Renting vs Buying with Heather Eason - 140

[00:00:00] Where do you land on the age-old question of Renting vs Buying? We're going to dive deep into this question today with our guest Heather Eason Welcome to Money Talk with Skyler Fleming, where we break down financial complexity and everyday conversation. Let's get talking

[00:00:14] Welcome to today's episode of Money Talk with Skyler Fleming. Today we're diving headfirst into the age-old debate, Renting vs Buying

[00:00:22] Spoiler alert, I'm firmly in the pro-Renting camp right now but we're going to explore all angles. We'll chat about the freedom of renting and the personal touches of home ownership

[00:00:31] You know the thrill of painting walls and adding rooms if that's your sort of thing or they can be used to calling your landlord on something breaks instead of dealing with it yourself

[00:00:39] We'll also talk dollars and cents everyone are where your rent keeps going up and what's the deal with down payments and emergency funds when you have to buy a house There's already enough money you need to spend what else do you need to save

[00:00:51] I've got you covered in that area today as well Plus we'll ponder the timeline should you really buy a house if you plan to stay there for less than seven years? Is home ownership the golden goose that everybody claims or is it just a goose?

[00:01:02] We'll debate whether it's a smart investment or if you'd be better off just betting on the S&P 500 And let's not forget the flexibility and perks of renting like having a gym, maybe a bar or a coffee shop right downstairs

[00:01:14] And maybe like you'll hear in today's interview a baseball field in your backyard Who needs a backyard when you have all of that? So I'm gonna share my personal take on rights okay to go against the grain and keep renting is a long-term option

[00:01:26] But remember life's too short to follow societal norms so make sure things fit your lifestyle So grab your favorite drink get comfy and let's dive into this episode and let's make the ramp versus buy a debate as fun as possible

[00:01:37] But the money talking points for today's episode are should everyone buy a home? 2 should home ownership be considered an investment? And 3. How can I make the decision that will best fit my lifestyle? With the money talking points in mind let's get talking

[00:01:52] Hello everybody welcome to today's interview on Money Talk with Scatherflemming Joining me today, I have Heather Eason Joining me today we're talking renting versus buying and Heather real quickly could you just give yourself a quick introduction So everyone can get to know you a little bit

[00:02:14] Absolutely thank you and thank you for letting me be here To my name is Heather Eason my background is I'm an electrical engineer I'm three businesses and I raised four kids I've started doing women for wealth podcasts

[00:02:29] It is truly just to help people with their finances especially women because there's a lot of negative emotions attached to Money with women specifically I am not a financial advisor I'm someone that's been there done that I was having my power and my water cut off 15 years ago

[00:02:48] Now I live on the lake I've got a boat, I've got extra money So I turned it around And I want to help other people do that Love that that's the best place to start

[00:02:58] And that's one of the reasons I love talking about money so much is I tell everyone If you're whether you're just starting out or you're really getting going Learn from others mistakes like you said you're someone who's been there done that

[00:03:07] So that's why we need to talk about it so we can say Oh, avoid avoid this mistake that I made and go this route We can just make it a whole lot easier for everybody But today we're talking about renting versus buying

[00:03:17] So let's jump into some questions and get your thoughts on him And this one was an interesting topic for me because I really haven't discussed it too much My wife and I have talked about it obviously because we're nearing a stage where we're making that decision

[00:03:30] But I am firmly in the pro renting camp right now And maybe that's it's obviously a recent see by us given interest rates and things like that And when you look at sort of mortgage calculated, you're like that's insane That numbers crazy

[00:03:44] So what should people consider when they aren't sure about the value of buying a home Where does that value lie? So for me I think value has changed throughout my life when I was younger I purely looked at local. What was the cheapest option I could find

[00:04:00] As a gotten older now looking okay, what are the intangibles? You know, do I want to be able to and an additional room if I want to Don't want to be able to paint don't want to be able to rip out flooring or remodel a bathroom

[00:04:14] And those are things you can only do if you buy a home if you rent you can't do those But if that's not important to you and there's not value to you right now in that

