide to rent it out.  Also if you do buy a property make sure it is in a good state of repair, you don't want to have to pay for a new roof for example in a couple of years time. Ideally you would then sell the house around the time property prices peak and buy another when they bottom out again.  Not easy to judge though! I'd review the Trust Fund against others if you decide to keep it there as 12% over 6 years isn't great, although the stock market has been depressed so it may compare favouribly. Keep some ""rainy day"" money spare if you can."

negative: "Must I rehash the obvious reasons why a community organizer lacks the business sense to see us through the mess?  ...and must I really detail why it is the corrupt career politicians in and out of congress that are to blame for this mess?  Obama's persistent electioneering since 2008, and the pandering to special interests to the tune of trillions is a good place for starters ...or perhaps the 7 figure price tag per job that he owns...  I dunno, I lost count of Recovery Summers (is this IV or V? ) and ""shovel-ready"" *jobs* obviously meant something else to him...  Yet, I suppose the dozen or so private firms that Obama haphazardly threw millions of tax payer dollars into that only ended up failing could also play a role ...but proceed to blame bush, and stack up the excuses. I'm waiting.   Sure, Romney may have been a shrewd business man, but at least someone made money and had something more tangible than ""hope."""

negative: Your wealth will go up if your effective rate after taxes is less than the inflation rate.  That is, if your interest rate is R and marginal tax rate is T, then you need R*(1-T) to be less than inflation to make a loan worth it.  Lately inflation has been bouncing around between 1% and 1.8%.  Let's assume a 25% tax rate.  Is your interest rate lower than between 1.3% and 2.4%?  If not, don't take out a loan. Another thing to consider: when you take out a loan you have to do a ton of extra stuff to make the lender happy (inspections, appraisals, origination charges, etc.).  These really add up and are part of the closing costs as well as the time/trouble of buying a house.  I recently bought my house using 100% cash.  It was 2 weeks between when I agreed to a price to when the deal was sealed and my realtor said I probably saved about $10,000 in closing costs.  I think she was exaggerating, but it was a lot of time and money I saved.  My final closing costs were only a few hundred, not thousands, of dollars. TL;DR: Loans are for suckers. Avoid if possible.

negative: First, look at the local housing market, and the price to rent ratios. If you are comfortable that a house can be had for near to the cost of renting, and are not still dropping is price, then focus on the down-payment. I don't imagine housing prices to start picking up any time soon, so you don't be too rushed. If you feel like you have a longer time to save before you want to buy, I would focus as much money as I can into a retirement account while still saving for a down payment. Since you are young, you really want your retirement accounts working for you as soon as possible. You should not be investing in 3% stable funds, but the stock market index funds. Retirement is for 40 years in the future. Using funds for a down-payment from a retirement account should be a last resort. Remember this money is to provide you security later in life, not to get you into a house. When you take out money and put it into a house, it will not be appreciating nearly as fast. It is easy to say you will save later, but the money you save early in life will make up 50% or more of your funds when you retire. That is why it is critical to save for retirement as soon as possible.

negative: "One small advantage to paying ahead is having an outstanding installment plan may preclude unlocking the phone for use on other carriers, for example during international travel. If unlocking is important, researching the particulars would be in order. I am more familiar with T-Mobile, and will use as a specific example. If I pay upfront, I can purchase the phone from Apple totally unlocked, and T-Mobile has no say in whether I use it on another carrier or not. (This actually costs a little more, because the phone from Apple doesn't come with a SIM, and T-Mobile charges for the SIM. At least as of iPhone 5s.) Looking at ""Unlock your mobile wireless device, Unlock Requirements"" on T-Mobile's website, at least some payment plans do not allow unlock until the phone is paid off. Obviously phones purchased for full price from T-Mobile start out paid off."

negative: "Yes you can. Volvo for example sells ""polestar"" tunes. Walk into the dealership, plunk down $1600, and your car gains 40 horsepower  from a software tweak. Still maintains the full warranty. Ford sells ford performance tunes the same way. Zero hardware changes. Here is the link http://accessories.volvocars.com/en-az/XC70(08-)/Accessories/Document/VCC-480810/2016"

negative: "Generally if you need to tap into your retirement for the house - you probably shouldn't buy the house. But that's your call. There are several things you could do. Sue your CPA ""friend"" for malpractice. Especially if there's any actual proof of that stupid suggestion. Check with your 401k administrator about home-purchase loan from the 401k. You'll be borrowing your own money, and repaying yourself back with interest, but it will be tax free and with no penalties. Keep in mind: if you cannot repay the loan, or you leave your employer without repaying it in full - the remaining balance will be considered withdrawal and you'll pay income taxes + 10% penalty on it. If you have an IRA, you can withdraw up to 10K without penalty if this is your first house (i.e.: you didn't own a house in the last 3 years), and is going to be your primary residence. You'll still pay taxes on the 10K. But, this is not available for 401k plans. You can request equal payments distribution calculated based on your life expectancy (This is the infamous 72(t)(2) distribution, even though many of the exceptions are in the IRC 72(t)(2). This in particular is 72(t)(2)(A)(iv)). Here's the full list of exceptions. Note that even if you're willing to pay the 10% penalty, many 401k plans do not allow distributions as long as you're still employed with the sponsoring employer. If you take a hardship distribution from your 401k (if it even allows it), you'll be prohibited from contributing for 6 months, and your employer will be prohibited from contributing on your behalf as well. I.e.: not only you take out your savings, you'll be barred from saving back. Also, in the same FAQ, it tells you that the hardship distribution can only include the amounts up to the original contributions (less whatever distributions already made), and not earnings or match. I.e.: it may actually be much less than the 40K you're counting on."

