Is Buying a Home vs. Having Fun a Trade-off in Your Twenties?

Q: Hello Ladies. I’m almost 22, graduating in May with my Masters and I’ve saved up for the past four years to be able to put about 20-25% down to buy a house, but my parents don’t want me to now that they see I was actually serious when I made that goal four years ago.

They said it would limit the fun I’m supposed to have in my 20s. They said it was an experience to live in an apartment complex. The whole idea of listening to people above and below you, trekking to their car everyday, hauling groceries up and down the stairs/elevator doesn’t seem like any type of fun I’d want to deal with.

But I admit with the house I want, my disposable income would go down after utilities, insurance, taxes, mortgage, lawn care, etc, and I wouldn’t be able to buy a new car, but I really want a house. I don’t want to pay rent somewhere just to be throwing my money away. At least in three years, I’d have some equity built up and if I ever meet anyone and get married, we’d have a place to live already. What would y’all suggest?

Is it worth having $300-$500 extra a month to spend on whatever and throw $600-$900 money away on rent or putting all of that towards a house, while in your budget you still have entertainment money just not $300-$500 more? No extravagant trips, but a couple of trips to the movies, dinner and maybe an amusement park. I don’t know, I think that is still having fun, but I am an Accounting major so….

A: As usual, there are two sides to this answer. Today’s answer will be in the form of point / counterpoint from two women who have different opinions that are reflective of 40:20 Vision.

For Home-Ownership

Dear 20-something,

I commend you on your ability to save money at such a young age!!  I’m now 45 and when I look back at all of the money I wasted paying rent I could just scream!  I wish that I had someone to tell me to buy a house and get a roommate who would pay rent that would go towards my mortgage.  I lived in an apartment for 8 years after graduating.  It was fun but it wasn’t living in the apartment that was fun – it was being twenty-something that was fun!  I was paying rent and paying for my masters at the time.  I was a teacher and did not make a lot of money but I still found ways to do a lot of interesting things.  I now have four children and know that when they are your age I will do whatever it takes to help them buy a house (one that would fit in with their budget-  don’t go overboard).

If you were to get a roommate or two that would be just like living in an apartment but it would help you to pay down your mortgage. You could still carry your groceries in and have neighbors – just not above and below you. I have friends who bought a home at your age (not many) and made great investments.  When you do buy, I am a firm believer in LOCATION, LOCATION, LOCATION!  We bought on a great street but have now done 2 additions and our value has gone up.  Our house is older but renovated with lots of charm.

Good luck with your decision. Your parents should be so proud of the very responsible woman they have raised.  I do not know many 22 year-old women in your situation!  – 45 year, Cleveland, Ohio


Counter Point – Against Home-Ownership (for now)

In today’s economy, there is still potential the housing market will continue to suffer ups and downs so there is no guarantee the house you buy today will appreciate the way you want.  Some of that is contingent on the location of the home so be very aware of the actual real estate market trends in the area and be comfortable with that potential roller coaster ride.  Things to think about beyond the mortgage:

1. Unplanned Expenses:  A home requires A LOT of extra money you can’t always plan for and can find yourself scrambling each month to pay.   Aside from the general utilities, there is home owners insurance, property taxes, general upkeep (who cuts the lawn, who removes the snow in winter time, etc…???) and then the big issues like roof leaks, pest removal, termites, (I could go on!!!) that renters do not need to worry about and frankly surprise many home owners with the frequency, scope and cost.

2. Room to Grow: The funds required to maintain a home could take away from other rites of passage in your 20s beyond Melrose Place revelry. Your twenties can be a time of fun, freedom and exploration…. a trip to an amusement park doesn’t seem like enough to me. Can you also take time enjoy the sites of the United States or travel outside of the U.S. and gain some valuable understanding of cultures and history of Europe, Asia, etc… Trust a 40-something, once you have a family, travel becomes a thing of the distant past.

3.  Alternate Investments: Don’t think you are wasting your money by paying rent. Rent is often 1/3 of the price of a total home ownership on an annual basis when you add up all the expenses.  You could invest that other money in a high yield fund that would give you a lot of cash in a few years time. Then you re-evaluate the home purchasing idea and a cushion in the event of home issues.

Bottom Line: I’d find a reputable investment counselor and go over your financial goals with him/her. But don’t forget to have fun… and leave the worrying to your 30s!!!! Live it up now, and reevaluate when you are  26 or 27. — 40-something, owned a home when she was single, San Diego, CA

P.S. If you do go the rental route, you can find a smaller, nice apartment or condo complex that is not noisy and full of hassles. Since you are good at saving money, it might be worth putting a little extra in rent to make the apt a happy place for her.  If you move to a more suburban neighborhood, full of families and farther from the social scene, your social life will decrease dramatically.

Thank you to these 40-somethings for their advice! They offer up a lot to think about and reflect what many 40-something women have to say. Quite a few 40-something women I’ve spoken with wish they had bought a house. So often, 20-somethings worry that buying a home will tie them down but what women today realize is that buying does not mean staying forever.  And while this may not be as big a pressure as women 20 years ago felt, don’t think that you should wait to buy a house until you get married. Your 20s aren’t a transition to another life-stage, they are a life-stage to be enjoyed and appreciated. If buying a home is something that will help you learn about yourself and what you want out of life then that is something to be considered.

At the same time, there are many trade-offs and in today’s market there is the question of whether real estate is still a sure bet. It also depends on the lifestyle you want. There are plenty of other women who enjoyed travelling a lot and moving to different cities, which conflicts with home ownership.

I have a feeling that since you are the type of person who was able to plan and save for a house at such a young age, you may be the type that would regret not buying a home. If you are a planner, you can plan for a social life as well. Don’t get so caught up in a home and your job that you aren’t getting out and meeting new people. There are so many places to meet other people from your neighbors to beyond. The coffee shop, the gym, local meet ups, young professional organizations – and then there is entertaining at home. That said, I agree whole heartedly with the advice to see a financial planner and consider your goals. Can you also afford some funds for personal growth of the travel type?  There are plenty of resources to do housing swaps or vacation rentals that might allow you to see the world as well. Consider roommates for sure to help contain the costs and have that 20-something experience of living with other young people. And don’t consider this home your last home…it’s an investment, a starter home or a home you could rent as a source of income if you move on.

And as others have said. Good luck with your decision!

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