[00:04:24] Then I would say then there's not value for you in buying the home at this point Maybe renting is where you need to remain. Yeah, I mean that makes sense because that's like we're not going to go

[00:04:35] Rift out our bathroom here in our apartment that we're in because one would get in trouble And two that's just work I don't need to do so that that's a great place to come down

[00:04:43] Painting adding rooms and remodeling or some great ones are there maybe some other things That people don't think about with apartments versus homes is there other things that you can do With a home that you couldn't do with an apartment

[00:04:54] Well, you know, one of the things you mentioned which is a downside about it And the downside about it in a home is that you either have to be the work yourself or you have to find

[00:05:03] High and pay someone else to do it. You know when you live in the apartment you're renting you call your Landlord you call your supervisor, you know you call someone or like with my kids They don't even do that they have an apple in their phone

[00:05:16] They just go in and create a work order on the apple in the phone And the next day somebody comes and takes care of it And so there's a lot of freedom and flexibility in that

[00:05:25] So I would say that's a proof renting and a con for buying your house Yeah, I would say too because all right, we've had my wife and I which I hope this doesn't extend to whenever we buy a home But we always have water issues

[00:05:37] Like we have sink issues We've I think every apartment we've moved into the sink sleek at least once and had to be in their place like the piping and stuff We had two dishwashers go out here like a water heater

[00:05:49] So those are the things that I'm just glad we didn't have to pay for them because it's not our our building So there are perks to renting and they definitely come in form of maintenance and like just ease with letting someone else take care of it So

[00:06:04] That's great Well, I was a great place to start thinking about renting versus buying but what are some key financial factors that people should consider when deciding between renting versus buying?

[00:06:14] So I would say the two things for me with renting you have to be aware that a lot of times and especially right now rent increases annually So hopefully everybody's already budgeting and so they have a monthly budget and they just need to be aware when you rent

[00:06:30] There's a good chance annually you rent and your daughter mount your paying to live there is going to increase

[00:06:37] Where's if you buy a home, you know, hopefully everyone's doing thick right mortgages 15 year and then you know it's locked in for 15. You know what you're going to pay every month on that house Toward your mortgage for 15 years is locked in so you don't have that variability

[00:06:53] However, you know with the house you've got to think about like you said, you know, are you going to have to replace a water heater? You're going to have to replace a roof, you know These are not cheap items these are expensive

[00:07:07] And so you know I told like said erase four kids, I told all four of them before you buy house number one, make sure you have a down payment

[00:07:14] Number two, make sure you have an emergency savings fund six to nine months worth of bills in the savings account just in case something happens because Murphy's law likes to camp out and I spare every month of that thing's happened.

[00:07:29] Yeah, and like you're saying the emergency fund needs to be a little bit more sure to up kids for my wife and I with us renting right now

[00:07:35] Our emergencies really consist of like flat tires or like something goes wrong with my bike. There are a lot simpler emergencies but when you own a home like I mentioned

[00:07:44] About two dishwashers go out the water heater those are just a lot bigger maybe more expensive like you said you have to hire and pay someone to do it if you need it replaced

[00:07:53] And things like that like that some extra cost so it feels like the emergency fund is even more important for homeowners because there can be some more extra cost on the back end of your home

[00:08:03] Absolutely completely agree with that. I think the last time I had a roof put on it was eight grand. Oh my gosh, that's that's crazy. That's that's a lot of money. So a lot of houses in my area are getting new roofs. So I will gladly not take that cost for right now.

[00:08:19] What kind of timelines should people be looking at when considering a house purchase versus renting and I'm thinking like how long of a horizon because people say you should plan to stay where you move for a while but renting offers some flexibility. What kind of timelines should people be thinking about.

[00:08:33] So my recommendation just based on life experience is you need to be comfortable in the area that you're going to live. And know that you're probably going to stay there for at least seven years.

[00:08:44] If there's a chance you're going to change jobs or maybe you're going to relocate because there's a different part of tail that has different amenities and you'd like to move there.

[00:08:54] You know, if you're not going to be settled and consistent for at least seven years don't buy a house because any equity benefit that you would have.

