Six years ago, my then boyfriend and I moved into our first apartment. It was a tiny one bedroom, but it was perfect for us at the time. Since that time we have moved twice; first into a larger two bedroom apartment, and finally into our first home. We recently purchased a three bedroom house with a full sized basement and a two car garage. After learning that our monthly mortgage payments were only slightly more than what were paying to live in the apartments, I decided to find out how much money we spent on renting and if renting was a smart financial move for us.
The tiny apartment
When my now husband and I signed the least on our first tiny apartment, the monthly payments were $329 a month, and remained there for the first two years. At the beginning of our third year the rent was raised to $359, where it remained for a year before raising to $379. We lived there for a total of four years and spent $16,752 in rental payments. We decided to move when we received notice that our rent would once again be raised, and this time it would take our monthly payments to $409 a month.
The two bedroom
Moving into this larger apartment wasn't a big financial transition because it was only $51 more a month than we would have been paying after the tiny apartment's last rent increase. For the first 12 months we lived in the two bedroom apartment we paid $460 a month, and after a rent increase at the beginning of year two we paid $473 for the final 12 months. Over the 24 months we lived in apartment number two we spent $11,196.
The bottom line
All told we spent $27,948 in rental payments over the course of six years. While I can't say that money was wasted because we did get what we paid for, I don't believe it was used in the best way possible. If we had purchased a home in the same price range we have now, our payments would have been close to the same price range. That means instead of starting out on a 30-year-mortgage in our early 30s, we would have been on year six.
I'd like to say that something major changed to allow us to afford a mortgage now, but the reality is, we could have afforded it six years ago, but we were just too young and to naive to realize we could have done so much more with our money.
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