# Ultimate List - Buy vs Rent



## MrBlackhill (Jun 10, 2020)

I'm not an expert, so please comment and I'll make adjustments.

Also, please comment what I should add to this list and I'll edit the post.


OwnerRenterYou are leveraging your money. The increase in value of your property is making you money on a huge chunk of money that you don't have at the moment.Once you reach a high wealth, that money invested in the market may increase in value faster than the increase in value of a property.Once the property is fully paid, your only expenses will be taxes and maintenance.You will continue paying the rent forever, which includes the increased renting cost year over year.You have to pay taxes on the property.You don't pay taxes on the property.If something has to be repaired or renovated, it's all on you. Buying the wrong property could suck all of your money for renovations and force you to sell at loss at some point if you cannot afford it anymore.You don't have the financial stress of maintenance and renovations.You can live there forever.The owner could kick you out.There's a lot of irrecuperable costs when you buy or sell a property.You can easily and freely move to a different location.The value of your property is not liquid. You need an HELOC to access that money and you'll pay interests on that money.You can freely access your money at no cost, depending on the account type and taxes implications.Mortgages are an efficient way to force people investing money in an asset (their home).Since the expenses of renting are lower than owning, you may end up spending the extra money instead of investing it or not tightening your belt as much as an owner. You are dependent of rising interests. If you bought something too expensive and rising interests forces you to sell, you may end up selling at loss. Also, you may not enjoy the present moment due to having no extra money left. If you have a bad year financially, you'll be squeezed by that amount of money you have to pay each month for your mortgage.Rising interests don't have the same impact on your finances. You gage how much money is invested for the future and how much is used to enjoy the present moment. You can reduce the amount of money going into investments if you have a bad year financially for a stress relief.You can do as much renovations as you wish.You have to accept every bad configuration and design of the place you are renting and the choices the owner will make for renovations and maintenance.You may end up spending money on unnecessary aesthetic renovations.You aren't in charge of the renovations, so you don't risk making such bad financial decisions.Until you build more wealth, most of your wealth is in a single asset : your property.You can fully control the diversification of your assets.You quickly have access to a secured loan at low rate.You need to build your wealth to secure a loan.You can rent your property and end up making money and even benefit from some taxes deductions.You are the renter giving your money to the owner.You have to insure your property.You only need insurance for personal belongings.If something has to be fixed, you are in charge of making it happen quickly and it'll be fixed the way you want it to be fixed.If something has to be fixed, you may wait a while due to a bad service from the owner and he may not agree to fix it or not the way you'd like it to be fixed.You make the rules if you want pets, if you want to smoke indoors, if you want outdoor decorations and such.The owner decides of the rules.


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## sags (May 15, 2010)

That is the best list I have seen yet. I like the green for good and the red for bad.

Add a header.........owner......renter......for those who can't figure it out without help.

Otherwise I give it an A+

Oops......maybe add snow shoveling,lawn cutting and leaf raking. Those are three things I don't miss about owning a home anymore.

In fact today I drank coffee and watched the maintenance guys cutting the grass. I love the smell of fresh cut grass when someone else is doing it.


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## nathan79 (Feb 21, 2011)

sags said:


> Oops......maybe add snow shoveling,lawn cutting and leaf raking. Those are three things I don't miss about owning a home anymore.
> 
> In fact today I drank coffee and watched the maintenance guys cutting the grass. I love the smell of fresh cut grass when someone else is doing it.


In a detached home the tenant generally does all of those things. If it's a townhome or condo, the building maintenance handles them regardless of whether one owns or rents. No difference.


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## prisoner24601 (May 27, 2018)

Buy: You have to pay insurance on a property that you own each year
Buy: you may have to renew your mortgage at a higher rate every 5 years


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## AltaRed (Jun 8, 2009)

There have been a number of buy vs rent threads/discussions in the past. Much of it is lifestyle preference, e.g. nesting, but with the exception of certain hot markets where price appreciation has clearly made owning more economically attractive, most studies show renting to be more cost effective, assuming capital otherwise deployed into ownership has been invested effectively in capital markets.

