The Dirty Truth About Home Ownership (Bestie Ep) #1009

Summary

Podcast Summary: How to Money – "The Dirty Truth About Home Ownership (Bestie Ep) #1009"

Release Date: July 14, 2025
Host/Author: iHeartPodcasts – Joel and Matt

---

Introduction

In the 1009th episode of How to Money, co-hosts Joel and Matt delve deep into the often unquestioned belief that homeownership is the quintessential path to financial success. Titled "The Dirty Truth About Home Ownership," this episode aims to provide listeners with a balanced perspective, challenging longstanding assumptions and encouraging thoughtful consideration before making one of life's most significant financial decisions.

Listener Stories: Real-Life Experiences

The episode kicks off with inspiring listener stories that set the stage for the discussion. Lindy shares her triumph in negotiating a significant discount post-purchase, highlighting the power of advocacy in managing expenses.

“But we haven't really talked about, I guess, doing it after the fact. And I think that is not usually as strong of an argument, but in Lindy's case, it worked.”
— Matt [04:19]

Another listener credits disciplined saving during COVID-19 as the catalyst for successfully purchasing a home, emphasizing preparation's role in financial milestones.

“One of our listeners was able to buy a home, largely because he was like, I was prepared. I was saving during COVID.”
— Lindy [06:17]

Debunking the Homeownership Myths

Joel and Matt confront the pervasive narrative that renting equates to wasting money, juxtaposing it against current housing market dynamics. They question whether the conventional wisdom still holds true in today's fluctuating economic landscape.

“The housing market now is just quite a bit different. It looks a lot different than it did a few years ago.”
— Lindy [08:34]

Financial Analysis: Renting vs. Buying

A significant portion of the episode is dedicated to analyzing the financial implications of renting versus buying. The hosts cite a recent Gallup poll revealing that Americans still view real estate as the premier long-term investment, despite recent declines in home values.

“According to a recent Gallup poll, Americans still believe that real estate is the best long term investment by far.”
— Matt [12:36]

Contrastingly, historical data showcases the S&P 500's superior average growth rate compared to real estate over the last 30 years.

“If you look at the last 30 years, real estate had an average growth rate of 5.3%, but the S&P 500 had an annualized return of 9.7%...”
— Lindy [14:09]

Additional Costs of Homeownership

Joel and Lindy illuminate the often-overlooked expenses associated with owning a home, including maintenance, property taxes, mortgage insurance (PMI), and unexpected repairs. Lindy shares her personal ordeal with home repairs, underscoring the time and financial burdens they can impose.

“There are these subtle psychological poles that cause us to consume and maybe our finances start spiraling out of control because we are just coaxed into spending more than we would if we were, if we'd remain renting.”
— Lindy [32:10]

Benefits of Homeownership

Despite the challenges, the hosts acknowledge the intangible benefits of owning a home. Stability, the ability to customize living spaces, and fostering deeper community relationships are highlighted as significant advantages.

“But one of the reasons that we were like, it wasn't just financial reasons though, right. Like it made sense from like a lifestyle standpoint.”
— Matt [43:22]

Prerequisites for Buying a Home

Before diving into homeownership, Joel and Matt stress the importance of financial readiness. Key prerequisites include:

1. Down Payment: A substantial down payment reduces mortgage rates and avoids PMI.
2. Emergency Fund: Maintaining a robust emergency fund safeguards against unforeseen financial setbacks.
3. Understanding Market Conditions: Assessing the local housing market and mortgage rates is crucial for making informed decisions.

“The number one piece of this, Matt, is understanding how long you plan to own the home.”
— Lindy [47:06]

Conclusion

Joel and Matt conclude by reiterating the necessity of a nuanced approach to homeownership. While owning a home offers unique perks, it's imperative to weigh financial implications against personal and lifestyle goals meticulously.

“Ultimately, it just takes a little bit of sacrifice, right? Like, are you willing to give up some other things, including some of your financial freedom, for that joy of homeownership?”
— Matt [57:43]

They encourage listeners to utilize tools like the New York Times' rent-to-buy calculator to visualize and compare financial outcomes based on individual circumstances.

“If you are listening to this podcast, most people live in one of these Cities, most people can save $800 a month by renting instead. That's almost $10,000 a year back in your pocket that you can do whatever you want with.”
— Matt [24:46]

Additional Resources

• Rent vs. Buy Calculator: New York Times Rent to Buy Calculator
• Show Notes and Links: Available on the How to Money website

---

Notable Quotes with Timestamps:

• “Because right when you look at those numbers, when you extend the time frame, it certainly points in favor of stocks being a far better long term investment.”
  — Lindy [14:09]

• “We're not trying to be contrarian for the sake of being contrarian.”
  — Lindy [21:27]

• “Renting puts a roof over your head, and so it's not throwing money away because it's giving you a place to call home.”
  — Lindy [23:04]

• “Nearly half of American adults say that they would suffer financial hardship within six months if they lost their primary income earner.”
  — Matt [37:00]

This episode serves as a critical examination of the conventional wisdom surrounding homeownership, urging listeners to make informed and personalized financial decisions.

Transcript

[Matt]

This is an iHeart podcast.

[Joel]

Life doesn't happen biweekly, so why should Payday the money you earn can be in your hands today with Earn In. Earnin is an app that gives you access to your pay as you work up to $150 per day with a max of $750 between paydays. Just download the Earn in app and verify your paycheck. Then access up to $150 a day as you work and leave an optional tip. Any money you access plus tips are automatically repaid from your next paycheck. Make Earnin a part of your financial ro. Join Earn In's over 4 million customers who say things like when I think about Earn In, I think about financial stability, security. It gives me a lot of peace of mind. Download Earn in today, spelled E A R N I N in the Google Play or Apple App Store. When you download the Earn in app, type in How To Money Under Podcast when you sign up. That's How To Money under Podcast. Earn in is a financial technology company, not a bank. Cashouts are based on your available earnings. Standard cashouts take one to two business days with no mandatory fees option to expedite your transfer for a fee. Tips are voluntary and don't affect the service. The Cash Out User Agreement for details Services not available in all states.

[Lindy]

Where do you see your career in 10 years? What are you doing now to help you get there? The sooner you start enhancing your skills, the sooner you'll be ready. That's why AARP has reskilling courses in a variety of categories like marketing and management to help your income live as long as you do. That's right.

[Matt]

AARP has a bevy of free skill building courses for you to choose from because the steps that you choose to take today will help you to love what you do in the future. And that's why the younger you are, the more you need AAR AARP. Learn [e-mail] skills hey, it's Joel and.

[Lindy]

Matt from how to Money. Matt, you and I, we do a decent amount of traveling. So what's a place that you think lived up to the hype?

[Matt]

That one is tough, but immediately what comes to mind is Scotland. The scenery in particular was insane. I'm specifically thinking about when we went and hiked Old Man's Store. Oh yeah. Felt like we were on a completely different planet. It was otherworldly.

[Lindy]

Sure was. Yeah. Yeah. In our Airbnb on the Isle of Skye, man, it looked straight out this field into the sea. Total tranquility and the castle gardens that we saw. And it felt straight out of a fairy tale.

[Matt]

It's true. Yeah. That trip showed us how big a difference the right place makes. And if you've got travel plans, don't let your place sit empty. Airbnb's co host feature makes it easy to earn a little cash while someone else manages the day to day.

[Lindy]

That's right. Find a co [e-mail] host. Welcome to how to Money. I'm Joel.

[Matt]

And I am Matt.

[Lindy]

And today we're discussing the dirty truth and about home ownership. The dirty truth.

[Matt]

The. Did you ever watch clinics? Was it Dirty Harry? That's the, that's what I'm thinking.

[Lindy]

I never saw it, no. But I like some Clint Eastwood classic, the Unforgiven. I think that was my favorite of his.

[Matt]

Yeah. We're talking about the dirty truth of homeownership and makes me think that we're going to uncover some sort of scandal or something like that. There, there is no expose that we're making public here to all of our listeners, but we do want to make sure that folks are entering homeownership with their eyes open, that you're thinking through all of the different factors, all the different ways that it's going to cost you. And mainly because I don't think there's, there's just not a lot of folks doing this. There aren't a lot of folks who are calling into question this sort of forbidden fruit, this thing that you dare.

