Estimated Monthly Savings: $80
Renting an apartment or buying a home?
The answer is not going to be the same for every person. There are perks to renting an apartment, just as there are perks to buying a home. Consider the pros and cons of each option, as well as your current situation when trying to decide what is best for your family. Some will say it is a waste of money or that you get nothing out of renting but follow along below to discover why renting an apartment is the right choice for many individuals.
Perks of Renting an Apartment
- Fixed monthly payment without paying interest
- Great option if you aren’t sure where your family should settle down at
- Some utilities are included (typically water)
- Landscape services are taken care of
- Free gym access at many apartments
- No out of pocket costs for plumbing or maintenance repairs
- Some apartments have pool access- great for families and children
Now that we have gone through some of the perks of renting an apartment, we are going to dig a little deeper and discover potential savings. Below is a list of common monthly expenses, along with an estimated cost of each expense. You will see notes alongside some categories with additional information and adjustments that correlate with renting an apartment versus owning.
Rent/Mortgage: $1,100 monthly ($13,200 annually) *The cost of paying monthly rent or a monthly mortgage payment is very similar, however with a mortgage comes interest expenses. If you take out a mortgage on a $150,000 home for 30-years and receive an interest rate of 4%, you will end up paying an additional $107,804 in interest for this home over the course of 30 years (paying the minimum monthly mortgage amount). This means an additional $299.45 per month of interest expenses if you break it down over the course of 30 years.
Gas Bill: $100 monthly ($1,200 annually)
Electricity Bill: $100 monthly ($1,200 annually)
Water Bill: $30 monthly ($360 annually) *If you live in an apartment, eliminate this monthly expense and hang on to that $360 each year.
Cable/Internet Bill: $150 monthly ($1,800 annually)
Landscape Services: $20 monthly ($240 annually) *If you own a home and do not pay for landscape services, consider the cost of purchasing your lawn mower, leaf blower, weed whacker & the cost of gas that runs these items… along with depreciation of value. Renters can go ahead and save that $240 annually.
Gym Membership: $30 monthly ($360 annually) *If your apartment complex has a FREE fitness center, go ahead and pocket the extra $360 each year, plus you can save on gas money and avoid a few extra miles on your car.
EXPENSE TOTALS: $1,530 monthly ($18,360 annually)
Now consider all of the adjustments we made for renting an apartment. We cut $80 worth of monthly expenses out and we are saving $960 each year – this is not including the monthly interest savings of avoiding a mortgage.
Of course, apartment living may not be for everyone, but this is a great option if you are not quite ready to make that big purchase yet or if you are not sure where your family wants to settle down. Either way, it couldn’t hurt to save $80 a month!