TODAY

TODAY   |  August 28, 2013

Rent it or buy it? Find out what’s worth the cost

Whether you’re looking to get new clothes, skis or even a vehicle, you are stuck with the option to either rent or buy. TODAY financial editor Jean Chatzky gives advice on whether it’s worth shelling out the money for owning that must-have item.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> the market for a new car or new place to live, you may want to hold off on buying and rent instead.

>> jean is here with what you might want to consider.

>> let's start with a big one, which is homes. buy or rent?

>> huge now because mortgage rates are still low. renting would not make sense but it does make sense if you will be there fewer than 5 years. what we have seen in the past decade or so is real estate prices don't always go straight up and you may need that time to compensate for the closing cost .

>> what about the argument that over the course of the five years you're flushing money down the toilet and not building equity.

>> when you're buying a house you have to not only look at the mortgage payment which may look small compared to the rent but you have to look to maintenance. you have to look at insurance and taxes and the overall cost to live there as well as to move there and funnish the place. it adds up quickly and under that 5 year time horizon renting is a better financial decision.

>> 5 years on --

>> 5 years on you want to buy and look at your local market area and make sure that you're not in a place where rents are extremely cheap or expensive.

>> another big one i ask myself every time a sign a lease is a car. rent or buy?

>> the guidelines are simple. if you like to have a new car every three years, if you don't put more than 10 to 12,000 miles on your car each year, and if you're meticulous about taking care of it, lease. everybody else should buy.

>> don't have children.

>> exactly. if you want to save money buy used. buy a lightly used car . one coming off lease is how you save the most money.

>> because driving a car off the lot you lose so much value the minute you do that.

>> yeah.

>> depreciation.

>> let's look at stuff we have over here. this is sports equipment . not talking about baseball but golf clubs , skis.

>> big purchases, $1,000 or more, typically, a lot of people make the mistake. they go out and think i'm going to ski 12 times this winter. they buy the skis and they ski twice. make sure that if you're looking at a big purchase like this you rent for at least a month to see if you a like it and b will actually use it.

>> also know the kind you want. experiment with different -- i just learn houd to surf or i'm learning how to surf -- i wanted to run and buy everything. but you try different models.

>> yeah.

>> and if you're going to stick with it.

>> and think about where you use it. if you're traveling to use it, it costs $150 just to put this stuff on a plane. you're better going and renting while you're there.

>> you could probably rent with better clubs than the one you might buy.

>> furniture, any kind of furniture.

>> furniture does not make sense to rent unless you're only going to be there for 12 months or less.

>> you're not going to sit on the couch.

>> yeah. again, those kids can be a problem. and renting to buy furniture rarely makes sense at all. the interest rates can be exorbitant but what does sometimes make sense is renting clothes. i'm wearing a dress from rent the run way.

>> really?

>> $65 to rent, $350 to buy and in this day of instagram if you don't want to be seen in the things more than once.

>> with guys, they should buy and women should rent when they can.

>> oh, he owns that.

>> he owns it.

>> that's a nice tux.

>> because if you're going --

>> i thought it was for me.

>> if you're going in your tux more than three times over a two to three year period, buying it makes sense.

>> too many weddings.

>> they told you what?

>> they said if i rented -- if i rented the three times it would cost more than just buying the tuxedo.

>> and now i want him to wear that every day.

>> yeah.

>> for the next two days.

>> this is one of brooke's shield's demands. all the staff be black tie .

>> everybody is in black tie .

>> in her presence.

>> that's important. everything is great.