Renting vs. Buying

Ray’s Take: Buying a home used to be the pinnacle of living the American Dream and the trophy of your financial success. Conventional wisdom held that you either paid your own mortgage or someone else’s. 

But in recent years people are questioning whether to buy that starter house or just wait to buy the dream house they will live in for 40 years. A new generation is choosing to rent instead of buying, and they may be on to something. 

Most often, people choose to rent because the housing in the area is simply too expensive. But there are some other reasons that prove the logic of renting over buying. 

Having flexibility is a great reason. If your job transfers you often or if you prefer to explore different areas and locations of the city, renting is probably the way to go. When you are a homeowner, it is much more difficult to relocate because of all the fees associated with buying and selling a house. If you have had a real estate closing, take a hard look at that settlement statement. There are a lot of hands out. 

People also choose to rent to save money in the short term. Renting should allow you to save more for the down payment needed to purchase a home. You also avoid real estate taxes and maintenance and repair costs that come with owning property. 

On the other hand, if you plan to stay in the same place for more than five years, buying a home could be the smarter choice. Staying in a house for five years or more means you are more likely to recoup what you paid in transaction costs and generate a return on your investment. According to Data Solutions’ 2017 Rental Affordability Report, buying is more affordable than renting in 66 percent of American housing markets. 

If you are having trouble deciding whether you should rent or buy, checkout the “Rent vs. Buy” calculators at or to see what you can afford and always consult with your trusted financial adviser for advice.

Dana’s Take: A friend of mine just experienced the good and bad of renting. Single, with grown kids, she was excited to sell the big house and rent a cozy duplex with a charming front porch. After one year, her landlord notified her that he would not be renewing the lease. That is the ugly side of renting – the landlord retains the right to un-house you, no matter how much work you’ve put into the property. 

Soon after, she discovered the good side of renting. She found a new apartment with better security and a new kitchen and bathroom. Flexibility is the upside of renting. 

Home is where the heart is, whether you rent or own.

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Saving Beyond Your 401(k)

Ray’s Take: Buried treasure may sound like something from a fairy tale, but in 2013 a California couple discovered the largest buried treasure in U.S. history. The Saddle Ridge Hoard, as it became known, was made up of 1,411 gold coins minted in the 1800s and worth more than $10 million.

While I have yet to meet anyone who buries their money as a method to save it, most people do use their employer-provided 401(k) as their primary savings vehicle. While a 401(k) is a simple and effective way to save money, it’s always good to consider other savings options to build your wealth in addition to your 401(k).

If you are enrolled in a qualified high-deductible health plan and are eligible for a health savings account (HSA), this can be a great option to help you save. Contributions to these accounts are pretax and withdrawals are tax-free for qualified medical expenses. In addition, unused money can stay in the account until retirement and you can use the money to pay your Medicare premiums.

Roth IRAs (individual retirement accounts) can also be a key player in your overall portfolio. The tax shelter benefits are so extraordinary that Congress specifically limits them to individuals and families with adjusted gross incomes of less than certain predetermined thresholds. Contributions are not tax-deductible, however, if you need to make a withdrawal of your past principal contributions, you can do so tax-free without an early withdrawal penalty, though you won’t be able to replace the funds again once they’ve left the account.

A traditional IRA is another option to consider. You can make contributions with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement.

Finally, a nonqualified investment account can be layered onto the above tax-favored accounts. With wise planning, these retirement savings options can help you save without burying your riches in your backyard.

Dana’s Take: As adults, we marry, get a good job, buy a house, start a family and assume our happily ever after will continue forever. In 2017, the probability of a marriage lasting 20 years was 52 percent for women and 56 percent for men.

Three of my close friends are going through major reversals of fortune in their mid-50s. Each of them had six-figure household incomes and large homes. Now, because of divorce, they are renting much smaller spaces and splitting their retirement fund in half.

Putting your money into a retirement fund is never fun, but it’s a good idea. Since we can’t see what is around the corner, it’s a good idea to seek the counsel of a financial adviser who plans for all outcomes.

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The Business of Airbnb

Ray’s Take: The story of one of the world’s hottest tech companies starts with two roommates, Brian Chesky and Joe Gebbia, offering air mattresses and homemade breakfast in their apartment to out-of-town guests who couldn’t afford a hotel room in San Francisco. What started as a way to make a few bucks to pay their rent is now the company Airbnb.

Airbnb is a privately owned accommodation rental website that enables hosts to rent out their properties or rooms to guests who use the website to find somewhere to stay. Airbnb now offers over 3 million listings in 65,000 cities and 191 countries.

There are several different reasons people are entering into the Airbnb business. Some want to make a few extra bucks off their available space, others want a stable secondary source of income and then there are those who want to build a serious Airbnb business that will become their main source of income.

Here are some things to consider before listing your property and entering into the Airbnb business. Get a market report for your property. Some markets are not big enough to support this type of business and you may not make money if there is not a demand in your area.

Get the proper insurance coverage. Airbnb’s Host Protection Insurance will act as primary insurance and provides liability coverage to hosts. If you have questions about how this policy interacts with your homeowner’s or renter’s insurance, you should discuss your coverage with your insurance provider. Some policies protect homeowners and renters from certain lawsuits that result from injury to a visitor, while others do not.