[Lindy]

Not speak ill of.

[Matt]

But in essence, that's what we're going to do today. We're going to poke the bear a little bit.

[Lindy]

Let's be honest, the facts on the ground have changed in the housing market significantly. Yes. In particular in the last year or two.

[Matt]

You got that as well.

[Lindy]

And so, yeah, we're going to talk about current trends and how that impacts how you think about buying a home or kind of staying put. But Matt, before we get to that, I just wanted to give a shout out listener, Lindy, she emailed us and she, she had to herself a pat on the back. And I will give her a pat on the back here, too, for scoring a discount. No, not just before she bought something after the fact. And I love this because she pulled.

[Matt]

The, she pulled that Costco Uno reverse card. She's like, hey, how about this?

[Lindy]

That's right. And so she had bought something and I think there was like a Mother's Day sale or something that happened right after the fact.

[Matt]

It was something that she had not yet Received the benefit of. It's like she had made the purchase, and then she saw that the price had dropped, and that's when she thought, oh, no, I should have waited to have made that purchase.

[Lindy]

Yeah, I got robbed.

[Matt]

Yeah.

[Lindy]

But no, if you just kindly asked. And she, like, literally detailed her email correspondence for us in the email she sent us. It was super sweet. Just asking, saying, hey, see, there's a discount now. I bought before the discount. Didn't realize this was coming down the pike. Can you apply this discount to my order? And the answer was, yeah, of course.

[Matt]

We're retroactively.

[Lindy]

Yeah, basically, 175 bucks back in her pocket just for asking the question. And we always. We talk a lot about asking for discounts and how important that can be. It's a good, good muscle to exercise to save money. But we haven't really talked about, I guess, doing it after the fact. And I think that is not usually as strong of an argument, but in Lindy's case, it worked. And it's still like, what's the worst that could happen?

[Matt]

They might be like, never hurts to ask.

[Lindy]

Yeah. They might be like, nope, sorry. But still, I think it's a good exercise. And sometimes people, especially on a product like that, will reconsider or they'll give you some sort of discount. And in this case, she got the full, full 50% off.

[Matt]

Heck, yeah. Well, and this is a reason that we love talking about money. This is one of the reasons behind the fact that we started this podcast is because we want folks talking about their money, not just in the ways that you could earn it and invest it, but also the way that you spend it. And we want there to be a whole lot of savvy consumers out there.

[Lindy]

And Lindy was like, I don't think I would have done this had I not been listening to you guys.

[Matt]

I know, I know. That's the.

[Lindy]

Always push me in that kind of direction.

[Matt]

Us patting ourselves on the back where like this. That's exactly the kind of behavior that we want to see. The folks who then feel empowered to, you know, basically be an advocate for themselves. Lindy, thank you so much for sending that win our way. And actually, it really does encourage Joel and I when we hear some of these different stories. And so if you have something not even similar, but something, you know, in this vein where you have made a positive change in your life when it comes to your money, we would love to hear that. We may not. We don't share them all on the show, but there's certain Ones that kind of stand out and.

[Lindy]

Yeah.

[Matt]

And ones that we have to share with our listeners for sure. But if you've got one of those. Yes, send them our way. How to Money podcast.

[Lindy]

We got another one today in our email inbox from a listener who was able to buy a home, largely because he was like, I was prepared. I was saving during COVID And if I hadn't have been listening to you guys and taking those steps, I wouldn't have owned a home today. So on that note, let's talk about homeownership. But first we'll mention the beer. This is called It Was a Time to Believe in Anything, and it's an IPA by burial. They have the most over the top beer names. And this one fits. Fits like a glove for the burial naming convention. But we'll give our thoughts on this one at the end of the episode. And let's talk about housing. Matt, the dirty truth about home ownership. There are a lot of things that we. I like houses. I mean, everyone does. I like. I like houses. I like the house we live in.

[Matt]

It's kind of like what we're fighting against is the fact that everybody wants a house. Everybody likes a house. Well. And part of that is a desire for everyone. Yeah. For all these millennials who are entering homeownership age to be able to get their hands on one.

[Lindy]

Yeah. And there's nothing wrong with buying a house. And in fact, I think it's going to sound like we think there's something wrong with it during this episode because of we're actually trying to combat the predominant narrative and help make people think again. But we will try to offer a balanced perspective on home buying. But it just makes me think, Matt, that, you know, in childhood there are all sorts of things we hear our adults say or parents say, and we end up kind of believing. Believing it as a stock belief. Our whole life, never really questioning the tenets of whether it's true or not. Makes you think about swimming after eating. Supposed to wait like an hour, Right?

[Matt]

We are entering pool season for sure.

[Lindy]

Yes, it is here. And you're gonna hear somebody say, you gotta wait at least 30 minutes or you gotta wait at least an hour after you eat before you go swimming. But this is one of those things. At some point, I finally got fed up and I was like, is this for real or not? And it turns out the Mayo Clinic says you might experience some minor cramping, but in no way is it dangerous to go swimming after eating. So this is one of those old wives Tales or whatever you call them that we've all heard growing up, but it's not actually true. Yeah. And I think the same thing can be said of owning a home. It's the surefire path to building wealth. That's how you get there. Home ownership. And it's this, like, money fact lodged somewhere in the recesses of our brain that we can't shake. And so we have to revisit the question. Is this actually true? Is this actually a fact? And it's really a nuanced topic, and so that's why we want to dive deep today.

[Matt]

Yeah. My favorite pool myth was that if you pee in the pool, it's going to turn red, and everybody's going to see that you pee in the pool. But, hey, that's not true. I pee in the pool all the time. Never turns red. Just kidding. I don't know.

[Lindy]

Hanging out at the pool with you.

[Matt]

Again, don't actually do that, because that's not hygienic.

[Lindy]

Right.

[Matt]

We got to keep that pool clean. But there are a lot of things out there that we believe to be true. But that's basically because it's just the default assumption. And the narrative exists that if you're renting, you are throwing away money. You need to. You got to buy a home in order to build up that equity. If you want to build up some generational wealth, you better get on the path to homeownership. Otherwise you're going to be left.

[Lindy]

How else are you going to get there?

[Matt]

And actually, the stats show that homeowners actually do have more wealth than renters.

[Lindy]

Are you upending our argument at the very beginning more?

[Matt]

No, no. We will get to that later on. We are not against homeownership, like we said at the top here, but it's also not a slam dunk decision, and it definitely doesn't ensure that you're going to build wealth faster. It might be a good forced method of savings for those out there who might have less discipline when it comes to your investing, but it is not a better route to financial independence as many folks assume.

[Lindy]

All right, so I think part of the reason is, like I said, the cult of homeownership. We've kind of had this.

[Matt]

That would have made a good secondary title.

[Lindy]

Yeah.

[Matt]

The cult of homeownership.

[Lindy]

That's been kind of maybe we'll change an embedded belief for a long time just in the minds of everyday Americans. And I think part of that comes from government. Part of that comes from news media. Part of that comes from Financial pundits. But something else. I think another reason that people really think that, that owning a home is like the best decision they can make from a financial perspective, it comes from just what's happened in recent memory. Right? Sure. There's a lot of recency bias is what I'm trying to say. And so if you bought a house in Florida back in 2019, my guess is no one could convince you that buying a home is a dumb move because home prices in Florida are up something like 80% in that time period. And so it would take a lot of persuasion to get you to even consider that buying a home might not be a slam dunk move all the time in every situation. And so, and even if you sold your home just a year after buying it, you still did well, like you still did okay, making enough to more than cover the transaction costs of that purchase in all likelihood. And so this torrential housing market and ultra low rates that we had for a bunch of years, that that fueled affordability. And that's really only reinforced the notion that owning a home is the quickest path to wealth. But someone who bought a home in, oh, six, they likely have a different feeling because they had a much different experience. They either some, a lot of folks had their home foreclosed on back then, or even if they didn't, they might have been underwater for a bunch of years and they might have a completely different perspective because they bought a home at a different period in time. And so I just think that recency bias is a part of this. It's tainted our view and it's created an even stronger bias towards homeownership. But the environment we're in right now is different and so different considerations are necessary.