What most people generally do not take into account is the amount of money sunk into owned property for upgrades, additions and renovations that would not otherwise occur in rented property. Houses are generally money pits at a capital injection rate of 1-3% of house market value per year. If they kept a detailed list of all the expenditures they make, most would be shocked.

I have owned 8 principal residences and rented houses 3 times in my 50+ years. Most of the owned situations were positive while a few were not, and all 3 rented situations were positive.


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## cainvest (May 1, 2013)

AltaRed said:


> Houses are generally money pits at a capital injection rate of 1-3% of house market value per year. If they kept a detailed list of all the expenditures they make, most would be shocked.


Upkeep is definitely a ongoing cost. From a purely financial aspect, I see many just pouring money into renovations that are not required, like $40k for a new kitchen every 7-10 years. For those that do those types of things it definitely isn't an investment.


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## AltaRed (Jun 8, 2009)

cainvest said:


> Upkeep is definitely a ongoing cost. From a purely financial aspect, I see many just pouring money into renovations that are not required, like $40k for a new kitchen every 7-10 years. For those that do those types of things it definitely isn't an investment.


It is 'nesting' driven, granted a new kitchen every 7-10 years is excessive. But every 15-20 years is not excessive for overhauls of kitchens and baths in particular, and 20-25 year cycles on most everything else. 

To keep a house relatively current and well maintained and marketable, a complete cycle every 25 years is not unusual.


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## Rusty O'Toole (Feb 1, 2012)

Two facts you overlooked. If you stay in the same rented house or apartment for years, the rent keeps getting cheaper under Ontario rent control. I have seen cases where people were paying less than half the going rate for units they lived in for 20 years. The other thing is, the landlord CANNOT evict you without cause. If you pay the rent, keep the place clean, don't raise hell and are not a criminal the only way to get you out is if they need the unit for themselves or a close relative, and they have to move in for at least a year. If you rent from a large company, as opposed to a little mom and pop operator, they can't even use that excuse.
If you plan ahead and rent a nice unit, even if it seems expensive to start, in 5 years it will be cheap and get cheaper every year. I think the prize winner was a woman who rented the same 3 bedroom apartment for 42 years, she was paying $240 a month including utilities when others in the building were paying over $1000. She and a few others in similar situations, were the reason I could not buy the property because the income was too low to carry it, even though the price was reasonable.


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## jargey3000 (Jan 25, 2011)

sags said:


> In fact today I drank coffee and watched the maintenance guys cutting the grass. I love the smell of fresh cut grass when someone else is doing it.


I love hard work! I can sit & watch someone doing it for hours!


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## off.by.10 (Mar 16, 2014)

It might be interesting to have a "condo" column as well. Otherwise, fun list to read.


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## MrBlackhill (Jun 10, 2020)

What do you think about these comparative calculations?

Scenario 1

Buying a $600,000 house
Down payment of $100,000
Mortgage of $500,000 at 3% over 25 years
House increases in value by 5% per year
Taxes are about 1% of the house value
Maintenance costs are about 1% of the house value
Scenario 2

Rents an equivalent house at a price-to-rent ratio of 20, therefore $2,500 per month
Rent is increased by 2% per year
Invests the difference between owning and renting at 8% return rate
Observations

Once the house is fully paid on the 25th year, it's worth about $2M while the renter has about $1.5M in investments
Even though the house is fully paid, on the 35th year, the house value and the renter's investments are worth the same and it becomes better to sell the house, invest that money and rent
They say to plan about 1% of house value in maintenance, but I doubt it holds true throughout 40 years with a house increasing in value at a rate of 5%
It's pretty a rough estimate and very theoretical, as to make things fair the renter actually sells some of its investment in years 26 to 32 because his renting cost is higher than the owner's costs
*This is just a financial comparison. Whether you should buy or rent is a personal decision and a lifestyle decision.*


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## ecorso (May 15, 2021)

Wow!!!!!!!!!!
Great job and I appreciate your hard work!


