We have fallen for the line that houses are a “great investment” and if you can quality for a loan you should buy one (and the biggest, nicest one you can “afford”) so you don’t keep throwing your money away on rent. And then keep trading up and moving up the property ladder.

Give us a break! That’s a sure way to the poor house. There is no shame in renting and it is not throwing money away. Do you throw your money away when you buy groceries, clothes for your kids, or health insurance? No. You have to pay for things to live, including your shelter one way or another. That’s just the way it is. Your shelter is going to cost, and it’s just a matter of who you are paying – the rental owner or the bank and government. And you’ll probably always pay more to the latter (or the ladder – however you want to look at it).

If you rent you have pretty low risk. If you buy, then you have to pay the property taxes, insurance and maintenance. Plus, if you buy a house with a loan, you’re going to pay the bank loads of interest, and keep paying for decades unless you’re smart about it.

If you do buy a house, here’s how to be smart about it. Put at least a 20% down payment on it (or whatever amount eliminates the need for mortgage insurance, which by the way protects only the bank, not you). The best policy is 100% down payment. But most of us won’t wait until we save the full amount, so just make sure the down payment is sizeable. Then, pay off the loan in ten years or less. Less is better.

If you can’t put at least 20% down and pay the house off in ten years or less, then you are buying too much house and/or paying too much. Shop around. Wait. Downsize it. Resist house fever. Your peace of mind later is worth resisting the impulse to buy that too big/too expensive dream house now.