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Should I Rent or Buy?

Should I Rent or Buy?

There is a lot of talk about which is better, renting or buying. Each has its disadvantages and advantages and neither solution is ideal for all situations. In general, renting is cheaper in the short-term, and buying is cheaper in the long-term. Though a buyer may pay twice as much for a home in the short-term, when the house is paid off, a buyer will pay nothing more aside from maintenance and taxes. The renter has to continue paying for the rest of their lives. Here are the reasons a person may buy, rent, or refrain from one or the other:

Benefits of Renting

Greater Flexibility

Renting allows greater flexibility than owning a home. If the right apartment is chosen, more money can be deposited in a savings account during the early years. Renting can help a person save to invest into a business or even to save for a down payment on a home. Renting also usually appeals to the transient community because the commitment is typically shorter than the commitment of buying a home.

Maintenance-Free

Maintenance is usually covered through the rental company. There is no need to invest into maintenance for the home because it is included. This saves the renter money and time. A person who is not ready for the responsibility of home ownership will appreciate a rental home.

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No Agents’ Fees or Stamp Duty Fees

Agents’ fees and stamp duty fees can be considerable if the home has to be sold at any point of home ownership. These fees do not exist with renting. Renters typically pay no fees if the home is left in the same condition that it was found when first occupied.

Not Tied to a Particular Location

If a particular location is not preferred, the rental agreement is typically only a year. Rental contracts do not have to be renewed if the renter doesn’t like the location or if the renter doesn’t like the property itself. Renting is preferable to people who want to try out a community before buying in it.

Benefits of Buying

Own an Appreciable Asset

Appreciable assets can be used for leverage or inheritance later in the future. Ownership is preferable because it is easier to obtain loans and build credit when buying a home than it is by renting.

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Discounted Variable Mortgage Rates

In the USA, Variable mortgage rates are now 1.25 percent lower than they were in 2011. The fixed mortgage rates have been discounted by as much as 2.1 percent.

Disadvantages of Renting

Rent is Becoming More Expensive Than Buying

In some regions, such as 388 suburbs, renting can cost more than buying. Rental rates for houses have risen by up to 4.2 percent over the past year. Rental rates for apartments are 2.9 percent higher for units in capital cities. The rental market has become quite competitive, and the costs are more expensive. When the rental costs exceed the mortgage costs, there are few advantages to renting.

No Appreciable Asset to Leverage

At the end of the rental agreement, the apartment will be returned to its rightful owner. Renting does not provide an appreciable asset that can be used to borrow against nor does it typically serve as a tax deduction. Furthermore, when the house is paid off in the future, buyers can rest knowing that they own an asset that can offer financial flexibility.

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Disadvantages of Buying

Long-Term Commitment

Home buying requires a long-term commitment. Some loans require up to 30 years. A person entering into a long-term contract must ensure that they like the home and the area. Selling a home before the mortgage is paid can result in losses if the economy is not good. Buyers must ensure they are prepared to incur losses before entering into a long-term contract.

Maintenance

Whether the home is new or old, the buyer is responsible for maintenance. These costs can add up over the ownership of the home. Every home owner must have money in reserve to cover the costs related to maintenance on a home, which could vary from year to year. If repairs to the plumbing or roof are needed, the costs could be considerable.

Rent or Buy: The Choice is Up Each Individual

Whether people rent or buy, the choice is entirely up to them. A home should only be purchased if it is within the budget. Saving for a down payment on a mortgage can significantly impede a person’s lifestyle. Save for a home only when life can be sustained and enjoyed during savings.

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LWP Property Group offer house and land packages for first homes buyers. Just be patient and perform the research necessary to find an affordable home whether renting or buying. This will prevent any problems in the future.

Featured photo credit:  A key in a lock with house icon via Shutterstock

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Published on January 8, 2021

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

1. Pay More Than the Minimum Credit Card Payments

Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

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You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

2. Start With High-Interest Credit Card Debt

If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

3. Revisit Your Budget

Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

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Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

4. Avoid Using Your Credit Cards

Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

5. Start a Side Hustle to Boost Your Income

You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

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Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

6. Sell Your Used Items for Extra Cash

Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

7. Know When to Seek Help With Your Debt

Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

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There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

In extreme cases, the debt solution can be:

  • Debt relief – where your debt is partially or wholly forgiven
  • Debt consolidation – taking out one loan to repay others
  • Debt settlement – the creditor forgives a significant portion of your debt
  • Bankruptcy – legal process for seeking relief from some or all your debts

It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

Wrapping It Up

Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

More Tips on How to Pay Off Debt

Featured photo credit: rupixen.com via unsplash.com

Reference

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