Or on the flipside, I've got some contractor/consulting buddies who regularly pull down $200/hr bouncing between Tech companies in the Bay Area and Seattle and big banks in NYC.

Not owning anything allows you to go where the work is and keep your net worth in assets that produce actual income (like index funds and bonds), instead of sitting around collecting unemployment during a dry spell because you're encumbered by your depreciating assets.

I'm sure some people will use this as a way to temporarily live beyond their means...but it's not like Credit Cards don't enable this behavior already. The US is the land of the free of course, where we allow the weak to be preyed upon.

I agree that many people already lived on a financial knife edge before all these rental services.

However the example of a contractor who lives an unencumbered life and saves a lot of money is not at all typical. It's similar to using the example of an investment banking associate or corporate attorney who pay high rent in Manhattan for some years and invest the rest, as an argument against buying a home and having a mortgage.

In reality, many/most people are better off with a mortgage because it forces them to save money, which they behaviorally wouldn't be able to do otherwise. Likewise, buying something and keeping it around probably prevents a lot of needless repurchases and upgrades of the same item. If you are rational the rental lifestyle can make sense in some cases. But for most it just facilitates impulsive behavior. Hence the rush to capitalize on it.

> better off with a mortgage because it forces them to save money

I'm going to go ahead and guess you don't have a large peer group who were buying houses in the late-2000s. A mortgage in no way forces you to save money, added to which it has a tendency to decrease savings due to the moral licensing of exactly your train of thought. "I'm already saving with my sweet ARM, I can afford to lease that car!"

People who are financially illiterate are going to be bad with money, regardless of the system.

This is a lot different if you're making $140,000/year gross vs the typical "rent to own" market of Aaron's and Rent-a-center for household furnishings, where the consumers make significantly less than that.

400k/year doing what?

There are lots of stories (and also some info) on engineers working at FAANG making ~$400k a year or up. Granted these are not your typical engineering jobs, but they do exist and in not so insignificant numbers; say it's 1% of engineers (made up number).

I am curious though as to the distribution of freelance / contract rates. Is $200 / hour also 1% of engineers? More? Less? Financially for the same person what's actually a better route? For someone that can get $400k a year at google, is that better or worse than the contract route on average?

$200/hour definitely isn't the top 1%. On the other hand you could work at FAANG and run a company as a side project, you could use some of your connections there to get interesting contracts.

A lot of things. Remember, this doesn't include their health insurance or a 401k and they will also have to pay self employment tax.

I think if you're making $200/hr and "bouncing around," you're not necessarily billin 2050 hours per year.

16 tons and what do you get?

Another day older and deeper in debt.

St. Peter don't you call me cause I can't go,

I owe my soul to the company store.

Renting things is a financial tool and it can save you money. The calculation is simple. You estimate the difference between how much something costs and how much you can sell it for once you're done using it. That's your real cost to own it. Compare that number to the cost of renting it for the same time period. If the cost to rent is lower, renting is a better deal.

For larger and more involved transactions (especially homes) things get more complex, but that's still the basic arithmetic.

Making more things rentable isn't a big problem. The big problem is that many people don't understand this arithmetic so they end up shooting themselves in the foot when you start giving them options. And unfortunately the people who need this knowledge the most are often the least likely to have it.

There's a simple solution which is to just teach a great personal finance curriculum in high schools nationwide. (Well, as simple as solving a problem for hundreds of millions of people is going to get.) Of course this being HN we can probably dream up fancier solutions like incentivizing people to take some personal finance training online.

In an efficient market, shouldn't the cost to own and cost to rent be roughly the same? Otherwise, everyone would rush to the clearly cheaper option.

A rational/efficient example of where renting might be a better deal for you is if you don't have access to wholesale prices and someone else does. They buy at a discount and then they rent out to you at a price which makes it cheaper for you than buying at retail.

A classic scenario is renting a movie. Let's use DVDs as an example--even though they're falling out of favor, they're a little simpler to talk about, and the economics of online aren't that much different.

Studios like big numbers and would like to sell movie media/rights/access/whatever (it's complicated) to someone who can drive lots of demand. So the rental outlet will get a steep discount on those things for buying in bulk.

Meanwhile, you're not even sure if you'll want to watch that movie more than once, and the resale value of a used DVD after a couple years is basically zero. So renting the DVD at least the first time, and maybe every time you want to watch it, is a pretty good deal.

Case in point, Redbox's "markup" over whatever they're paying the studios is large, but it's still a pretty good deal for you and me.

