One Big Reason Why Owning is Better Than Renting

December 22, 2011 Permalink

There are so many articles, blog posts, and discussions out there regarding whether renting vs. home ownership, or whether buying your own place trumps paying to live in someone elses.

I won’t bore you with my take on the whole thing. I’ll just tell you that I’m 120% home ownership and -20% renting, based solely on my experiences, thought processes, and the fact that I’m annoyed incredibly easy and I’m thisclose to filling up my top neighbor’s apartment with a bouncy castle so I don’t have to hear them stomping anymore.

An extremely important consideration in deciding whether or not to purchase a home, is that rent payments are forever. You’ll always need a place to live. Your mortgage can be paid off.

paying off mortgage, rent payments are forever My goal is to buy a house in 2012 or early 2013. I’m 23. If I took on a mortgage now, even at 30 years (the longest possible in Canada at 5% down payment), I would be 53 when I paid off my mortgage if I made no extra payments, prepayments, or increases in payments.

If I plan to live until I’m 85, I would still have over thirty years of life left in me after my mortgage was paid off. If I was renting, then I’d have 30 years of rent payments to pay.

Some might argue that their children will be paying for accommodations, but with children being less and less likely to care for their aging parents, I would never consider that a guarantee of a place to live, or even a likelihood of a place to live.

When you take out a mortgage, you’re paying into something that will eventually become yours and that, with the exception of house insurance, property taxes, and renovations and repairs, you won’t have to pay into after it’s paid off. When you rent, you’ll always have to pay rent.

When I think of my retirement, one of the things that I almost bank on, is that my mortgage by then will be paid off, so my cost of living will decrease thus requiring less in retirement savings and pensions than I require now by way of my income. If I had rent to pay, I wouldn’t be able to assume my cost of living would go down.

I had a co-worker when I worked in retail that struggled with this. She had never owned a home, and had rented her whole life. In her retirement, she had to work part-time because her pension and retirement accounts didn’t cover the cost of her rent. Many people would advise you to then just sock away more cash for retirement, but doing so and paying rent is sometimes hard to stomach. In Canada, home ownership is expensive, but so is renting.

After looking in the real estate market, at the current interest rates, rent and home ownership are about the same cost. For instance, on MLS there is an apartment for $179,000. It’s two bedrooms, one bathroom, and the payment is $851 per month plus strata ($170 for that building). That’s about $1021 per month, not including property taxes. This is with a 4% fixed interest rate (3 year fixed right now is 3.19%) and an amortization period of 30 years. There is a rental about two blocks down with one bedroom, one bathroom, and the rent is $950 per month. The MLS listing is 2 bedrooms, so even with property taxes, this is very comparable (I live in an expensive area).

The only difference is that after 30 years, you own the home for the first apartment. After 30 years in the second one, you still have to make payments. Other than wanting to punch my neighbors in the jugular and hating rental restrictions, this is a big consideration for my and the boy when we considered home ownership.

What’s your take? Put more money away now and be a rental lifer, or own your own home to decrease living costs in the long run?

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A Few Ways I Save

December 20, 2011 Permalink

It’s interesting reading other personal finance blogs, because you quickly realize all that you save on certain things without even thinking about it.

I thought I’d blog about a few things that I do to save money that have turned into sort of saving no-brainers to me.

No Cable

J and I cancelled cable almost a year ago now. It was a huge time suck, and also cost more than we should have been spending at the time. We’ve never had consistent cable, but every winter J tends to get bored and signs up for a couple of months.

I find it much more peaceful and productive to live cable free, so we keep the cord cut to avoid the couch.

That saves us around $50/month.

Meatless

I’m not quite a vegetarian, because I eat poultry, but I would rather not eat meat. I prefer vegetarian meals. When ordering at a restaurant, I always order vegetarian options.

As such, I cook vegetarian 98% of the time. The exception is barbecuing – and then it’s chicken.

Meat is probably the most expensive part of any meal, and I’m at a huge advantage because I just don’t like it. It’s a texture thing. J just rolls with it, because while he eats meat, he’d rather not have to cook separate meals from the ones we cook together. Even if we only ate meat once a week, we’d be saving big bucks. A 3 pack of boneless, skinless chicken breast around here is about $11, so lets go with that.

Total Savings = $44.00/mo

In reality, I’m sure we make up for these savings in other ways. Our gas usage is astronomical, and we live in an expensive neighborhood. But these are the things that we do intuitively which save us some cash every month.

What are some ways that you save that are easy for you?  

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Expensive Things That I “Need”

December 16, 2011 Permalink

I love nice things. I especially love nice clothes and home gadgets. I have always wanted a nice house with nice things in it, despite – or probably because of – my shopping addiction, there are quite a few things around the house that J and I have that are less than ideal.

When J moved out of his parent’s house, he was starting with nothing. For the first half of a year that he lived alone, all he had was a used mattress (which I scored for him from a friend), some dollar store dishes (which we still have and work great) and an exercise bench.

moving out meme

Since my mom had gone through a divorce and then re-married, and also loves making her home perfect and therefore buys new things all the time, I came with a whole bunch of stuff when I moved in with him.

My mom set us up with dishes, forks, knives, cups, mugs, a microwave, blankets, a TV, shoe & coat racks, and several other things that she had started putting away for me when I was a toddler.

While I don’t see any purpose in replacing our plates and glasses, which are fine being a bit mismatched, there are a few things that J and I would love to replace when/if we get into a new place.

A New Mattress

The first and most urgent of those being a new mattress. Ours was donated to J by a friend of mine. It was clean and rarely used, but in storage under a bunch of boxes for years. We’ve had it for about 4 years now, and it’s horrid.

I wake up every morning feeling so sore. I can’t sleep in on weekends past 6 AM because my back starts to kill me.

I can’t sleep on my right hand side because my lower back gets a dull, aching pain until I roll over.

This isn’t just a back problem. This doesn’t happen at my mom’s house, or at hotels. We’ve been saving change for a new mattress for a little over a year, and have about $700. When we move out of this apartment, we’ll buy a new one. We’ll have to subsidize the money we have saved by about half, but I think it will be worth it.

A Couch

Another thing we desperately need is a couch. Preferably a sectional.

Right before I moved in with J, his landlords were cleaning out their parents garage and they found two couches. They’re hideously ugly, but in relatively good shape. They noticed that he didn’t have any furniture, and donated them to us. That was about four years ago.

These couches are horrible. One didn’t last through the last move, so we have one couch and a Walmart fouton. They’re actually love seats. We’ve tried slipcovers, but they don’t stay on.

I think we’d have to budget about $1700 for a new, good quality lasting sectional. This won’t be happening until I have a steady paying job and we have some savings.

A Dyson

One thing I’ve been dreaming off for years is a Dyson vacuum. I love Dyson. J didn’t have a vacuum for three months after moving out, and I used a Future Shop gift card to buy the cheapest one I could find for him. At $40, the vacuum is a complete piece of crap, but has moved from place to place with us.

A New TV

Finally, we desperately need a new TV. The one that we have is from the early 90’s. It’s unbelievably heavy, and really, really big. I don’t mean big in screen size – I mean big. It’s only a 27″, but it weighs more than I do.

It’s a burden, but it’s a TV. We don’t have cable so it’s pointless to buy one now, so we’ll wait. I dream of a nice, sleek flat screen that we can mount on a wall. That will be about $600.

Especially since I don’t have a permanent job and still have tuition to pay, none of these things are going to be gracing us with their presence, except for the mattress, until I’m done school and find a steady, decent paying job. But a girl can dream, right?

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