Man Explains Why He Turned Down A Quarter Of A Million Dollars To Vacate His Apartment
To most of us it will sound like an insane decision, but it ended up saving him far more in the long run.
Nomad_Soul, Cookie Studio / Shutterstock.com | Canva Pro When it comes to money, most of us want as much of it as possible, as soon as possible.
But Evan Rugen on TikTok recently gave a perfect illustration of why this isn't always the best idea when we're lucky enough to have money fall into our laps.
Rugen turned down a quarter of a million dollars to vacate his apartment.
If you're anything like me, that sounds utterly and completely insane — not just the decision, but the offer itself.
If you also think this sounds like something that could only happen in New York City's unhinged rental real estate market, you would be correct!
But for Rugen, a finance and credit expert, the decision was a no-brainer — after he did some analysis and a bit of math, that is.
It all began when Rugen realized his apartment was rent stabilized but he was paying the regular rental market price.
Seven years ago, Rugen moved into his New York City apartment for an eye-watering rental cost of $5000 a month. But when he moved in, he noticed some tell-tale signs that he might be getting hosed, besides the fact that $5000 a month should be illegal in the first place.
"I essentially move in this apartment and I was like, oh, like all these appliances are from like the '60s," Rugen said in his video. This made him suspicious that his apartment was actually rent-stabilized, and after checking on the website Am I Rent Stabilized? he discovered that sure enough, it was.
"If you're given a free market lease, your apartment is actually rent-stabilized, that's fraud," Rugen said. That doesn't stop landlords from doing it or from coming up with elaborate, fraudulent schemes to get their rent-stabilized units taken out of the program.
When Rugen confronted his landlord, they tried to evict him, which is not at all how rental laws in New York City work. Tenants can only be evicted from rent-stabilized units under specific circumstances.
So instead, they offered Rugen a quarter of a million dollars to vacate his apartment, which he flatly refused.
Rugen calculated that having turned down a quarter of a million dollars to vacate his apartment has saved him $336,000.
Now, if you're like most people (me, I'm talking about me), your face would have lit up like a Christmas tree and you would have taken the $250,000 and run off into the sunset. When are you ever going to have this opportunity again?!
But in his video, Rugen did the math on a whiteboard, and it didn't remotely add up. For starters, he would have had to give a large chunk to his attorney, and then he would have had to pay taxes on the money.
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After all was said and done, he'd have been left with about $140,000 and still would have had to find a new place at the regular market rate of around $5000 a month.
His apartment "got converted back to rent stabilization," Rugen explained, "so now my rent is $2,000 a month"— a good four grand below today's market value. Over the long term, that adds up quickly to well over $140,000. Rugen calculated that over the seven years he's lived in the place, "I've saved $336,000 in rent and will live here for a very long time."
Rugen's forward-thinking approach is an example of the difference between a scarcity mindset and an abundance mindset.
Terms like "scarcity mindset" and "abundance mindset" often elicit eye rolls because of their popularity among those who claim you can simply "manifest" fabulous wealth and everything you want in life by thinking positive thoughts. That's… well, not how the world really works. But even mental health professionals say there's something to the dichotomy, and that a scarcity mindset — like the one that says taking the $250,000 and running for the hills is the only reasonable choice — creates anxiety resulting in perfectionism, impulsivity and hasty decisions that often don't take long-range factors into consideration.
So you take the 250 grand but still end up paying that $336,000 in extra rent over the ensuing years, for example, and end up hosed in the long run. No surprise, then, that financial experts often recommend tackling your scarcity mindset and learning to swap it for abundance to improve your financial health.
Of course, there are situations in which taking the $250k might make more sense. If you're only going to be living in New York for a year, for example, that $250k can be a game-changing nest egg, especially if invested properly.
But taking a step back, crunching the numbers, and thinking about the big picture — from a mindset that says you'll be okay, there's plenty of resources, and you're not in immediate danger — will lead you to the right solution that just must pay off in the long run far more than you'd expect.
John Sundholm is a news and entertainment writer who covers pop culture, social justice, and human interest topics.