It has long been part of the American Dream to own your own home. The basic concept is to provide a secure place for a family to live, while creating net worth over time in the form of equity. For those families that plan on living in one place for an extended period, that concept remains intact.

However, the circle of life is forever changing. Newlyweds become parents and children grow up to go off on their own. Parents get older and become empty nesters. Spouses pass away and we all have to deal with the challenges of aging. Statistically, many marriages sadly end in divorce and employment opportunities are often constantly changing. All the above factors play a part in deciding where to live, as we all cope to best position ourselves for the most enjoyable life possible.

Owning a home is not without risks. The day you purchase a home is a lot like buying a new car. That car is worth less the minute you drive it off the dealer’s lot. Closing on a home purchase is similar in that the day you close escrow, one would need roughly an instant 10% appreciation just to break even after reselling costs. In the case of a purchase with a 10% down payment, that down payment has been essentially wiped out the day the new homeowner receives their keys.

Along with that risk, while much of the monthly mortgage payment is tax deductible interest expense along with the property taxes, maintaining a house is not cheap. Property insurance, monthly maintenance and capital expenditures like appliance replacements are all necessary without being tax deductible. Depending on the age of a home, roof repairs, plumbing issues, painting, sidewalk repairs, etc., can all add up to a sizable number.

When it comes to renting, while the monthly charge is not tax deductible, rental insurance is a small fraction of property insurance. But, if an appliance breaks—call the landlord. If there is a water leak—call the landlord. Hot water not working—call the landlord. If your employment or family situation is uncertain, renting provides much more financial flexibility. These benefits vary from situation to situation.

The following is a ballpark comparison of renting for $1500 versus buying a $285,000 house with a pool, 10% down and a 4.75% loan. Obviously, it is a generalization and individual situations will vary.

The above does not even consider that initial renting costs to sign a lease are a fraction of the money required to put down on the purchase of a house. It also excludes the host of unexpected capital expenditures to maintain a house. Other factors to consider is the investment return on the amount of leftover money that does not need to be used as a down payment. Not only does the above comparison reflect an annual savings of $12,336, but this money can also be used to build cash balances or just to spend on fun.

Deciding where to live is one of life’s major decisions. Do your homework to put a plan together for your personal situation. Life can be stressful and often short. Plan your happiness!