[00:09:04] If you move in three years, you're not really saving equity. So there's no benefit in the house just rent and then also with renting if you're going to relocate.

[00:09:13] It's simple. You break the lease you go, you know, if you have a job change not a big deal if your wife has a job change not a big deal.

[00:09:21] I moved at one well I moved nine times in my career before I ended up starting my own company. One of those moves was to a different state and what happened was I had a house I was moving to a different state.

[00:09:37] It was not a good time to sell the house so then I was like, okay now I've got this house that is not a good time to sell whatever I'm going to do and I'm like well rent it.

[00:09:46] Well, it's hard to rent a house when you live in a different state. So I hired and paid a property management company. They did a horrible job, but I didn't know it because I was in the different state.

[00:09:57] So by the time the housing market had improved in that area and I was ready to sell it. I had to put a lot of money into fixing the house up just to make it sellable.

[00:10:08] I walked away with just enough money to buy myself and my husband dinner and a nice restaurant. That was it.

[00:10:15] I mean, it has gone so you know that's kind of a tail of caution. If you think you're going to relocate for me reason, you know the house can be a burden.

[00:10:26] Yeah, I mean that definitely makes sense. The housing being a burden is something you definitely have to consider if you're not going to be there for a long time.

[00:10:33] I like that thought, especially if people are maybe going to rent the house out and make sure you consider and do your due diligence there higher good company.

[00:10:39] But another thought that I have that maybe I don't know if I fully agree with this idea or not, but people consider home ownership and investment.

[00:10:47] And to me, investments go up in value, which there is equity in homes and things like that, but is home ownership really an investment?

[00:10:55] Or is that a risky way of looking at things because I think that can tend to inflate the necessity of purchasing a home in people's minds when they think it's just this big grand investment.

[00:11:05] So what do you think is an investment? Or is that not the right way to look at things? So for me, it's not an investment. If you look at the rate of return over, you know, unfortunately a lot of people end up having to get 30 year mortgages.

[00:11:18] So when you look at the equity you build over 30 years, but then you start subtracting out all of your operation and maintenance calls for owning that asset, owning that house.

[00:11:29] It's not as much as you could have made with that same dollar amount of money invested somewhere else. The stock market actually, this and peak 500 performs better over a 30 year period than a house equity for the calculations I've done with houses that I've looked at in the past.

[00:11:48] So you know that that's something you got to think about that opportunity cost. Could you take that dollar amount and put it in a better investment and make more money over that timeframe?

[00:11:58] Because the operation and maintenance on a house. I think a lot of people don't subtract that out, you know, they look at well grandma bought her house in the 40s for $7,000 and she sold it for $250,000, you know.

[00:12:12] Yeah, but what you're not looking at is you're not looking at inflation. You're not looking at the operation and maintenance. She had to pay to keep and keep that on the roof. The new all the new appliances. Kitchen's yeah.

[00:12:25] Absolutely plus when you go to sale a lot of times you want to update a house. So where is you might not have hated those countertops when you live there.

[00:12:36] You know, your filter comes in as like look those countertops. You got to replace them or you're not going to be able to sell the house. So again that's additional cost that you've got to think about that reduces that equity over time.

[00:12:48] Yeah, that's a great way to look at them glad that you painted that picture for everyone and also helped me gather my thoughts of why I don't necessarily think it's an investment because I think when we look at it is like, oh I'm buying it.

[00:13:00] I think people my age in their 20s will say, I need to go get a house so I can get the investment and get equity building for me. And it's like, yeah, but there was a I heard the term somewhere of like forever renter because of the way interest rates are things like that.

[00:13:14] It's like tends to be younger people think they're just going to rent forever and honestly the discussion that was had around that topic had to do with if we're renting forever where else can we deploy the money like you said can you put it in the S&P 500?

[00:13:27] Can you put it in some sort of index fund and let it grow because it's likely that if you if you start out super early and homes are super expensive now that money is especially going to grow faster and bigger

[00:13:40] In an index fund or something like that versus Straining yourself to go get a high mortgage payment that you can't really afford so I think that's a little bit of a perspective shift we need to get away from

[00:13:52] Absolutely, one of the things my youngest son so he and his girlfriend were thinking about buying a house and he decided to take the down payment put it into a high interest savings account.

