Should I deplete my saving and buy a house with cash, or should I rent?












26















My wife and I are very frugal. We've been living abroad for several years and saved a decent amount of our salaries. We've decided to move back to the US this year.



We've found a modest home that needs some work, but has good bones and is livable. We could buy the house outright in cash with our savings, but that would leave us with only a few thousand in savings. With that money we would also need to find transportation (maybe a car loan - yuck), buy used appliances and furniture and live on until we find gainful employment. It would be the most broke either of us have been since we were in college. We don't have any credit card debt, so we could rely on credit in an emergency, but neither of us like the idea of that. We'd also have to put off any repairs or updates to the house. The house is VERY low on taxes - $390/year. However, it's in a small town which will likely be a 1-hour commute from where I will probably find work. My wife could probably find work much closer.



The other option would be to rent a place. We could obviously rely on our savings until we find employment and not have to rely on credit for emergencies or buying reliable transportation. It just seems like throwing money away. On the other hand, it would be a very low-stress situation.



This decision has been so hard for us. Any advice would be appreciated.










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  • 3





    I'd definitely rent closer to your work (ideally for both of you). You'll spend a LOT of money over time on transportation costs. Some food for thought... jlcollinsnh.com/2012/02/23/… and perhaps this for a more extreme view on transportation LOL mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit

    – topshot
    yesterday






  • 1





    1 hour commute? Will this commute be by private vehicle?

    – Harper
    yesterday






  • 2





    Can you rent the house you wish to buy for a few/6 months until the new jobs & transport are squared away?

    – CrossRoads
    yesterday






  • 4





    "We've been living abroad for several years ..." BTW, you may be shocked to discover that, no matter how much cash you have on hand and no matter how high your income is, you simply won't be able to get a mortgage until you have a long credit record / employment history in the US.

    – Fattie
    yesterday






  • 13





    So your options are either buy a house 100% in cash, or don't buy a house at all? Not one for middle ground, are you? Only a Sith deals in absolutes. Mortgages, home equity loans, sleeping on a friend's or family member's couch till you get jobs, or anything else besides all-or-nothing are all impossible options for you?

    – Shane
    yesterday
















26















My wife and I are very frugal. We've been living abroad for several years and saved a decent amount of our salaries. We've decided to move back to the US this year.



We've found a modest home that needs some work, but has good bones and is livable. We could buy the house outright in cash with our savings, but that would leave us with only a few thousand in savings. With that money we would also need to find transportation (maybe a car loan - yuck), buy used appliances and furniture and live on until we find gainful employment. It would be the most broke either of us have been since we were in college. We don't have any credit card debt, so we could rely on credit in an emergency, but neither of us like the idea of that. We'd also have to put off any repairs or updates to the house. The house is VERY low on taxes - $390/year. However, it's in a small town which will likely be a 1-hour commute from where I will probably find work. My wife could probably find work much closer.



The other option would be to rent a place. We could obviously rely on our savings until we find employment and not have to rely on credit for emergencies or buying reliable transportation. It just seems like throwing money away. On the other hand, it would be a very low-stress situation.



This decision has been so hard for us. Any advice would be appreciated.










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  • 3





    I'd definitely rent closer to your work (ideally for both of you). You'll spend a LOT of money over time on transportation costs. Some food for thought... jlcollinsnh.com/2012/02/23/… and perhaps this for a more extreme view on transportation LOL mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit

    – topshot
    yesterday






  • 1





    1 hour commute? Will this commute be by private vehicle?

    – Harper
    yesterday






  • 2





    Can you rent the house you wish to buy for a few/6 months until the new jobs & transport are squared away?

    – CrossRoads
    yesterday






  • 4





    "We've been living abroad for several years ..." BTW, you may be shocked to discover that, no matter how much cash you have on hand and no matter how high your income is, you simply won't be able to get a mortgage until you have a long credit record / employment history in the US.

    – Fattie
    yesterday






  • 13





    So your options are either buy a house 100% in cash, or don't buy a house at all? Not one for middle ground, are you? Only a Sith deals in absolutes. Mortgages, home equity loans, sleeping on a friend's or family member's couch till you get jobs, or anything else besides all-or-nothing are all impossible options for you?

    – Shane
    yesterday














26












26








26


2






My wife and I are very frugal. We've been living abroad for several years and saved a decent amount of our salaries. We've decided to move back to the US this year.



We've found a modest home that needs some work, but has good bones and is livable. We could buy the house outright in cash with our savings, but that would leave us with only a few thousand in savings. With that money we would also need to find transportation (maybe a car loan - yuck), buy used appliances and furniture and live on until we find gainful employment. It would be the most broke either of us have been since we were in college. We don't have any credit card debt, so we could rely on credit in an emergency, but neither of us like the idea of that. We'd also have to put off any repairs or updates to the house. The house is VERY low on taxes - $390/year. However, it's in a small town which will likely be a 1-hour commute from where I will probably find work. My wife could probably find work much closer.



The other option would be to rent a place. We could obviously rely on our savings until we find employment and not have to rely on credit for emergencies or buying reliable transportation. It just seems like throwing money away. On the other hand, it would be a very low-stress situation.



This decision has been so hard for us. Any advice would be appreciated.










share|improve this question









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My wife and I are very frugal. We've been living abroad for several years and saved a decent amount of our salaries. We've decided to move back to the US this year.



We've found a modest home that needs some work, but has good bones and is livable. We could buy the house outright in cash with our savings, but that would leave us with only a few thousand in savings. With that money we would also need to find transportation (maybe a car loan - yuck), buy used appliances and furniture and live on until we find gainful employment. It would be the most broke either of us have been since we were in college. We don't have any credit card debt, so we could rely on credit in an emergency, but neither of us like the idea of that. We'd also have to put off any repairs or updates to the house. The house is VERY low on taxes - $390/year. However, it's in a small town which will likely be a 1-hour commute from where I will probably find work. My wife could probably find work much closer.



The other option would be to rent a place. We could obviously rely on our savings until we find employment and not have to rely on credit for emergencies or buying reliable transportation. It just seems like throwing money away. On the other hand, it would be a very low-stress situation.



This decision has been so hard for us. Any advice would be appreciated.







real-estate home-ownership rent






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edited 10 hours ago









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  • 3





    I'd definitely rent closer to your work (ideally for both of you). You'll spend a LOT of money over time on transportation costs. Some food for thought... jlcollinsnh.com/2012/02/23/… and perhaps this for a more extreme view on transportation LOL mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit

    – topshot
    yesterday






  • 1





    1 hour commute? Will this commute be by private vehicle?

    – Harper
    yesterday






  • 2





    Can you rent the house you wish to buy for a few/6 months until the new jobs & transport are squared away?

    – CrossRoads
    yesterday






  • 4





    "We've been living abroad for several years ..." BTW, you may be shocked to discover that, no matter how much cash you have on hand and no matter how high your income is, you simply won't be able to get a mortgage until you have a long credit record / employment history in the US.

    – Fattie
    yesterday






  • 13





    So your options are either buy a house 100% in cash, or don't buy a house at all? Not one for middle ground, are you? Only a Sith deals in absolutes. Mortgages, home equity loans, sleeping on a friend's or family member's couch till you get jobs, or anything else besides all-or-nothing are all impossible options for you?

    – Shane
    yesterday














  • 3





    I'd definitely rent closer to your work (ideally for both of you). You'll spend a LOT of money over time on transportation costs. Some food for thought... jlcollinsnh.com/2012/02/23/… and perhaps this for a more extreme view on transportation LOL mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit

    – topshot
    yesterday






  • 1





    1 hour commute? Will this commute be by private vehicle?

    – Harper
    yesterday






  • 2





    Can you rent the house you wish to buy for a few/6 months until the new jobs & transport are squared away?

    – CrossRoads
    yesterday






  • 4





    "We've been living abroad for several years ..." BTW, you may be shocked to discover that, no matter how much cash you have on hand and no matter how high your income is, you simply won't be able to get a mortgage until you have a long credit record / employment history in the US.

    – Fattie
    yesterday






  • 13





    So your options are either buy a house 100% in cash, or don't buy a house at all? Not one for middle ground, are you? Only a Sith deals in absolutes. Mortgages, home equity loans, sleeping on a friend's or family member's couch till you get jobs, or anything else besides all-or-nothing are all impossible options for you?

    – Shane
    yesterday








3




3





I'd definitely rent closer to your work (ideally for both of you). You'll spend a LOT of money over time on transportation costs. Some food for thought... jlcollinsnh.com/2012/02/23/… and perhaps this for a more extreme view on transportation LOL mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit

– topshot
yesterday





I'd definitely rent closer to your work (ideally for both of you). You'll spend a LOT of money over time on transportation costs. Some food for thought... jlcollinsnh.com/2012/02/23/… and perhaps this for a more extreme view on transportation LOL mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit

– topshot
yesterday




1




1





1 hour commute? Will this commute be by private vehicle?

– Harper
yesterday





1 hour commute? Will this commute be by private vehicle?

– Harper
yesterday




2




2





Can you rent the house you wish to buy for a few/6 months until the new jobs & transport are squared away?

