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Rent vs. Buy
- Thread starter intothepolis
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I am in the Columbus, Ohio area
I should clarify my last post a little bit. The electric bill would likely be more if I ran my A/C or heater more. I am all electric and have a heat pump. They work great so long as you don't go below about 35F or above 95F. I have ceiling fans in all my bedroom and I burn wood in my fireplace to help keep the electric bill down.
Not quite that far north thank god!
Not to borrow $150k to go to law school and quit looking for jobs online. Start networking and search for jobs through new and existing contacts. That's how you find jobs now. The days of looking for and finding a quality job on Monster.com or something similar are over. The people that post on there literally get thousands of resumes when they post a new opening.
Might as well start playing the lottery.
On the student loan side.....as someone who got sucked into the trap of those things let me go ahead and tell you now that it's not worth it (especially to that ridiculous degree). You are talking about taking out a ridiculous amount of money for an over-saturated field where the most widely available jobs are either as a PD or a sub-associate position (financially speaking.....no better off than you are now).
If you want to go to law school....great. But don't dig yourself such a deep hole of debt to do it. If you can't find a way to cash flow it then I would recommend you just put those plans to the side.
And as someone with a political science degree.....there are job out there available to people with no experience. But you're going to have to be ok with grunt work in the near term.
I'm now 55 but I'll tell you my story. I finished college with a BA and an Associates degree in Accounting. I stayed at home saving my money till I was 30 paying my parents $200 to 300 in rent (New Jersey). I moved to San Francisco to a studio apt at $300 rent for a year then moved to a 1 bedroom for $500. My first 2 years I worked with a temp agency till I was hired full time making start up pay of $20k for the first year. All this time I did not touch my savings (15k) and had no debt. After 5 years in California my company moved me to Atlanta. I was 35, had no debt and 15k savings. For my first 6 months I rented and looked for a small home. Looking back it might have been better to get a Townhome but I did not like apartment living so decided on a small home. As a single female I worked with 75k mortage. I found a 3 bedroom/2 bath ranch for that amount but used 65k (30yr rate about 5%) and my own 10k down. I was able to pay it off in under 15 years but I gave up vacations completely.
Currently I own my small home. The value of my home has gone down but so has my property tax. I have a perfect retirement home with no stairs, can walk to market, good neighbors. My monthly expenses for house and car are now about $300 and another $150 for internet and iphone service.
You have to think about where you want to be in 20 years. What you are willing to give up to get there. I never dreamed of marriage and kids so I didn't have that weighing me down but I loved travel and gave that up after I left home to get a place of my own. Now I can go where I want and 55 isn't too old to enjoy myself.
Currently I own my small home. The value of my home has gone down but so has my property tax. I have a perfect retirement home with no stairs, can walk to market, good neighbors. My monthly expenses for house and car are now about $300 and another $150 for internet and iphone service.
You have to think about where you want to be in 20 years. What you are willing to give up to get there. I never dreamed of marriage and kids so I didn't have that weighing me down but I loved travel and gave that up after I left home to get a place of my own. Now I can go where I want and 55 isn't too old to enjoy myself.
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I'd advise not drinking the Kool-aid like everyone else does and think law school = automatic $100k job. I'd wager the vast, vast majority of law school grads end up starting at $35k-$40k, and have $150k in debt to show for it, on top of undergrad debt. I friend's ex went to a top 20 law school, good grades, and she now makes $35k in a job that doesn't even have benefits. She went $180k in the hole for that. Law school is a business at its finest IMO.
Aside from that, rent. You won't be able to buy in your situation, and why should you want to? The American dream used to be to own a house, blah blah. Suze Orman now says that for the first time in history, the American dream very well may be renting. There are thousands of homeowners out there who I bet would give their left nut to be able to rent today instead of being trapped in their upside down mortgage. Renting is not a waste of money, anymore than paying for water or electricity--you need a place to live, so paying to rent one is not a waste of money at all, just as you need electricity and water and have to pay for those too without return--big misconception that renting is a waste of money.
Get a decent place, but not too expensive. I've had a big problem with paying more than $1000 for rent, so my wife and I got a place in a trendy part of town (uptown Minneapolis), $825 a month and about $10 combined for water/gas from the landlord. 450 square foot 1 BR, one unreserved parking spot out back. Ground level which sucks. Apartment was built in '63, so the building is old, but the insides are all updated and pretty decent. Not bad, but not a great place either, but the expenses have been low which have allowed us to save money.
Now since my wife isn't happy where we are, we are sucking it up a little bit and moving to a MUCH nicer apartment this weekend--better neighborhood (not as trendy but just as nice), twice the square footage, 3 year old building, two heated underground parking spots, walk in closets, third floor, etc., for $1075 a month which is still cheaper than a decent house around here and plenty affordable. Looking at what we get for that price, in our current neighborhood that would be a $1700/mo apartment, no joke. 4 miles over to St. Paul makes a big difference.
One other thing to keep in mind before you buy a house is that you will want a nice, reliable car. You need to get to work, and you're beyond the college kid jalopy stage and should need/want something respectable and fairly new that isn't going to leave you with expensive sudden repairs. Consider that as well. Certainly don't want to buy a house knowing you will never, ever be able to afford a new car for the next 30 years.
Most people say to try and have no car payments or anything when you get a mortgage. That may be true in the case of getting approval etc., but I kind of think you should have all other aspects of your life more or less how you want them and to your desired standard of living, and then see how much house you can afford and how much money you have to play with. In other words, just as an example, if you know you are someone who wants a nice car every 4-5 years, then consider how much per month you want to have for your car payment, and budget a mortgage around that and any other expenses. Probing deeper, it might not be a bad idea to explore the idea of a mortgage at your financial "worst" meaning when you have a car payment, etc. Then you know that if you can comfortably afford a mortgage at that point in time, things can only get better (cars get paid off, etc).
But for now, rent. There is absolutely nothing wrong with renting today. Property is no longer an investment, remember that. It's a place to live, nothing more. Don't expect a return.