Are we having a rental crisis?

rental increase


Half your income for rent? Say it ain’t so! According to a 2017 Harvard study (CNBC reporting), 45 million American households rent their home. Of those renting, almost half (21 million) are considered “burdened” because their rent is over 30% of their pre-tax income. 1 in 4 (11 million) are paying over 50% of their pre-tax income on rent; “severely burdened”. Craziness I say! According to Zillow, 21% is the historical “norm” (housing expense as a % of income).


Rental occupancy is at its highest level in 30 years. Apartment construction has jumped 35% since the housing crisis/recession due to increased demand; twice as many apartments were built in 2017 compared to 2016.  80% of recent apartment construction is considered “luxury”, largely due to the rising cost of construction (labor, materials, and land). Much of this building is in urban areas where the cost of living is already high. Is this sustainable?


I’m not going to insert politics into this discussion; however, I do want to give you some tools and ideas to help evaluate if you should rent or buy and how much of your income you should allocate to your monthly housing expense? If you don’t have a plan, you could find yourself “stuck” in a vicious cycle – not saving enough for a down payment (for purchasing a home) and therefore forced to keep paying ever-increasing rental payments.  This could lead to living paycheck-to-paycheck, credit card debt, etc.


In most major markets, buying a home is a better long-term solution (vs. renting) – but only if you’re ready? Let’s ask some questions first.   .     .


Do you plan to move in less than 5 years? I know this might be a difficult question but you will need to give it your best guess anyhow. If you said yes, you should probably rent; the transaction costs of buying and selling a home are too high if you frequently move; rent instead.


How much time and money are you willing to spend on repairs and maintenance? This is especially important if you are interested in purchasing a single family home – rather than a condo or a townhome. recommends you estimate 1% of the purchase price for annual repairs & maintenance on your new home. The problem with home repairs and maintenance is that they are lumpy – they don’t occur on a regular basis; for example, it’s difficult to know when major appliances (furnace, air conditioner) will fail, or when the roof might spring a leak. These expenses will surely occur; you won’t have a plumbing problem – you’ll have a plumbing emergency. It’s wise to set aside money (monthly) into a housing fund that can be used to pay for these irregular, but inevitable expenses.

Are you afraid? You will be.   .     . Yoda


How much will it cost in rent vs. a mortgage in your part of the country?

Do some research – look at comparable homes in your area – both for sale and for rent. Add up the monthly expense for interest, property taxes, and insurance – this is the rental portion of a monthly mortgage payment – ignore the principle portion of your payment; housing prices increase at basically the same rate as inflation (over long periods of time),  so its extremely likely that you will sell your house for more than you originally paid for it. Compare the rental portion of your monthly mortgage payment to rent for a comparable house.  Also factor in that your rent is likely to go up over time – probably in line with inflation; however, it has jumped 4 to 5% in some areas.  Just sayin’ .    .    .

I will share my situation

$582 monthly interest (goes down over time)

$311 monthly escrow (property taxes and insurance) (goes up over time)

$216 monthly repairs & maintenance (using the 1% factor) (goes up over time)

$1,109 total

When I looked up comparably sized houses for rent in my zip code ( I found a range of $1,720 to $1,995.  Realize that the landlord is paying comparable expenses too (property taxes, insurance, principle, interest), plus repairs and maintenance – as well as a profit.   .      .

I’m saving about $600 – $900 per month; probably helps that I’ve lived in the same house for the past 13 years.

I don’t really think it’s super important whether you rent or purchase your home – but I do want you to limit your housing expense to 25% (no more than 30%) of your pre-tax income. I believe this gives you the best chance to succeed in personal finance. I personally believe that purchasing is better than renting (financially at least) over the long-run (most of the time anyhow).  You can also make home improvements/decorating decisions without getting the approval of the landlord; plus you might be able to deduct the interest and property taxes on your income tax returns (if you itemize). The landlord is going to set the rent at a level to cover his costs as well as some profit. If you would rather rely on the landlord for needed repairs & maintenance, then you are going to ultimately pay for that – via higher rent. This concept applies to pretty much any convenience in life.

