Should I Rent or Buy?
If "stuff" is taking over your life, your house, your garage....it may be time to start making decisions whether to rent or buy your new stuff. â€¨â€¨Frugal fans know the less stuff you own, the less real estate you need. To help you cut down on that pile of permanent possessions, I've compiled a list of which items you should purchase, which you can get by with renting, and those that fall on the borderline.
1. Bikes - Rent or Buy
If you live in Colorado (like I do) or in Amsterdam, owning your own performance bike is even more important than owning a car. But in other places and at other times renting makes more sense.â€¨ City dwellers with limited storage space and cab fare are learning the pleasure of bike-sharing and bike-rental programs. (While we're on the topic, did Jerry Seinfeld ever actually ride the bike that hung in his apartment for nine years?)
One problem with many of these rental programs is the bike must be picked up and returned to designated locations, which isn't always convenient. London is trying out the OYBike System, which allows users to hire and return bicycles to more widely scattered locations via their cell phone.
2. Camping Gear - Rent or Buy
New camping gear is expensive and second-hand gear is an iffy proposition. Unless you're a hardened back-woods fan, many people find they don't use the equipment enough to justify buying all the equipment necessary. If you only use a tent once a year, it just doesn't make sense to let it grow mold in the basement or attic. Many local and larger chain stores, like Cabela's now rent all kinds of equipment for the casual camper.
3. Carpet Shampooer - Rent
I have a friend who owns a rug shampooer but uses it only once a year. Every four years he replaces it because the latest machine has clogged from lack of use. He still insists he's saving money and continues to buy new ones. Let this be a lesson to us all: Rent and let the merchant handle the maintenance. If you need industrial grade cleaning, call a professional. Look for cleaning store ads held by acne-faced teenagers bobbing along the side of the road.
4. Cars - Buy
Nearly 20% of us rent our cars (although it sounds better to say lease). If you rent your car, you are probably concerned about the instability of aging vehicles and feel more secure knowing that any major vehicular operation is covered. Think this through with me. You fork over a down payment, pay a rental amount each month, and then at the end of your term give the car back "free and clear" (unless you've racked up more miles than were allotted to you).
If you'd rather own it at the end of your lease, be ready to pay far more than the car is worth. Add on excessive mileage fees and leasing becomes a huge expense.â€¨â€¨But with the cost of trading in every two years, it makes more financial sense to lease. Yes, if you are foolish enough to trade in your car every two years. Buy a reliable used car and drive it until it croaks. My ten-year-old Honda Accord is still a joy to drive. While it may not look as pretty as the 2010 model, I rarely have to repair it and don't have a monthly payment. Cars are not an investment, they are an expense--aside from classic vehicles they will always depreciate in value.
5. Car Rims - Buy
MTV's "Pimp My Ride" has turned a simple thing like car rims into objects of worship. Flashy chrome wheels can now cost up to $1,000, launching an entire rent-to-own industry. Bling-hungry consumers with bad credit end up paying roughly $50 to $75 a week for a year to own a set of wheels that would cost them half the price if they paid cash. (It's an old con for a new product.) â€¨â€¨If your ride has gotta scream, wait until you have the cash and you can own the road.â€¨â€¨
6. Computers - Rent or Buy
If you own a small business, leasing computers can make sense. You preserve precious capital, are able to upgrade more frequently, and often get tech support from the leasing company. â€¨â€¨When you're a consumer, though, renting to own is usually a terrible idea. The fact that rental companies run no credit check should clue you in to the face you're getting the worse possible terms on an overpriced computer. You're better off buying a second-hand set up or saving for a cheapo.
7. Cribs and Children’s Furniture - Buy
Safety is the byword here. One look at the Consumer Product Safety Commission's product-recall list is enough to make you realize that safety hazards aren't always obvious.
If there's a chance your children may be at risk, buy new. With Babies R Us free shipping coupons you know you're getting the safest and best quality cribs, bassinets and other baby furniture on the market. â€¨â€¨According to the FDA, used children's furniture, particularly cribs, tend to take a harsh beating. You can never be too careful.
