The classic question "Rent v. Buy" always seemed so easy to me (ALWAYS buy, because then you're not just throwing your money away - you will OWN the asset at the end of the payments). However, recently I've come to realize that it MIGHT be smarter to rent when prices of the assets are falling (such as houses) or when dealers are dying to lease you a car and make you a better lease price than a sale price.
Turns out, it actually is complicated trying to decide whether to rent or buy something, because you have to predict the future. You have to forecast what you think the salvage price of the asset will be at the end of the term, and compare that to renting v. buying costs.
Closely related to this question is the decision of when to pay off your debt, in what order, and how much of it to pay off. The famous debt snowball worksheet helps you figure out what to do, based on the interest rates you pay.
The last thing I have to say about rent v. buy, is that there is some inherent benefit to owning stuff, instead of renting all the time - something intangible and thus, unquantifiable - but definitely beneficial.
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3 comments:
hey I just came across this blog when I was looking at your profile. Great stuff here, you are so smart!
Too bad you are married Leslie, I would either hook you up with my brother Tim (he has a similar blog, and he is too cool, but you are too old for him) or I would hook you up with Brad, but he is married as well, so I guess you are better off where you are and everything is as it should be. So I guess I'll just say that your blog rocks! AND you have the BEST, most AWESOME birthday in the world, anyone who shares it with you must be awesome as well.
How many times do you think I can use awesome in 2 min.?
I just found this blog of yours and now I'm a follower. :) Good stuff! I miss seeing you and everyone at book club! Anything exciting you could update me on? amber
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