You have decided it's time to move – for one reason or another, your current housing situation no longer serves your needs. Now you face the big decisions: Do I continue to rent or take the plunge into homeownership? Is it time to give up my private home and return to renting? Which makes the best sense for me financially?

If you have never owned your own home, homeownership should definitely be your goal, either short-term or long-term. The American Dream aside, investment in real estate makes sense for everyone at some point. That involves building and following a financial road map. The question is, where are you right now on your financial road map? To answer that question, you simply must analyze your financial situation. Take stock accurately and objectively - assessing both your monthly income and your monthly expenses. It is a simple three-step process.

Step One: Establish Your Monthy Income After Taxes

Start by listing all of your monthly income. Be sure to list salary or wages/tips, savings and investments, alimony and child support, social security or pensions,and any other source of income.

Next list your estimated taxes broken down into a monthly amount. Don't forget to include federal, state, and local taxes.

Okay. Now subtract your monthly taxes from your monthly income. The result is your net income after taxes.

Step Two: Establish Your Monthly Expenses

This step is a little trickier since you will be entering expenses in three categories:
* Current Expenses
* Expenses if I Rent
* Expenses if I Buy

The easiest way to do this is to create a 4-column table with one column listing the types of expenses and one column for each of the three categories. Create one row for each type of expense. Expenses listed might include Housing, Utilities, Food and Meals, Transportation, Healthcare, Personal Care, Child Care, Pet Care, Debt Payments, Insurance, Education Costs, Recreation, Professional Expenses, Charitable Donations, and any other expenses you might have.

Enter your existing and projected expenses for each of the three categories:

Step Three: Analyze Your Data

This analysis will take time and effort, but it will give you an accurate picture of your monthly expenses in your current housing status, if you choose to rent, and if you choose to buy.

Once you add up the items in each category, it is simple to compare your projected monthly expenses in each scenario with your monthly after-tax income. You will have your answer in black and white.

If you can afford to buy, and owning your own home is the best choice for your current lifestyle, you can comfortably pursue that goal.

If renting is your best or only financial option at this point, return to your financial road map and continue to move toward the goal of homeownership in the future.

There is no reason why the American Dream of home ownership cannot become your reality - if you remember to use housing psychology (and a little basic math) to make smarter decisions about your present status and your future housing goals.

About the Author
Lois A. Vitt is a housing expert and financial sociologist, and is the author of "10 Secrets to Successful Home Buying and Selling: Using Your Housing Psychology to Make Smarter Decisions", the first book in the real estate market to demystify the psychological forces behind our housing decisions. To learn more about Lois and this book, visit www.RealtyStudies.com.