So we were talking about amortization in class today and one of the examples I used was buying a house. So, in Excel(snort) I demonstrated that if you bought a $300,000 house at 8% interest with a 30 year mortgage you would end up paying almost $800,000 over the life of the loan. This led to the following discussion:
Student 1: So why don’t you just save up until you have $300,000, and then buy the house?
Me: You mean when you’re 70 years old and your 3 kids are married with kids, you’re going to buy a house then?
Student 2: Oh, well then why don’t you just wait til your parents die and then move into their house?
Me: You mean when you’re 50 or 60 years old and all your kids are grown, you’ll move into your parents old house?
Student 3: (incredulous) I’m not going to be 50 years old when my parents die!
Me: Well when do you expect them to die?
Student 3: A lot sooner than that!