negative: Mortgage rates tend to track the yield on the 10-year Treasury note. The CBOE Interest Rate 10-Year T-Note, TNX, is a security directly related to this rate. Divide the CBOE price of TNX by 10 to get the yield.  One can also track the  10Y T-Note yield at yahoo finance using ticker symbol (^TNX).   One can also track the  10Y T-Note yield at yahoo finance using ticker symbol (^TNX).

negative: This is why we need to get rid of the vultures that buy up property on the cheap, hoard it, and rent it out at a ridiculously inflated price.    The U.S., Australia, Canada, and others alike are in need of housing reform terribly.   As the article stated, eviction is not just a condition of poverty, it is a cause of it!

negative: Housing, eh? Housing costs are driven by salaries and land availability. Over in the Bay Area, $1500/mo for a nice 1-bedroom apartment is a good deal... but a decent software engineer with ~4 years' experience can get $120k, easily. The standard benchmark of affordability of housing is spending a third of your income on it a year: that guy can afford about $3,333/mo on housing. (If you don't fritter away the money and can keep your cost of living down and save money, you can really clean up, especially if you move elsewhere later.) So, to stop thinking about it in terms of dollar value, first try to think of it in terms of time: 33% of someone's salary or a third of their time at work going for housing is pretty nominal. Beyond that, think about it in terms of opportunity cost: If you saved that extra $20, what exactly would you use it for, and how much of that goal does it represent?

negative: "Go on a website that has real estate listings.  Find similar homes in the same neighborhood and list out the prices.  Once you have prices, pick out two with different prices and call the realtor of the more expensive listing.  Tell that realtor about the other listing and ask why their listing is more expensive.  Compare their answer to the home that you are considering buying.   For example, they may say that their house has a newly remodeled kitchen.  Does the house you are considering have a newly remodeled kitchen?  If so, then use the higher priced listing and throw out the cheaper one.  If not, use the cheap listing and throw out the expensive one.   Or they might say that the expensive house is in a better location than the cheaper house.  Further away from traffic.  Easier to get to the highway or public transportation.  If so, ask how the location compares to the house you are actually considering.  The realtor will tell you if the listings are comparable.   When I talk about ""similar homes,"" I mean homes that are similar in square footage, number of bedrooms, and number of bathrooms.  Generally real estate sites will allow you to search by all of these as well as location.   After all this, the potential seller may still turn you down.  If he really wanted to sell, he'd have suggested a price.  He may just be seeing if you're willing to overpay.  If so, he could turn down an otherwise reasonable offer.  How much he is willing to take is up to him.   Note that this would all be easier if you just bought a house the normal way.  Then the realtors would do the comparables portion of the work.  You might be able to find a realtor or appraiser who would do the work for a set fee.  Perhaps your bank would help you with that, as they have to appraise the property to offer a mortgage.   You asked if you can buy out a mortgaged house with a mortgage.  Yes, you can.  That's a pretty normal occurrence.  Normally the realtors would make all the necessary arrangements.  I'm guessing that a title transfer company could handle that."

negative: What are your goals in life?   If one of them is to appear wealthy then buying a high price import is a great place to start.  You certainly have the salary for it (congratulations BTW). If one of your goals is to build wealth, then why not buy a ~5000 to ~6000 car and have a goal to zero out that student loan by the end of the year?  You can still contribute to your 401k, and have a nice life style living on ~60K (sending 30 to the student loan). Edit: I graduated with a CS degree in '96 and have been working in the industry since '93.  When I started, demand was like it is now, rather insane.  It probably won't always be like that and I would prepare for some ups and downs in the industry. One of the things that encouraged me to lead a debt free lifestyle happened in 2008.  My employer cut salaries by 5%...no big deal they said.  Except they also cut support pay, bonuses, and 401K matching.  When the dust cleared my salary was cut 22%, and I was lucky as others were laid off.  If you are in debt a 22% pay cut hurts bad.

