Renters Are Not Losers

There is a stigma associated with renting, especially when renting anything other than a house.  The common thought is that people rent because they cannot afford to buy a house.  This means they are lower income earners and implies they are lower class people.

We are seeing both sides of this stigma, and for a while we thought the same thing.  I think we are conditioned to think that we must buy a house to show true success.  This is simply not true.  Now we are on the renting side of the equation, and we feel like people think less of us because we live in an apartment.

The concept of proving success through ownership of “things” is a core belief that we need to overcome in ourselves.  It is a tough belief to overcome.  When you strip away all the tangible items that define success, what do you have left?  You end up with a bunch of intagibles that can’t be compared on simple scale.

Strip away these tangibles

Big fancy house = success ??

Brand new expensive car = success ??

The latest brand name clothing = success ??

Expensive watch = success ??

And what do you have left

Happiness = success ??

Freedom = success ??

Let’s strip away all that nonsense down to find the root of the success factor.  The root of that is income.  How much money do you make.  If you want to make this real simple, you can poll your neighbors and ask how much money each one makes, put that in a list from lowest to highest, and all of a sudden you have a clear picture of financial success.

Why do we find the need to compare ourselves to others and to constantly compete for that top spot in financial success?  I like to have enough money to do the things I enjoy doing.  That doesn’t require any comparison at all.  If I’m doing the things I enjoy, why should I care what my neighbor is doing?

Even so, it is tough to be judged by those that think we don’t measure up.  We made some tough decisions to get our financial matters in order and to start living below our means.  We are being very realistic about what we can afford and about what are the most important things in our lives.

Sometimes we feel like failures because that’s how others see us.  I’m sure many of our old neighbors are wondering why we really sold our house.  I’m sure that most of them think we were having some real financial difficulty.    I bet that many of them think we were behind on house payments or were at the risk of foreclosure.  The truth is, we were living paycheck to paycheck while making all of our payments on time.    We were stable, but not in the position we wanted to be in.  The house and all the bills associated with it was pulling down and we wanted more freedom to do the things we wanted and to spend our money on the things, activities, and experiences we wanted.

Living paycheck to paycheck in order to have your dream house and dream cars is no way to live.  We checked out of that life and into a new one.  We are working to change our core beliefs about success and failure while trying to lessen the effects of how other people view us now.

Comments

  1. says

    I am so glad I found your blog, because we are at the beginning process of what your family did to reach the happiness you were seeking. We find ourselves not happy with the American dream and we too want to change our dream. Thanks for your informative posts.

    Sandy
    Cuban Housewife´s last blog post ..Finally Found A Place To Donate

  2. idreamofdownsizing says

    We’ve wondered this very thing as we’ve started formulating our downsizing plan. What will everyone think? It doesn’t really matter to us, but it is interesting to ponder. We have the fact that rent closer to work will be just as much as the mortgage way out in the sticks is. If people know we can pay the higher rent, maybe they won’t assume we were secretly in some type of financial trouble.

    I’ve really appreciated finding your blog. We started talking about selling the house and renting closer to work and the very next day I followed a link in a blog comment and found you. The only big difference I’ve found so far is that our 5 year old daughter has a 3 year old sister joining us in the downsizing adventure.

    • says

      idream,
      Most of the time it doesn’t bother us too much what people think, but it does get tough when almost nobody can understand what we are trying to do. Everyone gets so caught up in buying and up-sizing while we are headed in the opposite direction.

      What type of rental are you looking at? We ended up in a nice apartment 15 minutes from work.

      • idreamofdownsizing says

        We’re fairly certain everyone we know will think we’ve gone mad. Once we share the news, our story will be that we wanted my husband to have a shorter commute and that we’re renting for awhile so we can have time to look for a place to buy without feeling any pressure with time constraints.

        We’re looking at apartments as most likely and a townhome or small house as options. The major guideline is that it would have to be a commute of under 20 minutes for my husband and be equal to or less than the current mortgage (can’t get much cheaper and still be in a nice-ish place).

        The scary thing is that paying rent that’s the same as the mortgage will still save us tons of money every month as well as giving us lots of extra time.

  3. Karen (Scotland) says

    Another interesting post from you.
    I’ve mentioned before that I am actually a landlord so I see the renting scene from the opposite side. I’ve always been a firm believer in the security of (affordable and preferably fully paid for) property so I always struggled to understand why some people would continue to rent and “throw money away”.
    I use the quotation marks because my mindset has moved on in recent years. I still own and enjoy owning property but I’ve come to realise that there are many, many reasons why some people CHOOSE to rent – recently divorced or working locally and need somewhere to rest head between shifts (before heading home to family home at weekends), studying in this town for a year etc. From reading minimalist blogs, I now realise that some choose to remain flexible and transient. Some want to live where they can’t afford to buy. And so many other good reasons to rent.