Don’t buy more house than you need. Although purchasing a home might be financially beneficial over time (vs. renting); buying a home doesn’t compare favorably to the returns you could get in a low-cost index mutual fund (invested in equities). Buy as much house as you need and invest the rest!


Some specific advice from


If you are a family of 3 (with an average income) aim for a 3 bedroom and limit the square footage to 1500 (or less).


If you are single – go with a one bedroom condo – preferably close to your job.


You might ask yourself how handy you are and if you have time to do repairs & maintenance – if you really don’t want the inconvenience of repairs & maintenance then maybe you should opt for a townhouse or condo, whereby the homeowners association is usually responsible for exterior maintenance. Again, if you are want someone else to do these services for you – expect to pay for it – usually via much higher monthly HOA dues.


In most markets, the rental portion of your mortgage will be less than a comparable house would rent for; however, you have to use this savings to “offset” the upfront mortgage costs:  appraisal, loan origination, realtor fees, etc. – could easily be $3,000 to $5,000. A portion of this savings will also be used for repairs & maintenance – use 1% of the purchase price as an estimate.


Maybe you think 25% – 30% of your income for housing sounds great, but when you look at prices in your area, the math just doesn’t work – everything is too expensive!


Some practical, but not necessarily easy/convenient, advice:


1)            consider getting a roommate


2)            consider a different location – the most popular parts of town usually have exceptionally high prices for real estate.


3)            consider a different occupation/career. Maybe your income is too low.  See my previous post on improving your career path.

4)            consider a tiny home – I know this sounds a little crazy/extreme, but use it as a tool to save up for a really good down-payment for your next house.  Your first house doesn’t have to be your “forever” house.  I recommend a smaller “starter” home as your first home.


5)            shop around – especially if you are renting – don’t just accept a price increase from the landlord; use the internet and look for a better price. It’s cheaper (and more convenient) to at least attempt to negotiate with your current landlord – good tenants are hard to find – leverage that fact into a better price. You can always threaten to move. Go on social media and ask for suggestions – maybe someone you know has a room for rent.

buy vs rent

Let me know what you think – leave a comment below with your opinion of buying vs. renting in your area.

10 things I learned from Millennials



Alright, alright, I’ll admit it, I’m a little obsessed with Millennials. Their mind-set, their approach, their priorities – it all makes me curious about what makes them so different, compared to other generations? Millennials are also referred to as generation Y – they question the status quo – why do I have to work 40 hours a week when I can get my work done in 30?


Specifically I am interested in how they approach personal finance. I’m convinced they are truly, significantly different from previous generations. I’ve been accused of constantly throwing shade at millennials and will readily admit that some of their tendencies seem a little wonky (downright irritating actually, #YOLO – FALSE! – you live everyday, you only die once #YODO) – many are walking contradictions (aren’t we all?); having said that, today’s post isn’t about being hyper-critical of 20 and 30-somethings – we were all young and inexperienced once; besides, not all millennials are self-absorbed, think they’re entitled to a participation trophy and live in their parents basement.


I’m actually going to list the top things I have learned – and admire – about the millennial approach to finances, because truth be told, I’m a millennial wanna be – I’m just too old to be an actual member of the cool kids club.   .     .

young people

Before I get to the list, let me state the obvious – these traits don’t apply to all millennials. I’m not here to stereotype everyone born from 1980 through 1995, that would be crazy; however, there are some traits that are quite common among this generation – traits that set them apart from other generations. I’m going to list the top 10 things that I admire about the millennial approach to personal finance:


1)            It’s better to spend money on experiences than stuff. One survey (Harris poll) indicates that 78% of millennials would rather spend money on an experience than on a desirable good. For many, they simply don’t fall for the siren call of extreme materialism (Mcmansion, BMW, etc.). Buying possessions could drain your bank account. Experiences, this got me to thinking, what are some of my most memorable experiences?

My top 10 experiences, it was really difficult to list only 10 – I guess I’m rather nostalgic  .   .   .

