I am 29 years old and never intend to buy a house. Here is how I spend it instead.
- Jules Rogers, 29, is a freelance writer in Portland, Oregon, who never wants to buy a home.
- Her financial goal is early retirement, so she has money invested in index funds and a Roth IRA.
- In the meantime, she and her fiance appreciate their flexibility and have invested in two reliable vehicles.
I am 29 years old and it is unlikely that I will ever buy a house. This type of real estate investment is not part of my debt free life plans.
By investing my money in low-cost index funds instead – after maximizing my Roth individual retirement account – I’m preparing to become financially independent and retire early, a move known as FIRE.
I have moved to 5 different cities for my career since I was 21. My main expense, besides moving, was my cars.
Having a reliable car was essential to getting my first full-time reporting job in a daily newspaper 250 miles south of Portland. Later my fiance and I knew we would need a second vehicle when we moved to Houston so I could become a newspaper editor.
When I was 21, I started driving my fiancé’s 1992 Jeep Cherokee who couldn’t get downtown without forcing me to stop to fill the water tank. In the end, we bought two used Audi – a 2007 A3 and a 2012 Q5 – which are now reimbursed.
When you buy a used car, you let someone else take care of the depreciation, while still having plenty of reliable mileage for your future. In general, a new car can depreciate by 20% during the first year of ownership. In the first five years, a vehicle can still depreciate by 15% per year.
When we bought our 2007 A3 in 2015, we paid about 45.5% less than the original manufacturer’s suggested retail price, or MSRP, for the car. Regarding the 2012 Q5, we bought it in 2018 for 50% less than its MSRP.
We have already driven over 100,000 miles on these vehicles ourselves, mostly because of the daily commute and traveling across the country for work. We paid off the first in just under five years and the second in three years, and we plan to service these vehicles for years to come.
In all the cities where I lived, I never stayed more than 2 or 3 years before finding an external promotion
If I had bought a home from the start, conventional wisdom says that most homeowners have to live there for five to seven years, or even up to 10 years, to make a profit.
I chose to rent apartments: a rich square footage duplex with a master suite, backyard, and garage in Grants Pass, Oregon; an adorable two-story townhouse in Portland’s historic Sellwood neighborhood; and a villa-style unit in Spring, TX with Zumba classes and a saltwater pool where we’ve previously spotted Simone Biles.
Renting leaves me free to invest separately and not be linked to my life situation
As Robert Kiyosaki points out in his book “Rich Dad Poor Dad,” your home is not necessarily an asset for you, even if it is a long-term investment, even if it is the bank’s asset. Also, buying a home to live in can be a very bad idea for building wealth, as the costs of home ownership can be excruciatingly high and keep a lot of your equity tied up in the property.
According to a month of September redfin study, the national median monthly mortgage payment rose 67% faster than rent over the past year in August, following a seven-month trend, despite mortgage interest rates at record highs. And mortgage holders could pay more than $ 77,000 in interest after 15 years on a home that costs $ 250,000.
Keep in mind that the median price of a home in the United States was $ 380,000 in August (up 8.6% from 2020), so most homeowners will likely pay more, depending on interest rates.
For reference, where I now live in Portland, the August real estate market saw an average increase in selling price of 18.5% from August 2020 – a jump from $ 481,000 to $ 570,100, according to the RMLS.
On average this year, a 20% down payment in the US ranges from $ 37,525 in Indianapolis to $ 295,488 in San Francisco. It’s all the money spent – a liability, not an investment – until you rent a room, list it on Airbnb, or eventually sell the place. Your money is blocked and your life situation is blocked.
As for me, I’m still finishing the one from financial guru Dave Ramsey (edited) no baby to live completely debt free and invest in wealth creation (I just need to get rid of those pesky student loans).
FIRE is my moonshot, and as they say: Shoot for the moon; land among the stars. At least my money for investments and my life situation are free.