Protect your identity. Do your due diligence and screen all potential guests. Lock up or store all passports, bank statements, social security cards and anything that shows your full name and address. You may consider holding or forwarding your mail when you have guests.

Don’t forget about taxes. You might be subject to rental income taxes. To assist with U.S. tax compliance, Airbnb collects taxpayer information from hosts so they can provide an account of their earnings each year via 1099 and 1042.

Dana’s Take: Airbnb lists 300 rentals in Memphis and HomeAway lists 219. According to their maps, one or two of the listings are within walking distance of our house.

As we approach our empty nest years, I daydream about renting out our house on Airbnb. Ray would rather sell the house than rent it to strangers. I suppose Ray is right. Last summer, a Cooper-Young couple rented out their home through Airbnb, and police discovered the renter using it for an illicit enterprise. The neighbors weren’t too happy.

Short-term rentals sound like a dream but could turn into a nightmare.

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When It Rains, It Pours

Ray’s Take

I always have an umbrella in my car. Most of the time it just takes up space and I end up pushing it aimlessly around the car to make room for other things. And there are many months of the year when an umbrella seems utterly pointless. But in Memphis, when it rains, it pours, and when that day comes I’m happy to have it. 

The same holds true with an umbrella policy. Just like the name suggests, it’s important coverage to consider adding to your insurance arsenal. You may not ever need it, but when you do, you’ll be glad it’s there to protect you. 

Also known as “lawsuit insurance,” an umbrella policy is extra liability insurance over and above the liability coverage that’s part of your existing homeowners and automobile insurance. In addition, an umbrella policy can also cover the legal fees to defend you from claims of personal injury or property damage that could arise due to accidents.  It can even pay for the legal fees to defend you against false arrest and claims of libel, slander and defamation of character.

The truth is, accidents do happen. Do you have a pool, teen drivers, motorized vehicles, a boat, diving board or a trampoline? There are so many different scenarios of the unthinkable happening, and in every case, you need to be protected. 

Don’t assume the liability coverage in your home and auto policies are sufficient. Most home insurance covers liability claims only up to $300,000 for personal liability, and most automobile policies provide up to $250,000 per person for bodily injury. It’s usually recommended to get an umbrella policy if you have assets over $1 million, which is the minimum amount covered and costs between $150-$300 per year.  

Consult with your financial representative to see if an umbrella policy is right for you and your family so you aren’t caught out in the rain! 

Dana’s Take

Our friends’ college-age child, close in age to our own, was rear-ended by a drunk driver with two friends in the car. Tragically, one child was killed, even though no one did anything wrong. They were simply driving home. 

It is hard to imagine the emotional toll this event has taken on those three young adults and their families. Now, imagine if a lawsuit for millions of dollars was added on top of their loss. An umbrella policy could help cover some of the costs if this would have occurred. 

Ask your insurance agent or a Certified Financial Planner to review your insurance coverage and the policies of your adult children to make sure a large umbrella policy is there to protect your family. It’s one umbrella I hope you never have to use.

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How Much Are You Worth?

Ray’s Take: What do a class=learn" style="color: #7d0200; text-decoration: underline;" href="" rel='

Learn more about Mike Tyson

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Name SearchWatch Service'>Mike Tyson, Curt Schilling, Marvin Gaye, Francis Ford Coppola and Meat Loaf all have in common?


They were all worth millions at one point in time yet all found themselves bankrupt and broke. According to the New York Times, when Francis Ford Coppola filed bankruptcy his assets came out to be a whopping $52 million and his liabilities totaled $98 million. Wow. Talk about major overspending.


While most of us will never be as wealthy as these celebrities, calculating your net worth is an essential tool in measuring your overall financial progress from year to year.


To figure out your net worth, start by calculating your assets. For most people, this is your home, other real estate properties and vehicles. If you own a business, list the current market value. Next, you’ll need to gather statements for all your liquid assets. This includes checking and savings accounts, CDs, and other investment accounts like retirement and brokerage accounts. Last, list personal items of value such as jewelry, coin collections or any other items worth over $500.


Now calculate your liabilities. Add up your mortgage, car loans, student loans, balances on credit cards and other debt that you owe. Subtract your total assets from your total liabilities. Hopefully, your net worth is in the green but there are times in life when it could be in the negative.


Because of easy access to credit, many people with zero or negative net worth have lots of “things” like cars, TVs and even houses. It’s possible to have zero net worth yet appear prosperous by many standards. There are only a few good financial planning rules of thumb, and one is “spend less than you earn.”


Finding out how much you are worth is a good exercise to do each year to see how you are progressing or regressing on your financial journey. And to make sure you don’t end up in bankruptcy court with people – even celebrities – living above their means.


Dana’s Take: a clas="learn" style="color: #7d0200; text-decoration: underline;" href="" rel='

Learn more about Elizabeth Willard Thames

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Name SearchWatch Service'>Elizabeth Willard Thames wrote a book called “Meet the Frugalwoods.” It was about a young couple who achieved financial independence and early retirement (they called it FIRE) by saving more than 70 percent of their income in order to achieve their dream of living in the Vermont woods.


This was a truly inspiring story about a couple challenging their peer group’s values and putting their finances exactly where they found joy. They saved and nipped spending until they were able to live their dream of raising their two babies in the Vermont woods. The couple also shared case studies of others around the globe who have aligned their finances with their dreams.


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