Renting vs owing a home
I recently went into a full battle discussion of renting versus buying.
Though I see the pros and cons of each side.
But, I really do not feel rent is a waste. (Call me naive.....)
Everyone needs somewhere to live despite whether they own it or not...a waste to me is spending 800 bucks a month on a brand new gold toilet seat. You feel me? I can't ( Read more... )
When compared to home ownership, paying rent day after day, month after month, year after year and having absolutely NOTHING to show for it other than the fact that you have somewhere to sleep and keep your stuff--that's where the "waste" concept comes in. Even when you're paying for a car, you get to OWN the car once you make the last payment. Paying rent is really no different than living at a hotel, and really, the hotel is probably better since at least someone makes your bed every day. ;)
I have no idea what you pay for rent, but let's say it's $1200 a month, which is low for where I live. That's $14,400 a year. Assuming the rate stays the same, that's $72,000 in 5 years. So if you rent for the next 5 years, that's what you're giving up, not to mention what you've *already* given up for the last 5 years. And what do you have to show for it when you move out? Nada.
Sure, you can argue that you had a roof over your head and that you weren't living on the street, but I can argue right back that had you bought a house, you'd have those things AND $72,000 in equity.
The reality though isn't so simple. It's easy to make arguments on why you should buy, but when it comes down to it, buying itself isn't easy. From coming up with the cash for a down payment to struggling to make ends meet because you're suddenly paying 2-3 times more per month than you were before--easier said than done, seriously. You may be throwing away $1200 a month now, but can you stomach a $2500 a month mortgage, plus property taxes and homeowner's insurance on top of that? The truth is, you see far LESS of your money when you buy a house, which really sucks. But the benefit is that it's going toward an investment.
I myself rented for years before taking the plunge to buy a house. But in hindsight, I really wish I had bought much sooner than I did. Even in my final 3 years of renting when I lived with my boyfriend (now my husband), I estimate that I spent about $25,000 in rent, and that was SPLITTING the rent with him. He paid the other half. Who knows how much I--and we--spent in the years before that? But on the flip side, we had fun with the extra money we had left--we went to Europe, Australia, had parties, went to nice restaurants and bought most anything we wanted to without worrying. After we bought our house, on the other hand, we were suddenly budgeting for groceries. It was a drastic change.
So yes, both sides have their pros and cons. The biggest thing is that if you rent, you have money left over to do the things you really want. But that financial freedom is only perceived, if you think about it. What you're really doing is giving money away in order to have that freedom. Pretty ironic, really.
Anyway, I'm sorry that this turned into a book! Bottom line--don't buy if you can't afford it and if it will make you miserable. Wait until you're comfortable. But DO research it, and do your math. Ask yourself if you're okay with parting with all that money each year. If you'd rather see it going toward something of value, then I'd start looking to buy.
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