– CrossRoads
yesterday





Can you rent the house you wish to buy for a few/6 months until the new jobs & transport are squared away?

– CrossRoads
yesterday




4




4





"We've been living abroad for several years ..." BTW, you may be shocked to discover that, no matter how much cash you have on hand and no matter how high your income is, you simply won't be able to get a mortgage until you have a long credit record / employment history in the US.

– Fattie
yesterday





"We've been living abroad for several years ..." BTW, you may be shocked to discover that, no matter how much cash you have on hand and no matter how high your income is, you simply won't be able to get a mortgage until you have a long credit record / employment history in the US.

– Fattie
yesterday




13




13





So your options are either buy a house 100% in cash, or don't buy a house at all? Not one for middle ground, are you? Only a Sith deals in absolutes. Mortgages, home equity loans, sleeping on a friend's or family member's couch till you get jobs, or anything else besides all-or-nothing are all impossible options for you?

– Shane
yesterday





So your options are either buy a house 100% in cash, or don't buy a house at all? Not one for middle ground, are you? Only a Sith deals in absolutes. Mortgages, home equity loans, sleeping on a friend's or family member's couch till you get jobs, or anything else besides all-or-nothing are all impossible options for you?

– Shane
yesterday










5 Answers
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Because you don't have the jobs lined up, it makes more sense to rent for a few months for a couple of reasons:



A: You should never deplete your emergency fund of 3 to 6 months for non-emergencies



B: Once you land a job, you can make a better judgement as to where to live for the commute.



C: Car loans and credit cards are expensive forms of debt that should be avoided if you want to build wealth (the fact you have neither of these consumer debts is awesome, don't wreck that by putting your financial future at risk).



With rent, you're buying patience. There's a house on every corner so don't get house fever over this one property. Renting will provide you with the least risk and most options until you can get your feet under you after the move. Spend a year getting to know the neighborhoods, find employment and building up more savings for a larger down payment. If you find a home a year later you can buy for cash (over and above your emergency fund) even better!



Financial Expert, Dave Ramsey, has this to say about renting vs buying: https://www.daveramsey.com/blog/buy-vs-rent-myths-busted



The link covers what's mentioned above.



Keep up the great work!






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  • 4





    I appreciate your wisdom. It really helps to bounce stuff like this off a neutral party for an outside perspective.

    – krayziesensei
    yesterday











  • Welcome to Money.SE. A link, in and of itself, isn't such a bad thing, but links break. In this context, I'd suggest you just add a few lines to summarize what the linked article offered.

    – JoeTaxpayer
    yesterday






  • 1





    The link re-iterates the reasons I gave, but has additional useful information that was not pertinent to the question. I'll edit to clarify that the link says some of the same things.

    – Adam Klump
    yesterday











  • This is nearly the same advice I would give, only adding make sure you establish an emergency fund that covers your deductibles. That way credit cards are not needed. Also strongly second checking out Dave Ramsey.

    – J E Carter II
    yesterday











  • I am not familiar with the US, however I've heard about those "credit scores" thing. If the OP is aiming to buy, eventually, and may need a mortgage, then shouldn't they use this year of renting to build up their "credit score" as well?

    – Matthieu M.
    yesterday



















16














@Adam Klump gave the advice I would personally follow, but I want to give a third possibility.



I'm not from the US, but it seems to me that you don't have to buy the house outright in cash, you still have the possibility to take a loan. You'll still be able to pay it off whenever you want, and may be able to negotiate low interest rate and have the money to pay it off in only 10 years instead of 15/20/25... It should enable you to minimize total interest.



You would be able to keep a big part of your savings while still owning your home. The difference to be aware of between my solution and @Adam Klump's is whether it is cheaper to rent for a few months/years than to pay interest on a loan. That, and the difference in mobility, of course.






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  • 8





    Taking a mortgage is not a horrible solution. @Adam Klump mentioned Dave Ramesy, who points out that a mortgage is a hedge against inflation. A 15-20 years mortgage defrays the housing cost, and the money you pay with is progressively less expensive thanks to inflation.

    – J E Carter II
    yesterday






  • 1





    @MatthieuM. I'm not a banker but I wonder if hearing "I have enough to pay you back right now but I want to delay a bit" is not better than "I earn money so I hope I'll be able to pay you back on the long term" for a bank.

    – Echox
    yesterday






  • 1





    @Echox: I am not a banker either, however I would note that the very reason you take a loan is to use the other money elsewhere. There are quite a few stories about people getting a big payment (lottery, inheritance, ...) and spending it all in a few months or years; and even without going so extreme, without any revenue, this lump sum of money is going to shrink over time as it's spent for necessities: food, electricity, phone, ...

    – Matthieu M.
    yesterday






  • 2





    I don't believe that "mensualities " is an English word.

    – Acccumulation
    yesterday






  • 1





    @Acccumulation Agreed. It appears to be a French term meaning "monthly payment"

    – Brian
    yesterday



















9














You are overlooking the real cost of automobiles



People have a strong tendency to wildly delude themselves about the true, total costs of automobiles. About 15 years ago, AAA tallied up the total, real ownership cost of a reasonably recent car. It came out to $7000/year. And those costs haven't exactly gone down.



You didn't say where you aim to live. But I am guessing the under $400/year property tax doesn't fund a robust public transit system that makes life without a car workable as it might be in Brooklyn, West Hollywood, Little Five Points, city center Detroit, Jefferson City, Santa Cruz, etc.



Notably none of these places are an hour away from where all the jobs are. So you have plainly identified a location in rural or exurban America. It doesn't havetransit. It may not even have Über. It may be very nice in other ways, and you may have family support there. But you need to deal with the "car" thing.



The old AAA $7000/year presumed normal 10,000-12,000 mile/year use. A job an hour away - 2 hours driving a day - that means 60-120 miles a day, 15,000 to 30,000 additional miles a year to your car, with higher vehicle costs. Including insurance - the insurer cares when you drive a lot of miles.



Given your financial status, I gather you would pursue a used car, which means you will run afoul of Harper's Law: Never owe money on a car that's out of warranty. Because then you are really sunk: a broken car is worth nothing so your note is upside down (and they may call the note when they see the tracker stop moving), and you need another car ASAP.



This kind of overextension is exactly how people enter the death spiral that leads to 470 credit, payday loans and being unbanked.



The cost of transport must be factored as part of the cost of home ownership.



Especially if this is a "fixer", you will need to regularly transport building materials. I'm not saying "run out and buy an F150" because then, fuel costs alone on the 1-hour commute will murder you. You would need to rent a truck or pay for the building supply to deliver, so there's that cost too.



All this points out how wealth isn't cash, it's situation



Wealth is when your life and your assets are set up to work in your favor and save/make you money.



Simply having a pile of cash isn't wealth. Simply saving money isn't wealth, especially when the money-saving strategy causes difficult-to-contain expenses.



So for instance, I would not want to see you moving into a deteriorating trailer home that you can keep holding together. I would want to see you move into a good flipper candidate, so you can use your own skill assets to multiply sweat equity, yielding a property that is worth a lot, which you then sell and do again.



Even buying for cash is over-rated. I would much rather see you take a mortgage to buy a triplex where transit does work, close to jobs, and where the rental on the other two units mostly pays the mortgage. Rents go up, mortgage payments do not.



The point is to engineer wealth into your life.






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  • 1





    The average (currently ~13,500 miles/year) includes commute, suggesting a 60 mile commute would be an additional 15,000 doesn't make sense, commuting is the bulk of driving for most. Also, an hour commute doesn't mean you're living somewhere rural, in most major cities the traffic moves quite slowly. For a while I had a 10.8 mile commute that frequently took 1 hour due to traffic, and some places are much worse. I'd like to see that dated AAA data, guessing they include depreciation in that figure and base it on new cars making it of little use.

    – Hart CO
    10 hours ago






  • 1





    @hartco when you lived at the 10.8 mile commute, was your property tax $400? No it was not lol. That, and being an hour from jobs... Both strongly flag "rural". I know rural people with hour commutes, it's 60mi and it's a car killer... Depreciation is a real thing that does matter. Automotive TCO is expensive and people are crazy self-delusional about it, it's almost impossible to get them to honestly tally their true costs. I drive a pre-OBD manual-everything no-A/C econobox, and I do my own tranny swaps for $150, so my TCO is as low as humanly possible, yet still $4k/yr.

    – Harper
    9 hours ago



















3














My advice is to cost-compare buying vs renting before making the plunge to buy a home. Where I live, it's much more cost-effective to rent. Brother and I thought about buying a house. Even if we bought the house out-right with cash, we'd still have insurance and taxes to pay (not to mention any home repairs that might come up). The taxes + insurance alone was more then the cost of renting. Plus, the houses we could afford were located in inconvenient places where we work (the commute would be bad).



We live in a very mobile economy these days. The idea of buying a house is still part of that American Dream that people hold on to from the past, when people would get employed by a company and work there until retirement. (EG: people working at the same steel mill all their lives, or for the same headquarters corporate office all their lives).



Companies come and go based on global demands (eg: taxes lower in one country, they shift their headquarters to it. Labor is cheaper in another country, they shift all their manufacturing to it).