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## james4beach (Nov 15, 2012)

Great job here @MrBlackhill and I think your red/green list is excellent.

You might want to take a look at two videos from Ben Felix on this. Here's part 1 and some more calculations in part 2.

I think your calculation exercise shows that it's pretty much a wash (with uncertainty of the parameters) and either renting or home buying can work out better, depending on the timing, etc.

One thing worth noting is that many people are *not* disciplined savers or investors, and home ownership forces savings, plus the "buy and hold" nature of the asset protects the person from behavioural problems that they might be vulnerable to if they had gone with stocks. The same person might constantly chase returns and have a lot of turnover in stocks or mutual funds, but is prevented from doing that with their "buy and hold" house ... resulting in a better outcome with home ownership, *purely due to behavioural reasons*.

A renter might also spend away all their extra cashflow and not save up anything for the future. Or, like many of my friends, they might sit on the cash and fail to invest it properly in a portfolio that's getting a positive real return.

As I get older, I actually think these are reasons that "home ownership" works out so well for people and helps average people become so wealthy. It's actually much harder (requires more effort and discipline) as a renter to save your extra cash, and diligently put it into an investment portfolio, AND structure those investments well, AND maintain discipline.

I can point you to 3 or 4 friends of mine who are renters, have tons of extra cash, but have been sitting on _over a hundred K in cash_ for years, instead of investing it and getting a CAGR.


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## nathan79 (Feb 21, 2011)

james4beach said:


> A renter might also spend away all their extra cashflow and not save up anything for the future. Or, like many of my friends, they might sit on the cash and fail to invest it properly in a portfolio that's getting a positive real return.


That's pretty much what happens to the vast majority of people who rent...

_For those nearing retirement age (55 to 64), the median net worth of homeowners was $952,100, compared with $40,000 for renters. This suggests that renters in this age group have not accumulated a large nest-egg in preparation for retirement.






The Daily — Survey of Financial Security, 2019


The median net worth of Canadian families was $329,900 in 2019. Net worth was lower for younger families, lone-parent families, renters, and families without an employer pension plan. On an annualized basis, the net worth of Canadian families was up 1.8% per year from 2016 to 2019.




www150.statcan.gc.ca




_


james4beach said:


> I can point you to 3 or 4 friends of mine who are renters, have tons of extra cash, but have been sitting on _over a hundred K in cash_ for years, instead of investing it and getting a CAGR.


That's literally me. But the main reason I have all of this cash laying around was because I was hoping to actually buy a house... which didn't exactly work out because I could never keep up with the housing market. Had I been invested all along, I would be much further ahead right now.


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## james4beach (Nov 15, 2012)

As a thought experiment, related to an idea @MarcoE brought up before: imagine you have a dumb old balanced fund in an investment portfolio. It has some special characteristics:

you must add $ each month, or else you'll be thrown out onto the street
your credit history will be destroyed if you fail to invest every month
you can't change the asset allocation at all, you can't fiddle with the portfolio
it's *impossible* to disrupt this investment and put the money in Bitcoin instead
you only vaguely know the value of your investment portfolio
you don't see daily or even monthly changes
selling it is incredibly difficult and expensive
If that was your stock investment portfolio, you're certain to do tremendously well over the long term. It's mainly thanks to forced saving, forced investment, and forced discipline. Home ownership with a mortgage gives you exactly this situation.


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## MrBlackhill (Jun 10, 2020)

james4beach said:


> One thing worth noting is that many people are *not* disciplined savers or investors, and home ownership forces savings, plus the "buy and hold" nature of the asset protects the person from behavioural problems that they might be vulnerable to if they had gone with stocks. The same person might constantly chase returns and have a lot of turnover in stocks or mutual funds, but is prevented from doing that with their "buy and hold" house ... resulting in a better outcome with home ownership, *purely due to behavioural reasons*.
> 
> A renter might also spend away all their extra cashflow and not save up anything for the future. Or, like many of my friends, they might sit on the cash and fail to invest it properly in a portfolio that's getting a positive real return.


