Owning vs. leasing: Cons and also pros You Should Consider Before You Sign a Lease or a Mortgage.

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All set to lease or get a brand-new location to call house? Do not make this vital.
choice without thoroughly considering what's ideal for you as well as your economic future.
Eric Tyson, MBA as well as writer of the brand-new publication
Personal Finance in Your.
20s & & 30s For Dummies,®evaluates the advantages and disadvantages of possessing and also leasing.

Tax obligation reform currently restricts the residential or commercial property tax obligations and also home loan rate of interest that home owners might subtract. And also, as even more individuals worth having the wheelchair to go after tasks and also lives in various other cities, it's much less appealing to be secured right into a lasting home mortgage. As well as currently numerous individuals value the liberty of renting out over having a large residence to call their very own.

“Though having a house and also investing in genuine estate might pay off well over the lengthy term, renting out additionally has its benefits. To make the ideal choice, you require to comprehend your existing individual and also monetary scenario as well as assume thoroughly concerning what issues to you currently as well as what you assume will certainly matter to you in the future.”.

Tyson claims asking on your own some challenging concerns might assist you clarify your sensations regarding selecting to purchase or lease. Am I certain I desire to remain in my present community, city, or state? Do I desire to get a starter residence currently, or rent out for a couple of years and also after that acquire a bigger residence later on?

Next off, it's essential to very carefully consider the pros as well as disadvantages of possessing and also leasing prior to you select what is right for you.” When you lease, you do not have to stress concerning the frustration of preserving your residence,” claims Tyson.” Some of the economically effective tenants I've understood consist of individuals that pay reasonably reduced rental fee, either since they live in tiny real estate and/or have flatmates, or they live in a rent-controlled structure,” states Tyson.
As well as bear in mind: In an excellent actual estate market, all kinds of real estate value, although single-family houses have a tendency to do finest. Acquiring and also offering a home requires a great deal of costs, consisting of the expense of obtaining a home loan, evaluation costs, relocating expenses, genuine estate representatives' payments, and also title insurance policy. When you're under agreement to purchase a home, having your car loan rejected after waiting a number of weeks can indicate you shed the residential property as well as the loan you invested using for the funding and also having actually the residential or commercial property examined.

” Regardless of whether you get or lease, you will certainly commit a substantial quantity of loan to your real estate costs over the program of a life time,” wraps up Tyson. Ultimately, the best remedy for you as well as your monetary scenario will certainly end up being clear, as well as you can make a choice you really feel great around.”.

All set to rent out or get a brand-new location to call residence? As well as currently lots of individuals value the flexibility of leasing over having a sizable house to call their very own. “Though possessing a house as well as investing in genuine estate might pay off well over the lengthy term, leasing additionally has its benefits. Do I desire to purchase a starter house currently, or rent out for a couple of years and also after that purchase a bigger residence later on?” When you rent out, you do not have to fret concerning the migraine of preserving your house,” states Tyson.

Eight Signs and Symptoms of a Money Procrastinator (and How to Stop Being One)

It's no secret that many people avoid dealing with their finances in a responsible way. You might be one of them. Even if your financial picture looks (mostly) bright, procrastinating on money-related issues can cause you undue stress, anxiety, and unhappiness. And if you have serious money problems to contend with, avoiding facing them could cost you dearly someday.

Wherever you fall on the money-avoidance spectrum, financial expert and best-selling author Eric Tyson, MBA, says it's time to face your financial fears once and for all.

“Just about every person procrastinates on dealing with some aspect of their finances,” says Tyson, author of Personal Finance in Your 20s & 30s For Dummies® (Wiley, 2017, ISBN: 978-1-119-43141-1, $19.99). “Many people have a tremendous amount of anxiety about money that contributes to this avoidance. Either they don't budget responsibly, or they're not saving as much as they should, or in some cases, they're being outright self-destructive by not paying their bills on time, or at all. It all adds up to trouble that could be avoided.”

Money procrastination manifests in many different ways. Answer these questions to identify areas of your financial life where you may be procrastinating.

