Renting may have less hassles and commitment versus buying, but it is still costing millennials a huge chunk of change every paycheck.
According to RentCafe Millennials spend about $92,600 in total rent payment’s by the time they turn 30. The information came from U.S. Census Data on total income and total rent paid during an 8 year period. During that time Millennials spent as much as 45% of their net income on rent during their 20’s. (22-30 years old). The study showed that Gen X paid $82,000 by 30 and Baby Boomers paid $71,000 during that same time period. To put the ratios in perspective Gen X paid 41% and Baby Boomers 36% during that same time period. One of the potential explanations for millennials high rent payments is that they are the least likely generation to buy homes during that time. It’s not entirely their fault, as they have faced an uphill battle; coming of age during a recession and record breaking #’s of student loan debt. In addition to that millennials prefer to live in major cities, where rent and utilities are more expensive.
Tired of making your landlord rich? Click this link for free first time home buyer tips or to schedule a free consultation
What does this mean for me?
Unless you still live at home you probably don’t need a Masters degree to see what Rent does to your bank account. The more of your income that rent takes up the less money you have left over for savings, investing and paying off debt. This can translate into highest interest costs on credit cards and student loan debt, along with increasing the timeline for retirement. Even folks who are getting ready to retire now seem ill prepared for retirement. Some studies suggest that many baby boomers have dwindling retirement savings and plan to work long past the traditional retirement age of 65.
Why should I care?
Whether your a 20 sometime or close to retirement most people feel the pinch of rising rents. Because of the ever increasing cost of rent we are seeing a big rise in the number of Multi-Generational households. The last time we saw rates this high was during the great recessions when adults were moving back in with their parents to make ends meet. If rents continue to rise older generations may find themselves supporting their younger, or older family members. The bottom line is unless you want to continue to feel the effect’s of rising rents you should start thinking about something more permanent. It is especially a good time to get into a home as rates are still relatively low and besides taxes increasing, your payment will not go up for a 30 year fixed loan. We also offer No Money down Loans across the entire US of A. Remember you don’t need 20% down to buy a home, in fact the majority of home buyers put down less than 6%.
What can I do?
Your best course of action is to assess your current financial and living situation. You may not be able to find a cheaper per month payment buying but you WILL be building equity and reap the tax benefits of owning a home. If you don’t think your ready to purchase a home try these simple solutions below and set yourself up for a better future.
- Where is your money going? If you live above your means aka charging your credit card for non emergencies you may spend more than you can afford on luxuries, such as entertainment, dining out, uber rides and
- Consider housing alternatives. Though this isn’t possible for everyone, some people may be able to save on rent by looking in more affordable neighborhoods, getting a roommate or even moving in with your parents for a short period of time.
- Focus on paying off debt- Paying off debt can seem like a huge daunting task but its easier when you develop a game plan for paying it off. Start by figuring out how much you owe, which debt has the highest interest rate, and then how much a month you can put towards debt.
Don’t wait for Rates to go up
If you are thinking about buying next week, next month or even next year don’t wait to schedule a free consultation. We can work on a plan to pay off debt, and get you into a home