Being anchored to a house can prevent you from being mobile and taking advantage of the mobile world economy.



Also, some people still have it in their heads that houses appreciate with age (ie: gain value). This isn't always the case. Neighborhoods age. If they age gracefully, then the property value may go up. But, where we live, a lot of neighborhoods are just getting run down. A $200k house in a neighborhood back when is now valued at $150k, simply because the neighborhood is older, the houses are older, and the neighborhoods are becoming more run down. Instead of sticking around and fixing up old houses, people are moving to new houses and the neighborhoods run down. The commercial / businesses around the area are also changing. There used to be nice businesses. But, when the businesses near a neighborhood turn into pawn shops and pay-day loans.. the neighborhood has run down.



When renting, you're just locked in until your lease is up, and the landlord is responsible for all repairs. If rent goes up, or you get a job some place else, you just move.



If you have a house, you have to worry about a longer commute if your job moves. You can't jump on jobs that are across the country / globe, because you have a house to get rid of. You can try to turn the house into a rental property, but that can be an extra headache. In a buy'ers market, you will either have to sit on the house or sell it for a loss.



A house can just be a headache. But, it all depends on what your long-term goals are and the market you live in. For folks wanting to start a family, a house can be great. But, for one or two adults, renting may still be the better way to go.



So, you should consider why you want to buy a house. If you're chasing the American Dream (ie: everyone says you should), you should look around and see how that American Dream is working out. There are home owners that are stuck with mortgages, or with houses they've paid off that are in rundown neighborhoods where the home has lost value. (A house is not an investment. It's a tangible good that can depreciate in value.) The American Dream of owning your own home and retiring is becoming more and more unobtainable and/or impractical for most folks. I did the math a long time ago, and figured out I could either have kids and own a home.. and work the rest of my life. Or, rent, save my money, not have kids, and retire one day comfortable. I decided retirement sounds better.



So, you really need to map out your long-term goals, and compare them with current market values and estimated future markets to see what meshes with what you want.



Since my brother and I looked a while back, I have since settle down with a wife, but even we're sitting here renting, because it simply makes more sense to rent right now. We eventually want to get a home, but the city we live in is a massive metroplex, and the "sweet spot" locations in the middle of the metroplex are insanely expensive. Everyone is moving to the burbs, and the burbs keep pushing out furhter and further with urban sprawl, but that would put us at 2 hour commutes both ways to get to jobs. We decided renting and living near our jobs was much less stressful, and we spend less money, too.






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    1














    One important thing to consider is why you're buying a house. Don't buy one as a financial investment. Houses are notoriously non-liquid assets, and a surprisingly large amount of money goes into maintenance, so even if you avoid wiping out your savings by getting a mortgage (which, as noted, might be more difficult if you've been abroad), comparing the mortgage payment to rent isn't always a fair comparison. Home ownership is an investment, but it's more in terms of stability than in finances, and it's not one to be bought at the risk of the other.






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      votes









      85














      Because you don't have the jobs lined up, it makes more sense to rent for a few months for a couple of reasons:



      A: You should never deplete your emergency fund of 3 to 6 months for non-emergencies



      B: Once you land a job, you can make a better judgement as to where to live for the commute.



      C: Car loans and credit cards are expensive forms of debt that should be avoided if you want to build wealth (the fact you have neither of these consumer debts is awesome, don't wreck that by putting your financial future at risk).



      With rent, you're buying patience. There's a house on every corner so don't get house fever over this one property. Renting will provide you with the least risk and most options until you can get your feet under you after the move. Spend a year getting to know the neighborhoods, find employment and building up more savings for a larger down payment. If you find a home a year later you can buy for cash (over and above your emergency fund) even better!



      Financial Expert, Dave Ramsey, has this to say about renting vs buying: https://www.daveramsey.com/blog/buy-vs-rent-myths-busted



      The link covers what's mentioned above.



      Keep up the great work!






      share|improve this answer





















      • 4





        I appreciate your wisdom. It really helps to bounce stuff like this off a neutral party for an outside perspective.

        – krayziesensei
        yesterday











      • Welcome to Money.SE. A link, in and of itself, isn't such a bad thing, but links break. In this context, I'd suggest you just add a few lines to summarize what the linked article offered.

        – JoeTaxpayer
        yesterday






      • 1





        The link re-iterates the reasons I gave, but has additional useful information that was not pertinent to the question. I'll edit to clarify that the link says some of the same things.

        – Adam Klump
        yesterday











      • This is nearly the same advice I would give, only adding make sure you establish an emergency fund that covers your deductibles. That way credit cards are not needed. Also strongly second checking out Dave Ramsey.

        – J E Carter II
        yesterday











      • I am not familiar with the US, however I've heard about those "credit scores" thing. If the OP is aiming to buy, eventually, and may need a mortgage, then shouldn't they use this year of renting to build up their "credit score" as well?

        – Matthieu M.
        yesterday
















      85














      Because you don't have the jobs lined up, it makes more sense to rent for a few months for a couple of reasons:



      A: You should never deplete your emergency fund of 3 to 6 months for non-emergencies



      B: Once you land a job, you can make a better judgement as to where to live for the commute.



      C: Car loans and credit cards are expensive forms of debt that should be avoided if you want to build wealth (the fact you have neither of these consumer debts is awesome, don't wreck that by putting your financial future at risk).



      With rent, you're buying patience. There's a house on every corner so don't get house fever over this one property. Renting will provide you with the least risk and most options until you can get your feet under you after the move. Spend a year getting to know the neighborhoods, find employment and building up more savings for a larger down payment. If you find a home a year later you can buy for cash (over and above your emergency fund) even better!



      Financial Expert, Dave Ramsey, has this to say about renting vs buying: https://www.daveramsey.com/blog/buy-vs-rent-myths-busted



      The link covers what's mentioned above.



      Keep up the great work!






      share|improve this answer





















      • 4





        I appreciate your wisdom. It really helps to bounce stuff like this off a neutral party for an outside perspective.

        – krayziesensei
        yesterday











      • Welcome to Money.SE. A link, in and of itself, isn't such a bad thing, but links break. In this context, I'd suggest you just add a few lines to summarize what the linked article offered.

        – JoeTaxpayer
        yesterday






      • 1





        The link re-iterates the reasons I gave, but has additional useful information that was not pertinent to the question. I'll edit to clarify that the link says some of the same things.

        – Adam Klump
        yesterday











      • This is nearly the same advice I would give, only adding make sure you establish an emergency fund that covers your deductibles. That way credit cards are not needed. Also strongly second checking out Dave Ramsey.

        – J E Carter II
        yesterday











      • I am not familiar with the US, however I've heard about those "credit scores" thing. If the OP is aiming to buy, eventually, and may need a mortgage, then shouldn't they use this year of renting to build up their "credit score" as well?

        – Matthieu M.
        yesterday














      85












      85








      85







      Because you don't have the jobs lined up, it makes more sense to rent for a few months for a couple of reasons:



      A: You should never deplete your emergency fund of 3 to 6 months for non-emergencies



      B: Once you land a job, you can make a better judgement as to where to live for the commute.



      C: Car loans and credit cards are expensive forms of debt that should be avoided if you want to build wealth (the fact you have neither of these consumer debts is awesome, don't wreck that by putting your financial future at risk).



      With rent, you're buying patience. There's a house on every corner so don't get house fever over this one property. Renting will provide you with the least risk and most options until you can get your feet under you after the move. Spend a year getting to know the neighborhoods, find employment and building up more savings for a larger down payment. If you find a home a year later you can buy for cash (over and above your emergency fund) even better!



      Financial Expert, Dave Ramsey, has this to say about renting vs buying: https://www.daveramsey.com/blog/buy-vs-rent-myths-busted



      The link covers what's mentioned above.



      Keep up the great work!






      share|improve this answer















      Because you don't have the jobs lined up, it makes more sense to rent for a few months for a couple of reasons:



      A: You should never deplete your emergency fund of 3 to 6 months for non-emergencies



      B: Once you land a job, you can make a better judgement as to where to live for the commute.



      C: Car loans and credit cards are expensive forms of debt that should be avoided if you want to build wealth (the fact you have neither of these consumer debts is awesome, don't wreck that by putting your financial future at risk).



      With rent, you're buying patience. There's a house on every corner so don't get house fever over this one property. Renting will provide you with the least risk and most options until you can get your feet under you after the move. Spend a year getting to know the neighborhoods, find employment and building up more savings for a larger down payment. If you find a home a year later you can buy for cash (over and above your emergency fund) even better!



      Financial Expert, Dave Ramsey, has this to say about renting vs buying: https://www.daveramsey.com/blog/buy-vs-rent-myths-busted



      The link covers what's mentioned above.



      Keep up the great work!







      share|improve this answer














      share|improve this answer



      share|improve this answer








      edited yesterday

























      answered yesterday









      Adam KlumpAdam Klump

      74637




      74637








      • 4





        I appreciate your wisdom. It really helps to bounce stuff like this off a neutral party for an outside perspective.