Spring training baseball with my dad and Uncle Dale, in Florida near Orlando – there’s really nothing quite like spring training baseball – a timeless American tradition

UNC basketball game with my parents, when Hansbrough broke the scoring record (Go Heels!)

Banff (Canadian rockies) – hiking with friends to a frozen lake; 83 degrees at the base, then you hit the snow-line after a 45 minute hike – amazing!

Alaskan cruise with family – spectacular views, the train, the whales, the glaciers, the rainforest, the reindeer, the smoked salmon .     .      .

Disney vacation (2016) with just my family; Mickey, star wars, Indiana Jones, a safari ride, Epcot, international food & wine festival  – priceless memories!

Boat tour of Lake George with close friends – beautiful mountain views in upstate New York – I could easily go back every year!

Smith & Myers concert with a buddy – probably the best concert I’ve ever been to – small venue, great vocals, and some of my favorite alternative rock songs from Shinedown – including lots of covers: Phil Collins, The Eagles, Adelle, U2 – you get the picture.

Snorkeling in Georgetown (Grand Cayman) with Heather on our honeymoon; the blue water, the coral, the fish – all in crystal clear high definition!

The river walk in San Antonio with a mariachi band (with Heather) – hard to describe but its very picturesque – I love south Texas; Austin (live bands), the brisket (The Salt Lick), and of course the Alamo – Everything is bigger in Texas!

I think Millennials have a great point – I wouldn’t trade any of these memories for say a new beamer – not a chance!

What are some of your favorite memories?

2)            You can save money in a sharing economy. You can rent out a room in your house (Airbnb) and possibly bank a few thousand each year to help pay part of your mortgage.   Use Uber and maybe you don’t have to buy a car at all – might be workable if you live in a big city – imagine the savings of no car payment, insurance, gasoline, maintenance, etc. Social networking sites like make it easy for people to connect with others locally and share power tools or gardening equipment.


3)            Technology is your friend. Cut the cord. Automate your finances. Millennials are comfortable with technology and are more willing to pay bills online and automate their savings. See my previous post on

4)            Restaurants are expensive, instead, eat at home (be healthy of course). Millennials are increasingly shunning restaurants (especially chain restaurants, vs. their pre-recession levels) and why not? You can get great ideas from Pinterest and cook at home – after going to the farmers market (or ordering from Blue Apron) to get some local, ethical, fresh flavor. I believe the average restaurant meal is about $12 per person vs. $2 per person if you cook at home.


5)            Earn some mad money from a side-hustle – a recent study (Bentley University) indicates that 66% of millennials want to start their own business.  Maybe you want to start your own blog/podcast, provide online tutoring services, teach English remotely (via skype), be a social media/SEO consultant, pet sit, drive for Uber – there’s a lot of possibilities.    .    .


6)            Focus on learning in your career – lifelong learning can lead to a more fulfilling and healthier life.  Interconnected millennials embrace technology and prioritize happiness and learning – they believe there is a link between the two.  Millennials are constantly micro-learning with so much information at their fingertips (via the inter-web).  A lot of this information helps them with their career aspirations.


7)            Optimistic – Millennials are persistently more optimistic than other generations – about their prospects and the future.  80% think they will be better off than their parents (USA today).  See my previous post on 10 habits of happy people.

8)            More comfortable talking about money – Millennials are going to talk about their salary and finances and are unimpeded if other generations are uncomfortable with these typically taboo subjects (Cashlorette survey).  They are significantly more likely than other generations to discuss their salary with friends, family, even coworkers.  They are revealing and transparent – maybe in an effort to make the workplace more equitable – knowledge is power – know your worth.  Millennnials will use social media to ask for advice from peers – personal finance is a team sport!


9)            Simplify – This generation is more actively frugal, reconsidering the role of material possessions, luxury and sustainability – probably as a result of the great recession.  This new approach affects their shopping and consumption habits.  Whether by necessity or by choice – minimalism is now en vogue.  Basics are in – complexity and clutter are out.  Recycled and vintage are chic.  You have to be a minimalist to live in a tiny home.  I think millennials are redefining needs and wants, in pursuit of what’s really important – functional products with a lower environmental impact.


