How do you afford what you have?

"BaconSandwich is tasty." (baconsandwich)
09/09/2015 at 09:38 • Filed to: None

A recent situation has me thinking more and more about buying a house. But I’ve also been thinking about getting Mrs. BaconSandwich a used Volt so that all her driving around town will be on electricity only. (Both of our current vehicles are 13+ years old and have > 230,000 km on them). But I’m not seeing how we can comfortably have both, at least not without having a mortgage. This got me thinking - how do you Oppos afford what you have?

I like to think I’ve been pretty good with my finances - I’ve always avoided debt, didn’t have school loans, and save pretty much everything I can. After four or so after I finished my Bachelors, I decided to go back for a Masters, met my wife, and we got married. We now have an adorable little nearly-nine month old girl, and eventually plan on having at least one more child. Since we got married, I finished my masters and landed a job locally. It doesn’t pay tons, but it’s comfortable. We’re also currently house-sitting for a relative for a year and a half, so we’re be able to save a bit more. But after that year and a half, we’ll have to find a different place to live. This is what has got me thinking about buying a place. The trouble is, almost everything here is really quite expensive. I suspect the average house price is > $275,000. There’s no way we could do that without a mortgage, but that’s something I’m not terribly comfortable with. I’m also not totally comfortable spending all of my retirement savings to have a house.

The way I see it, financially, a person can do a few things:

Make more money

Spend less money

Borrow money

We’re already doing quite well for #2 - I’m not sure there’s much more that we can do there to live more frugally. Option #1 would require me finding a different job - likely in a different city which would have higher living expenses, so I’m not totally convinced that we’d save that much more unless I found a really high paying job. I’m not terribly keen on option #3. Up until this point in my life I’ve always been earning interest, not paying it. And the prospects of job loss are always somewhat worrisome. There’s also a number of predictions of a housing bubble burst up here in Canada, which would be a pretty bad thing if we bought a house before it does burst (if it does. If we were able to buy after a burst, it would certainly work to our advantage).

So how about it, fellow Oppo members? How do you manage to have nice places to live and drive nice vehicles? High paying jobs? Mortgage on the house? Or do you manage to get by with what you have?

DISCUSSION (60)

Eberle-Hills-Cop > BaconSandwich is tasty.
09/09/2015 at 09:44

For clarity, are you assuming people here buy their houses 100% cash?

GTI Sprinks > BaconSandwich is tasty.
09/09/2015 at 09:45

I’d suspect alot of that answer is credit and knowing how to use the market to their advantage. You can’t buy a house in cash and if you can, you wouldn’t be asking this question. A mortgage isn’t a terrible thing. If you have a decent line of credit, you may be in a good situation where mortgage payments would likely be in line with what you’d be paying for rent or in the better scenario less than what it costs to rent.

E92M3 > BaconSandwich is tasty.
09/09/2015 at 09:47

What’s wrong with having a mortgage? It’s better than paying rent, and making someone else rich. Usually the mortgage payment for a $250k house is cheaper than renting a house of the same value. In the states we also get a tax break on mortgage interest. So a loan at 4% is really like 2.75% after the tax savings are factored in. But to answer your question yes we have a mortgage. It helps that my soon to be ex wife and I were together for 14 years, and we both have worked the entire time. That makes a huge difference compared to my friends that have stay at home wives/moms.

G_Body_Man: Sponsored by the number 3 > BaconSandwich is tasty.
09/09/2015 at 09:47

I don’t have a high paying job, a place of my own, or a nice vehicle. Heck, I’m in the middle of moving from Ontario to BC, I don’t even have a car right now!

CalzoneGolem > BaconSandwich is tasty.
09/09/2015 at 09:48

I don’t drive nice vehicles. I drive cheap and comfy vehicles.

EL_ULY > BaconSandwich is tasty.
09/09/2015 at 09:48

good credit :]

On the real though, it’s just a lot of hard work and being responsible. It was a good 8 months of ham/cheese sandwiches and Ramen before I could get my house, pay for immigration process, and pay for a wedding this year. Busting ass from 7-7.

Things are not 100% easy currently, but working hard and working as a team helps even if one person is the bread winner. Also, getting help isn’t dishonorable.

ly2v8-Brian > BaconSandwich is tasty.
09/09/2015 at 09:50

I wasn't making enough to move out and live comfortably (as in plenty of room in the budget so that I'm not cutting it close every check). So I just got a nice truck.

