Some questions must be answered immediately. Everyone needs a place to live.  People, however, should not let this immediacy result in faulty thinking or incomplete analysis. This is because the number of possible answers to this question is huge and the impact of the choice has major impacts on one’s life.  Note, this decision will take time and a great deal of thought to be done right-whatever the decision turns out to be. It is important to realize that the rent or buy decision is coupled with how extravagant the living space will be. Big expensive places to live can take a large percentage of one’s income and limit a person’s ability to do many other things with their money. This does not mean people should avoid large high priced places to live if their values and life’s goals revolve around their home and they can afford it. Just look around. Housing options abound as do the ability to rent or buy. This question is the “poster child” of the personal nature of decision making. It is critical to know yourself both in the short and long term to make a good choice.

Application Insights-Should I Rent Or Buy A Place To Live? focuses on the personal nature of this choice and the connection to longer time frames and opportunity cost. Although is not an answer sheet, it is a strong reminder that the decision making structure must be followed in order to place all possible options and their expected benefits and expected costs on the table so future evaluations of your choice will yield few or no surprises. Because places to live decisions often have longer term consequences and problems seem to grow overtime, costly mistakes should be avoided. For these reasons, begin the process by picturing your acceptable place to live. What are its features, where is it located, and what does it allow you to do that you feel is important to you? Now do the same by picturing your optimal or dream living quarters. Note the similarities and differences between the two places and then determine the cost (price plus opportunity cost) of each. Be sure to look at rental options and outright purchase. You are now ready to follow the process as described in the guide or evaluate what you have already accomplished in this regard and add to the procedure. This will give you confidence that you have considered the important factors and blended them into being you.

• Clearly understanding what the question or problem contains is a must in this decision. Answering the question by saying rent or buy is only one part of the question. It is an important part as it relates to life style choices and short and long term financial matters, but the how much living space question is very important as well and it influences the payment question. If you are planning to seek a new career soon that may mean moving to another state, buying in today’s housing market may take second place to renting. If mortgage interest rates are low and you think real estate is a good investment in the long term and you expect to stay in your new place for a number of years, buying might be the best choice.
   
• Reflect back on your picturing of your place to live. Ask yourself why your dream place is different from others and what it allows you to do that is of high value?  Also ask yourself what does this place keep me from doing that I really like to do? This will usually be a money issue but location might also be an important factor.  It may be too far from the gym or shopping or relatives and friends. Knowing what is important to you will establish the criteria for weighing the expected costs and benefits of each alternative course of action.
   
• For some people this part of the decision making guide will be the most fun. Many people like looking at homes (rental or purchase). There are so many options and floor plans, new construction techniques and products it is like going to an art show. These field trips into the world of places to live are necessary to identify the many alternative courses of action people searching for a place to live actually have. Because this is a massive activity, be sure to seek input and help from the experts and people who specialize in being helpful in this area. Contractors, model homes agents, realtors, home magazines to name a few. 
   
• Once the alternative places to live (basic to extravagant) are identified and the benefits and costs of rental versus buying have been considered place value on each one as they relate to you the decision maker. Continue by weighing the expected benefits and expected costs of each alternative as they compare to one another. Recall that all costs and benefits of a decision are expected and are not known until the choice is made so work hard at doing everything you can to avoid problems, but don’t think problems can’t occur. Also remember that there are few perfect solutions so compromise is often needed in this choice making situation.  You may find the perfect house at a great price in a great neighborhood that is 10 miles further away from your job and “playground” than you would like. You might find the perfect rental living space that has twice the damage deposit than you want to afford. Compromise means ranking the things you value and giving in on the lower valued items.
   
• As mentioned earlier, seeking input from others is an important action plan and don’t forget to continue to gain the benefits of this activity by talking to the neighbors that surround the place you are strongly considering living in. They are a wonderful source of information and if you choose the place, you have already made some friends.
   
• Well, are you going to move back home or live in your “dream” spot? Be sure to remember that few choices are forever. Continue to evaluate you living space choice and modify when the expected benefits of moving again exceed the expected costs.