10)            Avid savers and avoid debt/credit cards – this might be a reaction to the Great recession of 2009 as well. A 2018 Bank of America survey found that 1 in 6 millennials now have $100,000 or more in savings. That’s impressive! One study (bankrate) showed that about 2 out of 3 millennials don’t have a credit card. Another study (Facebook IQ) said that 46% of millennials define financial success as being debt-free. 86% reported saving on a monthly basis!


Watch this funny video about Millennial stereotypes – it’s hilarious!


Hey, we got married!! Here’s why we aren’t broke(r)



Congratulations! You are about to get married!! Weddings! Cake! Ceremonies! Cake! A lifetime of happiness! Cake!!


…and debt.


The Knot, a popular wedding website, said that according to their 2016 study the national average wedding cost was $35,329 (not including the honeymoon).  That is a lot of money, but as many, many, many friends and family will tell you, that is a small price to pay for the memories, and the moments, and (hopefully) a once in a lifetime event.  But is it?


The problem with paying incredible amounts of money for that special, special day, (and don’t let anyone tell you that it is not one of the most wonderful, amazing days you will ever experience), is that the cost doesn’t end when the party does.  Very few people can pay that $35,000 out of pocket, and so the debt of the day will follow long after the chairs are folded, or stacked, or burned, depending on how crazy your reception gets.  So here are some tips to help you spend a lifetime of happiness together, instead of starting your marriage in debtors prison.

wedding prison

First thing first, sit down and create a budget. What can you afford? Are mom and dad helping? Some parents may want to be a part of the planning process and give their ok on each purchase before footing the bill. Some may want to contribute a certain amount,  or take care of a certain aspect of the wedding (the food, the DJ, etc.) Make sure to have these important (and potentially awkward) conversations to know what you’re working with.

bride father

Next, figure out what is most important to you and your new spouse to be. What is the non-negotiable on which your dream wedding hinges? Is it a fantastic buffet? A venue out of a fairy tale? A live band to keep the party rockin? Budget a little more for that and get thrifty with the rest. Keep it simple: don’t go overboard pinning ideas to your dream wedding board. While Pinterest (a virtual bulletin idea board) is a treasure trove inspiration it can easily overwhelm you in a bog of possibilities. Pick one theme; a rustic, greenery, victorian luau might be a little much.


Consider keeping the guest list small. More people = more mouths to feed and larger capacity venue. Both are high costs in wedding planning. You do not have to invite everyone. You do not have to invite all your co-workers or your boss. Make a list of people you can’t imagine having the big day without.  And be ruthless here, we went through seven revisions of our guest list.  We went from the initial 500+ guests to a final total of 96.  Some of those removals hurt.  Some of them came with giggles.  But we stand by our choices, and not having wedding debt looming over us really takes the sting out of getting the stank eye at church from your brother’s cousin’s fiancee’s boss’s sister.


Know when to DIY…and when to call the pro’s:  Doing it yourself can be super cost effective. But it can also be stressful and time consuming. Keep DIY decor simple. Dollar store vases and candles are simple, cost effective, and classic. Hand cutting and folding hundreds of tiny, sheet music, origami roses will have you (and the friends you drafted into helping) pulling your hair out and spending the same amount of cash on wigs as it would have cost to buy the things off of Etsy.

origami rose.jpg

The time of day of the wedding can be a huge cost saver. An early afternoon wedding is intrinsically less formal than an evening event. Casual attire, food, and atmosphere provide ample budget slashing opportunities. Just provide light hors d’oeuvres and lemonade, or perhaps just cake and champagne.  The time of year also greatly affects what the venue and rentals will cost.  January and February come with massive discounts for venues, rentals, and even caterers.