Very true for most people. Meanwhile, now that I'm an owner, I feel the opposite and wish I was a renter.

First, I know I can manage my personal finances pretty well when it comes to investment products. As a couple though, it's... much harder. I may be investing in stock-picking at the moment, but the first 8 years of my savings life were just me asking my bank to setup a weekly auto-deposit in the highest risk-reward fund they could offer me (which was... not that risky actually). And never looking at my investments, while making maybe something like 6% to 8% CAGR. And every time I got promoted, I went to the bank and asked to increase my weekly auto-deposit and reassess if they could offer me a higher risk-reward fund. Everything was running smooth, I was sleeping at night, enjoying the present moment with activities and travels, while saving slowly but surely for the future.

Then I found the girlfriend with whom I'd be willing to spend my whole life. And then came the discussions about having a baby, about needing more space to raise the baby, etc. And the idea to buy something to build our family nest. I must tell you, I'm the kind of guy who could've lived his whole life single living in a van around the world. But then yeah... the girlfriend... the family plans... and love. Good or bad decision, I'll never know. I wish I could've lived both lives.

So we decided to hunt for something to buy during these times of bubble real estate market with 15 over biddings on every property we'd visit. We first wanted a $350,000 condo, already renovated. Then we've let our agent convince us to buy a $650,000 duplex, not renovated, with 5% down payment. And now 2 years later, we have a $600,000 mortgage ongoing, we've made $200,000 renovations, which includes a $100,000 debt to my parents and a financial situation where I must use another $10,000 of our LoC as we have absolutely no money left in our bank account and a baby coming.

If some people don't sleep at night due to their investments in the market, well I do sleep very well at night with my investments in the market. Though I've been awake many nights thinking about the costs of the renovations, how my spouse wants that $50,000 bathroom and that $2,000 smart touch faucet in the kitchen, when will the 5-figures bills stop, can we really afford all this, is it good investment or luxury, will we be able to travel again, what if something breaks and needs a $20,000 reparation while we already have $10,000 on our LoC, will we be able to pay our debts before the next renovations, what if the baby gets sick, what is my spouse can't secure a permanent position at her current salary, etc. Not only that, it was also countless evenings shopping and countless nights talking about what we've been shopping. That's 7 months of renovations and it didn't cost only $200,000, it also cost me and my spouse lots of precious time. Maybe 30h a week of shopping and discussions during 7 months while she was pregnant. That's 30 weeks, multiplied by 30h, multiplied by a 30$/h net salary for each of us. Decide how you want to see it between 900h of our time each or a total of $54,000 if that time was paid to our net salary. A precious time that we could've invested elsewhere.

Will that bring us a higher net worth? And more importantly, while that make us enjoy life more? Well, we haven't enjoyed life pretty much for the past 7 months. And as I make some calculations, we certainly won't enjoy life pretty much the next year, other than free activities.

I've made a much more detailed table of calculations of our exact situation comparing forecast for our status as owner and what-if we rented. Obviously, since investments are compounding, it's pretty sensible to the parameters...

If our property increases in value at a rate of 6%/year while investing the extra money as a renter would be at a rate of 8%/year, then I should keep my property forever
If our property increases in value at a rate of 4%/year while investing the extra money as a renter would be at a rate of 8%/year, then I should sell after 30 years
If our property increases in value at a rate of 5%/year while investing the extra money as a renter would be at a rate of 10%/year, then I should sell after 20 years
If our property increases in value at a rate of 5%/year while investing the extra money as a renter would be at a rate of 11%/year, then I should sell after 15 years
If our property increases in value at a rate of 5%/year while investing the extra money as a renter would be at a rate of 12%/year, then I shouldn't have bought the property
That's from a financial stand point only, but honestly I have no preference between being an owner or a renter. I think I like the laziness and stress-less of being a renter. But I'm hoping that being owners will be a better financial decision for at least the next 15 years. Now that I'm an owner, I'm actually hoping that the real estate market of Montreal will follow the path of Vancouver and Toronto and that rents will continue to rise.


