I'm not really sure which forum to post this in, since it really encompasses all, but I am turning 30 in a few months and I am FREAKING OUT!!! Both me and my wife never finished college(hell, she never even finished high school), but we have made the best of things, with a few faceplants along the way, now married 7 years, with two strapping young men aged 4 and 1. Earlier this year, my wife lost her job. She's been on unemployment since. I make decent money working in Information Management for a Plastics Manufacturing shop. Due to her not working, we haven't taken too big of a hit, because the cost we're saving in daycare basically washes out the loss in her pay. But I find myself freaking out. We rent a good sized townhouse, we have never been able to afford a down payment in ridiculously expensive MD. However, in my desire to be completely independent, like anyone else, I find myself really tired of paying to live in someone else's house. I have been busting my butt this last year to start saving up money, and it's been going slowly but surely. When I had the money, I planned on moving somewhere more affordable(North Carolina is target #1). As it turns out, I'm decent at my job, and the 2 owners are looking to retire in a few years, and they might leave it to me. Obviously they won't do that if I'm not around here anymore. So, I'm starting to wonder if I should curb trying to buy a house for now, and just deal with renting, all the while not being sure what MAY happen with my job. And then, I started to realize that at age 30 I have no investments or college savings for my kids, so that adds more freak out material, in that I begin wondering if the money I'm saving should go there instead. Anyone have some advice for me.
The dream of owning a home can be a nightmare if you aren't financially ready. Focus more on your career path for now and don't feel rushed to become enlaved by a mortgage. I too felt I had left some boxes in my goal list unchecked as I crossed the thirty year threshold. The fact that you aren't living in your parents basement puts you ahead of half your peers. Save a twenty percent downpayment to avoid the needless mortgage insurance, clean up your consumer debts (if you have any) and then begin your househunt. Good luck to you and don't get caught up in your age.
Thanks for the encouraging words. Seeing the bright side does tend to make other things sort of fall in line.
Amen to that. Things happen to homes. I've lived in my home (my first and my wife's 3rd) for 9 years. During that time we lived through 3 Hurricanes (Katrina, Rita, and Isaac). Katrina did a number on us and we're still paying the bill for that one. We've had to repair our roof most recently, get a new AC ($18,000), Pool repairs and costs, I'm still fixing the garage due to poor construction, Home repairs, leaky pipes, bug guys, ... Our driveway needs repairs too. Then on top of all that there is the day-to-day stuff like painting, cleaning, and small repairs. Then there's the stuff we want to do such as new kitchen, finishing the garage, landscaping, etc.
Do you have any other investments started? Funds for the kids? Retirement?
That will be more important to get started than a house.
Nothing. That's a big part of my freak out. I am completely willing to sacrifice my comfort to give my sons a head start, but on the other hand, when they're gone, I would like to have something for myself.
I'll probably get beat up for saying this, but don't stress about saving for your kids education either. Ours is the first generation to do it and the media pushes it on us like you're a bad parent if you don't. My parents had nothing to give me for my education and I put myself through college. We need to realize we are also the first generation in many to make less money than the previous generation.
Its great that you want to plan and prepare. Your head is in the right place. But It doesn't sound like you need to freak out yet.
But I find myself freaking out.
Sorry to hear about the pressure you must be feeling. I understand why the situation might be troubling you, but freaking out won't help. Instead of worrying and fretting, do what you can, and accept your limitations. Then stop freaking out.
Your instincts that it is unwise to leave a job in an uncertain economy, and also, unwise to take on debt, ring true to me.
I suggest that instead, you make a heroic effort to save money you would have allocated to the house payment, to a savings program.
Also start cutting out any and all unnecessary expenses. No use having cable television--say--when peace of mind would be more valuable to you. Buy nothing on credit; pay cash up-front, AFTER specifically saving it up. Utilize the 15-second, 15-day rules: wait 15 seconds before making small purchases, considering whether you REALLY need it, and 15 days before making bigger ones, thinking of whether you need it, and whether you could get the same or similar benefit another, cheaper or better way.
Financial planners typically advise having 3-6 months living expenses saved up. Normally I think that would probably be adequate, but in this economy, you might want to pad it some more.
Once you have savings, you might find it easier and easier to save more. It's expensive to be broke. There are opportunity costs, and costs of borrowing.
If and when you have significant savings, come back to talk about investing some of your accumulating savings. Don't invest until you have MORE THAN ENOUGH savings first.
