Personal Finance Advice

Owning a home is the American Dream, and many people don’t feel as though their personal finances are well-rounded enough unless they have a mortgage in their names.  Some people simply assume that they can’t be in a good financial position unless they are homeowners.

This isn’t necessarily true, at least not with all people.  If you have never owned a home then you may not realize that a lot of people who own homes are in worse financial positions than people who don’t.  Although this isn’t true for the majority of homeowners, there are plenty of people who max out the equity in their homes and wind up in a situation where they actually owe more money than the home is worth.  Some people happen to buy a house in an area that encounters widespread real estate depreciation, and the next thing they know their dream home becomes a real financial problem.  For other people, damage to the house from an incident not adequately covered by insurance can be a financial blow that the homeowners just can’t recover from.

This isn’t what happens to the majority of homeowners, but it does happen to some people. 

Renting isn’t a sign of an unhealthy personal financial status.  In fact, renting is the better decision is many instances:

1.  You have a job which requires you to move frequently.

2.  You live paycheck to paycheck and have little or no savings.

3.  You aren’t really sure of your plans for the next few years.

4.  You are preparing to start a family and will need a bigger house than you can afford to buy.

There are also people who prefer to rent because of the flexibility associated with renting as opposed to owning a home.  If you want to move on impulse you might be able to wiggle your way out of a lease, or in the worst case scenario you may have to pay the rent until another tenant takes over in addition to penalties and fees.  On the other hand, if you own a home you’ll have to go through the process of getting the home placed on the market or renting it out to other people.  You can’t just walk away from a home that you have a mortgage on.

This isn’t to say that renters only rent because they want to be able to up and leave at a moment’s notice.  Instead, it points out the fact that renting is not something that is only done because there is no other choice.

If you choose to rent, you should not feel as though your personal finances suffer for it.  While it is true that owning a home can potentially raise a person’s net worth, it isn’t the only way to do so.  You can rent instead of owning and still have personal finances that are in great shape.

If you want to own a home, own a home.  If you want to rent, do so without feeling guilty about having made that choice.