Just wanted to add a couple of notes and clarifications:

Houses are almost never worth renting - even where rent is low. It costs a lot to rent a house, and you generally have to pay the utilites too.

Obviously it isn't worth renting if your monthly expenses owning would be the same! It only ever pays to rent if it means you can SAVE money towards a purchase. We figure for each year we rent (and save), we cut two years worth of mortgage payments. So in our (very specific) case, we are renting to decrease our mortgage!

"Obviously it isn't worth renting if your monthly expenses owning would be the same!"

Absolutely false.

When one rents, the landlord accumulates the equity. When one owns, the homeowner accumulates the equity.

HUGE difference!

That's assuming the costs for the house eventually purchased remain the same.
They don't. They fluctuate. There are periods of time where it has costed $100,000 to wait for 2 years' delay in purchase- just in the value of the exact same house. It could be double the differential if built from scratch-new. Materials costs change as well. As do base land values. It hasn't been downward over time in the majority of cases.

You're right, that is totally true, you have to constantly keep your eye on the market. Our plan isn't a long term one, but short term, and we are always watching housing prices. As soon as we had enough for a down payement, we started watching. Right now, it looks like prices are actually starting to go down, so we may take the plunge shortly!

Robespierre, I don't think you are disagreeing with me! Aren't we saying the same thing? That if it costs the same to rent as to buy, you should buy. . .

If you own, you also get stuck with the reverse equity, if you will, if the value of the housing market plummets. Now it doesn't matter if you don't intend to move, but if you do, you can lose a lot of money.

There are also closing costs which run into the thousands. If you move within a few years, you basically lose that value, which you would have had if you had kept that in the bank.

It isn't true that owning a home always means you come out ahead financially. It can take years to recover the value of your closing costs and the interest you would have earned on your down payment if the housing market drops. This isn't that incredible, I'll give you my example -- I bought a house for $190K in 1989 and paid about $4K in closing costs, I imagine, as well as the 20 pct down payment (I guess $38K). Then came that recession of the 1990s and the value of my house dropped to where you could barely sell in my neighborhood, but similar houses were selling for around $150K up until around 1994-95 or so, and then maybe $175-180 for another few years. They didn't even recover to the price I paid for at least eight years from when I bought -- and thought was just the same price, not higher.

So, if I had wanted to move anytime within 1990-1998, I would have basically lost the value of my closing costs, taken about a $35K loss in the value of the home, and I had lost the value of the interest on that $40K during that entire time period, which might have been around 8 pct a year. I was paying more in mortgage than when renting, also, although that wasn't the big issue, it was the value of the home.

Unless you are convinced housing values are only going up -- a lot -- it doesn't pay to buy if you may likely move within quite a few years. Even know where I live the market has dropped probably at least 10 pct if not more from just a year ago.

You can do it all as long as, unlike many young people, it doesn't all have to be first class.

My home, which I purchased at 26, is a condo. My trips are budget-conscious, I carry no balance on my credit card, and I drive an economy car. I don't think I had a proper stereo system until I was 30, because I understood the importance of prioritizing.

Buying a home is absolutely essential if you ever want to get ahead. Take cheap trips now if you must, but make saving that down-payment goal #1.

Christina--You're giving pretty bad advice, IMO. Of course no one should buy if they're not planning to stay put for a few years. But the recent softening of the market is an anomaly, and smart young people are getting in on real estate sooner rather than later. It's going to keep going up. Rent is thrown out money.

I doubt that there's anyone here who regrets buying their home as early as they did. Many of us, I'm sure, will be able to retire in a decent manner mainly because of our homes.

I don't think Christina is advising people not to buy, she is just sharing an example of how it doesn't always pay off, or can take a long time to pay off. Condo buyers are particularly bad at fast turn arounds on properties and spend a lot of closing costs.

People are so convinced that buying a house asap is always the best. And it isn't always. Just the same as anything, you want to buy low, sell high, and pay the least possible interest.

If you can't save your money, buying a house is a great idea, as it is forced savings. But if you can, it MAY be worth waiting a while and putting down a bigger down payment.

I've raised three children, and gave them all the same advice, which is not to say that they took it. Part of that advice is to set aside a substantial chunk of your income to take care of yourself as you age, as the demographics are pretty clear that the government will not treat them as well as it currently treats the aged.