Short-throw Granny Shifter is 2 #blessed 2b stressed > BaconSandwich is tasty.
09/09/2015 at 09:51

Loans. Credit is the engine of economic growth. I try to borrow intelligently and use savings in order to maintain liquidity of about 6 mo. worth of expenses. Whatever isn’t spent on loans or stuff goes into retirement savings where it earns far in excess of bank or loan interest.

Sir_Stig: and toxic masculinity ruins the party again. > BaconSandwich is tasty.
09/09/2015 at 09:53

A mortgage is pretty much inevitable unless you buy a house in Detroit. We have a mortgage on our house (it was 349k and while it’s nice, it’s also nearly 20 years old and needed stuff like a new fence) and also have car payments, but we put 50% down on the car and only took a 36 month financing term so we only have 2 more years of that. My wife and I both have good jobs and that leaves us fairly comfortable.

Hiroku > BaconSandwich is tasty.
09/09/2015 at 09:55

Well, I can afford my 17-, 19- and 21- year-old cars by buying them for pennies, deferring maintenance as much as possible and buying parts off junkyards and patching them up with duct tape. My minimum-wage-paying job is enough for me to comfortably afford living in my mom’s basement and even treat myself to a night out with friends at McDonald’s once a month!

Wait, this wasn’t the kind of advice you were looking for, was it?

Tom McParland > BaconSandwich is tasty.
09/09/2015 at 09:57

A mortgage isn’t the end of the world, most people have them. Just be smart about it and make sure you are not over-buying on your house. Run some home loan calculators and see what a 275k mortgage would cost you per month at various interest rates and various loan lengths. However, be aware that your base mortgage payment does not include your taxes and insurance escrow. So when you are shopping for a house on Zillow or whatever sometimes the taxes are estimated, divide that number by 12 and add to your monthly loan estimate, then add another 100-200/mo as a conservative estimate for insurance. Another thing you need to think about is closing costs, on a 275k loan depending on location this could be anywhere from 8-15k, that is cash you need to have with you when you sign the papers. Of course you can ask for a seller concession in which the closing costs are covered by the seller and rolled into the loan, but it will make your total loan higher. So let’s say you negotiate that 275k house down to 265 and request a 10k concession to cover closing, your loan would then be 275.

What it call comes down to is understanding your budget. Some rhetorical questions for discussion among you and the wife. How much (after taxes) do you and Mrs. BaconSandwhich have coming in every month? What are your current bills? What are your estimated food cost? How much do you need for savings, rainy day fund etc..? How much do you pay for rent? This one is important because you are essentially increasing or decreasing this amount. If your rent is a burden, most likely a house is going to be more expensive, but if you find yourself with a surplus every month, a home payment might not be too bad.

Before you jump into any major purchase whether it be a car or a home, make a budget. It’s not fun, but it will keep you out of financial trouble.

themanwithsauce - has as many vehicles as job titles > BaconSandwich is tasty.
09/09/2015 at 09:57

If you have good enough credit (which might be difficult sine you’ve avoided debt, ironically enough....) you can get a good mortgage on a simpler or older house. Then bust your butt doing updates and repairs and make your house worth more than you owe on the mortgage. That way you can sell once enough of the loan is paid off and have cash to buy a house and avoid a mortgage if you choose that route. Or do it again and bank the money. My parents did/do that. My mom said something like 75k in equity from our old house went to their retirement funds a few years ago to start making more interest.

FazeRacer > BaconSandwich is tasty.
09/09/2015 at 10:01

There’s nothing wrong with a mortgage. And as for the house bubble, it depends where you live. Chances are the housing market isn’t going to burst like it did in the US, at worst it will cool down a bit. Just make sure if you buy a house that you will live there a minimum of 5-10 years, any less and you will lose money.

Supreme Chancellor and Glorious Leader SaveTheIntegras > BaconSandwich is tasty.
09/09/2015 at 10:02

I manage to have a nice home because my parents haven’t kicked me out, yet. I do have a nice job though which pays more than it should

mazda616 > BaconSandwich is tasty.
09/09/2015 at 10:05

Living in an area with a low cost of living. My house was in the mid-$140s. 3 bedroom, 2 bath, built in 2001. Many other areas would have this house at $200k or more.

Kinja'd!!!

I also paid cash for my car six years ago, so no payment there. And we paid off my wife’s car with my share of my late grandfather’s estate. So, no payment there, either. I don’t make much money ($25k a year), but I make average money for the area I’m in.

