What the Christmas movie ‘Elf’ can teach us about today’s cost of living
However, the cost of living in New York City is a far cry from the North Pole, where Buddy grew up. According to Cody Garrett, a certified financial planner, a two-bedroom apartment in the Upper West Side, where Buddy’s father lives, would cost around $2 million, with a mortgage payment of $10,000 per month before taxes, insurance, and maintenance.
The ‘Elf’ lesson: Renting is often cheaper than buying
Moreover, renting is cheaper than buying in all 50 of the largest U.S. metropolitan areas, according to an April Bankrate study. Garrett notes that the cost difference has grown in 38 metro areas in the past year, making renting an increasingly attractive option.
The ‘Elf’ lesson: Emotions play a role in buying vs. renting
Consequently, emotions may also factor into the buying vs. renting trade-off. For some, buying can offer a sense of security, while others may prefer the reduced responsibility for upkeep that renting provides. Garrett suggests that a primary residence is often a lifestyle decision, not an investment.
The ‘Elf’ lesson: Affordability is key
In addition, affordability is crucial when considering buying or renting. Garrett recommends the 28/36 rule, where no more than 28% of gross monthly income should go to housing costs, and total debt including housing should be no more than 36% of monthly gross income. For the fictional Hobbs family, this means they would need gross income exceeding $450,000 to justify buying the property.
The ‘Elf’ lesson: Planning for the future is essential
Meanwhile, planning for the future, including saving and retirement, is essential. Garrett warns that high home costs can require sacrifice in other aspects of life, including pushing retirement dates later. The ‘Elf’ movie has other lessons when it comes to cost of living, particularly for the character Jovie, who works at Gimbels department store and lives in Chinatown.
The ‘Elf’ lesson: Making smart financial decisions
Therefore, making smart financial decisions is crucial when navigating the high cost of living in cities like New York. Garrett suggests that individuals can take steps to try to defray the high cost of living, such as finding roommates or additional streams of income.
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