  • Are you financially disorganized and prone to clutter? Because avoiders dislike dealing with money and related issues, they don't spend their free time keeping documents organized and easy to find.
  • Do you pay your bills and taxes late? Money avoiders often incur late fees and interest charges on various household bills. Those who are self-employed, and thus responsible for quarterly income tax filings, are at additional risk for falling behind with tax payments, which can have huge negative financial consequences.
  • Do you have unopened financial account statements? A classic symptom of money avoidance is having piles of unopened account statements, even during periods when your investments are doing fine.
  • Do you feel unease and shame about letting your money sit in a low-interest account? Even those who are able to save money may have a tendency to allow it to accumulate in bank accounts that pay little if any interest. While they may know that they could and should do better with investing the money, they can't overcome the inertia.
  • Do you feel enormous stress and anxiety over money issues and decisions?Whether you were raised in a home where money was an ongoing source of unhappiness and conflicts, or you believe you lack the skills and knowledge to take control of your current finances, making financial decisions makes some people feel uncomfortable and stressed.
  • Do you have a low level of interest regarding money issues and decisions? While some avoiders shun financial decisions and responsibilities due to anxiety, others are imitating behavior learned from their parents or are rebelling against a parent who was financially or emotionally overbearing.
  • Do you have an absence of long-term financial planning and thinking? Many money avoiders don't think much about their personal and financial goals for the years and decades ahead.
  • Do you have marriage problems relating to money? Money procrastinators typically have conflicts over money with their spouses, and their avoidance may stem from or be exacerbated by that.

If any of these scenarios sound like you, know that you can still get in control of your finances with some time and patience. Keep reading for Tyson's tips to help you stop procrastinating and start addressing your financial issues.

Recognize and admit that you procrastinate. “Until you recognize that you have a problem, you can't work on a solution,” says Tyson. “This is why recognizing your tendency to procrastinate is the first and most important step to changing the way you handle your money management.”

Figure out why you avoid dealing with money (and prepare to work on those issues).There are numerous reasons you might procrastinate on money issues. Maybe you feel incompetent to wisely handle your finances after several attempts to be financially responsible. Or perhaps you are disorganized in many areas of your life, and struggle just to deal with your work and family commitments alone. Other sources of procrastination may include marital friction, perfectionism that prevents you from ever getting started, or flat-out avoidance of difficult situations. Finally, Tyson says many people are money avoiders because they are able to get along sufficiently through either good fortune or by being surrounded by those who enable the avoiding behavior. Whatever the reasons you procrastinate where money is concerned, take steps to address those issues head-on and start changing your behavior today.

Work on one or two tasks at a time. “If you try to tackle your laundry list of financial to-dos all at once, it can be so overwhelming that you're tempted to give up,” says Tyson. “So focus on a few high-priority tasks to begin with, and once you've completed those, you can move on to the next few. Remember, if you've got a long list of goals, it might take six months to a year to work through those. Pace yourself so you won't give up.”

Automate your bill payments. Financially disorganized individuals are often late paying their bills. But late payments, particularly when it comes to paying taxes, are a problem that can lead to substantial late fees, interest, and penalties. One of the best things you can do to avoid those late payments is to set up automatic payment on your various bills.

“With just a little upfront work with each creditor or billing company you can rid yourself of unnecessary fees and interest and save a little time each month,” says Tyson. “Many companies accept and actually prefer payment through an electronic transfer from your bank account. Some loan holders (including student-loan holders) may even lessen your interest rate slightly in return for what amounts to a guarantee of an on-time payment every month.”

Develop a regular investment program. All money procrastinators should make their investing automatic, advises Tyson. If you work for an employer, let them know you want to sign up for their payroll deduction savings account program. Not only will your money grow faster inside a tax-deferred account, but your employer may also offer free matching money.

If you are self-employed, you'll need to establish your own retirement account. Find out about the different retirement account options and choose the one that best meets your needs. SEP-IRAs enable you to sock away large amounts—a self-employed person may contribute up to 20 percent of his business's net income up to a maximum of $54,000 for tax year 2017 ($55,000 for 2018). These plans may be established through major mutual fund companies like Vanguard, Fidelity, and T. Rowe Price. You can generally set up these accounts so a regular monthly amount is sent electronically from your local bank account to your mutual fund investment account.