negative: "If I buy property when the market is in a downtrend the property loses   value, but I would lose money on rent anyway. So, as long I'm viewing   the property as housing expense I would be ok. This is a bit too rough an analysis.  It all depends on the numbers you plug in.  Let's say you live in the Boston area, and you buy a house during a downtrend at $550k.  Two years later, you need to sell it, and the best you can get is $480k.  You are down $70k and you are also out two years' of property taxes, maintenance, insurance, mortgage interest maybe, etc.  Say that's another $10k a year, so you are down $70k + $20k = $90k.  It's probably more than that, but let's go with it... In those same two years, you could have been living in a fairly nice apartment for $2,000/mo.  In that scenario, you are out $2k * 24 months = $48k--and that's it.  It's a difference of $90k - $48k = $42k in two years.  That's sizable. If I wanted to sell and upgrade to a larger property, the larger   property would also be cheaper in the downtrend. Yes, the general rule is:  if you have to spend your money on a purchase, it's best to buy when things are low, so you maximize your value.   However, if the market is in an uptrend, selling the property would   gain me more than what I paid, but larger houses would also have   increased in price. But it may not scale.  When you jump to a much larger (more expensive) house, you can think of it as buying 1.5 houses.  That extra 0.5 of a house is a new purchase, and if you buy when prices are high (relative to other economic indicators, like salaries and rents), you are not doing as well as when you buy when they are low.   Do both of these scenarios negate the pro/cons of buying in either   market? I don't think so.  I think, in general, buying ""more house"" (either going from an apartment to a house or from a small house to a bigger house) when housing is cheaper is favorable.  Houses are goods like anything else, and when supply is high (after overproduction of them) and demand is low (during bad economic times), deals can be found relative to other times when the opposite applies, or during housing bubbles.   The other point is, as with any trend, you only know the future of the trend...after it passes.  You don't know if you are buying at anything close to the bottom of a trend, though you can certainly see it is lower than it once was.   In terms of practical matters, if you are going to buy when it's up, you hope you sell when it's up, too. This graph of historical inflation-adjusted housing prices is helpful to that point:  let me just say that if I bought in the latest boom, I sure hope I sold during that boom, too!"

negative: "There are a few factors at work here, supply and demand being the main one. The Office for National Statistics has some good information: http://visual.ons.gov.uk/uk-perspectives-housing-and-home-ownership-in-the-uk/ Supply has historically struggled to compete with demand in the UK and this situation has been exacerpated since the 1980s when Margaret Thatcher was Prime Minister.  She set up a variety of schemes to encourage people to own their own home, such as tax relief (MIRAS) and since then home ownership in the UK has increased dramatically. The then conservative government also set up the ""right to buy"" scheme (in 1980) that allowed council tenants to purchase their council houses at a discounted rate.  The effect of this was to increase the number of home owners whilst reducing the amount of housing available for councils to rent to new tenants.  Anecdotal evidence (I can't find a documented source to back this up) suggests that councils did not build sufficient new homes to replace those purchased by their ex-tenants. The population of the UK has also increased, by around 10 million since 1980 (around 20%) and this has pushed up demand for housing.  House building in the UK has not kept pace with these factors that has led to a shortage of supply that has pushed up prices. http://www.ons.gov.uk/ons/rel/pop-estimate/population-estimates-for-uk--england-and-wales--scotland-and-northern-ireland/2013/sty-population-changes.html There's another factor at play here as well.  If you go back to the 1970s around 53% of women would go out to work but in 2013 this figure increased to 67% as it became more common for households to have double incomes.  This extra supply of cash also pushed up house prices. http://www.ons.gov.uk/ons/dcp171776_328352.pdf Your question regards a debt based monetary system is not entirely clear, but there are limitations put onto how much money people can borrow that are potentially limiting how much house prices can rise by.  Today most lenders are more conservative in how much they will lend but this wasn't the case in the mid 2000s when house prices rose very quickly.   Lenders are more cautious today after the crash of the late 2000s, but things are begining to relax again and they are starting to lend more which could in turn lead to further house price rises in line with what was seen in the 2000s. Recessions have coincided with house prices falling back or at least being stable.  In the 1980s house prices trebled from 1980 to 1988 but then fell back a little as the recession hit, before starting to rise again in 1997.  This rise was sustained until 2008 during which time prices trebled again.  Based on this you could assume prices will treble again as we come out of the recession, as long as this is sustained for 8 years or so. However, as the potential for more households to become double income is reduced (high female employment already) and wages are unlikely to raise that quickly, this may not be realistic, unless the mortgage lenders become extremely lax, to the point of reckless! To answer your other question, about the affordability of housing, this will be based on the level of wages in the UK and how strict or lax the lenders are, also taking into effect the availability of housing for purchase.  If wages rise, house prices will rise, if lenders are willing to lend more money, house prices will rise and if demand continues to outrstip supply, prices will rise. None of the major UK political parties are likely to solve the problems of population growth and not enough houses being built so it is likely prices will rise but you could argue that they are not far off a peak based on current wages and lenders attitudes.  If the UK economy continues to recover from the recession, it is possible they will fuel another housing boom by lending ever increasing salary multiples as happened in the 2000s, unless there is government intervention, ie regulation of the lenders."

negative: The issue is that housing price increases can't sustain themselves indefinitely, in comparison to the rental market. Increases drive people back to the rental market, which brings the rental market up.  Also, just as a AirBnB would drive property prices to go up, it also allows people who would otherwise not be able to buy a house to make the house purchase. Example - Loftium is a mortgage lender that will give you a cheaper loan if you put your house on AirBnB. That enables people to purchase a home when they otherwise wouldn't be able to. So over time (many years), the market should work itself out.  In the short term, AirBnB can definitely cause market fluctuations. For example, it might enable people to continue to own their homes during a depression, which would cause a supply shortage.   The only factor that affects ownership prices differently than rental prices in the long term would be regulation. Here's a [good article](http://www.sightline.org/2017/08/14/why-seattle-builds-apartments-but-vancouver-bc-builds-condos/) about that aspect specifically.

