Do the work; crunch the numbers


Can you fill in the blanks? We graduate college, begin a career, start a family and __ __ __    __  ___ ___ ___ ___.  Yep. Buy a home. For most folks, purchasing a home is arguably the greatest measure of success, especially when we are young.

However, others argue that acquiring a house has more to do with succumbing to the dreaded “keeping up with the Joneses” disease, as our hyper competitive society and culture of self-absorption is often too much for peeps to endure.

One of the most notable symptoms of keeping up with the Jones is debt, as most homeowners don’t have the luxury of paying for their house with cash.  This is where things often get problematic for many, especially when we get hit with a down turn in the economy. Perhaps the corn-fed capitalist, Warren Buffet, said it best, “When you combine ignorance and borrowed money, the consequences can get interesting.”

I have long argued that renting is underrated when compared to buying a home, as many folks underestimate the cost of home ownership. As with most issues, if one maintains his or her position long enough, there is a good chance they will appear smart. For instance, anyone who did not own a home just before the Great Recession of 2008-09 looked like a genius while buying a home was a dumb money move that sounded smart!

In the final analysis, the housing crisis flipped the suggestion that home ownership was a no-brainer on its head. Nevertheless, when it comes to buying versus renting, there is a passionate debate. Each side, of course, has their own beliefs and convictions, but an answer for your particular situation comes down to doing some much-needed work by crunching some numbers.

The decision to buy or rent has way too many moving parts, not to mention things (assumptions) constantly change. As you might suspect, the cost of buying is more varied and complicated than for renting, making it hard to tell which is a better deal. Thanks to the New York Times, they can help you decide what is best for your specific place. If you are considering renting versus buying or vice versa, it is paramount that you get a hold of the New York Times calculator. If you have a computer, laptop, or smart phone I urge you to Google “New York Times Rent vs. Buy Calculator.”  

Yes, you. Yes, right now. I’ll wait … Tap-tap-tap-tap. You’re back. Great job!

The calculator takes the most important costs associated with buying a house and computes the equivalent monthly rent. Additionally, it keeps a running tally of the most common expenses of owning and renting. It also takes into account the opportunity cost (the return you could have earned by investing your money). Please keep in mind that even though your answer comes down to crunching the numbers, there is one paramount issue that we all need to consider…affordability. Just because our bank will give us a mortgage does not mean that we can truly afford to buy a home.  If this were the case, we might never have experienced the incredible housing meltdown from a decade ago.  

In the final analysis, sometimes it’s smarter to rent, and sometimes it’s smarter to buy. Rather than giving in to one side or another, let’s ignore the talking heads and self-proclaimed experts. Instead let’s do the work by crunching the numbers! Remember what Mark Twain once said, “It’s not what we don’t know that gets us in trouble. It’s what we know for sure that just ain’t so.


Harry Pappas Jr. CFP®

Managing Director-Investments

Master of Science Degree Personal Financial Planning
Certified Estate & Trust Specialist ™

Certified Divorce Financial Analyst™
Pappas Wealth Management Group of Wells Fargo Advisors

818 North Highway A1A, Ste. 200

Ponte Vedra, Florida 32082


The use of the CDFA™ designation does not permit Wells Fargo Advisors or its Financial Advisors to provide legal advice, nor is it meant to imply that the firm or its associates are acting as experts in this field.



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The opinions expressed in this report are those of the author(s) and are subject to change. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.





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