For me, it’s all location. If we lived somewhere with a higher cost of living, it’d be damn near impossible to afford a decent house. That’s why we stayed in our hometown while all our friends moved away to big cities.

If you can find a trustworthy realtor, they can find you something you can afford. There’s nothing wrong with having a mortgage. I view it as smarter financially than paying rent. At least with a mortgage, you’ll own the place someday. You can pay rent until you die and you’ll still be living in someone else’s property.

Sn210 > BaconSandwich is tasty.
09/09/2015 at 10:11

Look in to getting a mortgage for sure. There’s no shame in it and if you can save up enough of a down payment, your monthly bill won’t be so high (obviously). Of course there are a million different types of mortgages so do your research and choose the one best for you. My advice is to get enough of a down payment to avoid paying PMI, but also base your budget on only one of your incomes.

Funktheduck > BaconSandwich is tasty.
09/09/2015 at 10:22

Lines of credit is how most people, even those with cash, get things.

Some people break down all financial decisions between credit or cash by comparing rate of inflation, interest rates, and what that same amount of money can make by investing.

Say you’re buying a new car:

You have the cash to pay in full but you qualify for a 0% interest loan. You should take the loan in this case. Even if you took the full amount and put it in a low interest savings/checking account you’d still come out with more money than paying in full because you’re earning interest and that money is worth less over time on a loan because of inflation. That’s before addressing depreciation of the vehicle.

When it comes to homes most people will never have the cash to buy a home outright. I’m about to begin the home buying search as well. If I were to buy one of the homes in my neighborhood that are for sale I’d pay less monthly than what I pay now in rent. Sticking with that example I would have more money monthly to save or invest or whatever. The money put in also builds equity that can be borrowed against in case of an emergency or returned (hopefully at a profit) if and when you choose to sell

I'm a very debt averse person but taking out credit can be a good thing that puts money back in your pocket.

Party-vi > BaconSandwich is tasty.
09/09/2015 at 10:24

It is unrealistic to not get a mortgage on a house. All those people that wax philosophical about not being tied up in a mortgage and how “the bank owns the house not you” can go bugger off. You want a house. Houses are expensive, therefore you take out a loan. That’s how it works when you want something you cannot afford. I’m not sure what your credit situation looks like but I will tell you as first-time home buyers we only had to put down 6% of our purchase price, and I think we split closing costs and I bought out the PMI. We pay $1,300 a month on a 30 year $192,000 loan (4.75%), which includes about $300 a month in home insurance and property taxes. In my area a one bedroom apartment could cost the same, and renting out a basement room in a suburb would be around $900 a month, so it made sense for use to make the investment and build equity.

I would hazard a guess that a $275,000 loan would set you back around $1,400 a month, not including mortgage insurance or property taxes and home owners insurance.

petebmwm > BaconSandwich is tasty.
09/09/2015 at 10:28

The secret to me affording what I have is simple. Work ass off.

TheNeonDriver - Now with More BMW! > BaconSandwich is tasty.
09/09/2015 at 10:30

Don’t be afraid of a mortgage. Instead of putting money into someone else’s pocket, your putting (some) of your payment back into yours. If you have a good down-payment (in Canada anyway, with good credit), say 25-30% you can also use that as a line of credit at the same rate as your mortgage.

Where else can you get a 2.1% line of credit?
As others have mentioned, just keep in mind what you can actually afford, and don’t buy too much house for you to use.

misfitmascots > BaconSandwich is tasty.
09/09/2015 at 10:36

A combination of things. 2 above average incomes, excellent credit ratings, and saving. Having a mortgage is better than renting. You just have to be smart about it. Don’t buy a 6 bed 4 bath house when it’s only 3 people.

ranwhenparked > BaconSandwich is tasty.
09/09/2015 at 10:41

I don’t think there’s anything wrong with a mortgage, especially a nice, traditional fixed rate one at good interest. If you can save up enough for a decent down payment, you’ll already be starting off with some equity in it.

Unless you’re looking at a unique fixer upper opportunity in a “transitional” neighborhood or a mobile on a rented lot, I don’t think its realistic to expect to pay cash on a home in most parts of the country.