negative: "> At Google, they oversee a search algorithm that seeks to surface “authoritative” results and demote low-quality content. This algorithm is tuned by an internal team of evaluators. If the company silences dissent within its own ranks, why should we trust it to manage our access to information?  Yeah, ""persons""; *this* is going to be the organization that filters our searches and dictates whose videos we can easily watch.  I can almost get behind Steve Bannon's [""public utility"" idea](http://fortune.com/2017/07/29/bannon-facebook-google-monopoly/). Maybe with a little Sherman AntiTrust thrown in."

negative: Yes, why suffer any consequences when future people can be made to suffer them? That's what the thinking boils down to. It's the main factor driving the high rents & house prices now, including indirectly via artificial job creation.

negative: >First of all QE is an increase of money supply but using non conventional measures(there might be exceptions) some examples of this measures are changing interest rates or TLTRO.  Ok, but how is this different from printing money? I mean the money supply goes up in both cases, right? Shouldn´t this cause massive inflation?  >As to why this hasnt transitioned into more inflation, which in the end has but years after, has been a question that people have asked a lot. One of the reasons for this is the transmission mechanism not working properly, which implies that despite the fact banks have received money, they havent been able to move it to the real economy hence not increasing prices.  I have read that all QE has done is basically make the prices of assets such as housing, stocks, art and whatnot skyrocket. As if all the extra money has gone to a very few, specific areas while not touching the rest of the economy.  Is this something you agree with? Thanks for your reply, btw!

negative: I have been charting the CPI reported inflation rate vs . the yeald on the 10-year T-note. Usually, the two like to keep pace with each other. Sometimes the T-note is a bit higher than the inflation rate, sometimes the inflation rate is a bit higher than the T-note yeald. One does not appear to follow the other, but (until recently) the two do not diverge from each other by much.  But all that changed recently and I am without an explanation as to why. Inflation dropped to zero (or a bit negative) yet the yeald on the 10-year T-note seemed to seek 2%.  Edit: If you give this response a downvote then please be kind enough to explain why in a comment.  Edit-2: CPI and 10-year T-note are what I have tracked, and continue to track. If you do not like my answer then provide a better one, yourself.

negative: "According to Wikipedia, Treasury bills mature in 1 year or less to a fixed face value: Treasury bills (or T-Bills) mature in one year or less. Regular weekly T-Bills are commonly issued with maturity dates of 28 days (or 4 weeks, about a month), 91 days (or 13 weeks, about 3 months), 182 days (or 26 weeks, about 6 months), and 364 days (or 52 weeks, about 1 year). Treasury bills are sold by single-price auctions held weekly. The T-bills (as Wikipedia says, like zero-coupon bonds) are actually sold at a discount to their face value and mature to their face value. They do not return any interest before the date of maturity.  Because the amount earned is fixed at purchase, ""return"" is a more accurate term than ""rate"" when referring to a specific T-bill. The ""rate"" is the difference between this return and the discount value you purchased it at. So, yes, your rate of return is guaranteed. T-notes (1-10 year) and T-bonds (20-30 year) also have an interest rate guaranteed, but have coupon payments (usually every 6 months), paying out a fixed amount of interest on the principal.  (See more info on the same Wikipedia page.) Because those bonds are not compounding the interest it pays out, but instead paying out every 6 months, you'd have to purchase new securities to create a compound return, changing your rate of return over time slightly as the rates for new treasury securities changes."

negative: "According to the book of Hull, american and european calls on non-dividend paying stocks should have the same value. American puts, however, should be equals to, or more valuable than, european puts. The reason for this is the time value of money. In a put, you get the option to sell a stock at a given strike price. If you exercise this option at t=0, you receive the strike price at t=0 and can invest it at the risk-free rate. Lets imagine the rf rate is 10% and the strike price is 10$. this means at t=1, you would get 11.0517$. If, on the other hand, you did'nt exercise the option early, at t=1 you would simply receive the strike price (10$). Basically, the strike price, which is your payoff for a put option, doesn't earn interest. Another way to look at this is that an option is composed of two elements: The ""insurance"" element and the time value of the option. The insurance element is what you pay in order to have the option to buy a stock at a certain price. For put options, it is equals to the payout= max(K-S, 0) where K=Strike Price and St= Stock price.  The time value of the option can be thought of as a risk-premium. It's difference between the value of the option and the insurance element. If the benefits of exercising a put option early (i.e- earning the risk free rate on the proceeds) outweighs the time value of the put option, it should be exercised early. Yet another way to look at this is by looking at the upper bounds of put options. For a european put, today's value of the option can never be worth more than the present value of the strike price discounted at the risk-free rate. If this rule isn't respected, there would be an arbitrage opportunity by simply investing at the risk-free rate. For an american put, since it can be exercised at any time, the maximum value it can take today is simply equals to the strike price. Therefore, since the PV of the strike price is smaller than the strike price, the american put can have a bigger value. Bear in mind this is for a non-dividend paying stock. As previously mentioned, if a stock pays a dividend it might also be optimal to exercise just before these are paid."