I doubt studios want to give Redbox a discount, because rentals cut into sales, which the studios care about more than rentals. Redbox operates because of first-sale doctrine. I assume Redbox pays the same as stores pay, which is indeed cheaper than what a consumer pays, but there's no discount especially for Redbox. Why do digital rentals cost more than physical rentals? Because first-sale doctrine doesn't apply to digital so studios can charge more. First-sale doctrine prevents studios from charging more for physical rentals, and they won't be eager to pile on any extra discounts for Redbox.

I think the real benefit to the consumer of renting from Redbox instead of buying is that Redbox has economies of scale on exchanging movies between consumers and distributing them geographically. If a consumer buys a movie, watches it, and resells it, that's a lot of hassle, whereas Redbox has managed that redistribution by building automation.

Studios used to give discounts to movie rental companies. An old girlfriend of mine managed one about $15 years ago and I seem to remember the prices for new DVDs being $4-6 on the order form. This was for movies that retailed in the $15-20 range.

I think what happened is they started selling to Walmart et al for the same price.

That seems strange. I don't know what their motivation for that is, given I assume it would lose them money, and it's contrary to digital rentals being so expensive.

This article (admittedly from 2008) says studios hate Redbox. And that Redbox gets its DVDs from regular movie wholesalers (I assume where Walmart gets them too).

https://arstechnica.com/tech-policy/2008/10/universal-studio...

First sale doctrine protects your right to rent out a copy that you own to one person at a time. Since movies are in high demand when they first come out and the demand tapers off quickly, this alone doesn't create a very appealing economic model for rentals. At $20 per DVD it's hard to make back your cost. So the studios have offered rental outlets deals in the past.

I actually don't know the details of Redbox. The specific example I remember is Blockbuster video, which used to get copies of movies for virtually free, in exchange for sharing a portion of their profits with the studios: https://www.quora.com/How-much-do-movie-rental-stores-e-g-Bl...

I think the studios agreed to this because of market segmentation, for any given movie there are people who have no interest in paying $20 to own it, but will pay a few bucks to rent it once or twice. If the studios didn't support this model they'd be leaving money on the table.

It makes sense that rental stores would get cheap copies if they're also doing profit sharing. But it's unclear to me who's getting a better deal there compared to the rental place just buying at normal price and keeping all profits.

I just remember reading (or hearing) that it was a tough business because demand for new releases was very high, and then tapered off quickly. So a lot of DVDs would only get rented out 2-3 times and then would never be needed again, if you're paying $20 per DVD it's tough to come out ahead.

It's all ancient history at this point so my memory is fuzzy, but I think hobbyist stores actually had the better business model by that measure (they'd focus on a limited selection of classics that people would rent again and again). Then Blockbuster came along with these studio deals they were able to negotiate based on their volume, allowing them to offer practically unlimited copies of new releases. In conjunction with a decent selection of classics this enabled them to lure customers away from the hobbyists. A combination of pressure from the studios and the emergence of competitors with lower operating cost (Redbox, Netflix etc.) later crushed Blockbuster. And watching the studios raise their fees until Blockbuster collapsed surely contributed to Netflix's decision to produce a lot of original content. And now we're caught up to the present day.

No, because of the time value of money. Money now is worth more than money later. Having all of your toys today vs saving for a couple years to buy a home. [1] has a somewhat explanation but the same conclusion.

1. https://www.investopedia.com/terms/t/timevalueofmoney.asp

If I rent everything, and put my short-terms savings from renting (as opposed to buying) in the S&P 500, would I end up with more wealth in the long term, when compared to buying outright?

If the subscription economy has the effect of being a low-interest loan on anything, it's not a bad deal. One would be unwise to turn down a 0% car loan-- save your money, and grow it, instead of paying up front for the entire car. Same idea, but applied to the subscription economy.

Side note: There's a financing-related cost to a 0% car loan. It's whatever the surplus on the insurance that you're required to carry (because you have a loan) over what the true value of that insurance is to you.

I have a 0% loan right now on my LEAF. I'm likely to pay off that loan pretty soon as the value of that insurance (to me) is decreasing as the car ages, but I can't dump it unless the loan is paid off.

For you to be able to rent something, someone has to own it. And since that someone will want to make a profit, the rental fee reflects that.

I think a better option is shared ownership, such as several neighbors sharing a lawnmower, or similar things that see regular use, but also have significant idle intervals between uses.

Communal spaces and tools save money and foster collaboration.

Depends how much risk you are transferring onto the asset owner when renting. At a minimum they are taking risk on the useful life of the asset - they might also be taking risk on maintenance costs etc. An asset owner will want to be compensated for taking that risk (over and above expecting to break even on average ie in the form of a margin) whereas if you take the risk yourself as an owner then that doesn’t factor into your cash costs.