8. Caskets - Rent
What's creepier: Renting a casket or an industry that tries to convince survivors they're not paying proper respects to the deceased unless they spend $10,000 on a box?
For a few hundred bucks you can now rent a casket for the service and transfer your loved one into something more economical for burial. Besides, it's much greener to use an environmentally friendly casket than a steel box that will never find its way back to the earth.â€¨â€¨
9. Designer Handbags - Rent
Ladies who've seen the first "Sex In The City" movie know you can rent the hottest designer handbags for as little as $50 per month. Merchants such as BagBorrowOrSteal.com rent more than a piece of fashion: They're renting a lifestyle. And it certainly makes a lot more sense than shelling out thousands of dollars for bags that are going to be out of fashion in a year or two. (Let's not even get into the waiting list for those hideous Birkin bags.)
10. DVDs - Rent
Kids will watch the same movies over and over and over and over. But, generally, one viewing will do it for an adult. Check a movie out on Netflix, Redbox, Blockbuster or whatever first, then buy only the ones you really like.â€¨
11. Digital and Video Cameras - Buy
While they may look good, used digital and video cameras get their fair share of droppage and banging about. Once damaged, these cameras are expensive to repair. Unless you know what to look for, it's not worth chancing a second-hand camera.
12. Formal Dresses - Rent
Nobody would wear the same gown twice, especially when you can rent an outfit dripping in Dolce divinity. Websites like WearTodayGoneTomorrow.com offer haute prom dresses and evening gowns for 90- to 95-percent off the retail price. â€¨â€¨When it comes to wedding supplies and bridesmaid gowns, the Recession has turned renting into a sizzling trend. Besides, be honest, are you REALLY going to wear that dress again?â€¨â€¨
13. Furniture - Buy
Unless you move every year or two and pay big moving fees each time, never rent furniture. Temporary international relocation might be an exception. Scour the nickel paper for garage sales and pick up odds and ends until you can afford the expensive Haverty's set. I've found the best sofas at yard sales.
Some rental companies charge up to 50% more than the furniture retail value. And you have no guarantee as to the quality of rented furniture. Calculate the overall payout for your rented furniture--you'll find it is much higher than you anticipated. $200 per month may not hurt your pocketbook immediately, but you'll have nothing at the end of your lease term.
14. Gardens - Rent or Buy
Community Supported Agriculture is pretty cool. You get locally grown produce delivered to your door, but it doesn't provide the satisfaction of digging in the dirt and raising your own little babies.â€¨â€¨For those without yard space (including me), community gardens give us that satisfaction at a reasonable rental price.
15. Houses - Rent or Buy
Because of the sheer price of houses, there are many factors that must be considered before deciding to purchase a home. As we've experienced recently, being a homeowner doesn't guarantee steady appreciation each year. Rent typically doesn't increase or decrease as quickly as housing costs.
When housing prices are up, hold tight and wait for a lull in the market to buy. â€¨â€¨If you plan on moving within four or five years it may be prudent to rent rather than risk losing considerable money on your new home purchase. Regardless of your choice, make sure your housing costs don't exceed more than 25% of your household income (and put at least 15% down to not sweat the bills each month). Check out this calculator to assess your situation and make the best choice.
16. iPhones - Rent
Remember the short battery life of early iPhones? The death grip of the iPhone 4? Apple does an excellent job of making us drool over the latest and greatest iPhone, but I recommend avoiding AT&T's camp-out lines until Steve Jobs and crew have worked out the kinks. Renting the newest gadget from iPhoneTrip.com for a week allows you to give it a test drive. â€¨â€¨If a month isn't enough, Rentobile.com rents smart phones and every other type of mobile device on the market for as long as you like. But who knows, the luster may die faster than the battery.â€¨â€¨
17. Musical Instruments - Rent or Buy
Did you beg for guitar lessons when you were 12? Did your parents buy you a guitar? And did you quiet practicing at 13? â€¨â€¨An argument why you should rent instruments until your budding musician -- whether young or old -- decides they're going to stick with it: My sister has played the piano since grade school and, close to retirement, just finally bought the baby grand she's always wanted. â€¨â€¨In other words, unless you're a professional musician or your child is something of a junior prodigy, renting is a neophyte musician's friend.
