Better to Rent or to Buy?

Better to Rent or to Buy?

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"Don't trade houses or spouses."

That's one piece of financial advice I've heard over the years that I think will stick with me until I go home. It's just plain catchy. The speaker's meaning: If you want to stay out of debt and remain financially sound in your life, don't do the two things that will crush you financially: divorce and constantly "trading up" on houses.

Stick with your house, he told us, because the transfer costs of buying and selling homes (realtors, mortgage fees, amortization, etc.) will drain you.

For many of us, though, it's not a question of trading up on homes, but whether we should buy a home in the first place. Buy or rent? Which is better?

Well, there's a handy graph in a recent New York Times Business section. It compares the costs of renting versus buying equivalent homes.

The magic number? 7 years.

If you stay in your home for 7 years, buying is better. It will cost you $5,314 less than renting, an average savings of $759 each year.

However, if you stay in the home for less than seven years, it would have been better to rent.

Now, there are lots of assumptions in the article (a 1% increase in home value each year, a 3% increase in rent each year, etc.), including the fact that they are comparing equivalent homes. That's important because my experience has been that most of us don't move from renting a three-bedroom to buying a three-bedroom. Instead, we're probably renting something smaller (an apartment, a condo), so our rent costs are probably lower than the Times comparison.

And, it's taking into account averages. I have owned three homes so far. I wasn't in either of the first two for more than five years, but made money on both. That had a lot to do, though, with a lucky break in housing prices and employer moving benefits. Had I left this house before five years and born the transfer costs myself, I would have been under, no doubt.

So, if you're considering buying a house because you are "tired of throwing away money on rent." Check out the graph. You may not be throwing money away. And check out some Boundless articles on House-Buying 101 and Home-Buying Mistakes to avoid.

HT: Challies

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  • Comment by  Celebrindal:

    I totally agree that a guy needs to pay for the meal if he takes a girl out. In fact, unless they agree to split costs ahead of time (as in, he's up front about it when he asks her out and there's a VERY good reason for him not paying), a girl should be able to assume that the man will pay when she goes on a date. Unfortunately, not everyone thinks that way.  

    I was so impressed when my fiance first took me out on our first (and my first) date and he not only paid for dinner without a thought, he told me to get whatever I wanted, suggested dessert if I wanted it, and earlier when we were seeing some sights he paid for tickets at a little museum we visited and offered ice cream at a local ice cream parlor.  He never made me feel like I was being a big expense.  It would have been really awkward if he had.  His generosity and the fact that he so carefully looked after my comfort and walked on the street side (a lost art, by the way) and was also a good conversationalist...well, anyway, I fell in love.  By the end of our second date I was sure this was the man I was going to marry.  No kidding.  The wedding date is June 5th.

  • Comment by  Mike:

    I haven't commented in a while, but I've noticed a very interesting pattern in the last few podcasts.

    First, we had one about how it's OK for women to be better-educated (because of the "investment" in women we've been making), and, presumably, make more money than men. That discussion was prompted, interestingly enough, by two letters - one from a woman making six figures who was concerned about "golddigger" men.

    Then, we had a whole podcast about women not being pressed too hard about being beautiful. During that one, Lisa slammed all men for "scoring" the women in the room and not even giving women who weren't "up to snuff" in model-quality beauty a chance.

    Now, we have Lisa blazing away about men who don't pay the tab for dates ... while simultaneously saying men can score points by paying not only for their own dates, but for their female companions as well. Which, presumably, doesn't constitute "golddigging" on the part of the woman.

    Hmn. So, women have been preferentially treated over the past few decades ... which has resulted in higher education levels ... which causes higher salaries ... but men are still expected to pick up the workload, even when they don't have the same resources. All the while, women shouldn't be pushed too hard - and men shouldn't have standards that are too high.

    I see the staff at Boundless haven't changed their tune. Feminism is alive and well. All the benefits of the past, all the benefits of the present. And men should just suck it up.

    Fascinating.

    Now, in all fairness, Lisa did say she cooked for this fellow who came out to meet her, so she's somewhat off the hook. But the overall tone is still "dump on the men". And it's really getting old.

    How about a podcast speaking to the needs of the men, instead of just slamming on responsibilities? Shake things up just a bit?

    Just a thought.

  • Comment by  David:

    I think that Lisa's advice to guys about paying for stuff on a date is good.