My feeling is that for most Americans, a home is their best investment. That is not to say that it is best for everyone. People who frequently move are probably better off renting, as are people who live in an area where few homes are for sale, and the economic realities are skewed by things like rent control. But for most of us, renting means you are paying all the costs of owning (the mortgage, taxes, repairs, etc.) unless your landlord is a fool, while not reaping any of the benefits of ownership.

However, you have posted this in a predominantly American forum, and I'm not sure I would trust the advice you will get here. Relatively speaking, Americans overspend and undersave, and are merrily on the road to bankruptcy. You want advice from them? Further, in this forum, you will find a lot of people who, in my opinion, overvalue travel. Most Americans don't do that much traveling, and few of us are so out of touch with reality that we will describe travel as a necessity (a commonly expressed opinion here), when it is more accurately described as a luxury; no one will die if they cannot travel.

But realistically, it is your own decision to make. Unfortunately, what you do now cannot be undone, so I would urge you to give some thought to your future, as you apparently plan to raise a family, which can be very very costly.

Let me preface the following comments by saying I believe buying a home is one of the most sensible decisions that one can make.

Over long periods the appreciation of houses has been inflation plus 2%. That incidently is the return on TIPS. We have gone through, and maybe are still in, a period where that has been significantly exceeded in many areas. Most economists would expect a return to the norm which means a sustained period of slower growth or decline to compensate.

A number of individuals have mentioned the tax savings for mortgage interest and real estate taxes. True there is some but if your adjusted gross income is $60,000, you are paying 85% out of pocket. That drops to 75% up to $120,000.

The argument that houses don't depreciate is simply not true. Anyone who lived in Pittsfield, Mass when GE was downsizing knows that prices do go down. I'm sure the same was true in Gary, Indiana and in Rochester, NY with the downsizing of Kodak and Xerox.

This article from the WSJ by Jonathan Clements makes for good reading of the economics:

http://tinyurl.com/f64we

You have asked for a way to find balance, by which I assume you're looking for perspective.

"Live for today" sounds great, except you are going to have a lot of todays, and you are going to want to maximize your choices on each and every one of them. Choices about what you (and your kids) get to do, eat, live.

You also talk of goals, but it can be useful to compare what you see as a goal, and what the world sees as a goal. Yes, you can go your own way, but Fleetwood Mac and Frank Sinatra notwithstanding, we're social animals, we don't exist in a vacuum.

How do you foresee an employer rating your travel goal? Will he or she give you a salary bonus in consequence for non-business travel? Will your banker give you an interest rate deduction on your mortgage?

Okay, so maybe that's too prosaic an approach for you. Are you religious? Does your religion smile more on those who travel as opposed to those who don't?

After you've thought for a while, it's time to file travel under a category. How did you see your wedding reception, as a life-altering event or an entertainment expense?

Travel, wonderful though it is, we see as we did our reception - as entertainment.

You've asked for a way to measure things, to look at things quantitatively. So, were I you, I'd figure what percentage of my income is alloted as entertainment expenses, and then I'd save yearly until I had the amount required - including with kids, if it comes to that.

You CAN have it all...

Got married in 1997. Also baby in 1997. Two income houseld. Saved $$ like fiends for one year. Put 20% down on $150,000 house in 1998 and took a vacation. Saved like fiends again. Bought a new truck (without financing it) and took a vacation. Saved like fiends again. Remodeled the kitchen & added a bathroom (without a home equity loan) and took a vacation. Saved like fiends again. Bought 28 acres & a cabin in the woods (without a mortgage) and took a vacation.

You can see where I'm heading. If you save for the important stuff & give up the little stuff, you can have it all...

Our house is now worth $450,000 only eight years later. When the mortgage is paid off in 16 years, imagine the traveling we can do then!

My husband and I have been married for almost 41 years! We managed to buy a home, but never bought expensive furniture or traded cars every few years. We traveled as much as we possibly could (haven't actually seen THAT much of the USA).
Two and a half years ago, my husband, then aged 60, was diagnosed with early onset Alzheimer's Disease. I would NEVER put off what you love. Be smart, be a little bit practical, but make the most of each and every moment.
Love each other and have fun.
Mench