18. Office Furniture – Rent or buy
If you're our boss, you know quality, ergonomic chairs make for happy employees. Desks and filing cabinets, however, may not be as important. â€¨â€¨As with computers, renting office furniture allows you to preserve capital until you're ready to move into your ultimate digs. That's when it's time to whip out the checkbook and furnish your dream office.
19. Party Supplies - Rent
Unless you're a college student, there's more to throwing a party than buying a keg, throwing on a bed sheet and plugging in an iPod. And even bed sheets can get expensive. â€¨â€¨It makes sense to rent supplies for parties of more than 10 or 20 people, depending on your own resources. Items you'll often want to rent include linens, china, glasses, chafing dishes, a sound system, tent, chairs, tables, serving platters and more depending on the type and size of the party. â€¨â€¨Some party rental companies also provide green services by using recycled and sustainable materials, reducing waste, switching to hybrid trucks and even using solar panels.
20. Paychecks - Buy
Fall into the clutches of a payday lender and your paycheck is no longer your own. In a sense, your just renting cash from month to month and paying a hefty fee for the privilege. The fee may not seem like much -- say $40 to cash a $300 check -- but it works out to annual interest rates of over 400 percent.â€¨â€¨Own your future by staying away from these sharks. Pay cash, work with those to whom you owe money, make use of public assistance and food banks: In short, do whatever is necessary to avoid these people. â€¨
21. Pets - Rent
In a world where Paris Hilton finds her BFF on TV, why shouldn't the rest of us rent man's best friend? Or in the case of cats, man's best friend for right now. You'll save an arm and a leg (or a paw) on food and veterinary care while still receiving many of the benefits of a pet. â€¨â€¨Renting a four-legged-friend makes complete sense for the elderly, who can use the comfort of a pet but not necessarily the long-term commitment. Others might appreciate the opportunity to test if a particular breed triggers allergies or just want a companion for particular activities.
Flexpetz.com is one of the companies offering consumers the opportunity to spend time with a trained dog for a few hours or at regular intervals. There are many breeds available and some are trained in therapeutic behavior. Flexpetz says all are rescued and live with caregivers when not placed with a customer. The same can be said of many shelters, which offer foster and volunteer opportunities.â€¨â€¨If you're looking for something even shorter term, cat cafes are very popular in Japan. Patrons pay an hourly fee to watch and play with fuzzy friends who may or may not acknowledge their presence. (Disclaimer: I love cats.)
If you really want to indulge your fuzzy rental, check out toys and treats at Petsmart.
22. Pickup Trucks – Rent or Buy
If you're a cowboy or work in construction, your life revolves around your truck. Otherwise, consider how often you'll actually use that metal muscle to haul stuff. Do you really want to spend your weekends helping friends move, much less hoisting second-hand appliances into and out of that shiny truck bed?â€¨â€¨If you really only need a pickup a few times a year, rent one and buy a hybrid car
23. Plasma and HDTVs - Buy
You can buy a new Samsung 50-inch HDTV Energy Star television for around $720 or rent one at $35 a week for 116 weeks. That adds up to (madly tapping calculator) more than the lousy thing is worth.
Buy a second-hand television and set aside that $35 each week until you can afford to pay cash.
BTW: As with furniture, TV floor models are much cheaper. Just make sure they give you the original manuals and remotes. A salesman at Best Buy tried to slip in a Spanish language manual and universal remote during my last purchase.
23. Professional Photographic Equipment - Rent
Many major photographers own very little equipment these days, with the possible exception of their cameras. Perhaps that's because today's digital cameras are so expensive and require constant updating.
