Lately, there has been a lot of discussion regarding a growing student debt issue. Many young Americans graduate from college with tens of thousands of dollars of debt. Students who choose to pursue graduate and professional degrees frequently end up with hundreds of thousands of dollars of debt. Obviously, when young people begin their careers with this kind of financial burden, it vastly impacts their choices and ability to meet their obligations.
Because so many young Americans are saddled with the cost of education, they are delaying getting married and having children for years, and for some, the delay is indefinite. In addition, savings and investments are virtually non-existent for individuals owing mounds of money to lenders. Given that the interest rates on such loans often exceed five percent, with some loans costing as much as ten percent, many youngsters don’t see the point in socking away money in savings accounts with very little yield while their debts balloon.
Recent data also revealed that such debts are deterring homeownership among Americans aged 35 and under. Not only are young Americans avoiding the cost of homeownership, many of them are actually returning to their parents’ homes in order to make ends meet. Until recently, this was not exactly the cultural norm in this country. In many other countries, children reside at the family home until they marry, and those that don’t marry often never leave the family abode. It is fairly customary in other cultures for families to pool their resources in order to sustain the family unit. Because the economy is still recovering from the recession, this has become more commonplace in America.
Although the decision to avoid homeownership is understandable, there are some cities where it may actually make more financial sense to buy than to rent. In Miami, the renting versus buying debate has tended to favor buying. The cost of living and Miami real estate, as compared to the rest of the nation, are fairly affordable. Clearly, people shouldn’t seek a loan for a Miami property if they cannot afford to do so, but depending on how long a person intends to reside in the city, it is worth running the numbers to find out. Eventually, if Miami home prices continue to rise, the resale value of the property may help take a chunk out of those other debts.