    I also think that when a guy is paying for something on a date that girls should not offer to pay for some of it.  Just let him pay for you.  It's a date let us pay for it.

  • Comment by  Janelle:

    Amen Lisa!! It's a sad day when men have to be told that they're supposed to pay the bill on a date. I'm getting so tired of these boy-men (in and outside of the church)that want women to do all the work. The attitude that I'm noticing is the some men feel that the woman is pay for everything and even approach them about dating. Before I get called a man basher I know there are some great men out there, but I have not run into one yet :(

  • Comment by  Natasha:

    I haven't actually watched the show yet (I will, I will!), but re: the date thing- I think whoever did the "asking out" should assume they're paying unless otherwise discussed.

  • Comment by  Ultraviolet:

    Can I ask...*why* should men pay the bill? What is inherent in masculinity that makes them need to do this? (I'm a woman btw).

  • Comment by  MizattA:

    I agree with #2

    It does seem to me like Boundless has this attitude where just because God calls the men to be leaders of the Household that every piece of money needs to come from them, that every responsibility should be on their shoulders and not the women. Basically that the whole relationship and marriage is solely at the hands of the man and the woman shouldn't have to do a thing.

    want to go out guys have to pay(not saying they shouldn't at first, but after a while asking the guy to hold all the financial responsibility of taking you out all the time isn't realistically cool IMHO.

    Woman want to have kids and be able to support them, but not have to work, just have the men change jobs and/or work longer so the woman doesn't have to actually work.

    One of the reasons I never cared for Steve Weber's Tender Warrior was on multiple occasions he made it seem like everything in the marriage work load wise, feelings wise, and preventing divorce is the mans duty to take care of and if things are wrong its his fault. That if divorces happen its on the men, when in reality relationships are a partnership and two way street, asking men to take full brunt and full blame for things when women in general need to be able to put in some work too is not cool.

    I just think it be nice to have some articles/podcasts, whatever talking about what Women are responsible for doing in a relationship to help their husbands or to help their boyfriends(as they are by God's definition helpmates), to live as a Godly Helpmate, rather than treating us men like were Welfare and you as a female are on it, you do nothing and we take care of you for free like the last few boundless podcasts have been hinting at.

  • Comment by  Ben:

    The solution to this is really really simple.  The term "guys" is too generic.  The are no "guys" in society.  There are men and there are boys.  Men pay for their date's meals.  I'm a man, all the men I know pay for their dates.  Boys don't.  Women, stop dating boys.  Date a man instead.  The end.  

  • Comment by  Meg:

    Mike,

    This is offered in gentleness and humility.

    I was taught to give others the benefit of the doubt, and to offer peace and seek reconciliation  regardless of whether I was wrong or right.

    I do not know Lisa, and have only listened to three or four "pod casts", but I believe she means well and that her heart is to seek her Lord in all matters.  I welcome the encouragement of a Christian sister (I will meet one day in Heaven) and have never gleaned "feminism" from her communication.

    Women are having to go through life alone, so we need the capacity to earn our own bread, which requires a better education.  Acquiring that education can be time consuming and scary.

    I did not hear Lisa "slam" men for scoring women.  I did hear her say that women "score" men in the reverse of the way men score women--but to seek God's heart in all matters and be open to someone you might not initially consider.

    I haven't listened to the episode on "paying the tab", but I have witnessed Lisa's integrity in other areas and expect her to continue encouraging women to honor and respect men, be in the Word, lift each other up, place Christ first (above marriage) . . . and to be gracious if placed in the awkward position of reaching the end of a date and discovering you need to pay.  

  • Comment by  Ashley:

    I guess I feel like I should weigh in on the "Men should always pay" thing. Especially in light of the education thing.

    ...

    I work a 40 hour work week in a job that I am well educated for and well paid to do - and I live a certain lifestyle. Not a fortnightly pedicure type lifestyle, but certainly a step above canned tuna with ramen.

    The man I am seeing grew up poor, works hard at a low income job, has less education than I do - but is a fine fellow who love the Lord uncompromisingly and is working hard to get a sole proprietorship off the ground.

    Now, I could insist that he foot the bill whenever we're together... or I could acknowledge that building a business from the ground up is hard; that if I want to built a future with him, education is expensive and I don't want the burden of someone else's school debt (I'd much rather he responsibly budget what he has) - and that every now and then I want to go out for Sushi and not fast food, dangit. :P (He did pay on the first date, though.)