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> Very true for most people. Meanwhile, now that I'm an owner, I feel the opposite and wish I was a renter.
> . . .
> Then we've let our agent convince us to buy a $650,000 duplex, not renovated, with 5% down payment. And now 2 years later, we have a $600,000 mortgage ongoing, we've made $200,000 renovations


You've really showed the other side of this. Amazing how complicated these things are in real life, versus on paper. But yeah this is a good demonstration of how a house does not result in forced saving like my ideal.

I've been dating, but I've never lived with my partner. I have anxiety about what happens when getting a house together. Sometimes I wonder if all my hard work to build my financial future will be thrown away once I start living with a girlfriend/wife.

Do you have a household budget? This should provide guidelines on what you can spend. The budget should provide a template about how much money has to be saved & invested. You can't spend unlimited amounts. There has to be a cap on spending. I have a cap on mine too.

Can you not look at the budget, see that you're already at your annual spending limit, and say: no we can't afford a $50,000 bathroom right now. Or no, the budget says we can't afford a $2,000 faucet. How about we revisit this upgrade later?


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## afulldeck (Mar 28, 2012)

MrBlackhill said:


> Very true for most people. Meanwhile, now that I'm an owner, I feel the opposite and wish I was a renter.
> 
> That's from a financial stand point only, but honestly I have no preference between being an owner or a renter. I think I like the laziness and stress-less of being a renter. But I'm hoping that being owners will be a better financial decision for at least the next 15 years. Now that I'm an owner, I'm actually hoping that the real estate market of Montreal will follow the path of Vancouver and Toronto and that rents will continue to rise.


I'm a renter, who has owned two homes in the past. I find renting stress free, since my DW isn't asking to upgrade the kitchen every few years. If she asked for changes to the rental (lights, fixtures, fans) I just do it. Its cheaper than putting in a pool or a hot tub or fixing the roof and we are saving more....


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## MrBlackhill (Jun 10, 2020)

james4beach said:


> You've really showed the other side of this. Amazing how complicated these things are in real life, versus on paper. But yeah this is a good demonstration of how a house does not result in forced saving like my ideal.
> 
> I've been dating, but I've never lived with my partner. I have anxiety about what happens when getting a house together. Sometimes I wonder if all my hard work to build my financial future will be thrown away once I start living with a girlfriend/wife.
> 
> ...


Well, finances is a though subject in my couple. My spouse always hated finances. She has lots of qualities, but that's definitely not one of them. I mean, simply having to input the secret answer to an interac transfer is too much to ask her. Whenever I wanted to talk about making financial choices, she was having a fit. She has no clue of her personal finances and she can't tell why her last credit card bill was so high. She's materialistic. Unconsciously, she ends up always wanting the most expensive stuff. And she cannot get rid of her old stuff. When it comes to finances, we're totally at the opposite, so it makes it though to manage. Since she hates finances, so, obviously, I'm managing all of the finances... But that actually means that I'm watching the finances crumble and trying to save here and there while she's... on the spending side of the equation and having a fit because she "wants it so much" or "needs it so much" otherwise she'd be so sad and disappointed. She thought I was a pain every time I said something was too expense or we should save more. And she wants to be able to have everything NOW. So, at some point, I made sure we would be ok to pay the renovations but I knew there would be money missing for decoration and furniture. Since I couldn't get a decent talk with her, I just said "well, since you don't want to hear me about making choices and saving, I'll just say yes to everything you want but then I'll tell you once we have no more money and we'll have to stop all the spending at that point". As the story goes, last week, while she was talking about the next things she wanted to buy, I got one of the last bills for the renovations, which emptied our account and required us to use our LoC. And then I told her "we have no more money now, you won't have any of that because you didn't want to sit with me and plan properly the expenses and we won't be able to travel next year with the baby as we both wished". Her face changed, she started to stress, asking how come we got in that situation. And then I got her to sit down calmly and take about finances, make a real budget and forecast all the cashflow until the end of the year. She has wonderful qualities, but that's one huge issue on which I'm working hard.

