Frugal Living: Is Renting Or Buying Right Fo Your Budget?
We are constantly told that it’s good to buy. It’s great for the economy, and it’s great for you because it gives you assets. And if you ever need to fall back on them, you can sell those assets. I’m sure you’ve heard those types of arguments before right? But, it’s fair to say that buying isn’t always the ultimate solution. There are some situations where the alternate choice might fit your frugal living, save you money and ultimately lead to a better outcome.
Yes, getting on the property ladder is a brilliant idea, if you can afford it, but what if you can’t. It’s worth calculating the costs of property for a moment. First, there’s the initial deposit and let’s say that’s a conservative 10K. You might have that in your account, and that’s great, but on top of that, there’s the actual mortgage which could be over ten times that amount. On top of this, there’s the bills and any maintenance costs the property might need. So, those costs are quickly becoming more unmanageable and dicey.
What you should be doing is renting and staying frugal until you have enough money to put down one massive deposit. This will give you access to the better mortgage deals and help you avoid those expensive maintenance costs when you probably can’t afford them. It’s fair to say a lot of young homebuyers get the house and then have to let it go once the mortgage repayments become too difficult to handle.
Those Four Wheels
Yes, when we’re young we all dream of buying a new car and then when we’re older we grimace at the price tag for a new one. But the truth is that we’re probably right to grimace because buying a new car might not be the best idea. They depreciate ridiculously quickly, and there’s a better option available.
You can use car financing options from companies to essentially rent the car. Keep it for how long you need or want it by paying for it per month and then let it go. Or, pay to buy if you want to get the car gradually without having to scrounge the cash for that big one purchase. It’s entirely your choice but it’s important to realize that the options are there. In the long run, this could save you a lot of money.
What Does Renting Do To Your Credit?
If you can afford to rent and you always make sure you pay the bill on time, renting cars and property can improve your credit. It shows that you can be trusted as a lender and this can make it easier for you when those big lends come along like the mortgage. It can even help you get the more desirable property to rent because you will be seen as a better option for landlords.
Is There A Downside?
The only downside is that you won’t be an owner. Your car, your property and whatever else you choose to rent will belong to someone else. But that also gives you a lot of freedom and a lot less responsibility. Ultimately, this is going to make things cheaper for you and could free up more money that you can save and spend in other ways.
As such, buying is definitely not always for the best and renting could be a brilliant option for people who want to incorporate frugal living.