Hire financial help. Financial advisors are best suited for those who want to quantify how much they should be saving for specific goals and determining where to invest it. However, Tyson says there's no getting around it: You do have to do a lot of digging to find a competent and ethical advisor who has reasonable fees. With that information in hand, you can confidently and strategically evaluate potential service providers who can help you overcome your inertia and get you on track with managing your money.

“Chances are, you'll never love dealing with money issues and that's okay,” concludes Tyson. “But if you can accomplish foundational goals, you won't suffer the ill effects of someone who completely neglects their finances. It's not too late to change your relationship to money, and when you do, you will feel far more motivated and in control of your life.”

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About the Author:
Eric Tyson, MBA, is an internationally acclaimed and best-selling personal finance author, counselor, and writer. He is the author of five national best-selling financial books includingInvesting For DummiesPersonal Finance For Dummies, and Home Buying Kit For Dummies. He has appeared on NBC's Today show, ABC, CNBC, FOX News, PBS, and CNN, and has been interviewed on hundreds of radio shows and print publications.

About the Book:
Personal Finance in Your 20s & 30s For Dummies® (Wiley, November 2017, ISBN: 978-1-119-43141-1, $19.99) is available at bookstores nationwide.

Renting vs. Owning: Pros and Cons You  Should Consider Before You Sign a Lease or a Mortgage 

Ready to rent or buy a new place to call home? Don't make this important
decision without carefully considering what's best for you and your financial future.
Eric Tyson, MBA and author of the new book 
Personal Finance in Your
20s & 30s For Dummies,® analyzes the pros and cons of renting and owning.

At one time, it was a given that everyone wants to become a homeowner eventually. But now many people are reconsidering whether ownership is all it's cracked up to be. After all, real estate is not appreciating the way it once did, so, today, owning may not be the smart investment it once was. Tax reform now limits the property taxes and mortgage interest that homeowners may deduct. Plus, as more people value having the mobility to pursue jobs and lives in other cities, it's less appealing to be locked into a long-term mortgage. And now many people value the freedom of renting over having a spacious home to call their own. This poses a huge question for twenty- and thirtysomethings: Should I buy or rent a home?

“Choosing whether to rent or buy is one of the most important financial decisions you'll ever make,” says financial expert and best-selling author Eric Tyson, MBA, author of Personal Finance in Your 20s & 30s For Dummies® (Wiley, 2017, ISBN: 978-1-119-43141-1, $19.99). “Though owning a home and investing in real estate may pay off well over the long term, renting also has its advantages. To make the best decision, you need to understand your current personal and financial situation and think carefully about what matters to you now and what you think will matter to you in the future.”

Tyson says asking yourself some tough questions may help you clarify your feelings about choosing to rent or buy. Questions like: Would I rather pay more and live in a vibrant city, or enjoy a quieter life in a less populated area? Am I sure I want to stay in my current neighborhood, city, or state? Am I planning to start a family—and where do I see myself living when I start one? Do I want to buy a starter home now, or rent for a few years and then buy a larger house later on? Would I rather own a great home now, and have less money overall for travel and leisure?

Next, it's important to carefully weigh the pros and cons of renting and owning before you choose what is right for you. Keep reading to learn the pros and cons of renting and buying a home.

Renting Pros

You aren't responsible for fixing up the property. “When you rent, you don't have to worry about the headache of maintaining your home,” says Tyson. “That's your landlord's job.”

You have more financial and psychological flexibility. Especially in your younger years, you may not be sure that you'll stay with your current employer or chosen career. Should you change direction in the future, you may not want the financial overhead that comes with a mortgage, says Tyson. If you do decide to move, you can generally do so a lot more easily as a renter than you can as a homeowner.

You can have all your money in financial assets that you can tap into more easily. Some people enter their retirement years with a substantial portion of their wealth tied up in their home, a challenge that you don't face when renting.

It's a great opportunity to test living in an area where you may want to buy. If you're gearing up to purchase a home, renting gives you a chance to try out the area in which you think you'd most like to buy.

