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RENTING—RENT, DON’T BUY (UNTIL YOU’RE SETTLED)

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This flies in the face of everything you’ve ever heard, so why do I say it? Because it absolutely makes
sense.
Young people are told that they are wasting their money renting when they should be building up
home equity. And, of course, they get a tax deduction for the interest and property taxes they are
paying on their home.
Well, last time I checked, interest and property taxes were expenses. It doesn’t make sense for you as
a young adult starting out in the workforce to have unaffordable expenses so you can deduct a small
portion of that expense on your income tax. Wait until it makes financial sense for you.
Additionally, there are significant transaction costs in buying and selling a home—and don’t forget
the significant maintenance and repair costs that are needed to properly maintain your home.
On the practical side, purchasing a home when you’re in your twenties makes sense only if you have
stability in your life. If you’re married, feel comfortable about the long-term prospects of your job,
and aren’t planning to move anytime in the next few years, then you might think about buying a home.
However, most young adults need the flexibility to move when they are starting their careers. More
often than not, their careers cause them to move once or twice while they’re in their twenties. Selling
a house takes time and money (there are significant transaction costs for the seller). It doesn’t make
sense to be held captive in your location and at your job because you have a home.
Thus, if you’re single and want flexibility in your lifestyle, rent instead of buying a home. You won’t
be encumbered by the financial and maintenance headaches that come with managing a home.
Understand this, though: I’m not advocating that you never purchase a home. I’m just telling you to
wait until you can afford it and until it fits properly into your lifestyle.

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