Even if you had the $275k on hand, with mortgage rates as decent as they are, you’d probably still be better off doing 20% down on a 30 year fixed and investing the rest.

itschrome > BaconSandwich is tasty.
09/09/2015 at 10:46

Man.. I dunno but yesterday sucked for me. I have been fighting for two years with a company that my state sold my student loans too. they are unreasonable! they want too much money, and when ever I ask how much I owe they give me wide ranges of different answers so I refuse to pay them. I either owe them 4150 (as I was told at noon yester day) or 1800 which they told me at 6pm. they are threatening to garnish wages but I’m like I’ll pay you if you tell me how much I actually owe and will take less than $200 a month of which I can only figure $150 is service charges! then my state sent me a letter saying I owe them $850 for taxes I paid 6 years ago. Plus I have debts no government related, mostly health care, that they refuse to work payments on, they only will take the whole balance. Which I can never save enough up for because I barely keep above water. I need breaks, power steering repair. I was denied a raise this year because of a jackass who spread lies and bullshit about me at work, I’m underpaid to start. they even just instituted a no lateral movement policy in my department. If they find out I try for a job in an other department they will fire me. there is no vertical movement opportunities either. If i don’t work at least 60 hours a week I wont make ends meet. and I’m not even living high. my rent is only 950, electric is about 130, internet is 61, car insurance is 161 and phone is $80. Then I have student loans I do pay, $75. an old business debt for a failed venture I pay on $100. then I need $50 for gas a week and $100 for food. My monthly bills come to about $2100. I bring home about 2500 a month. but something always seems to come up so I can never build a savings account. and even then that extra few hundred could easy be eaten up by back debts for shit they refuse to work on payment. No I’m sorry I don’t have $879 to pay you right now, can I send you $50 a month? no ok great send it to collections and keep ruining my life with bad credit... assholes...

wait what was the question.... sorry about the rant.. I’m just feeling stuck and frustrated right now.. Oh also for fun, while I make 40k a year my manager, who only supervises 10 people makes over 100k and just spend 20k modding his camaro and made sure we all knew it.. dick...

BaconSandwich is tasty. > Eberle-Hills-Cop
09/09/2015 at 10:55

No. But I bet there are a number of Oppo members who do own (no mortgage).

BaconSandwich is tasty. > GTI Sprinks
09/09/2015 at 10:56

From some rough numbers I’ve seen, it looks like a mortgage would be about $500 more per month than rent. I should try breaking that down to see how much of that is interest payments.

someassemblyrequired > BaconSandwich is tasty.
09/09/2015 at 11:01

Credit isn’t necessarily a bad thing, but there are special considerations in Canada. Most loans are amortized over 25 or 30 years, but most refinance in 5 year intervals (a long fixed rate mortgage will carry a much higher rate). So a jump in rates could easily pop the bubble, especially if people are stretching to make payments. Also mortgage loans are recourse in Canada, which means that if you default, they can come after your other assets if the security (house) sells for less than you owe. Unlike the U.S., mortgage interest isn’t deductible, and in some jurisdictions you also give up the property tax deduction for renting.

That being said, if you can purchase for a monthly outlay (payment, house insurance, property tax, maintenance) than renting it can be a really good idea. That way your costs are pretty much fixed for a few years, where renting you’ll likely get increases. However if rents are lower, rent until the bubble pops. Rents will spike when the bubble bursts, but it will take time for rents to move, especially if you’re renting from a private landlord.

BaconSandwich is tasty. > Tom McParland
09/09/2015 at 11:01

I think that’s some pretty solid advice - I really do need to sit down and crunch some numbers. Generally, I don’t look at things too closely, but I do know that I’m always pulling in a positive number and savings have slowly been going up.

BaconSandwich is tasty. > themanwithsauce - has as many vehicles as job titles
09/09/2015 at 11:03

I do like that idea. I’m no stranger to doing stuff - I’ve done a little electrical, drywall, and shingling. Things like that don’t necessarily scare me, and I do like the idea of having an older house that we can then modify to our liking. For example, a lot of older homes only have a single electrical plug per room - something that’s pretty easy to change when you’ve got a room stripped down to the studs.

BaconSandwich is tasty. > FazeRacer
09/09/2015 at 11:04

I suspect you could be right. I’m not in Vancouver, and the economy of the small city I’m in is fairly stable, so I’m not sure housing prices will really go down all that much.

BaconSandwich is tasty. > Supreme Chancellor and Glorious Leader SaveTheIntegras
09/09/2015 at 11:05

I’d recommend saving all that you can while you can!

