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You are here: Home / Money Management / Building Wealth / Not Buying A Home Is A Mistake

Not Buying A Home Is A Mistake

January 23, 2018 By Twila VanLeer

Not Buying a Home is a Mistake
“The average homeowner to this day is 38 times wealthier than a renter,” David Bach asserts.
The single largest mistake America’s Millennials are making is failing to buy a home, according to millionaire and finance guru David Bach.

Although there is a school of thought that home ownership is the “American nightmare,” Bach holds to his premise that failure to buy a home limits young earners in their quest for financial well-being. “The average homeowner to this day is 38 times wealthier than a renter,” he asserts. “Buying a home is an escalator to wealth.”

Bach, author of “The Automatic Millionaire,” says he bought his first home in San Francisco. It skyrocketed in value. He then moved to New York, purchased another home and again saw a significant increase in value. He now owns a third home.

You have to live somewhere, he reasons, so why not make an investment in something that will pay you back over time? A renter can easily spend half a million dollars in rent over the years and end up with nothing to show for the expenditure.

“Or you can buy a house and spend the same amount paying down a mortgage and in the end wind up owning your own home free and clear.” As an example, he cites the math: $1,500 rent per month over 30 years equals $540,000 – money down the drain, in his opinion.

If you are considering the pros and cons of home ownership, he advises “Start by crunching the numbers. Do the math, starting with the smallest options. When you’re really clear on your goals, start shopping.

Rule of thumb: Make sure your total monthly housing payment doesn’t consume more than 30 percent of your take-home pay. Save for a down payment of at least 10 percent, more if possible. Don’t go overboard. Your first home may not be your dream home, but it is a step toward that end.

Buying a home puts you in the market, and, according to Bach, “You aren’t really in the game of building wealth until you own some real estate.”

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Filed Under: Building Wealth, Homes, Money Management, Mortgages, Renting

About Twila VanLeer

Journalist/writer for more than 50 years. Pulitzer Prize nominee, 1983 for coverage of the first permanent artificial heart. More than 50 national, regional, local awards for news writing. Main writer for a memorial book for Deseret News' 150 th anniversary and for a book recounting the 1997 re-enactment of the pioneer trek from Omaha to Salt Lake City. Co-writer and editor of "True Valor," a book on the history of the artificial heart. Author of the book, Life Is Just A Bowl Of Kumquats, a wonderful story of a house wife and her trials with raising a large family.

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