On a positive note... Our luxury bathroom is absolutely amazing, haha! (And so are the rest of the renovations. And now we're mostly done with the renovations of our unit for the next 20+ years.)


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## james4beach (Nov 15, 2012)

afulldeck said:


> I find renting stress free, since my DW isn't asking to upgrade the kitchen every few years.





MrBlackhill said:


> She's materialistic. Unconsciously, she ends up always wanting the most expensive stuff


As someone who hasn't yet "settled down" with a partner... can I ask both of you guys, what were some early warning signs of your partner's desire for expensive luxury things, or not caring about money, etc?

I wonder how I might identify this kind of thing early, while dating. I suppose that being materialistic and having expensive tastes is the obvious thing.


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## MrBlackhill (Jun 10, 2020)

james4beach said:


> As someone who hasn't yet "settled down" with a partner... can I ask both of you guys, what were some early warning signs of your partner's desire for expensive luxury things, or not caring about money, etc?
> 
> I wonder how I might identify this kind of thing early, while dating. I suppose that being materialistic and having expensive tastes is the obvious thing.


I think there's many different things:

Being materialistic
Never decluttering
Having expensive tastes
Not knowing how to manage finances
Getting caught in discounted sales tactics
I think I knew she was materialistic due to the amount of things she kept has she moved from one place to another and the accumulation of boxes she stored at her parent's home. She never decluttered. We moved boxes of... cleaning products! Many of them! She never knew that she had some kitchen wares 3 times, 4 times and even 5 times already. We moved some boxes of food that she brought back from Japan... 17 years ago! She has more than 3 full boxes (3x 1 ft³) of tea that she kept buying much faster than she would drink. Also, when she sees something she never heard of, she will create a need for it, even if she never had that need before. And when asking her to get rid of something or simply declutter, it's a very though process. She keeps too many things, even if it's useful things. For instance, we like to buy in bulk to reduce packaging waste, but now we have over 50 jars and she still believe we don't have enough of them, while actually there's 20 of them that have never been used for years.

About expensive tastes... When we go shopping, when she sees something she likes, she tries it and then she tells me that she likes it and she wants it, but then I ask her "have you looked at the price yet?" and she hasn't. She has no clue how much she's willing to pay. Even if that specific colour is 50% more expensive, she doesn't take a step back to think if it's really worth it. She never does a validation by comparing to other options. If that is what she wants - that is what she wants.

About not knowing how to manage finance, she never made a budget and never cared of her credit card balance. At least, she pays it every month, but not even looking at the expenses of the month. She didn't care that her credit card summary would still be send paper to her parent's house and having no online details of her expenses, even if it takes 5 minutes to change the parameter to have a detailed online summary. She has a student debt and she has no clue when it will end and how much interests she's paying. She can let insurance reimbursement pile up for months before doing the paperwork required to get the reimbursement.

About getting caught in discounted sales tactics, well, many people also get caught I must admit. If she sees something worth $150 with a 30% discount down to $100, she will rush to buy it, never asking herself if she really needs it or if a cheaper $50 equivalent is enough for her needs.

I must say that it looks worse than it is. It's not always true. For instance, she's a nutritionist and when we go at the grocery store, she knows way better than me what's expensive or not. There are many specific things that she buys frequently and she knows when they are cheap or not. But when we are buying new things or when there's an aesthetic attachment, it's much harder.

I feel like I'm depicting a really bad reputation, but it's not always that bad. I've been with girls spending hundreds of dollars in cosmetics but my spouse doesn't. My spouse is totally willing to go on a very low budget road trip, sleeping in the car, taking showers in a camping, cooking food on a little burner and taking a sh*t next to a tree, while other girls would never accept nothing less than a decent hotel room and a kitchen or restaurant.

It's hard for me to grasp. She would totally be willing to live a van life, yet she likes some very luxury things at home. I feel like she's two different person when she's travelling and when she's at home.

