Owning versus renting is a huge discussion these days. People are either all about renting or throwing their money into owning. It doesn’t even matter what it is: homes, cars, clothes. You name it, there is a discussion about it. While I am a big proponent of saving money, I also know it’s important to consider how you spend it.
The Pros and Cons of Owning
- You’re building equity. Especially in things like homes, when you purchase it, you are continuing to build your financial portfolio and continue to build wealth.
- After you finish paying it off, no one can take it from you. This is huge. Especially if there is a financial recession and you can’t afford to continue to make payments, no one can evict you if you own it.
- You can change things without penalty. This is probably one of my favorite aspects of ownership. You have the power to change things because it’s your property.
- Building your credit score. Until you pay off your purchase, every on top monthly payment adds to your credit score!
- Once you buy it, you’re stuck with it for the foreseeable future. You can’t return a home after all! Now, you can sell it, but it takes a lot of work and time compared to something like returning clothes.
- You have to spend money on it. When something breaks, you’re on the hook for it. This is pretty awful if you’re not super handy yourself (hello service call fees). However, you can also learn new skills!
The Pros and Cons of Renting
- You can get new things more often. This is the perk to renting clothes: you get new clothes whenever you want.
- You might not have to pay to maintain the item. While this is not true in cars, you don’t have to pay to fix basic things in apartments, for clothes, etc.
- Gives you the opportunity to see if you like it. This is nice if you’re trying out a new place to live or something like that.
- Opportunity to build your credit score. This is such a great way to build your credit score since it’s a monthly payment.
- You are spending dollars on something you don’t own. This is actually major because when you are renting, you don’t get money back when you return something. Instead, you give the company a certain amount of money so you can have the use of something (house, apartment, clothes, car, etc.). So let’s say you rent clothes. You pay the company to “borrow” the clothes and then you return them. You then pay another fee to rent more. If you bought the clothes outright, you could at least sell them somewhere for some more money.
- You might be responsible for general maintenance. This is especially true for cars! While you don’t own the vehicle, you have to pay for the same general stuff you would if you owned it.
- Major fees! There are often some pretty hefty fees added on if you don’t follow the contract you signed. Again, this is especially true for leases on cars when they have a mileage limit. I literally cringe thinking about how much you could owe.
- Reducing the carbon footprint. Y’all I truly understand this argument; however, I have to disagree that you’re helping out the enormous carbon footprint. The reason why, is when it comes to renting clothes, you’re paying to ship clothes back and forth. This is not something you have to worry about when buying clothes.
Owning Versus Renting: The Final Thoughts
Overall, I truly believe that you should own when having the choice between owning and renting. However, you end up spending more money when you are renting on something you won’t get money back out of. For me, I would rather know that I’m going to be able to get money back for the sale of an item instead of knowing I’ll return it with nothing coming back to me.
The amount of money you have to spend to lease something (apartment, car, etc.) is astronomical and almost just as much as a down payment or other fees on something you would own that is equitable. For instead, oftentimes what you need to put down to start a lease on a car is equitable to what you would pay in closing costs for a house.
What are your thoughts?