[00:14:04] He saw that money start to grow and he's like, what about taking that in the house? I'm just going to get there let it grow. And I'm like, you know, there you go and I said, you know, in a high interest savings account is there if you want it.

[00:14:16] I said, but if you have changed your mind totally and don't want to buy their better more lucrative investments out there even then just a high yield savings account. And I said when you're ready let's have that discussion.

[00:14:28] Yeah, and if you're looking at the home as an investment that means you have to compare it to other investments because but if you're looking at it as maybe a use like an item that you're using like about a home is like it's somewhere where you're living and you have flex or you have those intangibles like you mentioned.

[00:14:44] But if you're looking at it as investment that means you have to look at other things as an investment kind of compare apples to apples because when you add maybe the other things like a roof over your head the index funds aren't going to provide you with that.

[00:14:55] So like it's not really a fair comparison see after almost break them down to be even if you're looking at the home as an investment so. Awesome. Exactly. Yeah, and I think I said to you, um, the decision tree, um, you know, I learned that engineering school.

[00:15:10] I'm not going to get into it right now because it would just board everybody. I'll let everybody Google it themselves, but it is a great way to take a complicated.

[00:15:20] Process them and help you to make a decision based on your values and your needs and what you prioritize. Awesome. And if I can all find that that you sent me and then I'll maybe include it in the extra piece after this interview so.

[00:15:34] Fantastic. Let's talk about flexibility and maybe some other benefits to renting. Maybe I can speak to these ones too, but so renting provides some flexibility in terms of living location among other things.

[00:15:45] But we're talking a little bit about housing over renting. What are some other benefits that people need to consider? I know we talked about things like you can update things. You can renovate things, but what are some other benefits that people should consider for housing.

[00:15:57] Um, yeah. So one of the things that one of my sons loves about renting is that he is able to always be in a modern updated location. Mm-hmm.

[00:16:08] You know, so if he's renting an apartment and, you know, he like, well, you know, I like to have the latest and best or the greatest story. You know, I'd like to have a more modern aesthetic. Well, he can change apartments very easily.

[00:16:22] So he's able to get the things that he wants for his lifestyle easier, particular place that he's staying now has like a coffee bar. It's got a lounge. It actually backs up to the baseball field of the motel league baseball team.

[00:16:38] Yeah, and they go like a box seating area where they can go out and actually be part of the ballpark and watch the gains.

[00:16:47] And so he really enjoys that. So that's something that you can't get with a house that he was able to find with that apartment building.

[00:16:55] So there are things like that, you know, Jim's having a gym on site where he can just run downstairs during lunch, do his workout, take a shower, go back to work because he works from home remote.

[00:17:07] He has that flexibility and he really enjoys that. You can necessarily have that with a house. And there's also potential for more of a community environment too, where maybe like you're saying there's that coffee shop or a gym where he's meeting people who live in the same building.

[00:17:23] So now you're building connections and stuff like that. It's a third places are what those kind of places are called and they're very important.

[00:17:29] Especially I think for younger adults, especially like you said he has a place right next to the baseball field where you can go hang out with the people that he meets at the gym. So those are some awesome options for renting that's fantastic.

[00:17:41] Ultimately as we're beginning to head towards the end here, I want to hear where do you stand on renting versus buying? I personally believe that if you are going to rent or buy it is your decision.

[00:17:53] I am not an advocate of someone thinking, well, you know, you graduate hospital, you go to college, you find the girlfriend, you get married, you buy a house, you have kids, pick it up and stuff.

[00:18:05] Don't listen to societal norms, do what's right for you at that moment in your life. And that will change as you go through life events, you know, that'll change.

[00:18:15] At some point if you do get married and want to have kids, you're going to want to have a house more than likely because you're going to want that backyard for you and your son to be able to play baseball or you and your daughter to have a swing set.

[00:18:27] You're going to want those things later in life. But until you get to that life event, maybe renting is for you and I don't think renting is a bad thing or an negative thing.

