Rent Now And Save Money!
Many people cannot understand the logic behind renting a home in order to save money to purchase a home later! They feel every monthly rental you pay is a consumable expenditure whereas every lease rental in a hire purchase or a mortgage loan takes you nearer to making the house your own, though at the pace of one step at a time.
So they argue why not add the amount you are supposed to save and the amount you actually pay as rent and pay that whole thing as a lease rental instead, when with every monthly payment, you are coming closer to settling your lease and owning the house? But this thinking is not completely correct. There are definitely financial benefits to be gained by renting a house rather than buying one under many circumstances. It is all a matter of how much equity you have in the home purchased. Let’s go into it in more detail:
It is granted that the argument that rent paid on a rental house does not take the renter closer to ultimate homeownership whereas every lease rental or mortgage payment does is true. However, what is more important is to commence saving for buying a new house one day by staying in a small rented home (obviously with a lesser monthly rental) for the present, whereas if you go for a mortgage loan for example, then you can’t select to rent a small house now since it may not be the type of property you have in your mind to own as your dream home in the future.
Start From a Smaller Apartment and Graduate to a Larger Home
You must be willing to make a few sacrifices now for a brighter future. If you can stay in a small rented house at a nominal rent for the present you will have a good opportunity to save a lot for a future house.
This possibility will be lost to you under a scheme of hire purchase or mortgage payments, for you will from then onwards stay in your future home requiring a very much higher monthly outlay, since you would not want to plan to purchase a small cramped up house for your future dream home as already stated above. The Actual benefit of saving while paying a monthly rent too rather than going from the inception for a mortgage loan on your future home stems from this reality.
Apartment rentals are generally based on their respective floor areas and is expressed as a rate per square foot. Although the charges per square foot of area could differ between two apartments, they are likely to stay within a certain range for comparable accommodation within the same geographical area. Therefore you stand to save more by fitting into a smaller apartment for the time being.
Prepare a Budget Giving Priority to Considerable Present Savings
The monthly rent you pay for the floor area occupied is not the sole variable to be controlled for those who are really interested in saving quite a lot every month to purchase a dream home one day for your own. Entertainment and costs of having meals out eat a lot into an average monthly income earner’s purse strings and are controllable expenses provided you have the will and the correct attitude.
You should take best advantage of the fully equipped kitchens that are a feature of almost all modern apartments, to prepare your own nutritious meals at home and get rid of the bad habit of dining out. This is a good way to add to your savings while staying healthy too.
If you are really interested in saving in a significant way, then you have to curb your extravagant and superfluous lifestyles somewhat. Apart from food, you may be spending wastefully by subscribing to some TV channels that you hardly watch or going for various “plans” for your mobile phone, a good part of which you don’t make any use of; when paying on a per minute basis would be far more beneficial to you. You may even curb some wasteful expenditure by having a better control over the usage of electricity, water and gas for all your utility purposes.
Similarly you can cut down on your gas for the car by not undertaking trips unnecessarily. There are many instances when hiring an outside car could be less costly than using your own car. You should be very much alert to all these possibilities and act wisely and courageously with the emphasis on more savings.
Another area you can save is to take all your insurance covers as far as possible through one service provider and become entitled to bulk discounts. If you have many loans that you service monthly, consider going for debt consolidation where they convert all loans into a single loan requiring a single monthly installment at a more favorable interest rate. A rescheduling also should be possible to be accommodated into the new consolidated loan.