        – krayziesensei
        yesterday











      • Welcome to Money.SE. A link, in and of itself, isn't such a bad thing, but links break. In this context, I'd suggest you just add a few lines to summarize what the linked article offered.

        – JoeTaxpayer
        yesterday






      • 1





        The link re-iterates the reasons I gave, but has additional useful information that was not pertinent to the question. I'll edit to clarify that the link says some of the same things.

        – Adam Klump
        yesterday











      • This is nearly the same advice I would give, only adding make sure you establish an emergency fund that covers your deductibles. That way credit cards are not needed. Also strongly second checking out Dave Ramsey.

        – J E Carter II
        yesterday











      • I am not familiar with the US, however I've heard about those "credit scores" thing. If the OP is aiming to buy, eventually, and may need a mortgage, then shouldn't they use this year of renting to build up their "credit score" as well?

        – Matthieu M.
        yesterday














      • 4





        I appreciate your wisdom. It really helps to bounce stuff like this off a neutral party for an outside perspective.

        – krayziesensei
        yesterday











      • Welcome to Money.SE. A link, in and of itself, isn't such a bad thing, but links break. In this context, I'd suggest you just add a few lines to summarize what the linked article offered.

        – JoeTaxpayer
        yesterday






      • 1





        The link re-iterates the reasons I gave, but has additional useful information that was not pertinent to the question. I'll edit to clarify that the link says some of the same things.

        – Adam Klump
        yesterday











      • This is nearly the same advice I would give, only adding make sure you establish an emergency fund that covers your deductibles. That way credit cards are not needed. Also strongly second checking out Dave Ramsey.

        – J E Carter II
        yesterday











      • I am not familiar with the US, however I've heard about those "credit scores" thing. If the OP is aiming to buy, eventually, and may need a mortgage, then shouldn't they use this year of renting to build up their "credit score" as well?

        – Matthieu M.
        yesterday








      4




      4





      I appreciate your wisdom. It really helps to bounce stuff like this off a neutral party for an outside perspective.

      – krayziesensei
      yesterday





      I appreciate your wisdom. It really helps to bounce stuff like this off a neutral party for an outside perspective.

      – krayziesensei
      yesterday













      Welcome to Money.SE. A link, in and of itself, isn't such a bad thing, but links break. In this context, I'd suggest you just add a few lines to summarize what the linked article offered.

      – JoeTaxpayer
      yesterday





      Welcome to Money.SE. A link, in and of itself, isn't such a bad thing, but links break. In this context, I'd suggest you just add a few lines to summarize what the linked article offered.

      – JoeTaxpayer
      yesterday




      1




      1





      The link re-iterates the reasons I gave, but has additional useful information that was not pertinent to the question. I'll edit to clarify that the link says some of the same things.

      – Adam Klump
      yesterday





      The link re-iterates the reasons I gave, but has additional useful information that was not pertinent to the question. I'll edit to clarify that the link says some of the same things.

      – Adam Klump
      yesterday













      This is nearly the same advice I would give, only adding make sure you establish an emergency fund that covers your deductibles. That way credit cards are not needed. Also strongly second checking out Dave Ramsey.

      – J E Carter II
      yesterday





      This is nearly the same advice I would give, only adding make sure you establish an emergency fund that covers your deductibles. That way credit cards are not needed. Also strongly second checking out Dave Ramsey.

      – J E Carter II
      yesterday













      I am not familiar with the US, however I've heard about those "credit scores" thing. If the OP is aiming to buy, eventually, and may need a mortgage, then shouldn't they use this year of renting to build up their "credit score" as well?

      – Matthieu M.
      yesterday





      I am not familiar with the US, however I've heard about those "credit scores" thing. If the OP is aiming to buy, eventually, and may need a mortgage, then shouldn't they use this year of renting to build up their "credit score" as well?

      – Matthieu M.
      yesterday













      16














      @Adam Klump gave the advice I would personally follow, but I want to give a third possibility.



      I'm not from the US, but it seems to me that you don't have to buy the house outright in cash, you still have the possibility to take a loan. You'll still be able to pay it off whenever you want, and may be able to negotiate low interest rate and have the money to pay it off in only 10 years instead of 15/20/25... It should enable you to minimize total interest.



      You would be able to keep a big part of your savings while still owning your home. The difference to be aware of between my solution and @Adam Klump's is whether it is cheaper to rent for a few months/years than to pay interest on a loan. That, and the difference in mobility, of course.






      share|improve this answer










      New contributor




      Echox is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.
















      • 8





        Taking a mortgage is not a horrible solution. @Adam Klump mentioned Dave Ramesy, who points out that a mortgage is a hedge against inflation. A 15-20 years mortgage defrays the housing cost, and the money you pay with is progressively less expensive thanks to inflation.

        – J E Carter II
        yesterday






      • 1





        @MatthieuM. I'm not a banker but I wonder if hearing "I have enough to pay you back right now but I want to delay a bit" is not better than "I earn money so I hope I'll be able to pay you back on the long term" for a bank.

        – Echox
        yesterday






      • 1





        @Echox: I am not a banker either, however I would note that the very reason you take a loan is to use the other money elsewhere. There are quite a few stories about people getting a big payment (lottery, inheritance, ...) and spending it all in a few months or years; and even without going so extreme, without any revenue, this lump sum of money is going to shrink over time as it's spent for necessities: food, electricity, phone, ...

        – Matthieu M.
        yesterday






      • 2





        I don't believe that "mensualities " is an English word.

        – Acccumulation
        yesterday






      • 1





        @Acccumulation Agreed. It appears to be a French term meaning "monthly payment"

        – Brian
        yesterday
















      16














      @Adam Klump gave the advice I would personally follow, but I want to give a third possibility.



      I'm not from the US, but it seems to me that you don't have to buy the house outright in cash, you still have the possibility to take a loan. You'll still be able to pay it off whenever you want, and may be able to negotiate low interest rate and have the money to pay it off in only 10 years instead of 15/20/25... It should enable you to minimize total interest.



      You would be able to keep a big part of your savings while still owning your home. The difference to be aware of between my solution and @Adam Klump's is whether it is cheaper to rent for a few months/years than to pay interest on a loan. That, and the difference in mobility, of course.






      share|improve this answer










      New contributor




      Echox is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.
















      • 8





        Taking a mortgage is not a horrible solution. @Adam Klump mentioned Dave Ramesy, who points out that a mortgage is a hedge against inflation. A 15-20 years mortgage defrays the housing cost, and the money you pay with is progressively less expensive thanks to inflation.

        – J E Carter II
        yesterday






      • 1





        @MatthieuM. I'm not a banker but I wonder if hearing "I have enough to pay you back right now but I want to delay a bit" is not better than "I earn money so I hope I'll be able to pay you back on the long term" for a bank.

        – Echox
        yesterday






      • 1





        @Echox: I am not a banker either, however I would note that the very reason you take a loan is to use the other money elsewhere. There are quite a few stories about people getting a big payment (lottery, inheritance, ...) and spending it all in a few months or years; and even without going so extreme, without any revenue, this lump sum of money is going to shrink over time as it's spent for necessities: food, electricity, phone, ...

        – Matthieu M.
        yesterday






      • 2





        I don't believe that "mensualities " is an English word.

        – Acccumulation
        yesterday






      • 1





        @Acccumulation Agreed. It appears to be a French term meaning "monthly payment"

        – Brian
        yesterday














      16












      16








      16







      @Adam Klump gave the advice I would personally follow, but I want to give a third possibility.



      I'm not from the US, but it seems to me that you don't have to buy the house outright in cash, you still have the possibility to take a loan. You'll still be able to pay it off whenever you want, and may be able to negotiate low interest rate and have the money to pay it off in only 10 years instead of 15/20/25... It should enable you to minimize total interest.



      You would be able to keep a big part of your savings while still owning your home. The difference to be aware of between my solution and @Adam Klump's is whether it is cheaper to rent for a few months/years than to pay interest on a loan. That, and the difference in mobility, of course.






      share|improve this answer










      New contributor




      Echox is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.










      @Adam Klump gave the advice I would personally follow, but I want to give a third possibility.



      I'm not from the US, but it seems to me that you don't have to buy the house outright in cash, you still have the possibility to take a loan. You'll still be able to pay it off whenever you want, and may be able to negotiate low interest rate and have the money to pay it off in only 10 years instead of 15/20/25... It should enable you to minimize total interest.



      You would be able to keep a big part of your savings while still owning your home. The difference to be aware of between my solution and @Adam Klump's is whether it is cheaper to rent for a few months/years than to pay interest on a loan. That, and the difference in mobility, of course.







      share|improve this answer










      New contributor




      Echox is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.









      share|improve this answer



      share|improve this answer








      edited 13 hours ago





















      New contributor




      Echox is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.









      answered yesterday









      EchoxEchox

      2615




      2615




      New contributor




      Echox is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.





      New contributor





      Echox is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.






      Echox is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.








      • 8





        Taking a mortgage is not a horrible solution. @Adam Klump mentioned Dave Ramesy, who points out that a mortgage is a hedge against inflation. A 15-20 years mortgage defrays the housing cost, and the money you pay with is progressively less expensive thanks to inflation.