negative: You don't start out buying a shopping mall, you have to work up to it.  You can start with any amount and work up to a larger amount. For me, I saved 30% of my salary(net), investing in stocks for 8 years.  It was tough to live on less, but I had a goal to buy passive income.  I put down this money to buy 3 houses, putting 35% down and maintaining enough cash to make 5 years of payments.  I rented out the houses making a cap of 15%.  The cap is the net payment per year / cost of the property, where the net accounts for taxes and repairs.  I did not spend any of the profits, but I did start saving less salary.  After 5 years of appreciation, mortgage payments and rental profit, I sold one house to get a loan for a convenience store.  Buildings go on the market all the time, it takes 14 years to directly recoup an investment at a 7% cap, which is the average for a commercial property sale.  Many people cash out for this reason, it's slow, but steady growth, though the earnings on property appreciation is a nice bonus.  Owning real estate is a long term game, after a long time of earning, you can reinvest, but it comes with the risk of bad or no tenants. You can start both slower and smaller, just make sure you're picking up assets, not liabilities.  Like investing in cars is generally bad unless you are sure it will appreciate.

negative: I'm not asking for the world to owe a huge salary and benefits.  I am asking for jobs to pay a wage and provide benefits that allows the people they use to make money to live without worrying about getting sick or making rent.  I'm not saying everyone needs a salary that can play for a lexus and flat screen tv for being a cashier at walmart.  Just enough to pay rent, food, bills, healthcare.  Why in the world would you work at a place that doesn't pay you a living wage if you aren't getting something else out of it?


query: Paypal website donations without being a charity

positive: Yes, Paypal has such a button you can use, but to be clear, the money you receive is taxable income. Your website is providing 'value' to the readers, and while they may feel they are making a gift to you, it's earned income as far as the IRS is concerned.  (This assumes you are in the US, you may wish to add a tag to indicate your country)

positive: Yes, PayPal allows you to add a donate button to your website. You're responsible for any tax record-keeping related to income from the donate button.

positive: An answer from PayPal stated that donations may be turned on only for Business PayPal accounts that are verified for its non-profit status. Such PayPal Business account must be opened in the name of non-profit organization (not a single person) and go through verification process. One must provide the following information: That would mean that one cannot ask for donations as a private person, at least in Croatia, and probably in Europe.

negative: It's a good question. We can't know for sure, but here are some things to think about. Paypal advertises a discounted transaction rate for non-profit organizations.  In the U.S. at least, the rate they advertise is 2.2% + 0.30 USD.  There are lots of things that can come into play here, such as international rates or any special deal that Wikimedia has struck with Paypal, but it seems reasonable to guess that of your 2€ donation, Wikipedia sees perhaps 1.65€.  Note that most of the fee is a flat rate; of the next 2€ in your donation, Wikipedia gets 1.96€. Direct debit probably has lower fees.  Paypal has to account for some credit card transaction fees in their fee structure, and direct debit does not.  Therefore, I would guess that to maximize your gift, direct debit might result a little better than Paypal.   Charities, in general, don't want to tell you the best way to donate, because they want it to be as easy for you as possible, and don't want to discourage any type of donation at all.  They are very happy to get any donation, even if one method over another results in slightly higher fees.  Wikimedia, in particular, offers many different options for donating.

negative: I think about as close as you're going to get is to use a personal PayPal account, and set up a reminder to yourself to log in and send the money.  (Because, as you said, setting up a recurring payment is a business account thing.) From PayPal's website: Sending money – Personal payments: It's free within the U.S. to send money to family and friends when you   use only your PayPal balance or bank account, or a combination of   their PayPal balance and bank account. ... Receiving money – Personal payments: It's free to receive money from friends or family in the U.S. when   they send the money from the PayPal website using only their PayPal   balance or their bank account, or a combination of their PayPal   balance and bank account. You can automate the reminder to yourself with any of the gazillion task managers out there:  Google Calendar, MS Outlook, Todoist, Remember the Milk, etc.

negative: People put conditions on donations all the time. They donate to the Red Cross for a specific disaster. The donate money to a church for the building fund. They donate money to a hospital to buy a new x-ray machine. They donate money to the scouts for a new dining hall.  It is possible to donate money to a non-profit for a specific purpose. If the non-profit doesn't want to accept the money with those strings they can refuse. Generally these specific projects are initiated by the non-profit. But there is no requirement that the idea originate with the non-profit.  It is also up to the non-profit and their legal advisers regarding how strictly they view those strings. If you donate money for web design and they don't spend it all, can they pay net years hosting bill with the money, or must they hold it for a few years for when they need a designer again? If the company wants to provide the service, they can structure the project to pay their employees for their time. They pay employees for $100 of labor while deigning the website. The pay and benefits reduce profit thus lowering taxes.  Donating money to the non-profit to be given back to the company doesn't seem to be the best way to structure transaction. At best it is a wash.  Donating money to a charity and then directing exactly which contractor will perform the service starts to look like money laundering, and most charities will get wary.

negative: A fully automated website that literally does the selling for you.  Receive money daily paid directly to you PayPal account!  100% commissions from one incredible package... for just $6.99!  No Web Hosting Or Domain Fees!!   For all the details, visit website at:  http://victor699.beep.com/

negative: "In the US: In the UK: You can set up a CAF (Charities Aid foundation) Charity Account. This allows you to donate to charities anonymously, while still allowing the recipient to benefit from Gift Aid (where they can reclaim the income tax you'd paid on the donation). You can even use this account to donate to overseas charities if you're donating at least £250. Or you can use a different intermediary such as BT MyDonate or The Big Give or another intermediary. See the Wikipedia article ""Comparison of online charity donation services in the United Kingdom"". In Canada: If there's a United Way charity in your country, it may have a donor choice program which may be able to forward a designated donation to any other charity in your country.  The United Way probably charges a fee for this service.  I'm not sure whether or not the United Way would be willing to keep you anonymous, and I'm not sure whether or not the United Way would add you to its mailing list.  More details may be available elsewhere online."