[Matt]

Yeah, a part of the assumption that it's a really good idea to buy a home is what we've experienced over the recent decade plus. But there is just no guarantee that home values are going to continue to skyrocket because again, if you bought a home back in 2011, you're sitting on a ton of equity and you probably feel like a real estate investing genius, but that gravy train is slowing down. And in fact, a couple weeks ago, April's median home value data came out and we saw the biggest decline in home values actually in 20 years. But the default assumption, it still holds. According to a recent Gallup poll, Americans still believe that real estate is the best long term investment by far though, actually, I mean, I think it will be interesting to see if sentiments shift if we continue to see declines in home values or even if we see we experience a housing price plateau for a period of time. Because I feel like that would only reinforce the fact that folks are only looking at the short term, they're not looking at historical data. And that's what we like to look at.

[Lindy]

Right. Which I think that's how most people approach a lot of things. Makes me think of bitcoin and how, oh, flying high right around the super bowl, all those really expensive ads. It's funny, I was listening something the other day and I didn't realize the LA Lakers still play at a place called Crypto arena.

[Matt]

And they still got the naming rights.

[Lindy]

I think they still have the naming rights. For how long? Who knows? But this is one of those things that it's. It's again, that's recency bias too, in a lot of people saying to the moon, well, how are those people? I don't hear nearly the same vigor. I think there was a recent bitcoin conference in Miami, Matt, and it was sparsely unlike the couple years previously where it was tens of thousands of people.

[Matt]

Popping bottles left and right.

[Lindy]

Right. And so it's just interesting to note that that that taints a lot about how we view things. And I would. I don't think it's necessarily makes a lot of sense to equate investing your money in bitcoin or buying a house as the same, because home. We have a lot more history when it comes to buying a home. And home values do go up over time. Right. But it's also important to mention that the market you buy in matters. And buying bitcoin in January around the super bowl last year, that didn't pan out so well. And buying a home right now isn't going to be that bad. But it is important to consider the timing of the purchase. Matt, let's talk about historical data for a second. Because if you look at the last 30 years, real estate had an average growth rate of 5.3%, but the S&P 500 had an annualized return of 9.7% percent quite a bit more. And which of these is greater? Right. Which one would you prefer to see?

[Matt]

This is an easy question.

[Lindy]

And that reality holds if you zoom out even further and you look at an even longer period of time. Right. And so if you've listened to this show for any length of time, you know that we like real estate as an investment, but there's a difference between buying a home purely as an investment versus buying a home that you like. Right. That's going to that's going to serve as your primary residence. And we make completely different decisions when we're buying a home as an investment versus buying it as a place for us to live and to raise kids, have a family, stuff like that. The entire reason that we're having this discussion is just to combat the knee jerk belief that buying a home is the quickest possible route to wealth. Because right when you look at those numbers, when you extend the time frame, it certainly points in favor of stocks being a far better long term investment. Even though like you said, that Gallup poll, Matt, it shows that people believe the opposite.

[Matt]

That's right. Yeah. Well, actually, what's really unfortunate about that Gallup poll too is the fact that the biggest increase as to what people thought was the best long term investment was gold.

[Lindy]

Look at the numbers historically on that too.

[Matt]

Yes, exactly. Which by a long shot underperforms the stock market. Honestly, I think it's pretty equivalent to real estate over like the past 30, past 50 years.

[Lindy]

We detailed that in a recent how to Money newsletter, actually.

[Matt]

Okay, so when we're talking about homeownership, when we talk about its impact on wealth building, it's impossible to not talk about leverage. It is a key component in the perception and the reality of home price appreciation. Not having to save up the full purchase price of a home, using financing, taking on a mortgage, it allows you to buy something that you otherwise wouldn't be able to afford. And this is great news. Right. I'm certainly happy that mortgages exist and that I didn't have to save up the amount of cash required to buy a home in cash. And I couldn't imagine renting until being able to finally buy when you're like 50 or 60 years old. Right. It would make it untenable for the vast majority of folks out there. But leverage is a double edged sword. Again, ask any, any home flippers. Ask any real estate developers who were out over their skis back in 0708 as we experienced the popping of the real estate bubble.

[Lindy]

Yeah. The truth is on the leverage front, Matt, it gives and it taketh away. Right? It's, it's smart. Reasonable use of leverage can give you a boost. It can help you to afford something, like we said like 10% down. You can put 50,000 down to buy a $500,000 house. That's kind of incredible, right, that the bank trusts that you're going to pay that off over the next 15 or 30 years. But it can also be a rude awakening because if you're assuming that the value of your property is going to see a big bump in value in the short term. Leverage just might come back to bite you. You're in real estate in particular. A big chunk of folks tend to assume that not having to save up much money is going to save their bacon. But if the wind isn't at your back in the real estate market, and again, the wind has mostly been at our backs over the past 12 years. Using leverage too heavily can cause real harm. So if the wind, if the winds are all of a sudden shifts and it's blowing kind of at your face, it's creating, you got some headwinds going on. It could, especially for real estate investors, that use of leverage could really mess them up in a big way. That's right.

[Matt]

Yeah. So hopefully we are not completely shattering all of your hopes for homeownership, but we do have some additional dirty truths to get to when it comes to homeownership and also some of the things that you need to consider if you are going to go ahead with that home purchase. We'll get to all of that right after this. So, Joel, you know, I like the numbers. Well, here is a stat that will stop you in your tracks. Nearly half of American adults say that they would suffer financial hardship within six months if they lost their primary income earner. If that stat hits close to home, you are not alone and you are not out of options. Policygenius makes finding and buying life insurance simple, ensuring that your loved ones have a financial safety net that they can use in case something happens to you, whether to cover debts and routine expenses or even to invest the money and to earn interest over time. With Policygenius, you can find life insurance policies starting at just $276 a year for $1 million in coverage. It's an easy way to protect the people you love and feel good about the future.

[Lindy]

Yeah, Matt, the listener feedback we get about policy genius is top notch, right? They love how easy it is to cross this off their to do list. And that's because policygenius helps you compare your options by getting quotes from America's top insurers in just a few clicks to find your lowest price. And then policygenius, they lay out all your options clearly, right? Coverage, amounts, prices, terms. There's no guesswork, just clarity.

[Matt]

Secure your family's future with Policygenius. Head to Policygenius.com to compare free life insurance quotes from top companies and see how much you can save. That's policygenius.com the first step in solving any problem that we have in life. Whether we're talking about a conflict in a relationship, why the check engine light is on right, flashing on the car, or even why we can't seem to set aside enough money for different goals we have, the first step is to clearly define the problem. We've got to assess the situation. What's going on with your spending? That is where Monarch money comes in. But Monarch is more than just a budgeting app. It works as your own personal cfo, giving you full Visa ability and control over all your accounts, investments and financial goals.

[Lindy]

Monarch is truly a game changer and I love how you can choose goals that you want to hit and then you can rank them in order of priority. It's pretty rad. It makes those goals a lot more concrete and tangible. My top goal has been funding our family summer travels.

[Matt]

Nice.

[Lindy]

So start managing your finances to build the life you actually want. The truth is, without a clear financial picture, your financial dreams really can feel out of reach. And Monarch makes managing money simple even for busy lives.

[Matt]

That's right, man. Get control of your overall finances with Monarch Money. Use code [e-mail] in your browser for half off your first year. That's 50% off your first year at monarchmoney.com with code howtomoney.

[Joel]

Life doesn't happen bi weekly, so why should Payday the money you earn can be in your hands today with Earn In. Earn in is an app that gives you access to your pay as you work up to 150 doll per day with a max of $750 between paydays. Just download the Earn in app and verify your paycheck. Then access up to $150 a day as you work and leave an optional tip. Any money you access plus tips are automatically repaid from your next paycheck. Make Earn In a part of your financial routine and join Earn In's over 4 million customers who say things like When I think about Earn in, I think about financial stability, security. It gives me a lot of peace of mind. Download earnin today spelled E A R N I N in the Google Play or Apple App Store when you download the Earn. Type in how to Money under Podcast when you sign up. That's how to Money under Podcast Earn in as a financial technology company, not a bank. Cashouts are based on your available earnings. Standard cash outs take one to two business days with no mandatory fees option to expedite your transfer for a fee. Tips are voluntary and don't affect the service. See the cash out user agreement for details service is not available in all states.

