Today, we’re diving into the hot topic that’s on everyone’s mind: Should you rent or buy?
We’ve got you covered to help you figure out the best plan for your current financial situation. Learning how to make that decision can be overwhelming, but we’ve got some insider insights that make it a lot less daunting. 😉💰
This post explores the pros and cons of owning a home or renting in your 20s.
In today’s edition:
- We are covering the great renting vs. buying debate 🏠
- We will examine the pros and cons of buying a home in your 20’s – 30’s
- We will be exposing ways to grow your wealth 💰 besides owning real estate
🤫 Let’s fill you in on the secret
📩 Weekly serving of insider tips from the wealthy & healthy — take a sip.
The myth behind buying vs renting….
First, we’ve gotta talk about a classic financial myth that we’ve all heard before:
👉 Buying a home is always the smart move, and renting is basically throwing your money away. 🏠💸
Well, let’s set the record straight! The truth is, there’s no one-size-fits-all answer to this debate. Sometimes buying a home can be a great investment, but other times, it’s just not the right move for your financial situation. And renting? It can actually be a smart financial decision depending on your lifestyle and goals.
The bottom line is: Don’t fall for that old-school thinking. Keep an open mind, do your research, and make the best choice for you.
Buying vs Renting: The Pros and Cons
👀 Can you afford a house right now?
It’s time for a real talk about everyone’s burning question: Should you buy a house right now? 🏠
When it comes to figuring out if you can afford to buy a house, let me drop some awesome knowledge on you: The 28% rule. ✨
This rule is a common-sense approach used to calculate how much debt you can handle as an individual or household.
According to the 28/36 rule, you should spend a maximum of 28% of your gross monthly income on total housing expenses. That includes everything from your mortgage to utilities, insurance, and even the occasional weed-whacking gnome in the front yard! 🏘️💸
You also gotta keep your total debt service in check. That means you should aim to spend no more than 36% of your gross monthly income on all debt, including housing, car loans, and credit cards.
Here are some questions to ask yourself before deciding to become a homeowner:
1️⃣ Do I have enough money for a down payment without blowing up my whole net worth? 💸 Translation: Don’t go dropping $30,000 on a house if your total net worth is only $40,000. We gotta keep that balance in check!
2️⃣ Are you in it for the long haul? 🚀 Plan to live in that dreamy house for at least 10 years. That way, you’ve got enough time to (hopefully) recoup those closing costs and bask in the sweet, sweet appreciation value when you sell. 📈💰
3️⃣ Is your total monthly housing cost 28% or less of your income? 📆💰 We don’t want housing expenses gobbling up your hard-earned cash. So stick to that magical 28% rule and keep it in check!
4️⃣ Before you dive into real estate, are you taking care of other important expenses like debt and an emergency fund? 🚨 It’s all about prioritizing, peeps. Make sure you’ve got those other financial bases covered before jumping into the homeownership game.
Thanks to skyrocketing interest rates and a wild housing market, things are looking pretty different in the finance world these days. 😬🏠
But here’s the thing: it’s not all bad news. I’m gonna let you in on a secret 🤫
👉 Renting can actually work to your advantage financially.
Here’s the real deal: buying a home shouldn’t be seen as a guaranteed investment. Sure, a well-maintained house in a desirable spot can appreciate over time, but let’s be real…the numbers don’t always work out in your favor. 📈🤷♀️
The expected returns can vary WILDLY depending on your city. So while some lucky duck homeowners might be swimming in dough, others could be struggling to break even. 😬💸
👏 INVEST THAT EXTRA CASH 👏
Historically, stocks have been the golden ticket when it comes to returns. 📈💸 On average, they’ve been bringing in an 8% to 12% return per year, while real estate has been at 2% to 4%.
But here’s the tea: If you’re in a market where renting an apartment costs less than owning a home, you’ve got an opportunity to make those dollars work for you! 💸 Check out this: Rent vs Buy Calculator
Imagine you’re chillin’ in a sweet apartment, paying $1,500 a month in rent. Now, if you were to buy a comparable home with a mortgage payment of $1,900, that’s a $400 difference each month. Multiply that by 12, and you’ve got yourself a cool $4,800 a year that you can invest! 🚀✨
Here’s the kicker: unlike home equity, the money you save by renting is liquid! You can use that cash to build an emergency fund, tackle those student loan debts, or even fund your retirement account. Options galore, people! 💪💸
So, remember, it’s not all about the fancy real estate game. If the numbers don’t add up in your favor or you’re just not ready for that big mortgage commitment, renting can be a strategic move that gives you the flexibility and financial power to rock your money goals. 🎉
📰 In the News:
Gen Z & Millennials, don’t feel bad if you’re struggling financially
Struggling financially as a millennial or Gen Z? Don’t worry, you’re definitely not alone! In fact, a recent study by Experian found that over half of millennials and Gen Zs were “somewhat or very financially dependent on” their parents. Here are some more juicy details from the study:
👉 54% of millennials and Gen Zs were “somewhat or very financially dependent on” their parents
👉 61% of millennials and Gen Zs would rather spend money on life experiences now than save for retirement.
👉 57% of participants struggle to say “no” to impulse purchases.
The reason behind these struggles? Well, it’s no secret that many young Americans are grappling with the high cost of living, student loan debt, and an uncertain economy. As inflation raises the prices of everyday goods, it’s becoming harder and harder to reach financial goals like moving out or owning a home. 😩