[00:18:37] I think it's just where you at in your life so you have to make that decision. So I think it's a very personal thing. It depends on you your lifestyle where you're at in your life.

[00:18:47] What life events you've gone through and you have to make that decision based on your personal situation. So I guess that's my biggest thing is that don't listen to anybody else.

[00:18:59] You know, if you want to rent rent, if you want to buy buy whatever's right for you at that time is the right answer. That's fantastic and that's the power of money talks as we get it here.

[00:19:09] All these different perspectives and ideas and inputs and we're hearing a sale renting is great for these things, but home buying is great for these things and then you can take those.

[00:19:18] Have your own conversations have a money talk with your spouse or with your friends and say hey what do you think about this?

[00:19:24] So awesome. This has been fantastic Heather. Thank you for keeping an open mind and helping us see both sides of this picture because that's what I was really hoping for

[00:19:32] That there is two sides to this coin and both are great options for different people so two final questions here The last one is going to be what's one thing you wish you to have known sooner with money, but to give you a second think about that one

[00:19:44] The first question that I'm going to ask you is how do people learn more about you working they find you online So I mentioned earlier, I do have a YouTube channel called Women for Will it is about talking money topics specifically for women

[00:20:00] Although you know basic principles apply to anyone you can also find me on LinkedIn LinkedIn I have my personal email in myself. I number in my contact section so I'm a very open connector.

[00:20:14] I'm open to helping people I actually block off two hours each week on my calendar for free coaching so someone just is hey I just want to add I want to pick your brain

[00:20:24] I want to chat with you about whatever I'm dealing with like okay, let's put an hour on the calendar and we'll talk about it And it's completely free to them. I don't charge for that hour. I like I said I do two hours blocked off each week

[00:20:36] Now if I start to go over those two hours or if I have someone that continues to come back and you know wants to go through 15 things instead of just one

[00:20:47] Maybe we bleed over an hour then I might consider something else but for now two hours free to week for coaching Awesome, that's a great window and opportunity for people to have some extra you go check that out

[00:20:59] Connected with how they're in the maybe you can ask or send your questions but the final question here that I ask everybody is what is one thing you wish you would have known sooner when it comes to money The power of budgeting

[00:21:11] I am a huge advocate of budgeting you have got to have a budget and I understand a lot of financial people say pay yourself first in this before you pay anything else

[00:21:22] That's unrealistic for me as a mom. I had to make sure my kids had a roof over their head had you know utilities had food in the fridge So I looked at those necessity bills first nature those were paid and then anything extra was invested

[00:21:39] And the only way you can make sure you've got the necessities covered to know you got extra to invest is to do a budget every month and re-envaluate that

[00:21:48] You know whatever your time frame is I re-look at it once a quarter. I'm blessed at a position now that Thank the Lord. I'm not having to you know play the bill game where so you're okay, I can get this one behind this month

[00:22:03] And I'll pay that one next month and then I'll you know I'm not having to do that anymore, but I still budget and I still got back in reevaluated every quarter So my biggest takeaway would be please do your monthly budget know what you've got coming in

[00:22:18] I want to know how much you've got to say and automate that as much as you can Yes, I've got money every month going into an investment account

[00:22:29] It happens and I don't think about it. It's just automatic and I think that's great nothing more people should do that

[00:22:35] Yeah, automation is essential and I say automation takes the behavior and emotion out of money which sometimes can be good because we gotta keep it simple and make it automatic So, Heather this has been fantastic. I love that someone spoke to the power of budgeting

[00:22:46] That's a great takeaway for everyone to have at the end of this episode, so Heather. Thank you so much for joining Thank you Thank you so much to Heather, Eastern for coming on today's episode

[00:23:06] That was a great conversation and I hope you were able to take something away from it But let's talk about the money talking points now and let's start with the first one should everyone buy a home I don't think so

[00:23:17] There's probably people out there that should rent forever And if you're not married then I don't think home ownership is likely a good call I think that's a pretty good baseline judgment

[00:23:26] What's the point of having an entire home if you don't have a family or multiple people to live in it? And of course, you could house hack but that means multiple people are living in the home