[Lindy]

All right, Matt, we're back. Let's keep talking smack about homeownership and not on purpose. It kind of makes me think we.

[Matt]

Are doing it on purpose.

[Lindy]

Well, yeah, but. Okay.

[Matt]

Not for the sake of talking smack, but just for the sake of wanting folks to make sure that their eyes are open, that they are approaching this big purchase, while at the same time considering all the different facts and factors that they should keep in mind.

[Lindy]

Yeah, we're not trying to be contrarian for the sake of being contrarian.

[Matt]

Exactly.

[Lindy]

It makes me think of hazing. If you wanted to be in some sort of fraternity or something like that. I was never in a fraternity, never had the desire, never was cool enough, let's be honest, to do that. But if I had, there's, like, fraternities for nerds.

[Matt]

Yeah, I mean, like, fraternity for chemists, you know, different brethren that you can join.

[Lindy]

I'm not smart enough.

[Matt]

Professional fraternities, I guess, is what I'm saying. Okay. It's not just about partying, but there's.

[Lindy]

All, like, initiation ceremonies to get into that. And I don't know if they're. If, like, what they're doing really to make that happen, but if you still want to be a part of that fraternity after the hazing or that initiation stuff, then it shows that, okay, cool, you've passed the test. You really want to be there. And that's how I think of this episode. If you really want to buy a home, you're going to listen to all these things and you're going to be like, yeah, okay, I get it. I get all the potential pitfalls, but it's still the right move for me because I'm ready. And so we'll talk about what it looks like to be financially ready to buy a home as well in just a bit. But let's talk about renting for just a second, because the biggest misconception about renting is that it's for financial idiots. And you mentioned this line, I think earlier, Matt. Renting is throwing money away. And everybody has heard that line. Right. It just has sunk deep into our psyche now at this point that renting is ridiculous. And why would you do it for any longer than you have to?

[Matt]

In my. When I see people saying that, who I picture are parents, I feel like I see a lot of parents saying that to kids. And I think. I wonder if it has less to do with, like, the financial side of things and more about them wanting to encourage their kids to, like, grow up and get married, have some. Have some kids so that I can join my grandkids. Like, that whole thing, just trying to move them along in life as opposed to them actually providing them with any sound financial advice.

[Lindy]

Yeah, no, that's a good point. And part of it probably has to do with their bias. They're like, I bought a home for $70,000 32 years ago, and now look what it's worth.

[Matt]

Sorry, Mom. The market's a little different than it was.

[Lindy]

Well, and then again, you look at the numbers, and they probably would have been better putting money in the market, too, but they would have. It's just how they've rationalized it, how they've thought about it. But if you're young and you're just getting started in your career and there's a chance you might relocate for that career, renting is probably a slam dunk. Or you might just want to live somewhere else in the near future. Or it doesn't even have to be another city. It could be another part of town where you live. And so why would you buy? Like, don't rent. Figure out where exactly you want to live first. And even once you have, you might want to keep renting. I mean, one of the biggest perks of renting is that it gives you a ton of flexibility, and that is highly underrated. Also, renting puts a roof over your head, and so it's not throwing money away because it's giving you a place to call home, even if it's not a place that you own. And, like, plus, for all the home improvement haters out there, Matt, they don't have to fix stuff that goes wrong. Right? You got a landlord for that. And it certainly makes budgeting easier if you don't have all these other potentially intangible costs that we're going to cover in this episode, if you don't have.

[Matt]

Those to deal with unforeseen expenses, all you've got is a number that you text, right? And you say, enter. Appliance is broken. And that's how you get things fixed. But the biggest win that renting has over buying is affordability. So we are going to make an argument here on the financial side of things. There's a report from realtor.com and they find that you're going to save money by renting in 45 of the 50 biggest cities out there. So basically, that's, like, everywhere. Like, there's a chance that if you are listening to this podcast, you live in one of these Cities, most people.

[Lindy]

Live cities were the best to buy, but it was like Detroit and I don't even remember which. But there were very, very, very few. Let's be honest. Most. It's better to rent almost everywhere from a financial perspective.

[Matt]

Exactly. Yeah. And fact is, that's where the most populous areas are as well. Like the 45 of the 50 major cities is where a of lot large, large percentage of the US population lives. And on average, you're going to save $800 a month, which is insane. That's almost $10,000 a year back in your pocket that you can do whatever you want with. But hopefully you would take that money and you would invest it, but it could actually be much more than that. In many of the west coast cities, according to Redfin, the median estimated monthly mortgage payment for homebuyers out in California, specifically in San Jose, is $11,000. And you compare that with a median estimated monthly rent of 4,000. It's crazy.

[Lindy]

What a wild swing.

[Matt]

And one final stat here. Nationwide, the typical home costs 25% more to buy than to rent. And this is without even considering maintenance costs that we're going to get to. And as we talk about some of the additional expenses associated with homeownership. But going back to the 45 biggest cities where you're saving 800 bucks a month, were you to not actually spend that money and were you to take it and stick it in the market, if you were to invest the difference there, you would end up with over $900,000. That's assuming a 7% rate of return, which is fairly conservative. And you would have that much money after 30 years. That's nearly a million dollars, which it's just crazy to think that you could have that much just on this one expense. And this isn't like your combined portfolio, like total portfolio. No, just on the cost of housing. It kind of makes me. So on Monday, we talked about. A listener was asking about Indexed Universal Life, and we're talking about how. Oh no, it's this fancy product and yes, technically, you might be able to grow your wealth by taking that money and sticking it in that product, but instead go for the cheaper alternative and just invest the difference. It almost makes you feel like you can't compare homes. Sort of like you were saying earlier, you can't compare. It's not apples to apples. Yeah, this is like apples to bananas or something. But it kind of makes, when you put. Look at it from that, in that perspective, it kind of makes you think, oh man, what am I Actually giving up by purchasing a home as opposed to renting. Especially if you're talking about some of these more affordable cities where renting is drastically more affordable.

[Lindy]

Well, it makes me think about something else. If the numbers were to change on car leasing versus buying a car, that would change how we think about it. The reason we don't like leasing a car is because it's so darn expensive and because you have to give it back after two or three years. Right. You have kind of flushed a lot of money down the toilet in order to do that. And so the wiser thing to do is to buy a car. But let's say the price of leases was magically cut in half. We wouldn't hate leasing anymore. And in fact, I would probably be the first one to line up and lease a car. So it's the less about the term.

[Matt]

Or it's less about the language, it's more about the numbers. We would gladly issue a mea culpa and say, oh yeah, we used to say that we hate leasing, or oh yeah, yeah, we used to say that we hated index universal life. Yeah, but if the numbers change, if something is different on the ground, then we're going to follow where the data leads us.

[Lindy]

Right? And so much of it is a question of value and price. And so this is what makes renting potentially so much better for intentional money savvy folks, though, because you just mentioned, Matt, almost a million dollars. I mean, given some of those numbers, renters actually have a wealth building advantage, which is not how any of us ever talk about it, not how you ever hear about it. It's just that they rarely use it. And so, you know, it depends on where you live, of course, but you could easily be saving $1,000 a month or more by renting instead of buying. But the key here is that if renters would funnel extra cash into investments that they'd otherwise put towards a more expensive mortgage, they'd actually build wealth more quickly than their friends, their peers, who buy a house instead. It's the problem here, though. The crux of the issue is a lack of discipline, and that's the problem in this scenario. It's not that renting is dumb or the renters are at a disadvantage. It is that renters are saving a lot of money by renting in most of the country, but they're not funneling the money that they otherwise would have used to buy a house into the market.

[Matt]

And so the fact is, we are going pretty hard in the direction of, hey, you should consider Renting, it should not be a default decision for you to purchase a home. And a part of that is because homeownership just costs you more than you think. We've already talked about basically the upfront costs, like your monthly payments, but specifically homes are really expensive to maintain.

