In the next 2 years I have 3 major goals
1. Buy a house
2. Get married
3. Have a child
I have the means to do all of this (good job, long term GF that wants the same) but for some reason I am afraid to make the leap. I make more money than all of my friends that have gotten married and bought houses but somehow I just don't see how it's even possible to have an extra 1000-1500 every month for my budget. An acquaintance of mine that earns a similar salary just bought a house, new car, got married, and went to Ireland. I'm not interested in keeping up with the Jones' but I just don't understand how the heck he managed all of this.
I've always been the person that is extra careful when making big decisions. I notice that a lot of people just make these big decisions on a whim or are forced into them (unplanned pregnancy).
When you guys did these things, did it make sense that everything was going to work (especially financially) or did you just make it work?
I asked my dad roughly the same question not too long before I got married. The total conversation went like this.
Me: (asking same questions as OP)
Dad: Just like anything else scary, shit your pants and dive in.
Dad: If you want it bad enough you'll make it work. You think it was easy to raise you and your 7 siblings? I shit my pants on a daily basis...still dove in and made it work.
Your dad is a very wise man.
Do you live on your own or with your parents right now? Because a mortgage on a house is not really any more expensive than renting an apartment (at least where I live). My wife and I spend $1150 a month to rent a cheap and run-down 450sq ft apartment. Her parents spend $850/month on a mortgage on a $450 000 5-bedroom house which is about 5 times the size of our apartment.
My wife and I can't even qualify for a $200 000 mortgage, and yet we're spending more per month on housing than my in-laws with a mortgage twice that amount. We make a combined annual income of about $30 000 per year, yet we could afford a house, because a $200 000 mortgage would be no more expensive than our current rent (although the banks don't believe us, because our jobs aren't salaried).
My point is that if you do indeed have a good job like you say, I'm not sure why it would be so difficult to spend $1500 per month on a mortgage. I realize that housing markets are different everywhere, but housing is pretty expensive where I live in Calgary.
If you want it, then you'll make it work.
"Because a mortgage on a house is not really any more expensive than renting an apartment (at least where I live). My wife and I spend $1150 a month to rent a cheap and run-down 450sq ft apartment. Her parents spend $850/month on a mortgage on a $450 000 5-bedroom house which is about 5 times the size of our apartment.
My wife and I can't even qualify for a $200 000 mortgage, and yet we're spending more per month on housing than my in-laws with a mortgage twice that amount. We make a combined annual income of about $30 000 per year, yet we could afford a house, because a $200 000 mortgage would be no more expensive than our current rent (although the banks don't believe us, because our jobs aren't salaried). "
It's not that simple, man. You're just looking at the amount of the monthly payment of the rent VS the monthly payment of the mortgage but there are so many factors to consider:
-perhaps their monthly mortgage payment is low because they made a huge downpayment
-perhaps their monthly mortgage payment is low because they've already payed most of the principle
-perhaps their monthly mortgage payment is low because they were offered a really great interest rate because of their financial profile (income, assets, credit rating, etc.)
-perhaps their monthly mortgage payment is low because they also make large lump-sum payments in addition to their regular mortgage payments every year
OR, on the less positive side of things,
-perhaps their monthly mortage payment is low because they've barely payed down the principle (translation: they're still heavily in mortgage debt)
-perhaps their monthly mortgage payment is low but they have a shitty interest rate so, in the end, they're going to wind up paying 3-4 times what the house is actually worth
"My point is that if you do indeed have a good job like you say, I'm not sure why it would be so difficult to spend $1500 per month on a mortgage."
When the bank decides on whether or not they should approve you for a mortgage, they don't just look at your ability to make the monthly payments of the mortgage; they also look at your income, how likely you are to stay employed, all of your debt, your credit rating and all of the additional expenses of owning and maintain the house: the lawyers and realtors and the beginning, homeowners insurance, the cost of the heat/electricity/water/utilities, the property taxes, the condo fees (if applicable) the municipal fees, etc. When you break it all down, comparing monthly rental payments to monthly mortgage payments doesn't give you the full picture. In most cases, it's more expensive to own than rent regardless of the size of your monthly mortgage payment once you factor in all of the additional costs.
Also, with all due respect (sincerely, not snarkily), if your combined annual income is $30,000, I can't say I'm surprised that you don't qualify for a $200,000 mortgage.
Welcome to 2013. I believe that for the past 100 years or more, most people have been doing the things you list in a combination of planning and winging it. (Maybe I should say most middle-class people) My maternal grandparents seem to have planned those things. My paternal grandparents didn't as much. My parents also had the combination. But that period also spanned a period of prosperity, relative equality, and upward mobility.
That trend is reversing. Personally, I think a lot of people 40 and under today are either going to have to wing the financial issues of getting married and having a child, or not do them at all. Buying a house is another matter because it's supervised, so to speak, by banks.
I got married a year ago, and at the time I'd say it made sense that everything was going to work financially, but since then a lot of things haven't gone according to plan and now we make it work.
There's lots of ink spilled about this stuff. You can take or leave the links I post.
Did you really just post The Onion as a legitimate link?
Satire can teach, too.
Don't compare yourself to your acquaintance. You're just seeing what's on the outside. You don't know if he's up to his eyeballs in credit card debt, and even if he is, i doubt he would tell you.
If you don't think you can make it happen with what you make right now, then either wait a few more years or work at increasing your income. There's no good in jumping into something that's going to stress you down the road.
This is a math thing - You know how much you make - your banker will let you know how much they will loan you for a house..( use your head they might want to loan you more than you want to spend. look around at housing in your area to see what the kind of home you want is going for. Do you know where your money goes now. Most people when they "wing it" means they just stop spending if they don't have the money. Dave Ramsey's system is pretty good - much like other systems - but you have to know how much things cost, and how much money you have. For a while I never had to worry as I always had more money than I needed - So I didn't pay attention to where it went. I regret that - I wish I had paid more attention and used that extra money much more wisely -