You Are Not a Turtle

Turtles and snails are born with their homes on their backs. You, however, are not so lucky. Unless you plan to live in a cardboard box or you can talk someone into allowing you to live with them for the rest of your life, you will probably need to either buy or rent housing.

Homeownership

To Own or Not to Own

Home ownership isn't for everyone. It's definitely a long-term commitment. The prices of homes increase over the years, but usually at a slow rate. With all the financing, closing costs and other expenses associated with owning a home, you'll probably lose money if you sell in less than five years.

You also have to think about the upkeep of a home. Everything from cutting the grass to putting on a new roof is your responsibility. The costs can really add up. Then add taxes, water and sewer bills and other expenses and you can get into some sizable payments.

But when you take full financial and maintenance responsibility for a home, it's yours to do what you please. Paint the walls purple. Add a planetarium. Put in a fireman's pole. You're in charge.

There are also substantial financial advantages to owning a home. The part of your monthly payment that goes toward the principal is all equity and the part that goes toward interest is tax deductible. Compare that with paying rent, which is neither an investment nor a tax write-off.

As your equity increases with time (and payments) it will be a source of financial stability for you, giving you collateral for a loan or producing a large sum of money if you sell. And if you decide to sell your home, as long as you have lived in it for two of the past five years, you won't have to pay tax on gains of up to $250,000. The limit doubles to $500,000 if you're married and both have lived in the home for two years.