[00:23:34] So I think more people need to consider renting as a great option because it really can be There's so much flexibility in apartments or in renting that if you find one in a good community

[00:23:45] You can unlock a new opportunity in your life or you find one in a good city It's worth the extra cost because there's so many amenities nearby home ownership just simply isn't for everyone

[00:23:56] Even if prices are low because I think you you see now with home prices being Way up and interest rates being way up people are still trying to buy a home even though prices are high

[00:24:07] So I think we need to make sure we consider the flip side that even when home buying prices are low Renting may still be a good place to be for my wife and I home prices were super low in 2020 2021 2022 of course

[00:24:20] And then things started to flip around but we were still renting that whole time because our renting was a good deal But we could find places that were very cheap with how low interest rates were but we just weren't in a place to buy and that's okay

[00:24:32] So don't force it one way or the other whether you're trying to rent or trying to buy Don't force yourself to do it just because it's the normal thing to do

[00:24:40] If you're 20 years old and you're married and have a kid maybe home ownership is the right thing because you need that for your family Or maybe renting is the right thing because you need the flexibility because you're gonna move around

[00:24:51] So we'll talk about the lifestyle on how to find the place that fits in a minute But the second money talking point is should home ownership be considered an investment

[00:25:00] And if you made it this far you likely listen to the interview where you heard me mention that I don't think it should be considered an investment Home ownership is so much more than an investment like I said the S&P 500 doesn't provide a roof over your head

[00:25:13] So that's a little bit of a fair light to cast it in when you're comparing investments and I think that Considering home ownership and investment paints home ownership in a bad light in a flawed light I think it's something that you have to compare apples to apples

[00:25:25] Like I was saying in the interview if it's an investment then you need to truly pitch it against other investments Which means considering your expense ratio, which is all of your expenses that it takes to own a home

[00:25:38] Which is a lot that new roof cleaning maintenance everything like updating the door hinge broke fixing that that's an expense So you need to make sure you're keeping track of all those things that go into home ownership and home maintenance

[00:25:52] And that's your expense ratio. I think you're likely gonna find that expense ratio compared to an index fund It's gonna be a whole lot larger. Housing expenses and maintenance add up and then you have those large ones that really

[00:26:03] Just destroy your finances. So make sure you're considering that and make sure you're considering how much those e into your equity Also don't forget about the cost of borrowing because that's something else you need to consider in the expense ratio

[00:26:14] So I think painting home ownership solely as an investment puts it in a bad light, especially if it's your primary home Because there's so much more meaning in that primary home for you and your family. There's a place to live

[00:26:26] There's places to store things stuff like that, whereas an S&P 500 is simply just an investment Like it's just something that's gonna go up and grow with the economy So that's my take on home ownership being an investment

[00:26:38] But the third many talking point is how can I make the decision that best fits my lifestyle? First forget about the norms and the pressure Consider what you're doing right now in your life

[00:26:47] And then consider some of the ways that that might impact where you want to live is your career potentially changing or you potentially moving within the next seven years Do you hate fixing things? Do you just want to call someone to take care of it then consider renting

[00:27:00] Do you want to build on additions? Do you have these grand old plans of how big you want your home to be? Do you need more space? Do you want to buy your own land? Then consider buying a home

[00:27:10] So it's important to take stock of where you actually are in your life and decide based on that Don't decide just based on societal norms you could be 45 years old With two kids and still renting because you need that flexibility like it's totally okay

[00:27:26] So choose what's best for you and go with that But forget about the norms forget about the pressures If you feel pressure it may even be a good sign to go the other way because often societal norms and pressure lead us into

[00:27:37] The American dream which can be expensive So make sure you're following your own dream And that'll be great for you. But I want to talk about the handy hint next Today's handy hint is the emergency fund. This is something that is unnecessary For renters and homeowners alike

[00:28:03] You need to be able to take good hits to your budget and you have to be ready for the unexpected Here's a couple things that I came up with for reasons for different scenarios that you might need an emergency fund

