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8 Reasons Why Renting Is Throwing Money Away
Why Rent a Home Is an Insane Idea
1. Dead Money
In short, paying rent is dead money. Money that you pay towards the principal on your loan each month increases the % of your home that you own. In effect, you're paying yourself. Having a mortgage can lead to financial freedom. You end up owning an asset. And a house is the best investment that you can also live inside of. Home owhership frees up a substantial portion of your income for other investments, luxury purchases, holidays, helping your children, and of course an early, well earned retirement.
3. Cost Of Renting
If history is a past indicator, the cost of renting will steadily increase over the years due to inflation and rise in property prices. Inflation will inevitably drive up rents, even at current 2-3% levels. A home loan is a fixed amount so over time the mortgage becomes a small fraction of the house worth. Rent will inevitably be much more than mortgage repayments. Mortgage payments in general dont vary that massively over the life of the loan, while rent payments keep going up.
4. Shabby Retirement
Buying takes the lead when you factor in retirement. I'll have a house paid off well before I retire, but somebody who's rented for their whole life will be spending a big chunk of their super/pension on rent. Once you hit retirement and your income is reduced, it may be difficult to find a large sum of money each month. You may also be less able to absorb rent increases.
5. Lack of Privacy
Imagine disrupting your kid every year to move to a new place – leaving behind friends, changing schools, new environments to learn, etc. And don't forget regular inspections.
6. Social Pressure
There is a lot of social pressure for people to buy a house. Friends will ask you when you’re going to get onto the property ladder and gush about their beautiful new home. If you're 35 and don't have a property, she won't dating you. The truth is, you're renting, not because your money working harder in other investments, but because you have pissed it away on fags and booz and partying all the time. That's what other people will think about you. The is also pride and satisfaction in owning your own home.
7. No Savings Plan
Most pay the rent – then spend the rest. To make renting more effective than buying you need to be investing the money in higher yielding bonds/shares etc. rather a savings account. If you rent and invest the money, you may get larger returns, but in 15 years your $550K you potentially saved could be completely off, as if would rely on you being very tough on yourself not to spend any of that money, where as a mortgage forces you to save for long term investment.
8. Lack of Home Customization
Living in your own home also allows you the freedom to renovate and decorate your home as you please. When rent you usually can't modify the house too much (unless you have a decent Landlord).
Helping People to Be Really Realistic
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Buying Advantages and Disadvantages You Haven't Thought AboutRead...
by Alex Ershov @ 2019
Save Thousands Of Dollars
Make Right Decision
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