BaconSandwich is tasty. > mazda616
09/09/2015 at 11:07

That’s a pretty nice looking place, especially for the money! Something like that here would easily be $100k higher, if not more.

I certainly wouldn’t be against living in a smaller town, but finding my kind of work (software development) in a small place can be a bit tricky.

BaconSandwich is tasty. > Party-vi
09/09/2015 at 11:09

I think your estimate seems pretty accurate. I was talking with a co-worker about it, and I suspect he’s paying around $1,500 a month (albeit, including property tax).

Does it make more sense to put more down at the beginning, or do they generally charge higher interest rates if you do?

BaconSandwich is tasty. > petebmwm
09/09/2015 at 11:10

I hear you. At one point I was working 40+ hours a week, plus teaching a class at the university, and we had a brand new baby. You definitely learn to be more efficient with your time!

Sir_Stig: and toxic masculinity ruins the party again. > BaconSandwich is tasty.
09/09/2015 at 11:12

Really? several software developers at my wife’s work do all their work remotely and only come to the office a few times a year.

BaconSandwich is tasty. > TheNeonDriver - Now with More BMW!
09/09/2015 at 11:12

I definitely don’t plan on getting something big/fancy. I see way too many people that do that, and they just end up spending even more money to fill it with even more stuff that they don’t need and can’t afford. From what I’ve heard, the average Canadian is something like $27k in debt, not including a mortgage. That’s a situation I would never want to be in.

FazeRacer > BaconSandwich is tasty.
09/09/2015 at 11:15

I doubt housing prices will drop by much in most of Canada. Sure there are some markets that are overvalued (*cough* Toronto condo market *cough*) and those will see a correction, but overall I wouldn’t worry too much about that. If you stay in the house long enough a small drop in housing value will mean little. And think of it this way, rent won’t ever go down, it’ll only go up.

BaconSandwich is tasty. > Sir_Stig: and toxic masculinity ruins the party again.
09/09/2015 at 11:15

Yeah. It’s becoming more common, but in order to really get into the working remotely scene, you almost need to start off in a larger center, make connections, then go remote.

Party-vi > BaconSandwich is tasty.
09/09/2015 at 11:16

I do not know how mortgages work in Canada, but in the US most banks require 20% of the loan amount be paid up front, otherwise you will be forced to pay mortgage insurance until you have 20% equity in the house, which is pricey (I think we would have been paying $100/month for each $100,000 financed). The market should determine the interest rate you get, as well as your credit score. It should not depend on how much money you put down on the house. I would think if anything putting down more money would result in a smaller loan and they would want you to get a higher interest rate.

Because we are young, we wanted to get into the house for as little money down as possible, as we don’t expect to live here indefinitely (probably for kid #1 or 5 more years, depending what house values look like). I would go the same route and put down as little as possible while keeping in mind that a larger loan is going to cost more per month in payments.

FazeRacer > BaconSandwich is tasty.
09/09/2015 at 11:18

The interest won’t change, but if you put less than 20% you need to pay money to CMHC. The more you put down the less you have to pay.

petebmwm > BaconSandwich is tasty.
09/09/2015 at 11:18

it’s all about living below your means, I CAN afford a larger house, I just don’t need it, I CAN afford a new m3, I just don’t want it. I feel zero pressure to keep up with joneses, I just don’t care. When I do buy something, I buy something that will last, even if I spend a little more, i’m only spending it once.

Sir_Stig: and toxic masculinity ruins the party again. > BaconSandwich is tasty.
09/09/2015 at 11:22

True, just be the best programmer in your company and then casually mention you have to move, they will want you to keep working if you are good enough/know the software enough.

WesBarton89 - The Way to Santa Fe > BaconSandwich is tasty.
09/09/2015 at 11:34

My situation is a bit unique, so I don’t know if it’ll help, but hey, I’ll try.

I have a home, but I do have a mortgage payment. It’s not through a bank or anything. My uncle originally bought the house straight out for my family, with the agreement that they pay him back, and not risk foreclosure, and then they moved. It really wasn’t a good environment. So last year I agreed to pay off the house for them. It’s only $35,000 or so, and should be paid off in another 4-5 years. But since I’m paying my uncle directly, it’s not through a bank, no risk of foreclosure, anything like that. I still have to pay $600 a month though, plus utilities. $400 of that $600 is mortgage, the other $200 is for property tax and insurance. I just got lucky with that one.

