Challenging the "American Dream"

Recently I have started to really love my apartment. I went through and got rid of a ton of stuff I didn't need - giving a lot to Goodwill, selling some books over at our local second-hand bookstore, and giving some things away to other people who could make better use of the items than I could. I reorganized things so there is a much better flow and less clutter. I have plans to (hopefully this summer) paint, put up some artwork (helloooo Etsy :D), and refinish some of the furniture and cabinetry that I have now. All of this got me thinking - I really wouldn't mind living in this apartment for a long time. I love where it's located, that I have a garage (which is hard to find in my area of Milwaukee), that the rent is super cheap (seriously, you can't find a studio apartment in Milwaukee for what I am paying for my 2 bedroom), and that it's comfortable. It could use some updating, but all-in-all it's perfect for me. Not to mention the fact that I have four cats and my building manager is not only *okay* with that (and I don't get charged extra rent or security deposit for it), she has 4 of her own and brings mine treats and toys all the time. I had intended to live in this apartment, anyway, until I bought a house just because the rent was so cheap. Now I'm challenging the idea of buying a house at all. I had this discussion with coworkers and Matt, but I couldn't really come to a solid conclusion until I did some actual research. The pros of renting

  • lower monthly payment then mortgage
  • not responsible for property taxes
  • not responsible for maintenance
  • renter's insurance is much cheaper than home owner's insurance
  • may not have to pay all utilities (I don't have to pay water or garbage)
  • don't have to worry about lawn care, snow removal, etc
  • easier to move if you need/want to

The pros of buying

  • tax benefits (although in Wisconsin we do get a renter's tax credit)
  • equity is built up
  • control (for the most part) over monthly payments
  • no possibility of eviction
  • easier to make changes like painting, landscaping, remodeling, etc

According to the New York Times , with my current rent rate and the cost of an average home being $150,000, Buying is never better than renting over 30 years unless my home appreciates at 7% every year, then I would come out ahead after 7 years. The Home Loan Center has a mortgage calculator that told me that:

Buying a Home Will Cost You: $3369 more
Our Recommendation: Strongly advise renting

Now that isn't that great of a savings, but when you factor in the other costs of having a home (insurance, taxes, maintenance), it increases quite a bit. What should you do with the money you save renting? This article suggests investing in stocks would be a better option, economically, because homes tend to only return an average of 3% - equivalent to inflation. Stocks, on the other hand, return an average of 7%. I also found this interesting (from the same article):

"Renting is for poor people."
True. But it's for rich people, too. The average renter makes about $34,000 a year, but while the percentage of renters declines after incomes exceed $20,000 and rents exceed $600 a month, it jumps again once incomes top $150,000 and rents top $1,200 a month. In other words, poor people rent modest apartments for lack of choice. Middle-income people buy houses. High-income people, presumably with a dose of financial savvy, often rent nice apartments instead of buying.

So maybe I can't have the big backyard garden that I've always wanted, but the money I'll save renting I can easily get some space from a community/victory garden.

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