Although I guess it would be a little more accurate to say that I own a very very small percentage of a house and the bank owns the rest. That is the state of my life for the foreseeable future, until I pay it off or sell it. But I’m convinced that, for me, this is the best option and is certainly preferrable to renting.
I’d like to point out that there’s no right way to live a minimalist life. Some minimalists rent. Others own. But my goal is to own a house free-and-clear as soon as possible, which will either allow me to pocket all of my paychecks and retire early or allow me freedom to take on another job and not have to worry about a potential reduction in salary. Maybe I could even be a full-time writer!
In West Palm Beach, a mortgage can have about the same monthly payment as renting an apartment, so for me that’s a no brainer. Better my money go to my own investments than disappear paying for the privilege of living in someone else’s.
Not everyone agrees with this though, and I’ve seen some fancy ways to calculate the difference between owning a house vs. renting, or fancy ways to calculate if you’d be better off renting vs. owning, but to me it just comes down to freedom. How do you see yourself being the most free, finances aside? If it’s owning a house without owing money to a bank, and living there with the security of knowing you’re debt-free, then taking a mortgage out and buying a house is for you. But if you feel more free not being tied down anywhere, and you want to move around a lot, then renting is the way to go.
The house I live in now is actually my second house, so I’m no stranger to home ownership. The major difference between the two is that the first house I bought to flip and make some money on (which enabled me to afford to buy the house I have now), and the house I live in now is exactly the one I want to live in, in a great neighborhood by the beach, and it’s in a city that I love. I could live here my whole life and be happy; I’m in walking distance of a great downtown scene and it’s easy to go surfing.
The last apartment I lived in wasn’t bad, either, but it didn’t suit me. It was a high rise in the center of downtown with a beautiful view of the city. Every time I sent rent to my landlords, though, I knew I would never see that money again. That was the driving factor behind owning a house again, because every time you make a house payment, you’re essentially putting that money in a bank account (your house) that you can get back eventually (by selling the house).
Although some of the money does disappear (taxes, insurance, repairs, etc), I get a lot more freedom. I have a garage that I can use to work on any of my projects, without having to take an elevator ride up to an apartment every time I forget a tool. I don’t have to struggle to fit my 9’4″ surfboard in the elevator when the surf’s up. I don’t have to schedule the elevator when I want to move furniture (I have a lot against elevators). I can do whatever I want with the property, which is great for me because I like having projects to work on and my house (built in 1949) is certainly something that’ll need work. Oh, and you can write your mortgage interest off on your taxes, too, so that’s a bonus.
The one downside of having a mortgage is that it is something that ties you down somewhere. So if you’re making this decision, make sure it’s a place that you’ll either want to live in for a while, or that the real estate market will favor you if you decide to sell it quickly.
I also make efforts to pay my house off faster than the 30-year mortgage suggests I should. By paying an extra principle payment a month (which is pretty cheap in the beginning of a mortgage) I’ll be able to cut the mortgage in half, saving about $50,000 in interest. Also, since I have mortgage insurance (it’s a common misconception that you have to have 20% to put down on a house) this strategy will save me about $5,000 in private mortgage insurance payments by allowing me to get rid of this insurance after five years instead of ten. I’ll probably try to get rid of this quicker if I can, though.
The bottom line here is that you can look for blog posts that will tell you that renting is better, or owning is better, and to be honest I think that everyone who writes one way or the other is just trying to justify the decision they’ve made. They both have perks, and it’s up to you to figure out what’s best for your life.
Photo: The backyard of my Key West-style house in West Palm Beach. I’m a big fan of the foliage.