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Here I am again with another personal story. This is about our small 2 BHK apartment. Over the last couple of months an urge to buy our first home started to develop in me. All my friends, even the ones who came to this country from India are now home owners. Even my sister-in-law is a home owner too, in Houston. Lately were questioned by many about it. They even started making guesses about our financial situation, or the lack of money.
This is a strange situation to be in. It becomes very difficult to explain people who ask the same question multiple times. They simply think paying rent is waste of money. Some even calculated the amount of rent we paid in last 8 years and thus the money we wasted. Yes, we paid rent without building equity on a property of our own. but we did save on things we would otherwise would have spent money on.
I had written about my calculation before and recently came across a very good video tutorial on Buy vs rent, which solidified my way of thinking this whole buy vs. rent stuff. In the morning, while doing regular check on our credit card bills. I was pleasantly surprised with the way we spent in last few months. I attribute to the small apartment we live in.
As per our last 6 months of credit card statements, we almost spent nothing on durable goods, barring the new car we got in September. We spent most on rent and followed by travel, food and Gas.
We didn’t buy a single piece of furniture in last 6 months. We didn’t buy any new gadget either. No, there was no addition to bed sheets or pillows even. And we did it unknowingly/unintentionally!
Do you know what’s the biggest reason of this?
We have a small place to live and the place is so full with things, we just don’t think of buying something new that can occupy space. There’s no room for a furniture (the tine plastic Christmas tree I bought was somehow accommodated in between our dining table and sofa).
The walls in our rooms are full with memorabilia we keep on buying from the places we visit (last year we had 5 travels) and the pictures we keep on taking. SMB, my wife, loves to take pictures and she takes pictures by thousands each day, when she’s out-door. Some of those do occupy spaces on our walls.
In fact, I had to do a little DIY in our bed room to make room for the books I get to read and review every now and then. All out walk in closets, chest of drawers and night stands are full. In fact I had to take few hours to clean up the night stands during holidays. I got rid of almost 5 lbs of paper from them.
To make the matter worse, our freezer is also full and can’t accommodate any more magnets on the outer door wall. Kitchen shelves are full with sauces, powders, packets, bottles and spices.The granite is full with mixer, grinder, magic bullet, toaster, utensil stand, spices, sauces, fruit baskets, dough maker, rice cooker etc, etc.
We freak out if any one of us talks about buying something new which would occupy space. The only possibility of buying things new is to replace. But coming from a background in India, where we never throw goods in working condition, out, it’s unlikely that we will replace anything in near-future.
Yes, its high time that we replace our mattress, but apart from that, everything is functional, working. Naturally there was no durable item in our buying list since Last August (2013). We will try not to buy new gadgest. We will only upgrade SMB’s cell phone in April, when it’s due. She has an iPhone 3, the phone lost all its smartness long back and now functions as a basic phone with only voice and text capabilities.
Apart from this automatic control over impulses, there are other undeniable benefits of staying in a smaller place.
- We use less energy to heat up/cool down our apartment
- We don’t pay property taxes or other housing related expenses. The ones my friends pay and complain about
- We don’t have to worry about replacing appliances, let owner worry about that
- We don’t have to hire cleaners to clean our home
- No lawn/garden care expenses (although I love gardening)
- No other maintenance cost
While saying that I am happy with my status as a renter, I do miss that extra room we can make in to a study come hobby room, that lovely garden that only exists in my dream, or, the two car garage where our two cars can take refuge in when it’s raining outside.
Buying a new home may also elevate our status, to at least a few friends. So, it’ll be a constant tussle in our mind, to buy or not to buy. Till we buy, at least there’s one good thing – No buying unnecessary stuff!
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There is a compromise here. After our 4 children moved from home, we all decided to buy a 5 unit apt building. Each of us took a unit. We share ownership of the property and all expenses that go along with it.They weren’t ready to own a house, and we didn’t need to live in such a large house anymore.We rent out our family home.
As the kids outgrow their apt, they will rent it out.
You could buy a multi-family property, and rent out the other units. You will be basically living rent free. In the future you may want a house, and then you can use the equilty built up in this property, and the rent from your apt, to finance it.
We own lots of other rental properties too. We have always told our kids, paying rent is dead money.
This is a very insightful post. I think that you touch on a key point and that buying vs. renting all depends on the individual/family. In your example, buying a home would likely mean that you’d end up fill up every nook and cranny with more stuff (not necessarily a bad thing) though it would be more money out of your pocket (potentially more than the money you’d save from not having rent). It should always be a personal decision and never about status though that’s much easier said than done! I applaud you for sticking to your own strategy despite what others say about it.
We’re childless and in an apartment. We just see no need to buy at the moment, especially since rent vs. own are at the same rate in our city.
When we’re ready to buy, we’ll buy. But I see no rush to do it!
I do see it the same way. We are not losing money by renting. If property prices not going up drastically then actually I am earning more by having the down payment invested.
My portfolio (non retirement) earned at 10% in last 3 years. So I actually made more money by renting.
I have always been a large proponent of rent vs. buy specifically for young professionals. Largely due to the mobility flexibility one has when renting. Of course, in many cities the math is neutral to negative for buying. I am looking to buy, however, in the next two years. One thing that is important to acknowledge is that owning a home in full is always cheaper than renting, even if there are additional or increased expenses. We plan on reaching that point within 6-8 years of buying in an area where the equation is neutral, and so in the long term buying is superior financially for this particular plan.
Our house is only 1370 sq. ft. Like your apartment, our house is fairly packed. We cannot buy anything new unless we get rid of something else, first. Like you, that means we don’t need to buy much. Even when we got married 14 years ago, we told our guests not to give us anything because we already had too much stuff in our house. Which reminds me, I gotta clean out the garage. We park my wife’s Prius in there, but even without the car in the garage, I cannot get to one of the work benches. Too much stuff! I see a garage sale in my future.
I rent a small house and there are advantages, like you say. I would one day like the status and ‘pride’ that goes with owning my own house, but for now my living space is ideal and doesn’t cost a fortune to run.
The landlord recently provided a new freezer too, which is more efficient. I’m certainly glad that I didn’t have to find a way of paying for one when my old freezer broke.
I totally love smaller spaces! I live in a small house and never really want to change to anything bigger. I like having less space to clean and less space to heat and otherwise take care of. I also like that it makes it easier to not feel like I need to buy stuff to fill it up!
That’s what’s fun about small spaces. You’ve got to be smart and control everything that gets in and you have to choose what stays inside the house and what goes out. And it’s really hard to lose something in a very small space. When I started living in my condo, I was much more responsible with where I put my clothes and essential things because if I didn’t it will get stuffed with me noticing it. So I became more mature and more responsible, which is one good benefit for anyone who has just started living away from their parents.