Think outside the norm of typical wedding venues. Think parks, gardens, historical sites, your uncle Ulysses’s big back yard, or a friend of a friend’s restaurant patio. Steering clear of big wedding hotspot venues opens up cheaper and usually more unique options.  For example, we decided that our wedding would be held in a mountain cabin, and when we began looking at options, we realized that the cabin that would be large enough for the wedding, would be large enough to house our families and bridal parties, thus saving us a lot of hotel costs.  We ultimately fell backwards into a prohibition era mansion (another partial gift), but being open to new and unusual things led us to some really cool and unique ideas, that were at the same time frugal.

As for food, go casual. Use your favorite local restaurant, ask your aunts, or church ladies, if they would pitch in and make a dish. We got lucky here. We are blessed with some very generous friends and family who gifted us with, among other things, all the meat (cooked to delicious perfection) needed to feed our guests, as well as a truly top tier wedding cake (perhaps make very good friends with a professional baker six to twelve months before the wedding??). We only needed to buy the hors d’oeuvres, sides, and drinks. The cocktail hour hors d’oeuvres were fruit and veggie trays ordered from the grocery store (Costco or Sam’s Club are great options) and we ordered the sides from our favorite BBQ restaurant in the area.


There are many other areas we could touch on, but you are smart people, and you get the picture.


Ultimately this day is not about the wedding, it is about the marriage.  Don’t worry about the day so much, worry about the life afterwards.  If you are the type of people who want to start off with strong memories, and feel like you would regret not blowing out the wedding, go nuts.  But don’t be surprised when you are looking at your amazing, picturesque wedding photos over a single bowl of unflavored ramen split between the two of you, while hoarding spice packets to use on your 50 pound bag of rice that sits in the corner, because if I taste rice one more time this week, Susan, so help me, I will literally pound my face through the hornets nest in the backyard.  Of course the other end of the spectrum is to serve Taco Bell and wildflowers (vegan friendly!!) as your reception meal so that you can later look at dismal photos over filet mignon and beluga caviar.  Find your balance.  Find what you can live with.  Find that place where your memories and your bank account are friends.  Because, honestly, the best part of the wedding, is the wedding night.  (This statement is not endorsed to be published by my wife, and she is, frankly, mortified).

groom punch

The previous guest post was from Marcus & Laura.  Congratulations!

May the road rise to meet you,

May the wind be always at your back,

May the sun shine warm upon your face,

The rains fall soft upon your fields,

And until we meet again,

May God hold you in the hollow of His hand.

Q: Is Amazon Prime worth $99 a year?

prime black

A: you might have already guessed my answer, it depends .     .     .


I am not an Amazon Prime member but I am quite curious about this service and got to wondering if this is something that you should consider spending your money on?


I did some research and read a number of articles on the subject – I will put a link at the bottom of this post to one of my favorites on this subject, by Motley Fool.


My first question in this type of analysis is to ask why a company (Amazon in this case) would offer such a service? The answer, almost invariably, is because it makes them money.   .     .


There are about 90 million Prime subscribers in the U.S., so a lot of your neighbors already think it’s a good idea. Prime members in the U.S. spend about $1,200 annually, vs. about $600 for non-members. The annual fee to become a prime member is $99 (single payment) or $12.99 per month ($156 annually); the monthly cost went up 18% in January 2018, it was $10.99 previously. Amazon thinks their Prime service is a good deal (for Amazon’s profits of course – they’re already the dominant on-line retailer after all, and its not even close), but is it a good deal for you?


Let’s do a high level review of what the Amazon Prime service provides (before we pass judgment); there are many facets to this service (all included with your $99 fee), which makes the cost/benefit analysis a little complicated, and sorta depends on where you live.