        – J E Carter II
        yesterday






      • 1





        @MatthieuM. I'm not a banker but I wonder if hearing "I have enough to pay you back right now but I want to delay a bit" is not better than "I earn money so I hope I'll be able to pay you back on the long term" for a bank.

        – Echox
        yesterday






      • 1





        @Echox: I am not a banker either, however I would note that the very reason you take a loan is to use the other money elsewhere. There are quite a few stories about people getting a big payment (lottery, inheritance, ...) and spending it all in a few months or years; and even without going so extreme, without any revenue, this lump sum of money is going to shrink over time as it's spent for necessities: food, electricity, phone, ...

        – Matthieu M.
        yesterday






      • 2





        I don't believe that "mensualities " is an English word.

        – Acccumulation
        yesterday






      • 1





        @Acccumulation Agreed. It appears to be a French term meaning "monthly payment"

        – Brian
        yesterday














      • 8





        Taking a mortgage is not a horrible solution. @Adam Klump mentioned Dave Ramesy, who points out that a mortgage is a hedge against inflation. A 15-20 years mortgage defrays the housing cost, and the money you pay with is progressively less expensive thanks to inflation.

        – J E Carter II
        yesterday






      • 1





        @MatthieuM. I'm not a banker but I wonder if hearing "I have enough to pay you back right now but I want to delay a bit" is not better than "I earn money so I hope I'll be able to pay you back on the long term" for a bank.

        – Echox
        yesterday






      • 1





        @Echox: I am not a banker either, however I would note that the very reason you take a loan is to use the other money elsewhere. There are quite a few stories about people getting a big payment (lottery, inheritance, ...) and spending it all in a few months or years; and even without going so extreme, without any revenue, this lump sum of money is going to shrink over time as it's spent for necessities: food, electricity, phone, ...

        – Matthieu M.
        yesterday






      • 2





        I don't believe that "mensualities " is an English word.

        – Acccumulation
        yesterday






      • 1





        @Acccumulation Agreed. It appears to be a French term meaning "monthly payment"

        – Brian
        yesterday








      8




      8





      Taking a mortgage is not a horrible solution. @Adam Klump mentioned Dave Ramesy, who points out that a mortgage is a hedge against inflation. A 15-20 years mortgage defrays the housing cost, and the money you pay with is progressively less expensive thanks to inflation.

      – J E Carter II
      yesterday





      Taking a mortgage is not a horrible solution. @Adam Klump mentioned Dave Ramesy, who points out that a mortgage is a hedge against inflation. A 15-20 years mortgage defrays the housing cost, and the money you pay with is progressively less expensive thanks to inflation.

      – J E Carter II
      yesterday




      1




      1





      @MatthieuM. I'm not a banker but I wonder if hearing "I have enough to pay you back right now but I want to delay a bit" is not better than "I earn money so I hope I'll be able to pay you back on the long term" for a bank.

      – Echox
      yesterday





      @MatthieuM. I'm not a banker but I wonder if hearing "I have enough to pay you back right now but I want to delay a bit" is not better than "I earn money so I hope I'll be able to pay you back on the long term" for a bank.

      – Echox
      yesterday




      1




      1





      @Echox: I am not a banker either, however I would note that the very reason you take a loan is to use the other money elsewhere. There are quite a few stories about people getting a big payment (lottery, inheritance, ...) and spending it all in a few months or years; and even without going so extreme, without any revenue, this lump sum of money is going to shrink over time as it's spent for necessities: food, electricity, phone, ...

      – Matthieu M.
      yesterday





      @Echox: I am not a banker either, however I would note that the very reason you take a loan is to use the other money elsewhere. There are quite a few stories about people getting a big payment (lottery, inheritance, ...) and spending it all in a few months or years; and even without going so extreme, without any revenue, this lump sum of money is going to shrink over time as it's spent for necessities: food, electricity, phone, ...

      – Matthieu M.
      yesterday




      2




      2





      I don't believe that "mensualities " is an English word.

      – Acccumulation
      yesterday





      I don't believe that "mensualities " is an English word.

      – Acccumulation
      yesterday




      1




      1





      @Acccumulation Agreed. It appears to be a French term meaning "monthly payment"

      – Brian
      yesterday





      @Acccumulation Agreed. It appears to be a French term meaning "monthly payment"

      – Brian
      yesterday











      9














      You are overlooking the real cost of automobiles



      People have a strong tendency to wildly delude themselves about the true, total costs of automobiles. About 15 years ago, AAA tallied up the total, real ownership cost of a reasonably recent car. It came out to $7000/year. And those costs haven't exactly gone down.



      You didn't say where you aim to live. But I am guessing the under $400/year property tax doesn't fund a robust public transit system that makes life without a car workable as it might be in Brooklyn, West Hollywood, Little Five Points, city center Detroit, Jefferson City, Santa Cruz, etc.



      Notably none of these places are an hour away from where all the jobs are. So you have plainly identified a location in rural or exurban America. It doesn't havetransit. It may not even have Über. It may be very nice in other ways, and you may have family support there. But you need to deal with the "car" thing.



      The old AAA $7000/year presumed normal 10,000-12,000 mile/year use. A job an hour away - 2 hours driving a day - that means 60-120 miles a day, 15,000 to 30,000 additional miles a year to your car, with higher vehicle costs. Including insurance - the insurer cares when you drive a lot of miles.



      Given your financial status, I gather you would pursue a used car, which means you will run afoul of Harper's Law: Never owe money on a car that's out of warranty. Because then you are really sunk: a broken car is worth nothing so your note is upside down (and they may call the note when they see the tracker stop moving), and you need another car ASAP.



      This kind of overextension is exactly how people enter the death spiral that leads to 470 credit, payday loans and being unbanked.



      The cost of transport must be factored as part of the cost of home ownership.



      Especially if this is a "fixer", you will need to regularly transport building materials. I'm not saying "run out and buy an F150" because then, fuel costs alone on the 1-hour commute will murder you. You would need to rent a truck or pay for the building supply to deliver, so there's that cost too.



      All this points out how wealth isn't cash, it's situation



      Wealth is when your life and your assets are set up to work in your favor and save/make you money.



      Simply having a pile of cash isn't wealth. Simply saving money isn't wealth, especially when the money-saving strategy causes difficult-to-contain expenses.



      So for instance, I would not want to see you moving into a deteriorating trailer home that you can keep holding together. I would want to see you move into a good flipper candidate, so you can use your own skill assets to multiply sweat equity, yielding a property that is worth a lot, which you then sell and do again.



      Even buying for cash is over-rated. I would much rather see you take a mortgage to buy a triplex where transit does work, close to jobs, and where the rental on the other two units mostly pays the mortgage. Rents go up, mortgage payments do not.



      The point is to engineer wealth into your life.






      share|improve this answer



















      • 1





        The average (currently ~13,500 miles/year) includes commute, suggesting a 60 mile commute would be an additional 15,000 doesn't make sense, commuting is the bulk of driving for most. Also, an hour commute doesn't mean you're living somewhere rural, in most major cities the traffic moves quite slowly. For a while I had a 10.8 mile commute that frequently took 1 hour due to traffic, and some places are much worse. I'd like to see that dated AAA data, guessing they include depreciation in that figure and base it on new cars making it of little use.

        – Hart CO
        10 hours ago






      • 1





        @hartco when you lived at the 10.8 mile commute, was your property tax $400? No it was not lol. That, and being an hour from jobs... Both strongly flag "rural". I know rural people with hour commutes, it's 60mi and it's a car killer... Depreciation is a real thing that does matter. Automotive TCO is expensive and people are crazy self-delusional about it, it's almost impossible to get them to honestly tally their true costs. I drive a pre-OBD manual-everything no-A/C econobox, and I do my own tranny swaps for $150, so my TCO is as low as humanly possible, yet still $4k/yr.

        – Harper
        9 hours ago
















      9














      You are overlooking the real cost of automobiles



      People have a strong tendency to wildly delude themselves about the true, total costs of automobiles. About 15 years ago, AAA tallied up the total, real ownership cost of a reasonably recent car. It came out to $7000/year. And those costs haven't exactly gone down.



      You didn't say where you aim to live. But I am guessing the under $400/year property tax doesn't fund a robust public transit system that makes life without a car workable as it might be in Brooklyn, West Hollywood, Little Five Points, city center Detroit, Jefferson City, Santa Cruz, etc.



      Notably none of these places are an hour away from where all the jobs are. So you have plainly identified a location in rural or exurban America. It doesn't havetransit. It may not even have Über. It may be very nice in other ways, and you may have family support there. But you need to deal with the "car" thing.



      The old AAA $7000/year presumed normal 10,000-12,000 mile/year use. A job an hour away - 2 hours driving a day - that means 60-120 miles a day, 15,000 to 30,000 additional miles a year to your car, with higher vehicle costs. Including insurance - the insurer cares when you drive a lot of miles.



      Given your financial status, I gather you would pursue a used car, which means you will run afoul of Harper's Law: Never owe money on a car that's out of warranty. Because then you are really sunk: a broken car is worth nothing so your note is upside down (and they may call the note when they see the tracker stop moving), and you need another car ASAP.



