I know that the First Time Home Buyers tax credit is a big incentive to buy a house now. Many people are taking advantage of that. For me, its like buying something only because you have a coupon. Does it save you money? No, because you weren't going to buy the item before you had the coupon.
Around the time I got married, someone gave me some advice. He said: "I would recommend buying a house as soon as you can. You'll never be able to have a lot of money at once, so you might as well get into a house so you can at least start putting your money into something." Basically: 'No one can ever beat the rat race, so don't even try.' Really? Really?! I thought it was dumb advice when I first heard it, and now I think that is possibly the worst financial advice I've heard.
I have also learned something about myself recently. I just read "Rich Dad, Poor Dad." In it, Robert Kiyosaki says that people emotionally relate to money in two different ways. Either they look at money as a means to get what they desire; fancy car, big house, nice clothes. Or they look at money as a way to protect themselves from emergencies; job lay-off, major medical emergency. I definitely fall into the later category. Just as an example; if someone were to hand me $10,000 I would much rather put it in they bank for just in case, than spend $10,000 on a new car, clothes, or furniture.
With that being said, I will share with you our goals to reach before we get under a mortgage, because I believe that goals should be shared.
*Please Note: I understand that these are lofty goals and I have no illusions that we will reach them any time soon. If Rory and I are good about our budget, I think we should be able to do this in a reasonable amount of time.
1- Have a fully funded Emergency Fund.
Defined as six months expenses in a savings account.
2- Have a downpayment of 40-50%
3- Have $10,000 cash.
This is for replacing heater, water heater, A/C, and other appliances IF needed. Rory said the rest is mine to furnish and decorate.
4- The maximum mortgage length we will take out will be 15 years.
*Another Note: I really want to hear other people's opinions on this, so comment away.
And because I firmly believe that a post is always better with a photo:
13 comments:
Awesome goals! You're very ambitious (spelling? Hmmmm, too lazy to check.). Here's my two cents:
My husband and I bought our house 7 months after we got married. We got some very good advice from our parents and decided together we'd rather be spending money (if we had to at all, you'll see what I mean in a minute) on somethig we could eventually make our own then something that could, or would, never be ours. What we did a little differently then what most are doing right now though is we bought a duplex. Top and bottom. With almost an acre of land that is zoned multi-family. Now we pay hardly any of our mortgage (our renters do), we save money that would have been going to that or rent for emergencies or paying extra to the mortgage to pay it off quicker, and we hope to someday put another unit or two on the land. We kind of looked at it as our own little retirement plan. I absolutely LOVE havin my own house too.... On the other side though we have numerous friends that have tried to buy and gotten themselves in trouble. I think it comes down to know you and your family and what is going to work for you, not whether my way or your way or any body's way is the right or wrong choice. Anway. Glad you posted your blog link!! Good luck with your goals!
I've also thought about buying something where we could rent out the basement or something like that, we may do that one day, but I'd still want to have some more savings and a big downpayment before we do that just so that we pay less interest, you know.
Thanks for your input!
I've heard it's a great idea to buy something that you can share with renters! We didn't do that however, and are now trying to sell our house. We'll see how that goes.
Great goals!
When Gabe and I bought our house, we had actually been looking to just rent a bigger apartment. Our first one was a 1 bedroom, and since Jordan was on the way we needed more space. While looking around for an appartment, this house we are in came up for sale and it was such a good price that we realized we could be spending the same amount to rent a place as to buy this house. We just decided we were done throwing money into a place that wasn't ours. It was money down the drain.
I should add that Gabe and I felt like we were being guided by the spirit when we bought this house, other wise we would never have been able to make the decision to buy so fast. We just felt like it was right, and we still do. We have never regretted buying this house.
But that is us, and you and Rory are the best at deciding what is best for you and where you are being guided to. I think those are very good and responsible goals to have!
That is true. But I really don't see renting as throwing money down the drain because if something were to happen (i.e. job loss or other incident) we are not on the hook for the entire mortgage.
Best advice I am going to give you about getting your financial goals is to pay your tithing. That's all I am going to say.
What great goals (somebody has definitely been reading Dave Ramsey ;)! We're currently attempting to look for our first house and I can tell you'll definitely have more flexibility in what you can afford if you've reached your goals. Good luck!
Reading this made me think about my own finances and how Ryan and I prepared for our first home. It's different now, even just 6 years later. We both worked two jobs when we first got married and decided to put our money into something as soon as we could. Looking back, we definitely could have waited and saved more money. BUT, we got into a house a year or so before the huge housing boom, so we actually REALLY came out [and are still, even after the crash] ahead.
I think the more money you can save and put into a downpayment, the better. FOR SURE. But, also keep in mind how much you are paying in rent. My brother and sister inlaw bought a house after they had been married and renting for about 5 years. Their rent had always been between 550 and 625 a month and they did the math.... they had paid over 33,000 dollars in rent in just a few years... ouch.
No matter what our circumstances have been since we got married, we live by two things.
paying a full tithe.
and, living within our means.
@Zach -I plan on it.
@Whitney -Why yes, I have been reading Dave Ramsey stuff. With our tax return, we will be finishing off baby step no. 3. I'm pretty excited!
Good luck with house hunting!
@Morgan -I guess it is different for everyone. It does stink thinking about how much rent we've paid in nearly three years of marriage, but something has to be said for being prepared. Rory was laid off from his job about a year ago, and if we had a house payment at the time, we would have been in a world of hurt. Things worked out really well, luckily. I'm just glad we didn't take the mortgage route when we first got married. We had a lot of growing up to do.
Umm...I think that crappy advice came from Joe. And me. Sorry about that. Since then, we've become Dave Ramsey converts and wish we could get out of our house. Sorry about that.
No, that crappy advice definitely didn't come from you or Joe. Don't worry about it.
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