1)            Free and faster (2 day) shipping – with no minimum order required. This is the cornerstone of the service. This probably deserves a couple additional footnotes. You can get free standard shipping for orders over $25 anyhow (without being a Prime member) – but standard shipping takes 5 – 8 days. Although the vast majority of items qualify for 2 day Prime shipping, not everything sold on Amazon qualifies for 2 day Prime shipping – you can filter for items that are eligible for 2 day shipping (just look for the Prime logo) – just a little wrinkle I want you to be aware of. At $99, you would probably have to make 20 orders (of less then $25) to offset the upfront fee (assumes an average $5 shipping fee). Some will certainly value the convenience of 2 day shipping (note that same day shipping is available (via Prime Now) in select cities – 35 currently) and not having to wait until you build up a $25 order.

fast shipping

2)            video streaming. Prime membership also includes free access to thousands of movies and TV shows (including some original/exclusive content – such as The Grand Tour – a reboot of the popular BBC show Top Gear). Basically Amazon video streaming is a cheaper (watered-down) version of Netflix; it’s still worth something, even if it isn’t on par with other top-tier video streaming services.

grand tour

see my previous post on my experience as a cord cutter

3)            music streaming. Prime membership also includes access to about a million songs (no additional charge). It doesn’t have the selection of bigger services like Spotify or Apple music (over 30 million songs each), but again, it’s worth something. See my previous post on comparing Spotify and Apple Music.

4)            Audiobook streaming. Prime membership allows listeners to stream audiobooks on demand – rotating a selection of about 50 titles, as well as unlimited access to Audible channels – original programs, comedy, lectures, news articles, etc.


5)            Prime reading. Prime membership provides unlimited access to a rotating selection of more than a thousand ebooks, magazines, and comics.  These can be accessed via a Kindle, Fire tablet, or via the Kindle app. It will be missing some popular titles but it’s still worth something.


6)            Prime photos. This service allows secure, unlimited photo storage in the Amazon cloud.


7)            Twitch Prime. This service allows ad-free viewing on Twitch, the social-video platform and community for gamers.


There are other lesser perks that I didn’t list here, such as early access to Amazon lightning deals, but I think I have listed the vast majority of the services you get (for no additional charge) with Amazon Prime membership.


Let me circle back and remind readers that data indicates that Prime members spend about twice as much as non-members and about 40% more per transaction. I believe some of this behavior is psychological – people want to make their membership “worth it” – something to justify their annual $99 membership fee. I think this is potentially dangerous – while Amazon does offer fairly low prices, some analysis indicates that about 50% of their items can be purchased cheaper elsewhere (e.g., Walmart – their biggest competitor – which offers an online price match guarantee and free shipping options as well). I don’t want your Prime membership to be a license to spend more and I certainly don’t want you to stop comparison-shopping. I recommend you try to help compare online prices.  I believe Amazon is counting on you getting lazy and buying more and more from them (blind loyalty) – remember, they aren’t always offering the best prices.   .     .


In summary, Amazon Prime might be a good deal if you already frequently order from Amazon (at least 20 orders per year) – they certainly have great prices on some itemsdon’t stop comparing prices! It certainly makes shopping more convenient – especially if you’re already invested in the amazon ecosystem (Kindle e-reader, Fire tablet, echo, etc.).  I’m sure faster shipping is important to a lot of you as well – especially if you live in a fairly remote area that’s not that close to big box retailers (e.g., Wally World). It also might make sense if you opt for Amazon Prime and then cancel your Netflix and Spotify Premium subscriptions – this savings alone could offset the $99 annual fee.


However, if you don’t frequently (20 or more) order from Amazon and won’t use their video or music streaming services, then you should probably not become an Amazon prime member. Think about it (use critical thinking) – run some numbers. (review your own Amazon order history). Are you a disciplined shopper? – or will you spend more if you have a membership? Compare Amazon Prime to Walmart – many of the Walmarts prices are cheaper and they offer free shipping options as well (called shipping pass) – plus I think Walmart’s return policy could be easier to use (more physical locations). I recommend you try a free 30 day trial of Amazon Prime before you pony up the $99 (or $156 if you pay monthly) for an annual membership.


See my previous post on critical thinking skills.

I personally will not be paying $99 to become a Prime member. We don’t order that much from Amazon (maybe a few times per year – mostly at Christmas) and I don’t think I would use the other (e.g., music, video, book streaming etc.) services much either.


Let me know what you think of Amazon Prime. I might do a separate post on which items are usually cheapest at Amazon vs. other online retailers – it’s tricky (by design)  .   .    .

evil amazon