It may help you achieve big financial goals. “Some of the financially successful renters I've known include people who pay relatively low rent, either because they live in small housing and/or have roommates, or they live in a rent-controlled building,” says Tyson. “Some young adults live with a family member who provides them with a good deal on rent, which can have benefits. If you can consistently save 10 percent or more of your earnings, which you may be able to do through a low-cost rental, you're probably on track to achieving your financial goals.”

Renting Cons

When you rent, your entire monthly rent is subject to inflation. Of course, Tyson points out that living in a rent-controlled unit, where the annual increase allowed in your rent is capped, is the exception to this rule.

Landlords tend to want long-term tenants. “Most landlords prefer tenants who are stable renters and who remain for long periods of time,” says Tyson. “If you don't expect to stay in an apartment much more than a year or two, that's probably better left unsaid.”

You don't get to own the property. After paying all that rent, the property isn't yours at the end of the day.

Home Ownership Pros

With a fixed-rate mortgage, your monthly payment never increases. With a fixed monthly payment, you can budget with confidence. However, Tyson points out that your property taxes, homeowners insurance, and maintenance expenses will likely increase with the cost of living.

As a homeowner, you build equity in your property. That equity can be significant by the time you retire.

Owning may cost less than renting in some areas. This is especially true if you have the opportunity to buy at lower prices that occur after a decline in home values that sometimes occurs (usually around the time of a recession).

Mortgage interest and property tax payments for your home are generally tax-deductible. And in the early years of your mortgage, nearly all of your payment goes toward interest, Tyson adds. Be aware, however, that under the new tax laws, mortgage interest is deductible for up to $750,000 of mortgage debt, and your property taxes and state income deduction is capped at $10,000 per year.

It's a good option if you're planning to stay put. Financially speaking, buying a home begins to make more financial sense if you anticipate being in your home for three to five years or more.

There are plenty of options in the real estate market. When buying, you're sure to find a housing option that's right for you. In addition to single-family homes, you also have higher-density options like condominiums, townhomes, and cooperatives. If you don't have the time, energy, or desire to keep up a property, shared/higher density housing may make sense for you.
And remember: In a good real estate market, all types of housing appreciate, although single-family homes tend to do best. Shared-housing values tend to increase the most in densely populated urban areas with little available land for new building.

Home Ownership Cons

You could end up overpaying or paying more than you can afford. Buying a home can be financially rewarding, but owning a property is a big financial commitment that may backfire if you get in over your head or overpay.

Putting 20 percent down is a steep price for twentysomethings. “Many people, especially people in their 20s, don't have enough cash on hand to make the standard down payment of about 20 percent of the property's purchase price,” says Tyson. “Yet this is the percentage needed to avoid the added cost of private mortgage insurance (PMI) required by lenders.”

The associated costs with buying are also high. Buying and selling a property entails a lot of expenses, including the cost of getting a mortgage, inspection expenses, moving costs, real estate agents' commissions, and title insurance. To cover these transaction costs plus the additional costs of ownership, a property needs to appreciate about 15 percent during the tenure of your ownership.

Your mortgage may not get approved. When you're under contract to buy a property, having your loan denied after waiting several weeks can mean you lose the property as well as the money you spent applying for the loan and having the property inspected. This is a risk you'll have to take in order to secure a loan.

“Regardless of whether you rent or buy, you will devote a significant amount of money to your housing expenses over the course of a lifetime,” concludes Tyson. “This is a momentous decision, so make sure you're making decisions based on what is right for you—not what was right for your parents or even what's right for other people your own age. Take a long, honest look at your life and your financial goals. Eventually, the right solution for you and your financial situation will become clear, and you can make a decision you feel good about.”

# # #

About the Author:
Eric Tyson, MBA, is an internationally acclaimed and best-selling personal finance author, counselor, and writer. He is the author of five national best-selling financial books includingInvesting For Dummies, Personal Finance For Dummies, and Home Buying Kit For Dummies. He has appeared on NBC's Today show, ABC, CNBC, FOX News, PBS, and CNN, and has been interviewed on hundreds of radio shows and print publications.

About the Book:
Personal Finance in Your 20s & 30s For Dummies® (Wiley, November 2017, ISBN: 978-1-119-43141-1, $19.99) is available at bookstores nationwide, from major online booksellers.