      This kind of overextension is exactly how people enter the death spiral that leads to 470 credit, payday loans and being unbanked.



      The cost of transport must be factored as part of the cost of home ownership.



      Especially if this is a "fixer", you will need to regularly transport building materials. I'm not saying "run out and buy an F150" because then, fuel costs alone on the 1-hour commute will murder you. You would need to rent a truck or pay for the building supply to deliver, so there's that cost too.



      All this points out how wealth isn't cash, it's situation



      Wealth is when your life and your assets are set up to work in your favor and save/make you money.



      Simply having a pile of cash isn't wealth. Simply saving money isn't wealth, especially when the money-saving strategy causes difficult-to-contain expenses.



      So for instance, I would not want to see you moving into a deteriorating trailer home that you can keep holding together. I would want to see you move into a good flipper candidate, so you can use your own skill assets to multiply sweat equity, yielding a property that is worth a lot, which you then sell and do again.



      Even buying for cash is over-rated. I would much rather see you take a mortgage to buy a triplex where transit does work, close to jobs, and where the rental on the other two units mostly pays the mortgage. Rents go up, mortgage payments do not.



      The point is to engineer wealth into your life.






      share|improve this answer



















      • 1





        The average (currently ~13,500 miles/year) includes commute, suggesting a 60 mile commute would be an additional 15,000 doesn't make sense, commuting is the bulk of driving for most. Also, an hour commute doesn't mean you're living somewhere rural, in most major cities the traffic moves quite slowly. For a while I had a 10.8 mile commute that frequently took 1 hour due to traffic, and some places are much worse. I'd like to see that dated AAA data, guessing they include depreciation in that figure and base it on new cars making it of little use.

        – Hart CO
        10 hours ago






      • 1





        @hartco when you lived at the 10.8 mile commute, was your property tax $400? No it was not lol. That, and being an hour from jobs... Both strongly flag "rural". I know rural people with hour commutes, it's 60mi and it's a car killer... Depreciation is a real thing that does matter. Automotive TCO is expensive and people are crazy self-delusional about it, it's almost impossible to get them to honestly tally their true costs. I drive a pre-OBD manual-everything no-A/C econobox, and I do my own tranny swaps for $150, so my TCO is as low as humanly possible, yet still $4k/yr.

        – Harper
        9 hours ago














      9












      9








      9







      You are overlooking the real cost of automobiles



      People have a strong tendency to wildly delude themselves about the true, total costs of automobiles. About 15 years ago, AAA tallied up the total, real ownership cost of a reasonably recent car. It came out to $7000/year. And those costs haven't exactly gone down.



      You didn't say where you aim to live. But I am guessing the under $400/year property tax doesn't fund a robust public transit system that makes life without a car workable as it might be in Brooklyn, West Hollywood, Little Five Points, city center Detroit, Jefferson City, Santa Cruz, etc.



      Notably none of these places are an hour away from where all the jobs are. So you have plainly identified a location in rural or exurban America. It doesn't havetransit. It may not even have Über. It may be very nice in other ways, and you may have family support there. But you need to deal with the "car" thing.



      The old AAA $7000/year presumed normal 10,000-12,000 mile/year use. A job an hour away - 2 hours driving a day - that means 60-120 miles a day, 15,000 to 30,000 additional miles a year to your car, with higher vehicle costs. Including insurance - the insurer cares when you drive a lot of miles.



      Given your financial status, I gather you would pursue a used car, which means you will run afoul of Harper's Law: Never owe money on a car that's out of warranty. Because then you are really sunk: a broken car is worth nothing so your note is upside down (and they may call the note when they see the tracker stop moving), and you need another car ASAP.



      This kind of overextension is exactly how people enter the death spiral that leads to 470 credit, payday loans and being unbanked.



      The cost of transport must be factored as part of the cost of home ownership.



      Especially if this is a "fixer", you will need to regularly transport building materials. I'm not saying "run out and buy an F150" because then, fuel costs alone on the 1-hour commute will murder you. You would need to rent a truck or pay for the building supply to deliver, so there's that cost too.



      All this points out how wealth isn't cash, it's situation



      Wealth is when your life and your assets are set up to work in your favor and save/make you money.



      Simply having a pile of cash isn't wealth. Simply saving money isn't wealth, especially when the money-saving strategy causes difficult-to-contain expenses.



      So for instance, I would not want to see you moving into a deteriorating trailer home that you can keep holding together. I would want to see you move into a good flipper candidate, so you can use your own skill assets to multiply sweat equity, yielding a property that is worth a lot, which you then sell and do again.



      Even buying for cash is over-rated. I would much rather see you take a mortgage to buy a triplex where transit does work, close to jobs, and where the rental on the other two units mostly pays the mortgage. Rents go up, mortgage payments do not.



      The point is to engineer wealth into your life.






      share|improve this answer













      You are overlooking the real cost of automobiles



      People have a strong tendency to wildly delude themselves about the true, total costs of automobiles. About 15 years ago, AAA tallied up the total, real ownership cost of a reasonably recent car. It came out to $7000/year. And those costs haven't exactly gone down.



      You didn't say where you aim to live. But I am guessing the under $400/year property tax doesn't fund a robust public transit system that makes life without a car workable as it might be in Brooklyn, West Hollywood, Little Five Points, city center Detroit, Jefferson City, Santa Cruz, etc.



      Notably none of these places are an hour away from where all the jobs are. So you have plainly identified a location in rural or exurban America. It doesn't havetransit. It may not even have Über. It may be very nice in other ways, and you may have family support there. But you need to deal with the "car" thing.



      The old AAA $7000/year presumed normal 10,000-12,000 mile/year use. A job an hour away - 2 hours driving a day - that means 60-120 miles a day, 15,000 to 30,000 additional miles a year to your car, with higher vehicle costs. Including insurance - the insurer cares when you drive a lot of miles.



      Given your financial status, I gather you would pursue a used car, which means you will run afoul of Harper's Law: Never owe money on a car that's out of warranty. Because then you are really sunk: a broken car is worth nothing so your note is upside down (and they may call the note when they see the tracker stop moving), and you need another car ASAP.



      This kind of overextension is exactly how people enter the death spiral that leads to 470 credit, payday loans and being unbanked.



      The cost of transport must be factored as part of the cost of home ownership.



      Especially if this is a "fixer", you will need to regularly transport building materials. I'm not saying "run out and buy an F150" because then, fuel costs alone on the 1-hour commute will murder you. You would need to rent a truck or pay for the building supply to deliver, so there's that cost too.



      All this points out how wealth isn't cash, it's situation



      Wealth is when your life and your assets are set up to work in your favor and save/make you money.



      Simply having a pile of cash isn't wealth. Simply saving money isn't wealth, especially when the money-saving strategy causes difficult-to-contain expenses.



      So for instance, I would not want to see you moving into a deteriorating trailer home that you can keep holding together. I would want to see you move into a good flipper candidate, so you can use your own skill assets to multiply sweat equity, yielding a property that is worth a lot, which you then sell and do again.



      Even buying for cash is over-rated. I would much rather see you take a mortgage to buy a triplex where transit does work, close to jobs, and where the rental on the other two units mostly pays the mortgage. Rents go up, mortgage payments do not.



      The point is to engineer wealth into your life.







      share|improve this answer












      share|improve this answer



      share|improve this answer










      answered yesterday









      HarperHarper

      22.4k53577




      22.4k53577








      • 1





        The average (currently ~13,500 miles/year) includes commute, suggesting a 60 mile commute would be an additional 15,000 doesn't make sense, commuting is the bulk of driving for most. Also, an hour commute doesn't mean you're living somewhere rural, in most major cities the traffic moves quite slowly. For a while I had a 10.8 mile commute that frequently took 1 hour due to traffic, and some places are much worse. I'd like to see that dated AAA data, guessing they include depreciation in that figure and base it on new cars making it of little use.

        – Hart CO
        10 hours ago






      • 1





        @hartco when you lived at the 10.8 mile commute, was your property tax $400? No it was not lol. That, and being an hour from jobs... Both strongly flag "rural". I know rural people with hour commutes, it's 60mi and it's a car killer... Depreciation is a real thing that does matter. Automotive TCO is expensive and people are crazy self-delusional about it, it's almost impossible to get them to honestly tally their true costs. I drive a pre-OBD manual-everything no-A/C econobox, and I do my own tranny swaps for $150, so my TCO is as low as humanly possible, yet still $4k/yr.

        – Harper
        9 hours ago














      • 1





        The average (currently ~13,500 miles/year) includes commute, suggesting a 60 mile commute would be an additional 15,000 doesn't make sense, commuting is the bulk of driving for most. Also, an hour commute doesn't mean you're living somewhere rural, in most major cities the traffic moves quite slowly. For a while I had a 10.8 mile commute that frequently took 1 hour due to traffic, and some places are much worse. I'd like to see that dated AAA data, guessing they include depreciation in that figure and base it on new cars making it of little use.