[Lindy]

I've heard that. So I've experienced that.

[Matt]

Yes. It's just there, there's. There are just ongoing costs. I mean like patching a roof, the, the cost of maybe some fresh paint. It's getting warm these days. We've talked about getting your H Vac serviced. That's important as well. Pest control. That's something that costs some money as well. Although that is. That's one of those that you could totally DIY that you can do yourself. We actually have a great article up on the website that tells you ex. The how you should spend your $20 on these two items and how that will save you a ridiculous amount of money over the years. So that's one way that you could reduce that cost. But you're likely going to spend roughly about 1% of the purchase price every year on home maintenance. That's the, that's the general rule of thumb. But then just not to mention the, the fact that you are spending your time. There's this additional hassle factor with getting these things done, with scheduling the work being done there on your house or if you are looking to be a little more frugal, setting the time aside to actually doing that work yourself.

[Lindy]

Sure, yeah, there's a big time cost.

[Matt]

It's just a pain in the butt.

[Lindy]

Though, to being a homeowner, less so than being a renter. And sometimes there's an act of God, there's a tree that falls through your roof and it just ruins your day and potentially months of your life while you're trying to like work with the insurance company. Get that figured out.

[Matt]

You want to give folks a little update as to where things are at the given moment with your house.

[Lindy]

Construction is just about to begin, which feels like it's taking a long time to do that.

[Matt]

But it has been a long time. Yeah, but I mean, that's the.

[Lindy]

They've ripped out, unfortunately.

[Matt]

That's the insurance policy ripped out some.

[Lindy]

Of the things that were damaged and we've been living in it, but we're just about to move out. Construction is going to begin and hopefully it won't take more than a couple months. Fingers crossed.

[Matt]

Fingers crossed.

[Lindy]

But yeah, these are one. This is one of the things that comes along with homeownership and Granted, it'd be a pain if you're a renter, but not nearly to the same extent. And I think you'd still have to.

[Matt]

Move if you're a renter, but you wouldn't. It's just like, okay, well, I'm going to find another place. As opposed to having to do the work associated with.

[Lindy]

Right.

[Matt]

Getting this, not just maintaining this property, but getting it back to where it was. I feel like if I were in your shoes, that would be the hardest part is, is knowing that, like, you're.

[Lindy]

Not improving anything, you're improving it.

[Matt]

Exactly.

[Lindy]

Getting back to Z.

[Matt]

Like we added on, you know, like little screen porch on our house, whatever. And it's kind of a pain in the butt to coordinate with a contractor, but there's sort of this prize at the end of the tunnel where you're like, oh, but it's going to be worth it.

[Lindy]

Yep.

[Matt]

I cannot imagine the frustration that you're feeling when it comes to just getting back to baseline.

[Lindy]

Yeah. And it's just a part time job of it all. Like, that's what, that's what smokes me really, as I'm just contacting, talking to so many people, talking to contractors, the adjuster, all that kind of stuff. And I'm just tired of it. I'm just like ready for it to be done. So hopefully sooner rather than later. I think one other thing though, that gets people, Matt, you're talking about upgrades you added on the screen porch. That is something else that people, when they buy a home, don't you make.

[Matt]

An example out of me.

[Lindy]

They all of a sudden are like, what about this? What if I upgrade that? You know, I can make it, I can improve this or that. And that is kind of part of the fun of homeownership. But it also adds to the cost. It makes me think of the Diderot effect, Matt, and it's this.

[Matt]

The classic French philosopher, right.

[Lindy]

The 18th century French philosopher. And he, someone gave him, or I guess he sold his library for like the modern equivalent of $50,000. And he lived in poverty before that. He bought this fancy new robe.

[Matt]

It's more details than I've read in the past.

[Lindy]

Yeah. So I did some, just more research into it and. But in light of this gorgeous new robe, like, all of his other possessions just look dingy. They look like crap. And so I think that that can be the case for a lot of us when we, when we buy a home. It's like, okay, cool. Yeah, it starts with a coat of paint, but how far can well, I'm replacing the floors now. Or you know what, I need a new sofa in here because that's what's going to tie the whole room together. Or maybe a rug, I don't know. But these are the kind of things that happen to all of us as homeowners. There are these subtle psychological poles that cause us to consume and maybe our finances start spiraling out of control because we are just coaxed into spending more than we would if we were, if we'd remain renting. Sure.

[Matt]

Yeah. Well, and it's not necessarily too that, like maybe you love all your stuff. Like maybe you move in and you're just like, my stuff looks great in here. I love my house. But then that's the problem. Like you kind of like when you spend a lot of money on a house, that's where your dollar flow to. It makes sense that someone would take maybe a little, little bit more pride in their house compared to maybe where they were renting before.

[Lindy]

Right.

[Matt]

And so like once you start having a sense of pride, like you start thinking, oh, I want it to look even nicer. It's not necessarily that what you have currently, like your previous possessions are relatively shabby. It's just that, oh, I want this house to be nicer.

[Lindy]

Right.

[Matt]

And so like, you know, well, I'll use myself as an example again. But for us, like the landscaping at our house that we purchased last year, it was fine, but we really like to have an interesting outdoor area, so we started going down that direction. So maybe we felt we fell prey to that. But maybe it's you moving into the, you know, a house and you're like, oh, well, you can't have laminate countertops. That's just. No, like, that's just not so 1970s. I've got to, you know, you got to take care of that. Or oh, the, the carpet over here is. You can't just, A, we can't have carpet, but B, even if you did have carpet, that's dirty carpet.

[Lindy]

Right.

[Matt]

There's no way we're not going to rent a steamer and actually clean it. No, no, no. Let's just rip it out and do hardwoods.

[Lindy]

Like you said, it's a double edged sword of homeownership because I think some of it, those improvements can be a blast and it's really exciting to get to kind of create your own space. But the flip side of it is.

[Matt]

It costs you money.

[Lindy]

It can be a money suck.

[Matt]

Absolutely.

[Lindy]

And on top of the fact that you're spending a lot more than you would have been if you had been renting something similar. Also, it's also important to mention, Matt, that timing is crucial. Timing matters. And every market across the country is different. Of course, it's easier to buy a home in Mississippi than it is in Southern California, clearly. But market gyrations can change the value proposition meaningfully over time, too. The housing market now is just quite a bit different. It looks a lot different than it did a few years ago. It's always morphing and changing. That value proposition that I mentioned, we would change our tune on leasing a car if leasing prices were cut in half. Well, the value proposition of buying versus renting is different from state to state and from market to market as the market evolves. So if homeownership is a massive goal for you, it's worth, it's truly worth asking whether or not you'd be willing to move somewhere where the cost of housing isn't as expensive. We're all about putting down roots, staying in one place for a long time if you love the place where you are. But maybe moving elsewhere to a cheaper market makes sense for you if you're priced out where you're currently living. Or does perpetually renting make the most sense if you love where you live and just kind of. Of not. Not putting off a dream of homeownership, but maybe just being like, hey, maybe that was the wrong dream to begin with, and maybe the real dream is something else and it really is financial independence, which you're going to be able to get more easily by renting and investing a heck of a lot more.

[Matt]

That's right. Yeah. So the, the housing market has changed in recent years, and we touched on mortgages earlier, more kind of from a principal standpoint as to the. The power that it can have if the wind's at your back, but the problems that you can face if that wind is blowing in your face. But the specific rates that folks are paying right now, like the mortgage rate environment like that, is also changing the dynamics of homeownership. There was an article in the Journal just last week about the diverging paths of folks who bought a home just a few years ago and then the folks who purchased a home within the past six to nine months. We've previously said to avoid being a quote, unquote, payment buyer, where you're only considering the monthly payments. Well, that doesn't mean that you should ignore the interest rate altogether because they influence the payment on a home purchase massively. Any wannabe home buyers out there, they Know that interest rates aren't their friend right now but those fluctuations, they can and they should. Honestly they should impact your overall price range of homes that you can realistically afford. It should change the the filters or the parameters as you continue your home search. If you are seeing rates go up.