    (However, I also see so many tenants who have no choice in the matter. It does boil down to the fact that they can’t afford to buy a property. Often, not through low income but through decisions that they have made throughout their lives. No savings at all and debt still building and building, leaving them no choice but to pay expensive rent rather than buy. Sadly, those tenants are the ones that cause the bad image.)

    I think my only question to you would be about your old age? I don’t question your decision to rent now but what happens when you are past the working years and still have to pay a monthly rent. My Granny (who died last year age 81) was fortunate enough
    to be a local government tenant – a decent landlord and a (very, very cheap) tenancy for life. She is the last generation to benefit from that though and I worry about the next generation of tenants who live so long past retirement and have no home of their own. What happens if landlords object to stairlifts being installed or ramps being built up to front doors etc?

    It’s just a question out of curiosity, not a dig or an accusation at your choice to rent (which I’m sure you realise as I’ve always commented positive-ly. :-))
    Karen
    (Scotland)

    • says

      Hi Karen,
      I always appreciate your input from the view of a landlord. I agree with your observations on the types of people giving renters a bad image. Funny thing is, I know plenty of people that own houses but are in the same boat of not having any savings and spending too much on junk they don’t need.

      Your question of our future is a good one. I may go into more detail on savings in a future post because I think it’s an important topic that often gets overlooked. Financially, we’re in a reorganizing phase right now, but the plan is to take what we were previously spending on our second mortgage, $300 per month, and place that in a mutual fund. Assuming that grows at 8% a year, we’ll have about $400,000 in 30 years. That should be enough to either buy or continue to rent. That’s in addition to retirement savings that we are actively contributing to as well. That’s part of the beauty of our current plan, it freed up a lot of money to save for our future.

  4. Pamela says

    Maintain good relationships. An open relationship with your tenants will be key to knowing about potential problems with your property. “If your tenant trusts that you will act quickly and appreciate their diligence, they’ll make sure to be more proactive when things are not working properly,” offers Jonna Lewis, drawing from years of experience owning and managing rental properties of her own.
    Pamela´s last blog post ..Car Insurance Comparison Help

    • says

      Yeah, it’s tough living paycheck to paycheck. We got stuck in a cycle of that for along time. We made it out for a short time, but ended up back there again before long. The big change for us was when we finally made our move and started living on 50% of our income. That makes a huge difference, and you’re right, it feels liberating.

  5. Nightvid cole says

    “The house and all the bills associated with it was pulling down and we wanted more freedom to do the things we wanted and to spend our money on the things, activities, and experiences we wanted.”

    This is a VERY risky attitude. If you SPEND the money that would be going to house payments and maintenance (above the amount of your rent) on something else rather than investing it, at the end of 15 or 30 years you will have nothing.

    This is why people say the house is a “forced savings” plan. At the end you will have an asset. If you rent and fail to invest the excess cash flow because you want to “spend it on something else”, when you retire you may very well wish you had kept the house when you see how tough it is to pay rent using SS checks.

    • says

      Hi Nightvid cold,
      I can see how you might think this to be risky. It’s a popular sentiment that has been forced on us that we must buy a house to ensure a stable future.

      The simple fact is that with a small amount of financial planning, we can ensure a stable future without the hassle of home ownership. If you were to invest just $100 per month for 30 years, at 8% interest (an average amount for a mutual fund) you’ll have $146,000 after 30 years. If you up that to $200 per month then you will have nearly $300,000 after 30 years.

      If you aren’t good at making that savings yourself, you can set up automatic payments into a mutual fund so that you create that forced savings. Or you could increase your 401k contribution by that amount.

      And, here’s a bonus, at the end of 30 years, you can very easily access the money. If you need to access the money tied up in a house you would have to sell the house, which is much more difficult that cashing out a mutual fund.

      After living both sides of the rent/buy equation, I am much happier spending my time and money doing things I enjoy rather than sinking it all into a house. We only have so much time in this life, and I want to spend more of it living life instead of sitting on the sidelines because I put all my time and money into a house.

      • Nightvid Cole says

        With 3% annual inflation, in 30 years a sum of $300,000 will only be worth, in today’s terms, about $124,000.

        And you yourself said you were SPENDING the money you kept by renting instead of paying on a house. Not saving it. In this case you will have $0.

        Look, I’m perfectly okay with long-term renting, IF you are putting aside the extra cash flow. But according to your own admission you’re not doing that.

        Either buy a house or rent and invest the difference. But DO NOT spend your extra money. You will regret it!

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