        – Hart CO
        10 hours ago






      • 1





        @hartco when you lived at the 10.8 mile commute, was your property tax $400? No it was not lol. That, and being an hour from jobs... Both strongly flag "rural". I know rural people with hour commutes, it's 60mi and it's a car killer... Depreciation is a real thing that does matter. Automotive TCO is expensive and people are crazy self-delusional about it, it's almost impossible to get them to honestly tally their true costs. I drive a pre-OBD manual-everything no-A/C econobox, and I do my own tranny swaps for $150, so my TCO is as low as humanly possible, yet still $4k/yr.

        – Harper
        9 hours ago








      1




      1





      The average (currently ~13,500 miles/year) includes commute, suggesting a 60 mile commute would be an additional 15,000 doesn't make sense, commuting is the bulk of driving for most. Also, an hour commute doesn't mean you're living somewhere rural, in most major cities the traffic moves quite slowly. For a while I had a 10.8 mile commute that frequently took 1 hour due to traffic, and some places are much worse. I'd like to see that dated AAA data, guessing they include depreciation in that figure and base it on new cars making it of little use.

      – Hart CO
      10 hours ago





      The average (currently ~13,500 miles/year) includes commute, suggesting a 60 mile commute would be an additional 15,000 doesn't make sense, commuting is the bulk of driving for most. Also, an hour commute doesn't mean you're living somewhere rural, in most major cities the traffic moves quite slowly. For a while I had a 10.8 mile commute that frequently took 1 hour due to traffic, and some places are much worse. I'd like to see that dated AAA data, guessing they include depreciation in that figure and base it on new cars making it of little use.

      – Hart CO
      10 hours ago




      1




      1





      @hartco when you lived at the 10.8 mile commute, was your property tax $400? No it was not lol. That, and being an hour from jobs... Both strongly flag "rural". I know rural people with hour commutes, it's 60mi and it's a car killer... Depreciation is a real thing that does matter. Automotive TCO is expensive and people are crazy self-delusional about it, it's almost impossible to get them to honestly tally their true costs. I drive a pre-OBD manual-everything no-A/C econobox, and I do my own tranny swaps for $150, so my TCO is as low as humanly possible, yet still $4k/yr.

      – Harper
      9 hours ago





      @hartco when you lived at the 10.8 mile commute, was your property tax $400? No it was not lol. That, and being an hour from jobs... Both strongly flag "rural". I know rural people with hour commutes, it's 60mi and it's a car killer... Depreciation is a real thing that does matter. Automotive TCO is expensive and people are crazy self-delusional about it, it's almost impossible to get them to honestly tally their true costs. I drive a pre-OBD manual-everything no-A/C econobox, and I do my own tranny swaps for $150, so my TCO is as low as humanly possible, yet still $4k/yr.

      – Harper
      9 hours ago











      3














      My advice is to cost-compare buying vs renting before making the plunge to buy a home. Where I live, it's much more cost-effective to rent. Brother and I thought about buying a house. Even if we bought the house out-right with cash, we'd still have insurance and taxes to pay (not to mention any home repairs that might come up). The taxes + insurance alone was more then the cost of renting. Plus, the houses we could afford were located in inconvenient places where we work (the commute would be bad).



      We live in a very mobile economy these days. The idea of buying a house is still part of that American Dream that people hold on to from the past, when people would get employed by a company and work there until retirement. (EG: people working at the same steel mill all their lives, or for the same headquarters corporate office all their lives).



      Companies come and go based on global demands (eg: taxes lower in one country, they shift their headquarters to it. Labor is cheaper in another country, they shift all their manufacturing to it).



      Being anchored to a house can prevent you from being mobile and taking advantage of the mobile world economy.



      Also, some people still have it in their heads that houses appreciate with age (ie: gain value). This isn't always the case. Neighborhoods age. If they age gracefully, then the property value may go up. But, where we live, a lot of neighborhoods are just getting run down. A $200k house in a neighborhood back when is now valued at $150k, simply because the neighborhood is older, the houses are older, and the neighborhoods are becoming more run down. Instead of sticking around and fixing up old houses, people are moving to new houses and the neighborhoods run down. The commercial / businesses around the area are also changing. There used to be nice businesses. But, when the businesses near a neighborhood turn into pawn shops and pay-day loans.. the neighborhood has run down.



      When renting, you're just locked in until your lease is up, and the landlord is responsible for all repairs. If rent goes up, or you get a job some place else, you just move.



      If you have a house, you have to worry about a longer commute if your job moves. You can't jump on jobs that are across the country / globe, because you have a house to get rid of. You can try to turn the house into a rental property, but that can be an extra headache. In a buy'ers market, you will either have to sit on the house or sell it for a loss.



      A house can just be a headache. But, it all depends on what your long-term goals are and the market you live in. For folks wanting to start a family, a house can be great. But, for one or two adults, renting may still be the better way to go.



      So, you should consider why you want to buy a house. If you're chasing the American Dream (ie: everyone says you should), you should look around and see how that American Dream is working out. There are home owners that are stuck with mortgages, or with houses they've paid off that are in rundown neighborhoods where the home has lost value. (A house is not an investment. It's a tangible good that can depreciate in value.) The American Dream of owning your own home and retiring is becoming more and more unobtainable and/or impractical for most folks. I did the math a long time ago, and figured out I could either have kids and own a home.. and work the rest of my life. Or, rent, save my money, not have kids, and retire one day comfortable. I decided retirement sounds better.



      So, you really need to map out your long-term goals, and compare them with current market values and estimated future markets to see what meshes with what you want.



      Since my brother and I looked a while back, I have since settle down with a wife, but even we're sitting here renting, because it simply makes more sense to rent right now. We eventually want to get a home, but the city we live in is a massive metroplex, and the "sweet spot" locations in the middle of the metroplex are insanely expensive. Everyone is moving to the burbs, and the burbs keep pushing out furhter and further with urban sprawl, but that would put us at 2 hour commutes both ways to get to jobs. We decided renting and living near our jobs was much less stressful, and we spend less money, too.






      share|improve this answer








      New contributor




      blahblah is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.

























        3














        My advice is to cost-compare buying vs renting before making the plunge to buy a home. Where I live, it's much more cost-effective to rent. Brother and I thought about buying a house. Even if we bought the house out-right with cash, we'd still have insurance and taxes to pay (not to mention any home repairs that might come up). The taxes + insurance alone was more then the cost of renting. Plus, the houses we could afford were located in inconvenient places where we work (the commute would be bad).



        We live in a very mobile economy these days. The idea of buying a house is still part of that American Dream that people hold on to from the past, when people would get employed by a company and work there until retirement. (EG: people working at the same steel mill all their lives, or for the same headquarters corporate office all their lives).



        Companies come and go based on global demands (eg: taxes lower in one country, they shift their headquarters to it. Labor is cheaper in another country, they shift all their manufacturing to it).



        Being anchored to a house can prevent you from being mobile and taking advantage of the mobile world economy.



        Also, some people still have it in their heads that houses appreciate with age (ie: gain value). This isn't always the case. Neighborhoods age. If they age gracefully, then the property value may go up. But, where we live, a lot of neighborhoods are just getting run down. A $200k house in a neighborhood back when is now valued at $150k, simply because the neighborhood is older, the houses are older, and the neighborhoods are becoming more run down. Instead of sticking around and fixing up old houses, people are moving to new houses and the neighborhoods run down. The commercial / businesses around the area are also changing. There used to be nice businesses. But, when the businesses near a neighborhood turn into pawn shops and pay-day loans.. the neighborhood has run down.



        When renting, you're just locked in until your lease is up, and the landlord is responsible for all repairs. If rent goes up, or you get a job some place else, you just move.



        If you have a house, you have to worry about a longer commute if your job moves. You can't jump on jobs that are across the country / globe, because you have a house to get rid of. You can try to turn the house into a rental property, but that can be an extra headache. In a buy'ers market, you will either have to sit on the house or sell it for a loss.



        A house can just be a headache. But, it all depends on what your long-term goals are and the market you live in. For folks wanting to start a family, a house can be great. But, for one or two adults, renting may still be the better way to go.



        So, you should consider why you want to buy a house. If you're chasing the American Dream (ie: everyone says you should), you should look around and see how that American Dream is working out. There are home owners that are stuck with mortgages, or with houses they've paid off that are in rundown neighborhoods where the home has lost value. (A house is not an investment. It's a tangible good that can depreciate in value.) The American Dream of owning your own home and retiring is becoming more and more unobtainable and/or impractical for most folks. I did the math a long time ago, and figured out I could either have kids and own a home.. and work the rest of my life. Or, rent, save my money, not have kids, and retire one day comfortable. I decided retirement sounds better.



        So, you really need to map out your long-term goals, and compare them with current market values and estimated future markets to see what meshes with what you want.



        Since my brother and I looked a while back, I have since settle down with a wife, but even we're sitting here renting, because it simply makes more sense to rent right now. We eventually want to get a home, but the city we live in is a massive metroplex, and the "sweet spot" locations in the middle of the metroplex are insanely expensive. Everyone is moving to the burbs, and the burbs keep pushing out furhter and further with urban sprawl, but that would put us at 2 hour commutes both ways to get to jobs. We decided renting and living near our jobs was much less stressful, and we spend less money, too.






        share|improve this answer








        New contributor




        blahblah is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
        Check out our Code of Conduct.























