you're in your 20s or 30s, you may not now be thinking or caring
about your golden years, but look what will happen to your rent
over the decades ahead with just modest inflation! Then remember
that paying $750 rent per month now is the equivalent of buying
a home for $150,000. Well, in 40 years with 4 percent inflation
per year, your $750 per month rent will balloon to $3,600 per month.
That's like buying a house for $720,000!
the cost of purchasing a home generally increases over the years,
once you purchase a particular home, the bulk of your housing costs
are not exposed to inflation -- if you use a fixed-rate mortgage
to finance the purchase. Therefore, the comparatively smaller property
taxes, insurance, and maintenance expenses are the only housing
costs you will have that will increase over time with inflation.
if you must stretch a little to buy a home today, in the decades
ahead, you should be glad that you did. The financial danger with
renting long term is that all of your housing costs (rent) will
increase with inflation over time. We're not saying that everyone
should buy because of inflation, but we are suggesting that, if
you're not going to buy, you should be careful to plan your finances
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