Sometimes an opportunity comes to us to buy a home and when we look at our finances, we might believe we could afford to do so. The problem with this is that not everything was thought through. There are costs that you are not paying when you rent, such as: (a) the cost of paying the taxes on the home; (b) the cost of the light, gas, and water (which you don’t pay now) will be higher than you are used to; (c) the additional cost if something happened to your business or job you will need at least six months of finances to help you through the lean times (that’s good advice for anyone though); (d) the cost of the upkeep of the home (just to name a few!).

Taking the figures from above, let’s say you are increasing your costs by $500 a month. If you take that $500 a month and put it in a mutual fund (on average a mutual fund gives you a 12% return) and add $500 a month for 30 years (the length of a home loan) you will make $340, 259.12. Most homes do not give you that type of return. You put in over 30 years $180,000.00 by putting aside $500 a month. You made $160,259.12. That is a return on your investment of about 47%. It’s the beauty of compounded interest. This does not include what you employer might be matching at your job in a 401K. This is just your part.

Yes, I know. What about the increase of rent and things like that. Well, if you are diligent in what you do, you will have increase to cover it and still invest in your future that $500 a month.

I’m not telling you not to purchase a home; neither is this verse. What is just being highlighted here is that when you do want to buy a home, consider everything before making your decision.

NOTES

If you don’t own a home, would you now? If you do own a home, how can you pay it off faster so that you can then put the difference in investing further in your future?

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The book, the 1 Minute Guide to Health, Wealth, and Happiness: Wisdom from the book of Proverbs is a commentary/devotional/journal. Three books in one!

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