          3












          3








          3







          My advice is to cost-compare buying vs renting before making the plunge to buy a home. Where I live, it's much more cost-effective to rent. Brother and I thought about buying a house. Even if we bought the house out-right with cash, we'd still have insurance and taxes to pay (not to mention any home repairs that might come up). The taxes + insurance alone was more then the cost of renting. Plus, the houses we could afford were located in inconvenient places where we work (the commute would be bad).



          We live in a very mobile economy these days. The idea of buying a house is still part of that American Dream that people hold on to from the past, when people would get employed by a company and work there until retirement. (EG: people working at the same steel mill all their lives, or for the same headquarters corporate office all their lives).



          Companies come and go based on global demands (eg: taxes lower in one country, they shift their headquarters to it. Labor is cheaper in another country, they shift all their manufacturing to it).



          Being anchored to a house can prevent you from being mobile and taking advantage of the mobile world economy.



          Also, some people still have it in their heads that houses appreciate with age (ie: gain value). This isn't always the case. Neighborhoods age. If they age gracefully, then the property value may go up. But, where we live, a lot of neighborhoods are just getting run down. A $200k house in a neighborhood back when is now valued at $150k, simply because the neighborhood is older, the houses are older, and the neighborhoods are becoming more run down. Instead of sticking around and fixing up old houses, people are moving to new houses and the neighborhoods run down. The commercial / businesses around the area are also changing. There used to be nice businesses. But, when the businesses near a neighborhood turn into pawn shops and pay-day loans.. the neighborhood has run down.



          When renting, you're just locked in until your lease is up, and the landlord is responsible for all repairs. If rent goes up, or you get a job some place else, you just move.



          If you have a house, you have to worry about a longer commute if your job moves. You can't jump on jobs that are across the country / globe, because you have a house to get rid of. You can try to turn the house into a rental property, but that can be an extra headache. In a buy'ers market, you will either have to sit on the house or sell it for a loss.



          A house can just be a headache. But, it all depends on what your long-term goals are and the market you live in. For folks wanting to start a family, a house can be great. But, for one or two adults, renting may still be the better way to go.



          So, you should consider why you want to buy a house. If you're chasing the American Dream (ie: everyone says you should), you should look around and see how that American Dream is working out. There are home owners that are stuck with mortgages, or with houses they've paid off that are in rundown neighborhoods where the home has lost value. (A house is not an investment. It's a tangible good that can depreciate in value.) The American Dream of owning your own home and retiring is becoming more and more unobtainable and/or impractical for most folks. I did the math a long time ago, and figured out I could either have kids and own a home.. and work the rest of my life. Or, rent, save my money, not have kids, and retire one day comfortable. I decided retirement sounds better.



          So, you really need to map out your long-term goals, and compare them with current market values and estimated future markets to see what meshes with what you want.



          Since my brother and I looked a while back, I have since settle down with a wife, but even we're sitting here renting, because it simply makes more sense to rent right now. We eventually want to get a home, but the city we live in is a massive metroplex, and the "sweet spot" locations in the middle of the metroplex are insanely expensive. Everyone is moving to the burbs, and the burbs keep pushing out furhter and further with urban sprawl, but that would put us at 2 hour commutes both ways to get to jobs. We decided renting and living near our jobs was much less stressful, and we spend less money, too.






          share|improve this answer








          New contributor




          blahblah is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
          Check out our Code of Conduct.










          My advice is to cost-compare buying vs renting before making the plunge to buy a home. Where I live, it's much more cost-effective to rent. Brother and I thought about buying a house. Even if we bought the house out-right with cash, we'd still have insurance and taxes to pay (not to mention any home repairs that might come up). The taxes + insurance alone was more then the cost of renting. Plus, the houses we could afford were located in inconvenient places where we work (the commute would be bad).



          We live in a very mobile economy these days. The idea of buying a house is still part of that American Dream that people hold on to from the past, when people would get employed by a company and work there until retirement. (EG: people working at the same steel mill all their lives, or for the same headquarters corporate office all their lives).



          Companies come and go based on global demands (eg: taxes lower in one country, they shift their headquarters to it. Labor is cheaper in another country, they shift all their manufacturing to it).



          Being anchored to a house can prevent you from being mobile and taking advantage of the mobile world economy.



          Also, some people still have it in their heads that houses appreciate with age (ie: gain value). This isn't always the case. Neighborhoods age. If they age gracefully, then the property value may go up. But, where we live, a lot of neighborhoods are just getting run down. A $200k house in a neighborhood back when is now valued at $150k, simply because the neighborhood is older, the houses are older, and the neighborhoods are becoming more run down. Instead of sticking around and fixing up old houses, people are moving to new houses and the neighborhoods run down. The commercial / businesses around the area are also changing. There used to be nice businesses. But, when the businesses near a neighborhood turn into pawn shops and pay-day loans.. the neighborhood has run down.



          When renting, you're just locked in until your lease is up, and the landlord is responsible for all repairs. If rent goes up, or you get a job some place else, you just move.



          If you have a house, you have to worry about a longer commute if your job moves. You can't jump on jobs that are across the country / globe, because you have a house to get rid of. You can try to turn the house into a rental property, but that can be an extra headache. In a buy'ers market, you will either have to sit on the house or sell it for a loss.



          A house can just be a headache. But, it all depends on what your long-term goals are and the market you live in. For folks wanting to start a family, a house can be great. But, for one or two adults, renting may still be the better way to go.



          So, you should consider why you want to buy a house. If you're chasing the American Dream (ie: everyone says you should), you should look around and see how that American Dream is working out. There are home owners that are stuck with mortgages, or with houses they've paid off that are in rundown neighborhoods where the home has lost value. (A house is not an investment. It's a tangible good that can depreciate in value.) The American Dream of owning your own home and retiring is becoming more and more unobtainable and/or impractical for most folks. I did the math a long time ago, and figured out I could either have kids and own a home.. and work the rest of my life. Or, rent, save my money, not have kids, and retire one day comfortable. I decided retirement sounds better.



          So, you really need to map out your long-term goals, and compare them with current market values and estimated future markets to see what meshes with what you want.



          Since my brother and I looked a while back, I have since settle down with a wife, but even we're sitting here renting, because it simply makes more sense to rent right now. We eventually want to get a home, but the city we live in is a massive metroplex, and the "sweet spot" locations in the middle of the metroplex are insanely expensive. Everyone is moving to the burbs, and the burbs keep pushing out furhter and further with urban sprawl, but that would put us at 2 hour commutes both ways to get to jobs. We decided renting and living near our jobs was much less stressful, and we spend less money, too.







          share|improve this answer








          New contributor




          blahblah is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
          Check out our Code of Conduct.









          share|improve this answer



          share|improve this answer






          New contributor




          blahblah is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
          Check out our Code of Conduct.









          answered yesterday









          blahblahblahblah

          311




          311




          New contributor




          blahblah is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
          Check out our Code of Conduct.





          New contributor





          blahblah is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
          Check out our Code of Conduct.






          blahblah is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
          Check out our Code of Conduct.























              1














              One important thing to consider is why you're buying a house. Don't buy one as a financial investment. Houses are notoriously non-liquid assets, and a surprisingly large amount of money goes into maintenance, so even if you avoid wiping out your savings by getting a mortgage (which, as noted, might be more difficult if you've been abroad), comparing the mortgage payment to rent isn't always a fair comparison. Home ownership is an investment, but it's more in terms of stability than in finances, and it's not one to be bought at the risk of the other.






              share|improve this answer




























                1














                One important thing to consider is why you're buying a house. Don't buy one as a financial investment. Houses are notoriously non-liquid assets, and a surprisingly large amount of money goes into maintenance, so even if you avoid wiping out your savings by getting a mortgage (which, as noted, might be more difficult if you've been abroad), comparing the mortgage payment to rent isn't always a fair comparison. Home ownership is an investment, but it's more in terms of stability than in finances, and it's not one to be bought at the risk of the other.






                share|improve this answer


























                  1












                  1








                  1







                  One important thing to consider is why you're buying a house. Don't buy one as a financial investment. Houses are notoriously non-liquid assets, and a surprisingly large amount of money goes into maintenance, so even if you avoid wiping out your savings by getting a mortgage (which, as noted, might be more difficult if you've been abroad), comparing the mortgage payment to rent isn't always a fair comparison. Home ownership is an investment, but it's more in terms of stability than in finances, and it's not one to be bought at the risk of the other.






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                  One important thing to consider is why you're buying a house. Don't buy one as a financial investment. Houses are notoriously non-liquid assets, and a surprisingly large amount of money goes into maintenance, so even if you avoid wiping out your savings by getting a mortgage (which, as noted, might be more difficult if you've been abroad), comparing the mortgage payment to rent isn't always a fair comparison. Home ownership is an investment, but it's more in terms of stability than in finances, and it's not one to be bought at the risk of the other.







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                  answered 11 hours ago









                  Sean DugganSean Duggan

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