Your Money: The Missing Manual

Chapter 10. House and Home

"A house is made of brick and mortar, but home is made by the people who live there.”

—M.K. Soni

Housing is by far the largest expense in most people’s budgets. According to the U.S. government’s 2008 Consumer Expenditure Survey, the average American family spends $1,747.83 on housing and related expenses every month. That’s more than they spend on food, clothing, healthcare, and entertainment put together. So if you want a quick way to improve your financial health, housing is the place to look.

So far, you’ve read about a lot of different ways to save money: You know how to spend less on groceries, trim your transportation budget, and use credit wisely. Everyday thrift can boost your cash flow, helping you to get out of debt and save money. But even all those changes combined don’t have the power to affect your budget like what you spend on housing.

This chapter will give you the facts you need to make smart housing decisions.

The Eternal Question: Rent or Buy?

Deciding whether to rent or buy is a complicated financial and emotional decision. Real-estate agents like to say, "Renting is like throwing your money away.” On its surface, this advice seems to make sense, so it gets repeated a lot in popular culture. But in a 2008 issue of Newsweek (http://tinyurl.com/nw-rentok), Robert Shiller, a professor of economics at Yale University, wrote, “The popular argument that renting is equivalent to throwing money down the drain is really fallacious.”

In some cases, ...