[00:28:13] Emergency funds are absolutely essential for home buyers because those expenses and emergencies can be a lot bigger Unexpected repair and maintenance can cost a lot more money than you can just quickly turn around in your budget

[00:28:25] I will say when you're renting the emergencies and things that you need to fix like maybe a flat tire or bike repairs and things like that

[00:28:32] Those can be a lot easier to flip around in your budget though you should still have an emergency fund to help take care of those big things that can still happen even when you're renting But consider how the emergency fund is also a financial safety net

[00:28:45] It provides that safety net in case a job loss or income disruptions and job loss can happen to anyone who's renting or anyone who's owning a home So it's something they can happen to both parties so make sure you consider that safety net aspect of an emergency fund

[00:28:59] The emergency fund also helps avoid accumulating debt from high interest loans or credit cards during emergencies Again, it helps avoid needing to go to the bank and say hey can I get a

[00:29:09] $3,000 credit limit increase something happened to my window and it needs replaced and then in a couple of months You're still paying it off at 18, 20, 22% so be sure to go check out my brand new credit card guide about more information on credit cards

[00:29:22] Add money talk with scatherfumbing.com slash resources How much do you save for an emergency fund? Well aim for that three to six months number that's mentioned by everybody And make sure it's three to six months worth of living expenses in your emergency fund

[00:29:36] And this should be less than three to six months of your income because you should be living on less than you make right It shouldn't be three to six months worth of expenses and have that be more than three to six months worth of your income

[00:29:47] That's just something to consider. Make sure your emergency fund is readily accessible in a savings account It can be in a high yield savings account at a bank like ally or those other high yield savings accounts Because you can access it quickly within a few days

[00:29:59] Make sure you have a way to regularly contribute to your emergency fund And treat it as a non-negotiable expense Especially until it gets to that three to six months worth of living expenses

[00:30:09] And of course if you are considering buying a home you absolutely have to make sure your emergency fund is a priority To have in place before committing to the cost of a mortgage and the cost of home ownership

[00:30:21] And understand that an emergency fund is completely separate from general savings or investment accounts It is its own thing. You can have savings for vacations or your pet So we're other things like investing in retirement

[00:30:34] But your emergency fund needs to be its own thing and it needs to not get touched so that you know exactly how much you have in there But also you can maybe budget for emergencies Of course if you see maybe some maintenance coming up in your home

[00:30:46] Start budgeting for it so that it's not an emergency Incorporate potential emergency expenses that might come up If you notice neighboring houses getting their roofs changed Maybe consider that and get ahead of that giant cost that surprises so many people

[00:30:59] So there's a lot of great things that come from the emergency fund But that's today's handy hint next I want to talk about the financial stakes. What does it stake between renting and buying? There's some things you have to consider that we're going to talk about next

[00:31:11] So what is that stake between renting and buying? Well, there's a lot of things let me quickly go through the list and then we'll talk about them a little bit more There's renting creases. There's mortgage rates. There's down payment

[00:31:31] There's emergency funds. There's maintenance. There's repair cost. There's investments. There's flexibility There's lifestyle. There's a amenity envy. So let's talk about each one of those Rent in creases. Your rent is likely to go up each and every year

[00:31:43] Which is a good thing. It's completely fine. So make sure you're not surprised by it Because it could be like getting a surprise subscription fee hike So hooray for that right? Fix mortgage rates or another thing you need to consider

[00:31:54] Make sure you buy a home with a fixed mortgage rate Sure there's maybe places to consider variable rate But you'll know if that's the right thing to consider And if you're considering it do a lot of research

[00:32:05] But make sure you lock in a fixed rate that way there's something that finally doesn't get more expensive With age because all those people that locked in Six seven eight hundred dollar payments 20 years ago or whenever it would have been

[00:32:16] They're loving that now because they locked it in with a fixed rate And of course down payments can seem dramatic because you're like how in the world am I going to get 20

[00:32:24] To put down that's a ton of money and down payments can make you feel like you're digging through the couch cushions You're breaking all the piggy banks, but it's something you need to consider so that it doesn't turn into this