I can afford that, along with my vehicles, because I find good deals on cars, get them cheap, order parts from RockAuto or wherever, and my stepdad has a garage at his work, at his disposal, that he can use for pretty much anything, and I mean full garage, including paint booth, rotisserie, lifts, the works. So I don’t need to pay for labor. I wouldn’t be able to swing it. My fiancee and I only make a combined $37k per year, and with all of our expenses, we wouldn’t be able to manage.

Hopefully, you can luck into something pretty good. I’m not sure how things are in Canada, but I would suggest a mortgage. Most really aren’t that bad of an idea, as long as you know what you’re getting into. Do some research, look into interest rates, terms, etc. Don’t overpay. Start your budget low.

I don’t know what $100,000 CAD would buy you, but maybe start there, and work your way up. That $275k CAD is about $208k USD. So, $100k CAD, that’s about $76k USD.

Around here, that $275k CAD would buy you this, and this is probably $75k USD overpriced.

http://westmd.craigslist.org/reb/5205669407… My house, while it doesn’t have the garage or flat yard, has over double the square footage of this house. You can get some similar things for upwards of $100k less.

For the $100k CAD price range, that gets you this around here.

http://westmd.craigslist.org/reb/5184599416…

It’s not a bad deal. If home values are similar for you oop north, try finding something cheaper to start out. Get a cheaper home with a 10-year mortgage, build your finances up, and then sell when you are able to get what you really want long term.

CaptDale - is secretly British > BaconSandwich is tasty.
09/09/2015 at 11:35

I barely afford what I have... Its bad to be honest.

GTI Sprinks > BaconSandwich is tasty.
09/09/2015 at 11:38

You mentioned you have a year and half before you buy, seems like a reasonable time to try something like mint (or just some good use of spreadsheets) to track your finances.

crowmolly > BaconSandwich is tasty.
09/09/2015 at 11:39

Sam > BaconSandwich is tasty.
09/09/2015 at 11:42

It’s impossible to say this without sounding like a little shit, but having parents who have good educations and very well paying jobs helps a lot. They’re able to provide a good seed to grow your own personal wealth. Unfortunately, parents aren’t something you’re able to go out and get.

Of course, it also only helps for the first 20 or so years of your life. After that, it’s just being overdependent.

MontegoMan562 is a Capri RS Owner > BaconSandwich is tasty.
09/09/2015 at 11:43

Tom nailed it.

Mortgages can be great. First step is guaranteeing it’s a fixed rate mortgage. That variable shit can get out (I swear it should be illegal on anything, credit cards or mortgages). The taxes and insurance are the big one. A lot of times it will match the actual cost of the mortgage in monthly costs. And, be aware they aren’t fixed. If your insurance goes up, your monthly payment goes up. My Taxes just went up because of the purchase price I got the house for last year (this is my second house, yes we financed both of them, I made a profit of 20k+ on a house I paid 72k for in 2010 last year, best profit of anything I’ve ever owned). Why did this happen? The State Equalized Value of the property changed with me new purchase price, and I planned for it accordingly. So my payment just jumped around $60 a month (plus I had to pay the extra owed on the taxes for the past year, about 800 bucks). I knew when I bought the house, they’d probably go up in the next year I owned it. They’ll most likely level out from now on though.

How do I afford it? I try to live cheaply on a lot of stuff, I just ditched cable TV and upped my internet speed, i pay only 20 bucks a month for that now. Saved over 85$ a month so my $60 a month mortgage increase is just fine. Feel free to fire any questions at me you have, I’ve bought and sold a home and it can be stressful and overwhelming.

Snuze: Needs another Swede > BaconSandwich is tasty.
09/09/2015 at 12:33

This is an interesting discussion, thanks for bringing it up. I’m actually in the same boat right now. This has really got me thinking about some things and what our plans are.

We live in northern Virginia, right outside of Washington, DC and its so expensive to live here. Our rent is $1800+utilities a month and that’s actually pretty “cheap” compared to a lot of places. But to buy a house we’d have to move at least 30 minutes further out and our mortgage would be the same as our current rent, possibly more. Its a daunting proposition, in fact kind of scary when you really thinking about it.