negative: Yes, you can set up a PayPal or a Google Checkout account without a bank account linked to it. Neither PayPal nor Google Checkout requires you to link to a bank account. Both services provide for linking your payment account to a credit card instead.

negative: "I agree with the rest of the answers -- you're probably better off just using it for some predictable flat-rate recurring monthly service like NetFlix, or making a charitable donation if you're into that sort of thing. But since that wasn't what you asked, I'll try to provide an answer: If you don't mind throwing away money, send money to yourself using PayPal. Here's how:  Set up a PayPal Business Account, and use your personal PayPal account to send funds to it by setting up a PayPal subscription. PayPal says ""You can have one Consumer account and one Business account."" A PayPal Payments Standard business account has no monthly fee -- only transaction fees. According to PayPal, ""in order to set up a repeating payment, [you] would need to create a Subscription or Recurring Payments button from the Merchant Services tab"" (in the Business Account). You would then click the link/button to set up the subscription from your personal PayPal account, to make it send money to your Business account on an automatic schedule. You can then, at your own leisure, send the money back to your personal account without paying a second transaction fee, then finally send it back to your bank account. Or, if your bank account is not yet tied to your personal account, you can tie it to the business account instead, and deposit the funds into your bank account. Unfortunately, this step can't be automated. Again, to reiterate, you're much better off just using it for something recurring."

negative: "Can a company say ""StackExchange"" donate to a non-profit company say $5,000 in agreement that they will spend that on paying a designer for a new website? And most importantly is this donation still tax deductible? A non-profit would have to typically create a bucket for IT Services or Website design. As long as ""StackExchange"" specify they employ a profession service to get it done, there would be no issue. If ""StackExchange"" were to specify an individula/company it would be an issue."

negative: very simple.  RBI has stopped connecting Indian Bank's to Paypal, for deposit or withdrawal. You need to use a third party website (Online wallet etc) to send whatever money you have in the Paypal account.  Connect your Bank account with the third party website, and withdraw the money

negative: "Having worked for both a non-profit and a charity, it is my recommendation that you always donate directly to the charity, and not through any form of solicitation.  Most of the telephone calls that you receive are likely from telemarketing companies.  It has been my experience (through exploring them as a means of fundraising) that the charity will likely only see about 10% - 25% of the funds raised in their name!!  I imagine that a number of door to door solicitations are also done by professional fundraisers. WRT sharing of lists, it is likely not the charities that share the lists, but the companies that they hire to solicit for them.  I always ask to be put on their ""do not call"" list To verify that a person collecting at your door is from the charity that they represent, can you pledge a donation, buying time to look into them?  Or write a cheque in the name of the charity if it is known to you?  I doubt that many scammers would go to the trouble of trying to open a bank account in the charity's name. I like YMCbuzz's point about the online donation - I use CanadaHelps.org.  They are very upfront about the small (3%) fee that they charge, and the rest of the money goes to the charity.  I have used them working for a charity, so I can vouch for how much is sent to the charity."

negative: Yes. Donating to name-brand charities or politicians will result in you geting solicitied for more donations -- charities sell your info and donation habits.

negative: "I linked my bank account (by making a transfer from bank account to Paypal) without linking a card. This should not give Paypal any rights to do anything with my bank account - transfer that I made to link it was exactly the same as any other outgoing transfer from my bank account. On attempting to pay more that resides in my Paypal balance I get  To pay for this purchase right now, link a debit or credit card to your PayPal account. message. Paypal is not mentioning it but one may also transfer money to Paypal account form bank to solve this problem. Note, that one may give allow Paypal to access bank account - maybe linking a card will allow this? Paypal encourages linking card but without any description of consequences so I never checked this. It is also possible that Paypal gained access to your bank balance in other way - for example in Poland it just asked for logins and passwords to bank accounts (yes, using ""Add money instantly using Trustly"" in Poland really requires sharing full login credentials to bank account - what among other things breaks typical bank contract) source for ""Paypal attempts phishing"": https://niebezpiecznik.pl/post/uwaga-uzytkownicy-paypala-nie-korzystajcie-z-najnowszej-funkcji-tego-serwisu/"

