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Financial Feud: Rent an apartment vs. A home

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In Dispute:

$325 a month

The Argument:

Sean

My wife and I are moving to Sonoma, Calif. this summer, but can’t agree on how much to spend on rent. She’s set on a single family home for $1,525 a month and says a comfortable living situation is worth paying more for. I think we should live in a smaller place and pay as little rent as possible -- around $1,200 a month -- so that we have money left over to save and do the things we love, like travel. AM I RIGHT?

Expert Opinion:

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Sean

The Argument:

My wife and I frequently fight over money. After losing my job, we both returned to school and are now living on student loans and borrowed money. We have two daughters and often disagree over what is a want and what is a need.

In terms of a home for our family, we both agree that we'd like to have room for a garden and some chickens, and we're adamant about being in a good school district. But, I'd like to wait until we can better afford it. My wife wants it now and doesn’t mind taking on a small amount of additional debt to pay for it. She’ll be at home taking care of our newborn until she starts a nursing program next fall and doesn’t want to go stir crazy as a stay-at-home mom.

In a couple of years, I’ll be a certified public accountant and she’ll be done with nursing school. We’ll both be in a position to make more money, so she thinks we’ll be able to pay off our debts then.

I think at you and your wife’s stages of life, career and family (all developing and growing), your preference for the lower rent option is smart -- not because you’ll have more money to “do the things [you] love, like travel,” but to avoid taking on more debt.

It’s always a bad idea to count on future higher income when making decisions about present consumption; it leads to borrowing that sometimes does not get paid off later, but simply rolled over.  Incomes sometimes don’t grow as hoped, and unexpected expenses come up.  (I know this from personal experience.) 

Try sacrificing the house space now in order to make it more likely you’ll safely afford a nicer house later.

About the author

Diane Lim is a DC-area economist dedicated to wise, fiscally-responsible and socially-valuable public policies, and a mom dedicated to four great kids.

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