    I have not always felt this way. I once scandalized a whole room full of (quality! Christian!)guys by suggesting that it's appropriate for a man to ALWAYS offer to pay. A quality lady may, after the first date, let him know that he doesn't have to... but he will ALWAYS offer and never assume that she will foot the bill. (One of these "quality" fellows insisted that "going Dutch was the best thing that ever happened to dating". It kind of ground my gears. Then again, he got married before I have so...)

    I guess now that I'm in a situation where it just doesn't make sense for us, I'm a little more understanding.

  • Comment by  Michela:

    Lisa- THANK YOU! This is something that has been a big issue for me for a long time.

    I have had this happen several times, but perhaps the best example was when I was in college. I got set up on a date with a guy I barely knew. He contacts me before the big night and informs me that we will be watching a movie and that I should bring my own food. Needless to say, that date was over before it began.

    On the flip side, I went out with another guy a few times. He took me to a couple of really nice restaurants, told me to order whatever I wanted and that, in no uncertain terms, he would be paying for the meal. To me, that said that he cared enough about me to invest in me, and I can't begin to explain how special I felt!

    I know some of you guys are in college, or have limited finances. I would wager that to most women, it's not about how MUCH you spend. Rather, it is the WAY you treat her. If you are nickel-and-diming your date, she is going to feel like an inconvenience. If you take the time to think "how can I show her I care, that I want to invest in her?" you will already be on the way to establishing a good relationship.

    The bottom line is, women want and need to feel respected, loved, treasured, protected, and cared for. Even if it is just a first date, you can really make an impact by just showing your willingness to provide and care for someone.

    And seriously, guys, please don't pay for the bill and then spend the rest of the night complaining about how you have no money and are poor and everything is so expensive (yes, this happened to me too...). PLEASE.

  • Comment by  MrsLarijani:

    One of the joys of a shared bank account: I can tell my husband "It's OK, honey, I've got this one!" ;)

  • Comment by  EKB:

    Mizatt A (2),

    I do think you have some legitimate points.  I agree that after the first few dates, the man and woman should share the financial cost of the relationship, especially in situations where the woman is better off financially than the man.  I think the "who pays" issue is one for common sense and not dogma.  You are also of course right that the responsibility for keeping the marriage healthy lies on both the man and the woman.

    However, I think you are treading on dangerous ground with statements like:

    "Woman want to have kids and be able to support them, but not have to work, just have the men change jobs and/or work longer so the woman doesn't have to actually work."

    I think it is clear that you don't value the unique contributions of women. Understand that some particularly intense aspects of motherhood that many stay-at-home moms practice, such as breastfeeding and/or homeschooling, are difficult or impossible to combine with work outside the home.  As the daughter of a stay at home mom, I can attest that she "works" many more hours a week than my father, who works in the medical field.

    Women really can't win on this one.  If we want to continue our careers even part time, a lot of Christians say we don't really love our kids.  On the other hand, people like you devalue the hard work that is motherhood by saying it doesn't even count as work.  No wonder both at-home and working moms feel guilty!

    Sorry to take that so off-track, but I think that it's important for men to understand the unique contributions of women and particularly mothers.  

  • Comment by  DanGill:

    There are so many variables in the lives of people and families, and in the economies of different times and places that you can't really make a blanket "do this" or "don't do that" when it comes to housing.

    We bought our house about 26 years ago. It's nearly paid off now. So I guess we pass the 7-year test. Then again, we added onto the house about 12 years ago. Personally, I hate the idea of moving, but for some it makes sense.

    So, what happens when the kids are all gone and you have more space than you need to maintain. Sell and downsize? Hang on? If renting, it would be easier to move, but what happens to all the equity that you would be building up in your own home?

    There are no hard and fast rules.

  • Comment by  Lynne:

    I read this article in the NYT, Heather, and it's nice to see it discussed here on Boundless.  

    As my husband and I are in our mid-40s and still haven't bought a house.  For us it's the logical conclusion to a matrix that balances commute time, housing costs, car costs, and school districts.  We hear the "throwing away money on rent" comment frequently...especially from relatives.  

    My response has typically been:  

    "If I wasn't paying rent, we'd be living in the car, so it seems like a pretty good deal for us"  

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