RallyWrench > BaconSandwich is tasty.
09/09/2015 at 13:03

As others have said, cheap old cars help, and I do all the work on them myself plus being in the industry helps with parts costs when necessary. I’ve stopped working on my two old (also cheap and long term owned) project cars for the foreseeable future as well. The newest car we own is a 10 year old minivan, and we took a small loan out to make up the difference in cost from selling our old wagon. We also don’t have any really expensive habits, and our only debt is now the house and the small amount we owe on the van. We cut up our credit cards some years back and haven’t had one since. I’ll get one soon as a safety net because I’m a responsible father now, but it’ll only be there in the event of a savings-draining emergency because I otherwise believe that credit cards are parasites.

My wife and I moved into an almost impossibly tiny barn loft for a couple of years, and both worked to save for a down on a house before we had kids. I then sold 3 old cars I’d had since before we were married to contribute to that. We managed to grab a pretty nice (for our area) 1400sq/ft $300,000 house when the market was at bottom, for which the mortgage is now a couple hundred less than it would cost us to rent an equivalent house. For first time buyers there can be mandatory Mortgage Insurance if you don’t have 20% down, which in our case amounted to $260/month. It’s like they want you to fail, but fortunately it goes away once the house either gains value or you pay 20% off and refinance.

After all that, we can get by with my wife staying at home with our kids now, which is a much better option than painfully expensive daycare. I’d happily stay home myself if our wages worked the other way. There’s not much money left at the end of the month, but it’s better than renting, and the house is gaining value so at least we’d be ahead if we had to sell. If you can stretch to it, get into a house. It was uncomfortable, and there’s always the “uhhh, just kidding...” moment when they call to say your offer has been accepted, but it’s worth it long term. You’ll need a place to homestead the old truck project you’ve talked about ;)

BaconSandwich is tasty. > petebmwm
09/09/2015 at 14:38

Oh, I’m totally with you there.

BaconSandwich is tasty. > WesBarton89 - The Way to Santa Fe
09/09/2015 at 14:41

Unfortunately, there’s absolutely nothing here under $100k - at least nothing suitable for human habitation. If anything, even the dumpiest places start at $150k, and even that is really really low.

BaconSandwich is tasty. > GTI Sprinks
09/09/2015 at 14:42

Yeah. I already use Excel, but I actually need to sit down and crunch some numbers. (As well as do a little reconciling).

BaconSandwich is tasty. > Sam
09/09/2015 at 14:43

I hear you. My parents were both teachers, and scrimped and saved all they could to put all us kids through school. That’s something I’d like to be able to do for my children as well.

BaconSandwich is tasty. > Snuze: Needs another Swede
09/09/2015 at 14:46

Yeah. It seems like our generation is going to be squeezed pretty good. I ran across an article the other day that said a lot of people our age are continuing to rent rather than buying for a few reasons. One, is buying a house requires you to stay in one spot for at least a few years, and a lot of people don’t like that.

Snuze: Needs another Swede > BaconSandwich is tasty.
09/09/2015 at 14:57

Interesting, because I was talking to my Aunt on Monday and she was telling me about an article she read that said people in our generation are less inclined to move for work.

Sometimes I think people are just making shit up...

But you’re right. I was talking to my insurance company the other day to update some stuff on my auto policy, and the conversation led to home insurance since we’re looking to buy, and the guy on the phone was telling me he also did some real estate and said a lot of younger people aren’t buying, and that with the bubble bursting, homes aren’t really the investment they used to be, so I should think long and hard about it. But dammit, I want a garage and stuff!

WesBarton89 - The Way to Santa Fe > BaconSandwich is tasty.
09/09/2015 at 15:05

That’s a shame. High cost of living really sucks. Hopefully you figure something out.

BaconSandwich is tasty. > Snuze: Needs another Swede
09/09/2015 at 22:01

I hear you - a garage would be so nice to have. Right now I have access to one, but it’s already half full of stuff - no room for a car. Still a little room for wood working, so I can’t complain.

BaconSandwich is tasty. > WesBarton89 - The Way to Santa Fe
09/09/2015 at 22:02

I’m sure it’ll all work out.

TheNeonDriver - Now with More BMW! > BaconSandwich is tasty.
09/09/2015 at 22:37

We were FAR FAR more in debt. But that’s why we moved from downtown Toronto to Yellowknife for 4 years. We paid back a good chunk of out debt, and bought a house. We are moving back to Toronto, and we will be in the same situation. Only I won’t have that nice garage...
Set a budget, live within it.

BaconSandwich is tasty. > TheNeonDriver - Now with More BMW!
09/09/2015 at 22:52

Another good saying I’ve head: Use it up, wear it out. Make due, or do without.