[00:32:35] Crazy explosion drama filled time where you're trying to find money for a down payment Emergency funds of course we've already talked about those homeowners need to make sure to have a solid one in place because the roof won't fix itself

[00:32:47] And duct tape really only works on small leaks and you still even need to get those fixed Maintenance can also be mayhem which is great for renting But when you own your the handyman or handy woman, but if you're renting you just call someone and it's great

[00:33:02] Repair costs also add up a lot like I mentioned in the interview my wife and I have had two dishwashers recently go bad

[00:33:08] It would be a ton of expense on us a new fridge. Eliki faucet that is a very expensive repair bill that you're going to have to cover So maybe you need to start a YouTube channel and maybe make your own home improvement show

[00:33:21] And the other thing is the uncertainty of your investment Think your home will make you rich then make sure you consider maintenance and repair costs and things like that But the S&P 500 is still going to be a great way to invest your money

[00:33:34] Flexibility is also something you have to factor in renting means you can move whenever Bottahouse your stuck until the market decides to be nice to you owning home also ties your lifestyle down Renting lets you channel your inner no mad without worrying about a for sale sign

[00:33:48] Let's say you want to move across country if you're buying a house That's a big deal if you're renting you just call up some places and see what's available Maybe fly out there and check out some apartments and it's really easy

[00:33:58] A amenity envy is also something that people get because home owners may not get cool amenities like a gym or a coffee shop

[00:34:05] Home owners get the thrilling adventure of mowing the lawn and unclogging toilets where his renters have it a little bit easier with amenities very close by Usually so that's something to consider renting versus buying but there's some things that are at stake

[00:34:18] Something you need to consider but let's wrap up today's episode next So to begin is we wind down here. I want to talk about what are others saying

[00:34:35] We had some great input from the credit card guide reels and tick talks on social media in the one where I showed about how credit card rewards are worth it Especially if you pay off your balance and full

[00:34:46] A listener Nathan said you should only use credit cards not your money if the information is stolen and why not get cash back Just pay it off fully so that's a great insight use them just pay them off fully. That's absolutely essential

[00:34:58] Also on tick talk a listener Stephanie shared she always thought you had to carry a credit card balance So I'm glad we were able to dispel that myth because you don't have to carry a credit card balance

[00:35:09] Another listener also shared the heat and know there were different types of credit cards So what I'm taking away is there are some great insight gained from that money talk credit card guide Which you can find at money talk with scatherfumbing.com slash resources so head over there

[00:35:22] Get your free guide and start learning about credit cards And that wraps up our deep dive into the great rent versus buy debate today We unpacked the pros and cons of renting versus owning a home

[00:35:33] Touching on everything from the ability to paint your walls the color of the rainbow and the joys of not having to call it plummeting yourself all the time We talked about financial considerations like the predictability of a fixed mortgage versus annual rent hikes

[00:35:44] The contendous sneak up on you like a bad April Fool's joke We also covered the importance of having a down payment and an emergency fund before taking the dive into home ownership

[00:35:53] We weighed in on whether at houses a good investment or just a fancy piggy bank that eats your money Spoiler alert the S&P 500 might be better for growing your wealth over 30 years in a home

[00:36:04] And don't forget the flexibility and amenities that come with renting who doesn't love having a gym or some sort of coffee shop just an elevator right away In the end remember to choose renting or buying should depend on your personal circumstances and not just societal expectations

[00:36:19] It's okay to keep renting long-term and avoid the so-called American dream if it doesn't align with your lifestyle Thank you for tuning in if you want to learn more check out my website at money talk with Skylar Funding.com

[00:36:31] Please consider sharing with a friend having the rent versus buy to bait with them yourself Especially if you come down on different sides of the fence, they can make for a really fun money talk

[00:36:40] And don't forget the takeaway tip always have a solid emergency fund and budget meticulously before making any big financial decisions Thank you for listening to money talk with Skylar Funding. I'm your host Skylar Funding have a great week

[00:36:53] Thank you for listening to money talk with Skylar Funding. This show is provided for information and entertainment purposes And may not be specific to your unique situation. Please be sure to do additional research before making any financial decisions