Don’t Tell This Guy He’s Throwing Money Away on Rent
By: Rocco Pendola
Tags: Money, Rent, Housing, Renting, Personal Finance

Don’t Tell This Guy He’s Throwing Money Away on Rent

Source: Author

I took the picture fronting this article. It’s a house 30 seconds from my Los Angeles apartment building.

I love this house. Except I don’t want it. You couldn’t give it to me. I really mean this. I prefer renting. By a mile. If you offered me this house — and money was not a consideration — I’d take a luxury top-floor apartment with a wraparound balcony in the heart of one of my favorite Los Angeles neighborhoods instead. I’d only take a home if I could put your money, time, and stress into it rather than mine.

That said, as I wrote recently, I try not to judge homeowners or react too strongly when somebody tells me I’m throwing money away on rent. It used to upset me:

Some homeowners get all smug and talk down to those of us who rent. This serves no purpose other than being counterproductive (you’re just gonna make me want to rent even more!) and unhelpful. Empower, don’t belittle me.

Given my goal of wholly inclusive personal finance (across income, class, race/ethnicity, and preferences), I aim to empower rather than belittle. It’s the only way we’re going to move money conversations forward and bring positive change for everyone. By acknowledging and appreciating the decisions, individuals make on the basis of their unique personal financial situations.

As Springsteen said, nobody wins unless everybody wins.

This said, there’s still nothing like a fierce argument in favor of something you believe in. I sort of relish sitting back and reading a good one. So I decided to share this comprehensive and, um like, totally passionate one with you.

Medium reader, DMorrow, recently argued in favor of renting. Let’s take his response to my recent article; We Ignore the Most Critical Part of the Rent Versus Own Debate, point by point alongside my thoughts and commentary interspersed:

Old adages die hard. Often, they outlive their usefulness. This happens as much in personal finance as any other space.

You’re throwing money away on rent!

It’s simply no longer relevant, or, in many cases, true.

While home ownership can be a viable, lucrative, and financially sound option for many, it’s the barely beating heart located inside what’s left of the carcass of the American dream for many. America has changed since the government and industry forced the suburbs on us. For a growing number of Americans, the dream has changed as well — sometimes by choice, sometimes by necessity.

We take housing for granted.

It’s certainly a privileged statement — you’re throwing money away on rent.

We all require shelter. Just like food. Food and shelter. Basic needs.

If we looked at housing the way we look at food — and made it a sociopolitical goal that everybody has to have these two things with no exceptions — we would go a long way to resetting and maybe even forgetting the rent versus own debate. Because, as long as there’s a housing and gentrification crisis amid people going unhoused, I really don’t care if you rent or own. It’s the least of my housing-related concerns. But, I digress.

Except in frothy markets such as Los Angeles (the median price of a single-family home here has increased 16.6 percent year-over-year), I’d agree on the five-year thing. That aside, I have always had a difficult time buying the your home is an investment argument.

First, you need a place to live. It’s not truly an investment until you sell it and move elsewhere. Second, it’s an investment that can potentially keep on giving; however it’s going to take — in myriad ways — for the life of the “investment” and maybe beyond. You gotta make sure you’re okay with this before taking the plunge. I don’t. So I happily rent.

I’d like to think this is something a majority of people consider a universal truth. But maybe not. Consider what I wrote after a conversation with a friend in September:

He mentioned to a friend he was going to pay his house off because he didn’t want the stress of a mortgage. The friend told him he was nuts because: 1. It doesn’t make sense to pay off 2.5% interest debt with your investments exponentially outpacing that rate of return. 2. You should actually take advantage of low rates and your home equity and tap that equity by using it to get a loan. My friend’s friend advised him to not only keep his current debt, but use it to take on even more debt. With friends like that…

So, yeah, taking out debt on top of debt — never a good idea. I’d have a difficult time keeping an open mind on this one.

Don’t be sorry.

For the record, I don’t think people who buy homes are stupid. Even if they’re stretching themselves financially to realize their dream (or perceived obligation) of home ownership, stupidity doesn’t enter the equation. Other factors such as socialization, psychology, preferences, and desire do.

We’re socialized with ferocity to buy into the notion of home ownership. This plays into our psycho-emotional penchant to do what society (and our family and friends) expects of us. To impress them with our achievement. In America, at least, we equate buying a home with having made it.

When I can rent a luxury penthouse apartment with a wraparound balcony in the heart of one of my favorite Los Angeles neighborhoods and not sacrifice the security of my personal financial situation, I’ll equate that with making it. I mean, I might not want to do that either, but I’d do that before sinking my wealth into a home.

But, yeah, to each their own. I’m not going to argue about it. But I can still enjoy reading other people’s impassioned takes against the merits of home ownership.