negative: "I know your pain oh, so much.  I literally have a 14 gallon rubbermaid container FULL of solicitations I have received.  Even worse, for-profit fundraising companies send most of those mailings! They take the money, and deduct their ""expenses"", rigged to consume almosts all your gift.  Some companies have been caught passing as little as 9% to the charity.  First let's talk about a few issues.  Authentication.  Is that outfit really a tax deductible 501c3 charity?   Address.   Is this their genuine address, or is it the dropbox of a scammer or one of those evil for-profit fundraising companies?  Acknowledgement.   For gifts over a certain size, you need a thank-you letter from them to show the IRS that you really donated.  Will you get it?  The limit is $250 (no letter, deduction rejected) but as a practical thing, it helps in an audit to show as many donation letters as possible.  Charities cannot issue them retroactively, but can issue you second copies of ones they sent previously. If the charity drops the ball, you lose.  Obviously enough, you go to the post office and spend $1 on a money order.     This does not authenticate them as a charity. It does not assure it goes to their real address.  You can do both these things yourself, by checking their data on the IRS website or on guidestar.org. You don't get an acknowledgement.  I mention these because donation websites work much the same way. DAFs require a higher one-time commitment but are much simpler and more efficient after that. If you are planning to give $5000 in a single year, save it up and open a Donor Advised Fund account.  A DAF is itself a charity.   You donate to the DAF, and take the tax deduction for charitable contributons.  Then, you tell the DAF to donate it to other charities on your behalf, or anonymously.   Their concept is, you use the DAF as a ""buffer"" so you can easily make the tax-deductible donation when you need to for tax purposes, then at your leisure research charities and support them.  However, I asked my DAF - most people donate and then immediately re-donate the money, leaving the fund at zero balance.  My DAF doesn't mind that at all, and they charge zero fees for this.   (Its expenses are paid by those of us who leave money sitting around in the DAF.  Mine charges 0.6% a year.  This money can be invested sort of like in a 401K, and each investment also has an expense ratio, such as 0.18% a year in my chosen index fund.)  Websites like ""justgive.org"" will take any amount of your money and re-donate it to the charity you select.   They deduct 3-5% for their expenses (notably paper, stamps, and the 2-3% it costs them to process your credit card)."

negative: Does the above mean I will not be able to send money to myself or my mother Yes that is right. PayPal will only be used for small trades. The credits into PayPal cannot be used to purchase anything, and will have to be credited back to the linked Bank Account. This is to ensure right reporting and taxes are being paid. You could use alternative Bank channels for getting funds.

negative: "The account I have found that works best as a HSA is Alliant Credit Union. They have fee-free HSA (no fees for almost all types of transactions or monthly fees) and a fairly decent online banking website. I've been with them for about 5 years now without trouble. FYI - They are a credit union not a bank so you do have to make a small $10 donation to one of their charities to become ""eligible"" for opening the account."

negative: This kind of questions keeps repeating itself on this site and the answer is generally it doesn't matter. As you said yourself, there are costs either way, and these costs are comparable. Generally, merchant fees differ tremendously between the different kinds of merchants, and while gas stations and video rentals may pay up to 5% and even more, charitable organizations and community services are usually not considered as high fraud risk operation and are charged much lower fees. Either way, paying employees, managing cash/check deposits or paying merchant fees is part of the charity operational expenses. Together with maintaining offices, postal office boxes, office supplies, postage expenses and formal stationary and envelopes needed for physical donations handling. I would guess that if the charity's majority of donations come on-line as credit card/paypal payments - check handling will be more expensive. So I suggest you take the route you consider majority of donors pay - that would be the cheapest for them to handle. I would guess, credit cards being the most convenient - would be the way to go.

negative: To be safe you should donate the printer to the charity. Or even better, have the charity purchase it and you donate a equivalent number of dollars directed towards purchasing the equipment. Once your wife no longer volunteers with the charity it should be returned to the charity because they own it.

negative: In the. US, i'd suggest hitting the Charity Navigator website for evaluation of how efficiently various charities will use your money. At this point I won't donate money to anything that gets less than three stars unless I know the organization very well indeed -- and I've been progressively swapping out 3-star groups for 4-star organizations in the same category. Many of the groups reviewed by CN are international,  so you might find it useful even if you're donating from/to elsewhere.

negative: "Charitable donations can be deducted from your income, and in that way make your taxable income lower, hence lower taxes. That's the meaning of ""tax deductible"". As to ""if I donate it then the money will be given right to the charity instead of spread out to many other places"" - taxes are being used by the government based on its own decisions (presumably made by elected officials thus representing the will of the voters). Charities use the money based on their defined goals. Giving money to a charity will ensure it is used for the specific goal the charity declared, and that's the way for you to funnel money to the goals of your preference/choice. For example, you can donate money to your temple, orphanage around the corner, or the gay rights organization. Or anti gay, for that matters. Your money will be spent on the goals of your choosing. Re advantages - charitable donations are used by the rich folks to avoid paying taxes on their income (because they're deductible), so someone might donate money to places they use themselves (like the temple/church for example, or the school where the kids go, or politician which will ""objectively"" choose someone's business for a big government contract, etc etc). For ""ordinary"" people it's a way to reduce the taxable income and divert the money to the specific goals of their choice. For example, donating $100 to Red Cross Japan Tsunami relief fund, will reduce your taxable income by $100, and total taxes by $28 (assuming you're in the 28% bracket), thus the $28 will go to the specific goal your choose instead of the general taxes."

