Path to Financial Independence #1 - Should we buy a house or not

As I mentioned in my previous blog (Life), all we need to live a happy life is food, clothing, and shelter. When it comes to shelter, how you handle it is really important. Will we purchase a house, rent a property, or live with our parents? What would be our next goal once we have more money and are married? This blog will provide you with information on what you should do before making a crucial decision.

Our mentality

Most of us want our own home because it makes us feel special or because our neighbors already have one. The majority of us believe that owning a home provides more stability and is a valuable asset  because we don't have to follow any rules, we don't have to pay rent, we can do whatever we want on the walls, and so on. 

When the property is ours, there are no limitations.

Let's put our emotions aside for a moment and consider our financial situation. (This is primarily for persons whose sole source of income is their salary.)

This is how the scenario goes: We'll apply for a home loan to purchase a home. We will be in debt for the next 25 to 40 years. Whatever happens, we must labor because we are enslaved by debt. For the next 25-40 years, we won't be able to take risks in our employment, and we won't be able to worry about anything else. Expenses rise as we require new furnishings, a new car, and the associated maintenance costs. As a result, a portion of our income will be locked in for the next 25-40 years. And between the ages of 25 and 40, we will be in the prime of our lives. And the property will not be ours until we have fully paid off the loan. But what if one of us loses our jobs? 

Can we finance a world tour or something exceptional for those few years?

Let's talk about renting a home now. We have the freedom to live wherever we desire. We can quickly relocate if we find a nice job in a new location. We can look for a smaller place if we lose our work. There is no need to be concerned. We can put money aside for other things.   

But now comes a famous question asked by many

Instead of paying rent, why shouldn't we pay EMI, atleast we will have a property for ourselves at the end.

Yes, this sounds appealing, but it is a poor investment strategy, particularly for those in the middle class. Purchasing a home does not only entail paying a loan; there are also property taxes, upkeep costs, and other expenses to consider. And we can't be certain that the value of the property will rise. As a result, the house is usually taken under liability.

There are exceptions; in some circumstances, the property value will skyrocket due to the addition of an airport or other amenities. There is a large profit in this scenario. The important thing to remember is that EMI costs are more than rent, and we must pay taxes and other expenses. 

Investing in flats is another extremely terrible investment option. There is no place value after paying for all these years, thus it falls under liability. These can be described mathematically, but I'd rather express it in plain English. 

The rich buy assets

The poor only have expenses

The middle class buy liabilities they think are assets

                      

                                   - Robert T. Kiyosaki

Is this to say that we should never buy a home?

No, we should strive to invest in assets (anything that puts money in your pocket) first, and then utilize that money to buy your property once assets start generating money. As a result, it will have a minimal impact on your lifestyle, and you will feel free rather than bound. So, if you have a solid career, think twice about purchasing a home. 

Before you invest, go over everything with a fresh mind and try to see things from a different perspective.

I will try to give you more in depth explanation in my upcoming blogs.