Fight Club

Hi Scott,

My partner and are currently having a massive argument: I am pro renting and she is against it. We do not have any debts, and have about $80,000 in cash and shares. We both want to buy a house -- but for me it is not the right time. I have put together an Excel spreadsheet to show her how renting is better, but for some reason I am unable to win this argument with everyone saying that house prices will go up. Scott, I need your help to show her that renting is not bad!

Sachin

Sachin,

Dude. Mate. Cobber. You’re going about this all wrong.

With a spreadsheet? Really? Come on! I can just picture you sitting her down at your computer:

“If we =Sum:B2-B11, clearly the figures show, darling, that we’re much better off renting this one-bedroom, half-a-bathroom apartment. I mean the spreadsheet doesn’t lie. It’s just maths, honey.”

No, it’s not.Buying a home is both a financial and an emotional decision.Your position is this: you’re worried about losing money if you buy and house prices go down -- or, that you could have waited till prices crashed and bought a nicer home for the money you spent.

Your partner’s position is this: she just wants a home to call your own.So who wins the fight?

Well, let’s go back to the spreadsheet.

Truth is that no matter how much you fiddle with your formula, your spreadsheet will never be able to spit out when (or if) the housing market will crash. So, you’re effectively delaying your decision (and your life) for something over which you have absolutely no control.

So now open a new spreadsheet. Use your analytical skills to work out whether you can comfortably afford a home. Do a forecast for the next ten years, factoring in outliers like getting married, having kids, going down to one income, and interest rates hiking to 10 per cent.

Then make the decision together, as a team.

Scott