negative: Yes, #2: the Hackathon prize money counts as income, but a donation to charity is a deductible charitable gift. For more background and a few scenarios: http://people.opposingviews.com/deductible-donor-donates-prize-2517.html

negative: "Donations, particularly those in the context of you providing a free service (software, libraries, etc.) are a notable grey area in tax code. Simply naming a button ""Donate"" doesn't necessarily classify the money transfer as a ""gift"". The IRS can decide that it's money you're being paid to continue your excellent work/service, making it taxable income (unless you're a registered non-profit organization). In the instance of Patreon, and many other crowd-funding services, you're providing a certain level of ""service"" for each tier of donations (such as early access or something, I'm not sure what you're offering), which means they're receiving consideration for their donations, which most likely makes it fall into taxable income (again, unless you're a registered non-profit organization). State tax law is even more convoluted, and you should consult your tax professional for clarification on your specific situation."

negative: From my experience using PayPal for selling products on eBay (and for the last two, experiences of a friend)...  Can paypal get money from my Bank Account without my authorization. This is assuming they have transferred the funds to me. They can't pull money from your bank account without your authorization. They will, however, take the money from your PayPal account if it's still there, or leave you with a negative balance if you've already withdrawn. They will do this as soon as there is a claim against you and will only release the funds if the investigation ends in your favor. Any money received would first be used to satisfy the negative balance. What actions can paypal takes against me if charge back amount is very high and I don't agree / pay them. They will send it to a collections agency. Is there any case it is going to effect my bank account, i.e. is there any chance paypal can block my bank account in India. They will block you from using PayPal. If you try to sign up again with a different bank account or credit card and they recognize you as the account holder, they will block that account as well.

negative: If I donate $10,000 to charity then I can deduct that $10,000 from my income and not pay income taxes on it.  So if I make $50,000 a year then I will only pay income taxes on $40,000 instead of $50,000 since I donated $10,000 to charity.  This is what is meant when charity contributions are said to be tax deductible. Don't feel like you have to donate to charity.  You owe no one anything.  You do more for others by working (assuming you work in the private sector). If you know of someone personally that is in need of aid then you could give them some help directly.  I find this more effective then blindly dumping money in a bureaucratic, inefficient charity.  I also find there are very few people in need of charity. Personally, I think charity donations are a way for people to feel good about themselves.  They rarely care if their donations are effective.

negative: I know in the UK at least, 99% of the time even legitimate collectors don't work directly for the charity.  They work for independent for-profit companies.  The companies collect a large comission (around £50-£70) for every direct debit signup. The guy that knocks on your door will see very little of it.  Have a look at this: http://blogs.mirror.co.uk/investigations/2005/08/just-6-for-eight-days-work-for.html The bags you get through your door for clothing donations are run on a similar basis - the clothes and profit go to a private company, which makes a donation to the charity out of their profits.  Sometimes as little as 0.1% of your donation will go the charity. Always go direct to your chosen charity.

negative: It's possible the recipient of the payment is not setup to receive funds form PayPal from a credit card, too.

negative: You could find a relative in another country who has the ability to receive PayPal, and have them transfer the money to you via Western Union or Hawala.

negative: Yes. I have a US based website that accepts payments via PayPal and can confirm we have many customers from India. Here is a list of countries PayPal supports. Note typically there are some additional fees associated with currency conversion.

negative: Economic efficiency is overrated. I would rather give money to a charity that spent 15% on human resources and 10% on marketing to get $10 million in incoming donations than to a charity with an 8% expense rate that receives $1 million in incoming donations.

negative: "I wouldn't trust ""about.com""; they're based on grabbing content from other places and are entirely unreliable. You can use the money transfer on PayPal, or transfer through a bank. I wouldn't give my bank account details to complete strangers, though. But that's me, with my distrust of the human kind."

negative: "The thing to look at is PayPal's ""PayPal.me"" service, which is a pretty neat little item.  When you sign up for a PayPal.me account (totally free), you create a unique username.  So for example, my PayPal.me account name is DanCAnderson.  I can give someone the following web link to send me $500: http://paypal.me/DanCAnderson/500 If you click the link above, you'll see what the user sees (my company name is Salt River Networks, Inc.).  I gave a live link so you can see the working example of it (no need for anyone to send money! chuckle). I can change the amount by simply changing the value at the end of the URL. When they go to that link, they see a landing page with your name on it and the amount to send to you, then they go through the normal process of paying via PayPal. It's a pretty neat service, and I've used to it bill a few clients for work I've done by emailing that link to them rather than going through the whole PayPal procedure."

negative: Although there are no transaction fees from PayPal, your bank should treat this as a cash advance rather than a payment and so will charge you fees.  The cash advance fee will be larger than 1%, so you'll definitely lose money.  Plus you'll start paying interest immediately (unlike for purchases).  PayPal warns that you'll get cash advance fees here.

negative: "Can I teach children an invaluable skill for free and provide a website or PayPal link for anyone who appreciates the result of my gift to their child and wishes to gift me money (or maybe they don’t have a child but believe in my revolutionary contribution to the future) as they see fit, up to $10K? Two immediately obvious problems with this strategy: What about when you receive gifts from people who aren't in the US? You have to declare, and pay taxes on, foreign gifts. It seems to me that these may not be gifts because they are given in connection with the service you provided rather than from ""detached and disinterested generosity"" as required to make the gift tax exempt. (See Commisioner v. Duberstein -- gift given to thank associate for a sales lead did not arise from detached generosity. See Stanton v. United States -- gift given in appreciation of services rendered may or may not be a gift for tax purposes. See also Bogardus v. Commissioner -- gifts inspired by past service can be tax exempt.)"