I must admit that my opinion may be biased as I could live a very, very frugal and minimalist life. She keeps saying "well, you could live with just an underwear and you'd be happy". When she met me, at my apartment I had a queen bed, a few clothes, a toothbrush, two plates, two bowls, two forks, two knives, two spoons, two glasses, one pot and one pan. That's about it.


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> I think there's many different things:


Thanks for the thoughts. Lots to wrap my head around here. I am trying to balance looking out for my financial future (because I'm on a good track at the moment) with being open minded to meeting an excellent girlfriend and moving in together.


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## ludetuner (Dec 28, 2016)

Thanks for sharing. This rent vs buy analysis is especially important if you like in Vancouver (or Toronto). I’m always amazed at the $ per sq. for a condo purchase in Vancouver. Much more cost effective to rent IMO.


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## MK7GTI (Mar 4, 2019)

MrBlackhill said:


> I think there's many different things:
> 
> Being materialistic
> Never decluttering
> ...


As renter for the past 12 years and more than likely another 5 years, this is a great thread. 

On the personal side of things, thank you for sharing your personal experiences. Especially with your wife. My wife was like yours before we meet. Expensive tastes when it came to just about everything. Luckily for her and me I suppose, she always paid her credit card off each month and never had a student loan. But over the last 6.5 years I've managed to turn her into someone who has a very good handle on personal finance. Very budget focused, paid her 5 year car loan off in 2.5 years. Still wants me to manage her investments for her but at least she is with me when buying stocks/ETFs and asks the right questions. 

I've had a few friends over the years ask me for help with their personal finance and one of them turned about their situation. It took them a few years but they went from the average person with credit card/LOC debt, car loan, personal loan, not investing to everything being paid off and saving a boat load. It's stunning to me that so many people know what they are doing is the wrong thing but yet NEVER change. They go do that road until they are bankrupt.


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## afulldeck (Mar 28, 2012)

james4beach said:


> As someone who hasn't yet "settled down" with a partner... can I ask both of you guys, what were some early warning signs of your partner's desire for expensive luxury things, or not caring about money, etc?
> 
> I wonder how I might identify this kind of thing early, while dating. I suppose that being materialistic and having expensive tastes is the obvious thing.


There was no early warning signs while dating. She came from a middle-class family, I came from a poverty-class family. (Yes there is poverty in Canada.) We didn't have much the first 15 years of marriage. Spent our time putting one foot in front of the other financially, driving junk cars, walking everywhere and pushing ourselves for better opportunities. Those sacrifices eventually started to paid off. But as we both became more successful she had a tendency to fall towards the hedonistic tread mill with the argument "we work extremely hard and gave up much (which was true), so we should buy it (I typically didn't want it, or wanted freedom more)."

Unless its absolutely obvious - that your not aligned with your thinking. I think it would be hard to tell.

Life can change you as you live through it, both positively or negatively. You just need to figure out how to roll with the punches. When you're a team you need to work it out--there is no real alternative unless you like to be a statistic....


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## Johnny199r (May 20, 2014)

Is it clear your girlfriend likes "nice things"? Does she always talk about it? Does she get envious of other people's houses/possessions? Or is she generally content in life?

I had a girlfriend who was pretty and she knew it. She would say "my ex boyfriend bought me a $5000 watch and took me to Turkey, why dont you do anything like that for me??

My answer?

"Why dont YOU do anything like that for me?" She was speechless.

While I thought in my mind "I bet her ex wishes he didn't spend all that money on her now".

It's all about finding someone that is more content in life, rather than always trying to keep up with the Jonses. It's obvious once you spend a few months together if they fit into category A or category B.


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## Jimmy (May 19, 2017)

Globe Article by Rob Carrick recently "  *Renters, here are seven financial advantages over homeowners"*

In a hot housing market, the most pointless personal finance debate is whether it’s financially better to rent or own.


If high house prices are killing affordability for you, it’s financially necessary to rent. You might choose to buy if you could, but that’s not happening at current prices. So, what are the financial implications?