[Lindy]

I think interest rates should determine the purchase of a whole lot of other things a whole lot less because oh, what's the APR on your credit card? Guess what, for how the money listeners it shouldn't happen. I don't care because you should be paying it off on time and in full every month. It doesn't matter if the APR on my credit card is 82% because I've got that set up for auto pay and I'm paying the full statement balance. Same thing with a car. Like I'd rather you not take out a car loan. And so it doesn't matter if interest rates cash. Yeah we talk about that.

[Matt]

Don't really care about car loans.

[Lindy]

Sure interest rates on, on cars used a new used in new car loans have gone up but the goal is to not have a car payment at all. Right, that's but for almost everybody listening, not being able to avoid a mortgage is an impossibility. Same with Matt and I. We've had a mortgage on every property and that's okay. It's just what are the terms of that mortgage? They massively influence more than any other product like what you can afford, what you should be looking at.

[Matt]

Totally.

[Lindy]

It's also important Matt to mention equity which is it's a different beast than money that you've accumulated in the market. And so a home is an illiquid asset which means it's more difficult and often expensive to tap your home equity or to yeah to come buy it in some way form or fashion. And so if you do opt to grab some of those wealth gains via a home equity line of credit or something like that, you start putting the asset that keeps a roof over your head at risk. Right. And so what do you do with the wealth you accumulate in a house? Our advice has always been mostly to leave it alone. You might yes take some to make some some small improvements to your house or something like that. That is typically the best use of home equity is to make improvements when you want to over time. But the fact that your net worth has grown because you're the equity in your home has grown really shouldn't change the way you live your day to day life. Although I feel like it can more if you are investing in the market and Those funds are just easier to access, especially if you're investing some of those, some of that money in like a brokerage account. But Matt, it's not all doom and gloom. And we do you and I own houses. We own multiple houses because we're landlords as well. So we're not completely against homeownership. We just want people like you said to go in with eyes wide open. Let's talk about the benefits of homeownership and then maybe some of the prerequisites for before you start looking to buy a home where we think you should be financially before you start that search. We'll get to that and more right after this.

[Matt]

So Joel, you know I like the numbers. Well, here is a stat that will stop you in your tracks. Nearly half of American adults say that they would suffer financial hardship within six months if they lost their primary income earner. If that stat hits close to home, you are not alone and you are not out of options. Policygenius makes finding and buying life insurance simple. Ensuring that your loved ones have a financial safety net that they can use in case something happens to you, whether to cover debts and routine expenses or even to invest the money and to earn interest over time. With Policygenius you can find life insurance policies starting at just $276 a year for $1 million in coverage. It's an easy way to protect the people you love and feel good about the future.

[Lindy]

Yeah, Matt, the listener feedback we get about policygenius is top notch, right? They love how easy it is to cross this off their to do list. And that's because policygenius helps you compare your options by getting quotes from America's top insurers in just a few clicks to find your lowest price. And then policygenius, they lay out all your options clearly, right? Coverage, amounts, prices, terms. There's no guesswork, just clarity.

[Matt]

Secure your family's future with Policygenius. Head to Policygenius.com to compare free life insurance quotes from top companies and see how much you can save. That's policygenius.com looking for a smarter way.

[Lindy]

To teach your child to ride a bike and support American jobs at the same time. Most kids bikes are just cheap imports. They're heavy, clunky, hard for kids to control. Guardian Bikes is changing that. They're assembling bikes right here in the USA with plans for full US Manufacturing in the next few months. It's a commitment to higher quality and American craftsmanship you can trust. Each bike is lightweight, low to the ground, and built to help kids learn to ride faster, many in just one day. No training wheels needed.

[Matt]

And here is the real game changer. Guardian's patented SureStop braking system. One lever, it stops both wheels giving your child more control. Faster stops and it prevents those scary head over the handlebar accidents. It's so easy that even a two year old can do it. And so if you are ready to support American jobs and keep your kids Safe, head to guardianbikes.com today. You'll save hundreds of dollars compared to the competition. And when you join their newsletter you'll get a free bike lock and pump which is a $50 value.

[Lindy]

That's guardianbikes.com built in the USA made specifically for kids. Guardianbikes.com this episode is brought to you.

[Matt]

By Navy Federal Credit Union. Navy Federal can help you find and finance the right vehicle with ease. Assuming you hadn't saved up the cash and and this summer you are in the driver's seat with savings, you could get a $250 bonus when you buy your next car through Navy Federal's car buying Service. Powered by TrueCar and Finance with Navy Federal.

[Lindy]

With this tool you can find the vehicle that's right for you as you search through inventory and compare models. And you can get an amazing rate when you finance with Navy Federal. Navy Federal strives to support all active duty veterans and their families to achieve their personal and financial goals. And this partnership with TrueCar is one of many tools Navy Federal uses to help its members.

[Matt]

That's right, make your plan with Navy Federal and TrueCar today. To qualify for the $250 bonus, car purchase and financing must be completed by September 2, 2025. Terms and conditions apply and are available at navyfederal.org TrueCar Credit and Collateral subject to approval. Navy Federal is insured by ncua. Alright, we are back in. Jill, you know, dunked on home buying quite a bit. But the truth is we mostly like owning our own homes. Even with all the trade offs, with all the downsides that we've mentioned. We don't rent, we own our homes.

[Lindy]

So people are like why aren't they taking their own medicine?

[Matt]

I know.

[Lindy]

What's the disconnect?

[Matt]

Well, it mostly has to do with the intangibles that you experience when you are a homeowner.

[Lindy]

And by the way, not to rub it in or anything like that, but we also bought most of our homes in a different environment where the buy to rent ratio was significantly different.

[Matt]

Absolutely.

[Lindy]

And so that changed. But I think now.

[Matt]

I would certainly Be thinking twice, much more.

[Lindy]

I'll be looking at the rental market.

[Matt]

But that being said, one of the reasons that we were like, it wasn't just financial reasons though, right. Like it made sense from like a lifestyle standpoint. There are these intangibles and when you own your own place, you've got a little more stability at home. Right. Like you know that there isn't a landlord out there who might either drastically raise rent on you or even just kick you out because they've decided to sell the place because home values have shot through the roof and it's time for them to cash out. So if you decide to stay in that home long term, you just know where you're going to be a decade or two from now when it comes to renting. Not so much. You might know where you're going to be for the next 10 months, but beyond that, who knows?

[Lindy]

Yeah, I do think that that is one of the biggest benefits, the putting down routes, the knowing where you're going to be, especially if that's where you want to be and you don't want to leave. I know people who have been long term tenants in certain places. I had a neighbor two doors down back when we lived in town, Matt, and his landlord sold the house and he had been there for like 14 or 15 years and he was devastated because he couldn't afford to buy it and, and he had to find somewhere else to live. But he had like buy in. He had stake in that neighborhood. And I was so sad to see him go. I was like, I wish I had like an ADU in the backyard, man, that you could live in. But that, that is, there are a lot of renters who do want that sort of buy in, but they, they aren't guaranteed it. Right. If they're renting and, and not owning. And so I think another perk of homeownership is, is customization abilities. We kind of talked about the downsides of that with like the Didero.

[Matt]

It can be expensive, sure.

[Lindy]

But it's also one of the most joyous things about owning a home, right?

[Matt]

Sure.

[Lindy]

Being able to transform that space and turning it into the place you want to live. And really like if you're renting, yeah, you can ask your landlord about painting or putting up some wallpaper or something like that, but they might say no. And even that is just kind of a basic adjustment. But yeah, you're certainly not going to be able to knock down walls or alter the layout or modify the space.

[Matt]

And you wouldn't want to Right. Because you, like, you wouldn't want to spend that much money because you know that there's a chance I might only be here for a year or two. Like. Like this. Like, you are entering into that housing arrangement with a temporary mindset, and when you do that, you're not really willing to put forth the resources, whether it's time or money, in order to make it feel a little bit more like home. Honestly, I think that's one of the downsides of renting, and I don't want to put it in a negative light. So I'll say it's one of the upsides of owning your home is that it can. I think it can have a more positive impact on maybe the depth of relationships or the amount of community that you're able to build up around you. Because if you are. Say you're just renting a house and you're thinking, all right, I'm just, you know, I'll live here for maybe 12 months. Maybe I'll push that out to 18, maybe even 24 months. We'll see. I think when you enter into that mindset with a transient mindset, I don't think you're gonna be as willing to build relationships. Right. Like, the people who live on your street, they're your neighbors, and you might.