Logically yes I think it would be close, depending on how you objectively define close. Humans aren't always logical though and that low monthly repayment without requiring you to save up can look really tempting.

At least with something desirable like a car, where some parts of the world have seen a significant shift towards renting.

No idea how well it works for beds, but it wouldn't surprise me if there's margin there too.

The idea that everyone will go for the cheaper option is predicated on the fact that human beings have literally no motivation other than to be perfect wealth accumulators.

In that model they wouldn't rent _or_ buy a bed, because they could just sleep on the floor. Or more accurately, they'd rent or buy whatever they think would maximize income including the cost of it; e.g. if having a bed maximized overall health over life or something then they'd buy or rent the most basic bed that fulfills the criteria of keeping their back healthy or whatever.

I own loads of furniture that's like, mine. It has value to me in the fact that it's my object, unencumbered by financialization.

Personally I seek to minimize financialization wherever possible. I'll pay slightly more up front for things to just delete the monetary stuff from my brain. I don't want to think about it, I want my life to work and money to exist at the side of it not in the forefront.

I think most markets are not efficient in that sense because people don't have perfect information and are not perfectly rational.

It seems like you'd see the same kinds of problems with this as you would with predatory lending: even if the cost of a loan (or renting in this case) were much higher in even the medium term, if you're poor enough, it still makes sense because the alternative is not having enough money to live on, right now. Loans and renting are IMO potentially the same thing in this context.

It seems to me there's a fairly straightforward regulatory solution to this issue: require tighter financial checks, or reduce the protections given lenders in case of default.

It's actually not that different than before. Clothes wear, smartphones get outdated, people are already used to renting their home & car, etc.

There's not many things you only ever buy one of.

I guess, but it makes things even more disposable, more consumerist. More detrimental to the environment.

I could make a case for the opposite -- consumers tend to buy something new at the store then throw it out a couple of years later. I can imagine these types of companies buying more durable goods so they can rent them out to multiple people back to back instead. I see it as almost automating the craigslist model.

They can calculate how long rented equipment lasts, and at least for electric scooters, the time they last is pretty short. 28.8 days and 92 trips. I don't know how long the average non-shared scooter lasts but if I paid $300+ for my own electric scooter I'd want it to last much longer and go on more trips than that. https://qz.com/1561654/how-long-does-a-scooter-last-less-tha...

Time will tell, of course.

You might be right... but I’m pessimistic here. Renters and leasees take less good care of the items they let or rent. The clothes will have a faster velocity to the waste dump, etc. manufacturers and purveyors will cater to this increased velocity...

People are worried about drinking straws. Imagine all the new plastic items to cater to this new usage pattern...

As someone who just recently stopped being a "landlord"...I very much agree that renters put a magnitude more wear and tear on things. The wear and tear people put on things when they don't own them...and without even being consciously aware of it.

I know now that anything rented should maximize durability while minimizing cost. Time will tell which one weighs heavier, but I'm pessimistic also, and guess that minimizing cost is overall cheaper than durability.

Indeed, and the difference with the "craigslist" model is I'm incentivized to keep the value of my goods as high as possible to maximize my return. Rental, I'm incentivized only to keep it in "good enough" shape the owner will take it back. Maybe some sort of value-share program where you get a rebate on your rental fees the better condition you keep your stuff? Aligned interests, and still automated.

Considering the way people often abuse rentals I think the extra durability will mostly cancel out and there are other costs like energy efficiency that I doubt they will optimize for the end user.

It may be a boon for repair-ability though if they see it's economical to have in house fixers.

>I can imagine these types of companies buying more durable goods so they can rent them out to multiple people back to back instead

Again, Rent-A-Center has existed for decades already, and their goods are certainly not more durable than standard consumer goods.

It's the Rent-A-Center model.

On the other hand, what about people with lots of credit card debt?

Basically the same thing except instead of renting off the "-as-a-service" crowd they're renting off the bank.

One small difference - eventually they pay the bank debt off and own the item. The as-a-service users pay forever.

A lot of people just keep their credit cards maxed, pay the minimum every month, and re-sell things they've bought at a loss.

Sure. Even then though, if they ever decide to stop living that way they can pay off their debt without borrowing more, and keep the stuff they bought.

re-sell things they've bought at a loss

Only a loss compared to the price at the start. If you account for the utility they got from the item and depreciation it's probably just the current market value.

Who says they have to spend 100% of their paycheck?

That's kind of like asking "who says they have to get student loans," great advice for any individual but not so great as a prediction for what we'll be reading about in the NYT 20 years from now.

Welcome to modern serfdom, implemented by app. Your boss is an app, your job is classified as an "independent contractor", you own nothing. You can never get off the treadmill of wage slavery.