Renting can be expensive in its own right. But ideally, you can create a track of wealth creation that runs parallel to the property owner’s rising equity. You do this by investing the money you save because you don’t own. Here are seven ways to find the money:

*Lower home insurance costs*

It’s worth singling out home insurance because it has stealthily become a significant cost of home ownership. A column earlier this week explains it all, but a rise in water-related claims because of climate change has driven premiums higher. Now, there’s additional upward pressure on premiums from a pandemic-driven renovation boom that has ignited demand and prices for lumber and other materials. Renters insurance might run you $200 a year. For a house, you could easily pay five times and even 10 times more.

*Lower car ownership costs*

It’s normal for rental units to come with a parking spot. Two spots can be a rarity, so there’s incentive for couples to try and get by with a single vehicle. Renters may also be able to afford better locations, that is, near public transportation. Over all, there’s potential for significant savings on gas, insurance and maintenance.

*Zero property taxes*

Yes, property taxes are factored into rents. But that’s a lot different than being on the hook for hundreds of dollars in property tax a month. Those who laugh at people with rental costs at the same level as mortgage payments seem to forget the owner’s burden of property taxes and home upkeep/maintenance.

*Zero upkeep and maintenance*

There’s a rough guideline that maintenance and upkeep on a home equals an average annual 1 per cent of a house price, but it seems outdated in today’s pricey market. Is it automatically more expensive to keep an urban home in good shape than a similar property in a small community? No, so let’s amend the rule to between 0.5 per cent and 1 per cent of a home’s value on average a year for owners. Regardless, these are outlays renters never have to worry about.

*Zero reno and improvement spending*

Renting means accepting that you’ll never have the owner’s ability to customize and personalize your living space with sunrooms, decks, hot tubs, swimming pools, gazebos and other accoutrements. Oh, well. You can spend some of the tens of thousands of dollars in savings to travel to amazing places, and stick the rest in the investment portfolio you mention every time a homeowner drones on about all their equity.

*Less debt*

You need to own a home to get a home equity line of credit. Sure, that’s a negative for the renter in a sense because HELOCs are the way to borrow at the lowest cost. A HELOC might go for the prime lending rate at banks, currently 2.45 per cent, plus a markup of something like one percentage point. Add on several percentage points for unsecured lines of credit, which means more expensive borrowing.

Less access to HELOCs does offer one big advantage: less opportunity to sink into perma-debt, which is a term for HELOC balances that never get paid off. A 2019 survey by the federal Financial Consumer Agency of Canada highlighted how common this is: About 25 per cent of HELOC holders said they always or mostly make the minimum payment each month.

HELOCs have been used extensively as a supplement to paycheques to help people live beyond their means. With their extra cost, unsecured credit lines just aren’t as practical or tempting to use.

*More labour-force mobility*

The postpandemic economy will bring a period of adjustment in which people reassess their job situation. They may be asked to resume commuting to the office, or risk having their career sidelined by working at home. Openings for good jobs may come up in other cities for people willing to work on-site.


If you rent, you’re mobile and thus able to move wherever there’s an opportunity for career advancement. Homeowners can certainly move as well, but with 10 times the cost and complication.


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## MrBlackhill (Jun 10, 2020)

Jimmy said:


> Less access to HELOCs does offer one big advantage: less opportunity to sink into perma-debt, which is a term for HELOC balances that never get paid off. A 2019 survey by the federal Financial Consumer Agency of Canada highlighted how common this is: About 25 per cent of HELOC holders said they always or mostly make the minimum payment each month.


I don't know if perma-debt is good or bad, as it depends of how you use that debt. If you pay only the minimum because you can't afford to pay more and you are just increasing your debt due to unreasonable expenses, then that's bad. If you pay only the minimum because you are leveraging that low-interest debt into higher return investments, then that's good (unless you are taking too much risk).

So, out of that 25%, I'm wondering how much is good vs bad perma-debt. There's certainly more bad than good, though, because most people can't manage their money properly.


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