[Lindy]

Not even be doing it on purpose. It's like a subtle psychological. Yeah, Exactly.

[Matt]

Exactly. Yeah, 100%. But if you were to buy that home, the people who live on your street, they are potential friends. You know, it's like, oh, not only friend friends. Yeah. And like, friends and resources and teachers, it just. It feels there's. I don't know, it's like I'm trying to be. Approach it from, like a wholesome kind of. There is a change that happens. And like you said, it may not even be all that intentional. But when you know in the back of your mind that you may not be there for that long, well, why not spend your time and energy on something else that isn't tied geographically to a location? Right. Like, you would spend maybe some of your extra time and energy on your career. Because guess what? If you were to up and move on, you take your career with you, it doesn't necessarily have to do with that particular house.

[Lindy]

Yes. I think that is a big plus in. In favor of buying a house. You know, where you're going to be, you know who your neighbors is going to be. I mean, yeah, some of them are going to move on, too, but it's. It looks a lot different. For sure.

[Matt]

Yeah.

[Lindy]

And you enter into it with a different mindset. And. And I. I don't know, I think that's powerful.

[Matt]

Yeah.

[Lindy]

But let's talk about some of the prerequisites, some of the things that we want people to consider and to think through before they kind of start perusing Zillow, find an agent and start trying to get pre qualified. And so, yeah, even though we've spent the majority of this episode really kind of discussing the dirty truths of homeownership and much less time discussing the pros of it, those benefits can be so incredibly powerful that they can be enough to push you in the buying direction. So let's discuss what an aspiring homeowner needs to consider, really, before they start making offers. Right. And the first, the number one part of piece of this, Matt, is understanding how long you plan to own the home. That's got to be the top factor. Right. And like five to seven years is a good rule of thumb, but given where home prices are right now, I want to extend, maybe go to the longer side of that timeline, maybe more like seven or eight years. Because if you're buying a home in hopes that it's going to appreciate in the next two or three years, like homes have over the past few years, you might think, oh, cool, I'm going to make out like a bandit. I'm going to buy this home. I can barely afford it, but if I can afford it for 24 months and then flip it, I'm going to be just fine. Well, the likelihood that you get burned goes up so much more if you're approaching a home purchase like that. And so time is your friend on. Even if you overpay a little bit, that's okay. As long as you plan to stay in that home for a long enough period of time to make up for that slight amount where you overpaid. Right. Like, the longer you can commit to owning that home, the better decision it's likely to be.

[Matt]

Yeah, well, and you said owning that home. I think there's a difference too, between owning that home and living in that home, because as long as you own it, then it's like it's okay for you to not necessarily continue living in there. And so what I'm hinting at here is converting that primary residence into an investment property. Joel, that was like your first investment property happened to be the first house that you purchased as your primary residence.

[Lindy]

And my second rental property was the second exact.

[Matt]

Yeah, yeah, mine. We really liked our first home, and then we ended up actually buying separate investment Properties, but that can be next one. It's not about you necessarily living there, it's about you maintaining that ownership because the transaction costs are so stinking high. And if you have an ability to amortize that, if you have an ability to stretch those expenses out over a longer period of time, all the while, hopefully, while the value of that home is continuing to rise, you're going to end up in a stronger position from a financial standpoint point. But also, let's talk about the down payment required, because three quarters of folks who want to buy a home, they haven't even saved a dime. That doesn't bode well. If you can't save up a meaningful down payment, then how are you going to be able to afford some of those other increased costs that we just talked about, some of those unexpected costs.

[Lindy]

For folks who can't save a down payment. I realize it's difficult and it's a large sum of money, but that's what I always come back to is like, cool, if you can't do this, if you can't find the skin to get in the game, how are you going to be able to afford the increased costs every single month, every single year for years to come?

[Matt]

Yeah, well. And we didn't even talk about some of like the more like phantom hidden costs of like a potential HOA or the fact that most homes are probably. They tend to be a little bit larger than the little apartment that you're renting. So you're talking about increased utility costs, you're talking about taxes, the property taxes, because you're buying in an up and coming part of town. And guess what? The fact that you even bought that house, house guarantees, almost guarantees. I should say that the estimated value of that home is more than what it was. You know what the tax records show.

[Lindy]

Previously I've talked to a lot of neighbors nearby who own a home and they're like, did you just get that tax bill? Because this is like the season to get them.

[Matt]

Oh, yeah.

[Lindy]

And they were.

[Matt]

And they're looking at you and they're like, dang you, Joel, for spending that much on the house because it raises the value of all the houses and.

[Lindy]

Their faces were pale white. But all my renter friends living in complete, complete happiness, they're not even thinking about that stuff. And not that taxes don't influence the price of rentals, they do, but not to the same extent. There's still just this massive discrepancy right now in so much of the country between rental prices and what you would be shelling out every month to buy a home. I think a lot of people think, well, the landlord's going to be able to just boost rent by the amount that the taxes go up. They might try, but if it's not competitive in the market, they won't be able to.

[Matt]

It's a slow boost, It's a gradual, slow moving freight train. But for all the aspiring homeowners out there, we would love to see you put down 20% which will often like that's going to net you the best rates and terms while also whittling down those payments. But again, we understand that that can be an incredible sum of money. And so if you're a first time home buyer, we'll say that it is okay to put down less. But saving up a meaningful chunk is just a necessity no matter what. We want to make sure that you've got got skin in the game. While simultaneously we understand that it's not purely a financial decision that drives whether or not that you can buy a home. There are other life reasons to purchase a home and we think that those can be just as important. It's not just about the numbers, it's about what it is that you want your life to look like.

[Lindy]

I wouldn't make an idiotic financial decision because of those life decisions, but those certainly weigh in and you might be willing to trade off some of those, some of those financial things. It might mean, hey, you're going out to eat less or something like that. That's a worthwhile trade off, right. To own a home if that's what you really want and if you found the right place to settle down. But it's also important to know that. And by the way, Matt, you mentioned the down payment. Yeah, you got to save that up. But at the same time, you have to keep that emergency fund on hand even as you're buying that home. Right?

[Matt]

Yeah, yeah. Don't tap into that, like keep that margin on hand because like we said.

[Lindy]

Costs are likely to go up. You might want to do some things to the house. But. But what if you lost your job two months after buying that home? You want to make sure that you, you haven't depleted your emergency fund completely in an effort just to get your hands on that house. Right. And so yeah, plan for at least three months worth of living expenses even after all the costs you're going to incur when you close on that house that you're buying. Yeah.

[Matt]

Don't forget all like the prepaids because a lot of times we'll be like, oh yeah, tax bill comes out in March and you're buying this summer. So we're actually going to prorate and there's going to be six months worth of taxes that you have to come to the table with. And you're like, wait, what, what? That's, that's so much thousands of dollars that you weren't necessarily expecting to pay. Those are the kind of expenses that kind of seem, it seems like that they just kind of pop out of nowhere that you have.

[Lindy]

That's why you got like that stat about. I think it was 77% of people not having saved a dime when they want to buy a home. It's so sobering because I'm like, there's all of these ancillary costs that come along with it. And if you haven't even thought about the down payment, if you haven't started day one, putting money aside for it, you're, you're so far off from being ready to do that. And maybe it's just this pie in the sky, hope for people. Hey, yes, someday down the line, I'd like to own a home. But if you want that goal to become a reality, you gotta start setting money aside for it right now.

[Matt]

That's right. Yeah. The last thing that you wanna do is just buy a house, move into a home that you were barely able to afford. Then you're hit with a bunch of unexpected expenses that just leave you incredibly financially vulnerable. Like you mentioned getting laid off from a job. Or like what if you get sad and you have a high deductible plan and you got to reach a 10,000, $11,000 deductible before the insurance kicks in, like that kind of thing. And you can't, you need to plan for it and you need, that margin needs to be there.

