The Rachel Cruze Show - 5 Reasons to Rent Instead of Buy

Starting point is 00:00:05 Well, hey, you guys. So today I want to debunk a myth that has caused a lot of people to feel the pressure to buy a home before they're actually ready. The biggest myth that I continue to hear is that renting is a waste of money. And maybe you've heard this before or even believed it yourself. But listen, it is not always true, okay? And I know it can feel like you're throwing your money out the window when it comes to rent. But again, you are not wasting money always. Okay, renting can actually be a really wise decision that you make in your season of life. Now, there are pros and cons to renting and buying, but today you're going to learn the five situations when renting is better off for you than actually buying a home.

Starting point is 00:00:47 Before we dive in, though, make sure to like and subscribe to this channel to get all the latest content when it comes to your life and your money. All right, the first situation when renting is totally okay is if you are moving to a new city. Listen, a new city obviously has all different types of towns around it. You can go in the city, suburbs, depending on traffic flow, all of it. And if you are new to that city, you have to learn the city before you go and buy. Because when you go and buy something, when you go and buy a house, you want to be in at least five years. And so if you're moving to a new place, you want a good sense of what is going on in the city and the part of the city that you're looking at.

Starting point is 00:01:27 Because if you're going to put roots down, making sure that you're actually going to enjoy that part. I mean, I travel all over for work and sometimes for vacation. And we actually just went to Denver with my family. And, Godly, we went to all these different parts of Denver. And they all, like, had different personalities, different styles, different, you know, closer to the mountain. And you're like, yeah, this is just one city in all of America. And again, there's so many different facets of it. So if I was ever to move there, I'm like, I would want to live somewhere and not be, you know, tied down for five years to make sure that this is the place I actually want to be.

Starting point is 00:01:58 So again, if you're moving. to a new city that is a reason to rent. Another reason to rent is if you have a big life change happening. So if you are getting married, if you're going through a divorce, if you're fresh out of college or grad school, anything like that, just rent for a year. When it comes to big life change, if you have not bought a home yet, it is still really wise just to pump the brakes a little bit on that big investment and just

Starting point is 00:02:23 like, hey, I'm going to get through this big change first and foremost, let my emotions of whether it's sadness or excitement or whatever it may be drive a financial purchase, which, again, sometimes our emotions can do that. So making sure that you are on top of it knowing, hey, I am out of this crazy season, and I'm to a point that I actually want to plant roots down and it's going to be okay. So just rent. If you have a big life change coming up, it's really, really wise. All right, so those two reasons. We're kind of more life-related of why you would rents, but coming up, we're going to talk about the financial reasons on why you should rent. So if you still have debts and you are paying it off, be a renter. Do not go in

Starting point is 00:03:06 to this idea of saying, golly, I have to go and buy a house when I have student loans and credit card debt and car loans. Because the truth is, when you have debt and payments going out for a lot of people, and especially with inflation and how life is right now, living paycheck to paycheck can be a very real thing. And even if you have a little bit of margin, what ends up happening is if you don't have savings and you do have payments and something happens to the house, heating and air breaks, or you have to replace your water heater, like these really expensive replacements in your house or fixes, you want to be able to have cash available to do that. And so that is really, really important. So again, making sure that you are completely debt-free is really key. Now, the fourth reason

Starting point is 00:03:46 why you should keep renting is if you don't have an emergency fund saved. Because Like we talked about, home ownership is so expensive, you guys. And if you're having to replace expensive things in the home, you need money to do that, or it's going to cause a lot of stress. And when you're renting, the landlord covers basically everything, which is amazing. But making sure you have an emergency fund is really, really important when you are a homeowner. Because when you own a home, again, $10,000 could happen for sure to do one of these big expenses that we were talking about.

Starting point is 00:04:16 So having an emergency fund is really key. So again, being out of debt. and having an emergency fund are reasons to go and buy, but if you don't have those, renting is still a good option. All right, the last situation that I would encourage you to rent is if you don't have a down payment saved yet. So there are some loans where you don't have to have

Starting point is 00:04:35 any money to put down, and those are usually really crappy loans. So if you are a first-time home buyer, I would have five to 20% down to be able to put down for your down payment. Because again, it is really, really wise and you're gonna be in a better financial situation, if you have that money saved and you're working towards that down payment. Now, if you hit that 20%, you'll be able to avoid PMI, which is fantastic. But again, if you don't have that in your first-time home buyer, I know it can be expensive.

Starting point is 00:05:03 So you can go all the way down to 5%, but you want to have some cash to put down for a down payment. Now, when you're getting your mortgage, I always recommend a 15-year fixed rate. And your housing should be no more than 25% of your take-home pay. And again, that's going to include if you rent as well, that 25%, is a really key percentage because it just keeps it balanced when it comes to your mortgage or your housing costs because you want the rest of your income to be able to do things for you like saving up for retirement or going on vacation with your family, doing other things in it not just going to a mortgage payment because some people are getting house poor

Starting point is 00:05:41 where 50% of their income is going to pay for a house and it's just really, really difficult to be able to live the rest of your life and have that much of your income going towards your housing. All right, if you fall into any of these categories, you have officially have my blessing for you to rent for the time being, okay? So, just say it with me. Renting is okay. Renting is okay. And people think like renters go to hell or something. It's just unbelievable. Everyone's like, you're renting, you're renting. Listen, it can be a really smart decision for you right now, and that's okay. And this even goes again for great deals. Now, I know it's tempting, but the last you want to do is to have a home that you can't afford. And remember, you're not renting forever,

Starting point is 00:06:22 and it's really important to be wise because this is probably the largest financial purchase that you're going to make. And if you are buying time renting, just know you're doing it so that your home is a blessing and not a burden. All right, if you know anyone who's thinking about buying a home, make sure to share this episode with them so they can consider their housing options. And if you are looking to save some money, make sure to watch weird things people. do to save money, including me that's coming up next. And if you're listening on podcast, make sure to click the link in the description. All right, you guys, remember to take control of your money and create a life you love.

The Rachel Cruze Show - 5 Reasons to Rent Instead of Buy

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