I will probably catch flack for this, but I suggest buying and READING (most people don't read most of the books they buy) these two books, USED:
The latter book has caught some flak for among other reasons, it is somewhat fictionalized, but written as though an autobiography.
The principles are, however, sound. Most high wage-earners have ZERO net worth. The previous book says the same thing, and that assertion is based on research.
A typical millionaire is a guy in overalls who owns the trucking company.
You don't "invest" money into a house; that is what financial planners call a "use asset". Robert Kyosaki goes further and calls it a "liability" because the cash flow is going the wrong direction!!
When we bought our current house, we not only paid cash for it, we also bought it with the intention of extracting income out of it. We rent out two of the spare bedrooms. It's a small house, and I have a BIG family. We deal with the crowded living conditions to bring in some income even from our own house.
We do that a lot of different ways. Used to rent out my son's cello once he outgrew it. Brought in $15/month.
Generally speaking, it is advantageous to have multiple streams of income, some of them from investment, NOT just wage labor. You only have so many hours in a day.
Great prosperity to you.
Welcome to adulthood.
When I turned thirty I was shacked up, renting a room in a friend's house with a part time job not in my field and with no money.
It's all relative I guess.
Take a step back. Better to freak out at 30 than at 40 or 50 or even beyond. I'm pretty young, 23, so please take my comments with a pinch of salt but they might lead to some helpful thoughts.
Have you considered moving to a smaller, lower rental house? It would be worth living in the cheapest place you realistically can (which includes somewhere you can be happy living) and start putting less money in someone else's pocket and more in your own. Of course if you're well established and can't move on the cheap then that might not be an option but it is worth considering.
If you rent a car or run an expensive car it might be worth getting a cheaper, second hand one for a few years. Along with the house these two can add up to a considerable amount.
Then I'd suggest writing down everything you spend money on. Absolutely everything and see if there are cheaper ways of doing each thing. For example if you go to the movies you might consider getting an account somewhere that will post DVDs to your house, or find a streaming package, normally they are pretty cheap and you will end up watching more movies as a family. Stuff like that. Really go to home on your spending while trying not to damage your quality of life.
Finally chase your wage opportunities, I'm sure you're doing this and it goes without saying but you need to be thinking about your income and your outgoings. If you get the chance to do overtime, contracting on the side or a few additional projects somewhere seriously consider them.
Stop freaking out, start looking at things objectively and start making a plan for what you actually want. Build your finances from the bottom up, decent savings come before buying a house and if you prioritise putting money aside for your kids start looking at options for that now. They're still young. You're massively ahead of a lot of 30 year olds so don't sweat things too much just think it through properly and start taking action.
As others have said, "Welcome to the real world!"
You should be freaking out a bit, but you need to freak out over the correct things. You do need to worry about your family's financial security and your retirement, but you don't need to obsess.
A couple of points in the OP. You have a toddler and an infant at home. Your wife is a "stay at home mom" and you've pointed out that since you don't pay daycare, her lack of outside income is a wash. You're actually doing pretty good. Especially considering you're not quite 30, and your post indicates you're technically a bit undereducated.
I would recommend the following, if you've not already done so:
1. Set up an emergency fund, and don't touch it. You may not be able to get to that "magical" $1,000 minimum for a while, but keep at it.
2. Fund a retirement account. If your job has a 401k, that's super easy, if not, get down to the Credit Union and get an IRA going. NOW.
3. I'd strongly recommend both you and your wife "finish" your educations. It may not seem like much, but in my experience, the lack of at least a GED or an AA pretty much guarantees you'll remain in the lower economic levels. You can't rely on being a fortunate outlier such as Gates, and Zuckerman. Finish school at least to the Associate Degree level. It's more often the documented completion of a task that counts.
4. Don't get too wrapped up in buying a house just now. Also adjust your expectations of just how much house and yard you really need. Although the "McMansions" with multiple bathrooms, one room per child, and enough "private space" for each adult are nice, a family with two children of the same gender can easily live in a 1950s era two bedroom, one bath house on a small lot.
Great list, especially the last one!
I think 30 is a tough age for a lot of guys... Everyone tends to freak out a little about it. Granted, I'm 29 years and 52 months old... so yeah... I don't have any good advice for you, since I obviously haven't dealt with 30 in a very productive manner.
If you are worried about it, just figure out where you can cut costs. People were just fine with tiny houses and their kids sharing rooms and the whole family sharing a bathroom a good few years ago, and there are a lot of modern conveniences that don't really add anything to our life but costs. Anyway, good luck with it.