[Lindy]

And you can't plan fully for everything.

[Matt]

Of course.

[Lindy]

Right. That's what some insurance products are there to help you with. But it's also true that you can't, there's not really an insurance product for losing your job and not be able to pay your mortgage.

[Matt]

Yeah. And at the very least, like in my mind, this is a non negotiable having the emergency fund set aside because like when it comes to the down payment, it's not ideal. But it's okay for you to not necessarily have that 20%, even though that's 100% ideal. Because if you aren't able to put down that full 20%, it means, yeah, your mortgage rate, it may not be the absolute most competitive rate, but it's going to be pretty dang close to what most lenders are offering for 20% down. And you're going to have to pay a little bit extra for pmi. Right, but like, at the end of the day, we're talking about like a few percent. Right. But let's say you get fired. Let's say all of these unexpected expenses hit you all at the same time and you don't have the cash on hand to get by, and you turn to credit cards. What's the interest rate on those bad boys? You're talking like, 20%. And so there's a drastic difference between saying, okay, it's not the most ideal thing to not put down 20%, but the difference between a few percent versus, like, 20% that you're paying when it comes to credit cards, that's a big old stinking spread. And we want to make sure that you are not entering into a situation that could leave you vulnerable to that 20%.

[Lindy]

Yeah. And the emergency fund is really there to insulate you from ever having to tap credit cards in a way that is not just not ideal, but really.

[Matt]

Crappy, very harmful to your financial health. And the other thing, too, with like, pmi, like, that's something that you can, you know, after, you can come back to that and get that thing pulled off.

[Lindy]

So it can be a temporary expense.

[Matt]

Exactly, yeah.

[Lindy]

All right, so basically the whole goal of the this episode is to challenge assumptions, right? And it makes me think, Matt, like, which came first, the chicken or the egg? That is a question that no one knows the answer to. Right. But according to Pew Research, 96% of folks in the top 10% of net worth own their home instead of renting. But is it the home that makes you rich, or do rich people tend to buy homes like, and I think the latter tends to be true to a certain degree. And we.

[Matt]

A circle has no end, Joel.

[Lindy]

Right. Yeah. And so, I don't know, we've used that reality to create a different narrative, right? One that centers around the home purchase, just making people rich, creating the wealth, and depending on the specific location and purchasing climate, it has helped fuel the net worth of buyers, specifically who purchased two to 12 years ago. Those people have done incredibly well. But expecting that to continue to be the case, given the amount of upward movement we've seen in the housing market, for homeownership to be what pushes you towards financial independence is highly unlikely. And so it's, it's not that it, it can't be a financial decision that makes sense for Your family just think twice before you buy into the home. Ownership equals wealth. Building that correlation, I'd say is pretty suspect.

[Matt]

Yeah, yeah, totally. And ultimately I think it just takes a little bit of sacrifice, right? Like, are you willing to give up some other things, including some of your financial freedom, for that joy of homeownership? I think that is an important question for folks to ask because again, we've owned multiple homes ourselves, you know, we've invested in real estate. And given the right climate, given the proper financial planning, owning a home can be the perfect move for you. And there's a chance that the returns could be pretty significant as well. But I also wouldn't count on that, you know, that home being the smartest financial move that you've ever made.

[Lindy]

I sure hope it's not. I sure hope it's not, by the way, because if it is the best financial move you've ever made, it means that you haven't invested inside of the retirement accounts that we talk about as being the biggest wealth drivers. And so maybe it is. I think for a lot of people it has been. That doesn't mean it's the best route though.

[Matt]

Totally. Yeah. And to a certain extent when, like when you buy a home, like you said, like you are putting down roots, like there is an amount of permanence, like there's a degree, like you are anchoring yourself essentially. And you just gotta ask yourself if you're ready for that stage of life, if that's what you want the next seven plus years to look like. But ultimately, I think what we're pointing at here is that you shouldn't be buying a home or you shouldn't continue to rent purely based on financials. There are so many other more important factors in life to consider. It shouldn't just be for financial reasons though. That is an important lens to look at the decision making process through. But it shouldn't just be only financial reasons, but life reasons as well. Whether that's closer to family or friends or whether it's schools or a pace of life. If you, if you can't rent there, then okay, yeah, maybe buying there is something to consider.

[Lindy]

Yeah, but makes me think of one more thing. It's kind of like who's worse off when it comes to higher education. It's the folks who went to school for three years and took on the student loan debt but didn't get the degree. The same thing is true for people who buy a house. The people who are absolutely in the worst position are the folks who are there for a year or two and sell. And so that timeline is massively important when you're making this decision. Absolutely. As well. So our. Matt, let's get back to the beer that we had on this episode. This one's called let's Do It. It was a time to believe in anything is an ipa.

[Matt]

Kind of fits along with the. The theme of the episode a little bit. Like, we do not want you to believe anything when it comes to housing.

[Lindy]

Yeah. And. And we hope you folks who want to buy a home, want to own a home at some point, achieve that. But we hope you achieve it under the right circumstances. But, Matt, what were your thoughts on this beer?

[Matt]

My tasting notes are going to be similar to some of the other burials that we. That we've had with a few additions, conditions. It's certainly sharp. Again, the amount of hops that they must put in their IPAs is just off the charts. But in particular, this IPA. Is this a double or a single?

[Joel]

I don't know.

[Lindy]

Single.

[Matt]

It's a single. Regardless. It had this brightness to it that I felt that I feel like the other two didn't. And I feel like you can see it in the color a little bit too. Like, it seemed like maybe it was a. I don't know, maybe it was a touch more vibrant. But on the. In the mouth, it had just a, like a lightness and a brightness to it where it felt like it was alive. This reminds me of some of those. Of those early fresh hot beers that we had. I don't know. I feel like fresh hot beers were real big.

[Lindy]

Like, I was totally thinking fresh hot.

[Matt]

Beers six, seven years ago. And we got a few that were.

[Lindy]

I thought this was more. More laid back than some of the other burial beers. And. And even still, it's intense from an IPA perspective, but it's less intense than. Than the other burial IPAs we've had. And. Yeah, fresh hot vibes for sure. Like, I'm tasting the grain on the vine almost.

[Matt]

Yeah, yeah. It's like tingly.

[Lindy]

Yeah.

[Matt]

Like, it. Almost.

[Lindy]

Almost.

[Matt]

It's like for any of the Chinese, like, Szechuan fans out there, and you kind of got that tingle on the tongue. Like this one kind of has that going on. It certainly has some of those higher notes, like, on the scale, as opposed to, like those lower, deeper, earthy notes that you get with some of Burial's IPAs. But definitely really enjoyed it, though.

[Lindy]

Yeah, this was a good one. All right. But that'll be it for this episode. You can find show notes, links to some of the stuff we mentioned, including. I don't think we mentioned this, but there's a New York Times has this great rent to buy calculator that we'll link to up there.

[Matt]

We should totally do that.

[Lindy]

You can, there's. There's so much you can play around with there.

[Matt]

A lot of sliders.

[Lindy]

Yes.

[Matt]

Makes it a lot of fun to play with.

[Lindy]

And you can basically say, this is the purchase price I'm looking at, blah, blah, blah. And they'll say, well, if you can find a rental in this price range, then renting makes more sense. Or here's what tips the scales and when you might want to buy. I think that's a helpful tool to play with if you're in the market. Absolutely.

[Matt]

One of the things you can play with too, is you can change the scale as to how long it is that you'll stay in that property and you can physically see how it's like instead of buying that home. Now, what that means is that you couldn't. You could afford renting a place for that that cost you this much stinking money. And it would. It's going to blow your mind. It's amazing because it puts the closing costs, the transaction costs into perspective. Yeah, we'll. We'll make sure to link to that in the show notes. It can be incredibly enlightening, but otherwise, that's going to be it for this episode. For all the listeners out there who have not left us a review yet, we would greatly appreciate some kind words over there. It helps us to get the word out. Out. Helps other folks to find how to money and to better their financial standing. But Joel, that's going to be it for this episode. Until next time, Best friends out. Best friends out. This is an I heart podcast.