renting vs buying e.g. can you still afford pet food with a mortgage?

I live in downtown Washington, DC with my husband where we rent 600 square feet & love it. We long sold the car & we both walk to work (…I endure a hefty commute from the bedroom to my home studio 15′ away).

After scoping out properties with an agent – we’re delaying home ownership, despite the market stats.

I sometimes get defensive on this issue, esp with friends who’ve owned for some time. I let my self-concept get all out of whack, thinking my man & I are somehow less adult for not owning property in our 30s.

The truth is, I believe buying now makes us financially vulnerable no matter how much home price tags decline. To get into a 600 square foot home in this area, we’d:
-have to relinquish our emergency cash reserves toward down payment & closing costs;
-retain a minimum monthly mortgage of $2k for 600 square feet at a conservative purchase price of $230k;
-that leaves minimal to zero monthly margins for unforeseen expenses or increased contributions toward retirement.

Granted, we’ve chosen to live in pricey downtown near work for simplicity of living. Walking to work is addictive, especially that welcome by-product of zero car payments and insurance.

And Stephen Pollan chimes in:

Today when young clients come to me to discuss real estate, I tell them to buy their second home first. I tell them to steer clear of “starter houses” they’ll eventually outgrow, and instead buy the kind of home they would have stepped up into after selling a starter house. I tell them to plan on buying a house they could be comfortable in for the rest of their lives. If that means waiting longer to buy, so be it. That will give you more time to save money, …more time to separate your needs from your wants. The result will be a more intelligent buy.

So right now, I’m glad to help our landlord with his property ownership & tax benefits. As his renters, we’ll keep chins up while investing in our fiscal balance and discipline.

More from:
–CNN’s cost of living calculator (knocked my socks off when my cousin in Tulsa, OK said we could live in a 4 bedroom, marble kitchen estate for what we’d pay for 600 sq ft in DC);
Rent v buy calculator which assesses whether buying a home (or renting & investing the would-be mortgage payment) would be best per your current stats;
–Pollan’s book Die Broke offers frank, reasonable insight to personal finance

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2 Responses

  1. Hear! Hear! Buy only when it makes sense to buy. For now, put that money toward faster growing, more liquid investments and you may make more $ in the long run.
    By the way, living close enough to work such that walking is a boon for the money-conscious. You save on travel expense (well you run up shoe costs but that’s a lot less than gas) and you save on long-term health care costs with all the exercise you get!

  2. Pollan’s advice is sound on so many levels. Consider the time/effort that goes into moving alone. If time is money, moving had darn well pay off some dividends. Better to just move once and be done if at all possible. I’ll sign off tonight as “Moved cross country 4 times and wish I had all that time back”.

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