Aug 102018
Buying Vs Renting : Which is better?

Buying a house is everyone’s dream. The desire to buy your own house is what keeps everyone working a job that they sometimes might despise. The idea of living paycheck to paycheck is what keeps us working hard but our internal desire to owning a home is what makes us work even harder.

Of course, there is an emotional aspect to the idea of home ownership and can be a very delicate scenario while doing so.  

Before I delve any further, I am not someone who is against the dream of buying a house nor anyone who is working for their paycheck.

The bigger picture I’m trying to illustrate here is about having enough financial education that will stop you from spending or relying on your paycheck to buy a house.

The Albatross effect

I grew up listening to the ideology of study hard, get a good job, earn well and buy a house.

From relatives to distant family members, everyone around me followed the exact same routine. They worked all their life saving for the dream house. Applied for a home loan. Spent the next 15 to 20 years of their lives’ repaying the bank with double the interest.

But that was not all. After you repay, you soon must catch up with the monthly maintenance bills, guilty buys due to the constant battle you have with your partner about what’s trendy and the list are exhaustive.

And when everything is set, ‘round comes your retirement days and soon your dream is as tiny as a pea. And that when it dawns upon you that your dream house took away from you most of the money, possibly even your retirement money, forcing you to live on pensions or low savings.

This makes it a burden because now you suddenly have a set roof over your head, but not enough funds to match it.

However, today, renting a home is extremely easy. Whether it be an Airbnb or hotel apartments, getting a nice rented house is quite flexible giving you the freedom to choose among furnished statuses as well. This idea permits you to walk into your new house with just your baggage of clothes while giving you enough time to accumulate and to utilize your money wisely to grow in building assets or even a channel of passive income.

Millennials: To buy or not to buy

Most of the millennials nowadays prefer renting a house rather than buying. The reason being, we’d rather use our savings in traveling the world to empower ourselves with the ways of the various land. We also sought after building passive income streams to find our financial freedom.

And after it has all been sought after, then maybe think of buying our dream house. That way you needn’t be worried about income or even losing your job. If you know how to work on building wealth, your income doesn’t stop.

So being a pro at being a millennial, here are a few points that need to be considered before thinking of buying or renting a home.

1. Before you buy anything, learn financial education

Learning financial education is one of the most important self-knowledge you can ever give yourself. As soon as you start earning know how much you earn annually, what are your expenses and how much money can be budgeted right.

Know exactly how much you can afford. Understand and scale your saving limits for the next 3 to 5 years.

Living a life with debt and no money is far more worse than anything. For me, it all started when I first read the book rich dad poor dad. It changed my life, it may do the same for you.

2. Downpayment Vs Security deposit & Emi Vs Rent

Buying a house needs a down payment and monthly payment along with other hidden charges like tax, society charges, maintenance charges and so on. The EMI on buying a house is well known to be attached to hidden charges and an extract a lump sum amount of interest.

Renting a house, on the other hand, requires only a security deposit that will be refunded after certain deductions with absolutely no hidden charges, whatsoever.

3. Build passive income stream

Gone are the days where getting a job or starting a business were the only ways to earn money. The Internet is filled with ways to help you earn your side income. From building your website, drop shipping, or anything you could ever think of, the internet recognizes your service and rewards you with passive income.

Easier said than done, building a passive income will test your patience and hinder your focus, but once it’s set, you are good to go.

4. Build assets and not liabilities

Our society teaches us to depend on just one income stream and investing in these exhaustive banks saving schemes to give us our financial security. But to be honest, it doesn’t and before we realize that, it too late.

So understand that anything that takes money from you, is a liability. Buying a car will cost you more money and can be a liability. No, have a car if you must. But if you’re able to improvise a passive income out of it, then why not. You can start a transport company where having a used car can be an asset if managed properly.

5. Sounds impossible but never ever apply for a loan or credit card.

Try not to borrow money from the bank. Even though every advertisement of home loans shows the happy family enjoying a big swanky house, for most of them it’s just a uncharted territory.
Reality is a lot worse and bitter.
Banks work on a purpose to take money from you, not give you your dream house or financial freedom. You have to work all your life to repay not just the money borrowed but also the bank extra interest. And it is not worth it.

Not just from home loans, stay away from personal loans and credit cards too, no matter how good the offer is. Unless faced with a die-hard situation, or you think you can manage your debt well and pay off soon.

6. Let the world look down on you if they think you don’t own a house

Not everyone understands the concept of reaching financial freedom and building passive income is the only way to have your dream retirement days, where you or your family will never have to worry about any bills. Buying a house at the age of 55 with your passive income will only secure your hard-earned money. The world will look down on you because you are not doing what they did with entire life, paying the mortgage.

So, the bottom line is: before you buy anything, think wisely. Don’t give in to one side or another. Understand each advertisement, real estate agent or property guru. Don’t spend money that will leave you broke and hopeless in the future. Research every term and understand every money put in getting a house or renting a house. Discuss and talk to people who’ve bought a house as well as rented one, and understand the pros and cons.

And try not to take a decision because someone asked you to.

Always take a wise financial decision when it comes to your hard-earned money.

Which brings us back to the question of buying a house or renting a house, and since it’s quite subjective, see what works well for you. But personally, I am convinced that more people are renters than those who spend time and energy discussing wallpaper that will come up behind their tv for viewing pleasure.

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