Most photographers rent all other equipment, such as lights, booms, stands, clamps, etc., on a per job basis. They also find it pays to rent equipment and field test it before buying photography equipment to make sure it's an accurate match to your needs.
Once you've put together disc or two worth of photos, you can store them as digital files at Kodak Gallery.
24. Recreational Vehicle - Rent
RVs range between $9,000 and $200,000 with wide differences in quality and performance. Unless you live in the thing or need it for cross-country travel at least once a month, you'll come out ahead spending the $500 per week rental fee (plus mileage) for your yearly getaway. Hard core campers who travel 50 days out of the year or more might consider buying a used (at least three-year-old) model.
25. Second Life Real Estate - Rent
For those of us not familiar with Second Life Real Estate, it is a completely online world operated by Linden Lab. According to "How To Do Everything With Second Life," you first want to see how "laggy" the region is during peak hours when lots of people are logged. If you're renting and not paying much up front, you can always abandon the land if it proves unpleasant. Whatever that means.
26. Skiing and Snowboarding Equipment - Rent or Buy
Newbies will want to rent or borrow everything until they learn how to stay upright for longer than 10 seconds at a time. Kids might want to rent as well, since they'll quickly outgrow those first snowboards (the younger set is rarely interested in hitting the slopes on two planks of wood.) â€¨â€¨Renting allows you to figure out the style and size of skis and snowboards that are right for you. You'll know you're ready to buy when you don't want to share, you're sick of poor quality equipment and want to hit the slopes without having to hit the rental shop first.
27. Solar Panels - Rent
Few of us consider installing solar panel systems because the return on a $20,000 to $50,000 investment is so far down the road. Even after tax rebates, it takes years for that investment to pay off in locally generated electricity. â€¨â€¨As a result, the American solar industry has never really taken off...until now.
Several years ago, three photovoltaic companies got together and came up with a plan to offer leasing programs so homeowners could begin receiving savings almost immediately. Read our comprehensive post, "Can't Afford Solar Panels? Lease Them." â€¨â€¨
28. Textbooks - Rent
Textbook prices have increased at four times the rate of inflation since 1994, with no end in sight. It's a crime, but one federal rules are working to change. â€¨â€¨Commerce is catching up, as well. Some colleges have started programs that allow you to rent your books. For example, Rent-a-Text.com has teamed up with more than 800 college bookstores. Students pay about half the purchase price to rent for a single semester and you can shop in-store or online. Chegg.com is the Netflix of book-rental companies (shipments arrive in a distinctive orange box) except they both rent and buy textbooks. Other online textbook renters include CampusBookRentals, BookRenter, ECampus, TextbookRentals and CollegeBookRenter.
29. Tools - RENT
Attempting that home improvement job and need a tile cutter? Just rent one unless you plan on becoming a mosaic artist. Need to spread a mound of dirt to fill in holes in your backyard? Round up the neighborhood kids and a bushel of shovels or get a backhoe from Home Depot if the job is a biggie. â€¨â€¨If the carpet looks shabby and needs a shampoo, I like to rent a carpet cleaner from Lowe's or Home Depot. For an industrial grade cleaning, it's far cheaper than hiring a company and better than the units I can afford. Keep a cache of the basics for everyday jobs, but for bigger tasks check out the tools at your local home improvement store.â€¨â€¨
30. Tuxedos - Rent
Unless you're a magician, attend a plethora of fundraisers, like to buy formal costumes, or have a lot of brothers the same size who are getting married in rapid order, rentals are the way to go. â€¨â€¨
31. Vacation Homes – Rent or Buy
Did you ever visit a place so stunning, so enchanting you wanted to live there but couldn't afford it? You could rent a piece of this heaven via a timeshare, if owning two properties is out of your reach. â€¨â€¨On the other hand, timeshares can be constricting for some. If you have the money and ability, it makes perfect sense to purchase the property as a financial and lifestyle investment.
32. Yachts - Rent
Millionaires can afford to buy, berth and bathe oversized boats. The common man can possibly afford a canoe. It's not so much the original price that eats a hole in your pocket as the upkeep.
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