For most of my life I’ve been under the impression that owning a home was always the best option financially. Dozens of personal finance books seem to say the same thing and I bought into it. Hook, line and sinker.
My family has spent the last dozen years or so scrimping to pay the mortgage, property tax, insurance, maintenance, utility bills, lawn and landscaping expenses. We bought appliances, lawn mower, hedge trimmer, snow shovels, wheel barrows. We planted annuals, perennials, sod, shrubs, trees and hanging baskets. Lawn fertilizers. Grass seed. Squirrel baffles for the chimney. Bird-proof vent covers. Christmas lights. Animal proof garbage cans. Multifunction sprinklers.
None of which we had to buy when we rented during the first few years while our children were young. Over the past dozen years of home ownership we’ve spent so much money on the “joy” of maintaining a home that I’m almost ill at the thought. All of the vacations we couldn’t afford. All of the investments and opportunities that we had to walk away from because we had every cent tied up in a house. It’s a nice house. I like it a lot but now a part of me resents it too. It’s cost us a lot of money over the years. It’s appreciated considerably in value over the 12 years but the hidden costs offset that considerably.
Once I got my head around the idea that I didn’t have to own a house – a lovely sense of freedom hit me. I can rent a nice apartment, in a nice area for less than half my combined mortgage, tax, and insurance payments each month. My utilities are included in my rent so I don’t have to worry about how a hot summer or a cold winter will affect my bills.
I have the freedom to know that I’m living worry free. If the toilet backs up or the roof leaks I don’t have to worry about it. I just pick up a phone. I don’t have grass to cut, weeds to pull, snow to shovel.
Not only is renting going to be considerably less expensive financially – it’s going to free up a significant amount of my time.
I plan to live on a fairly tight budget but this time it’s by choice not necessity. Now I can invest extra money in mutual funds and other investments. If I held onto the house as an “investment” I’d rarely if ever have any extra money. Usually when I did have a little extra it would when the furnace would die on a cold night or the electrical panel would act wonky and off went that extra money in the pocket of the repairman.
Yes, once I really started thinking about renting vs. owning, I’m shocked I bought into the hype for so long. Apparently I’m not the only one who thinks renting makes sense over owning.
A quick breakdown of the costs of renting versus owning for me:
Rent = $768 per month – includes utilities
Own = $1620 per month – includes mortgage payment, insurance, property taxes – does not include monthly utilities which run approximately $200/month
My cost of living is reduced by more than $1000/month – freeing up that money to be invested in high interest savings, stock market, bonds or mutual funds – any of which, if chosen wisely, will result in a higher rate of return than my house would have over the coming years.
And the reduction in stress and worry is really invaluable.