Wednesday, March 6, 2013

Financial Peace University Week #8

Lesson #8 had a message I wish I had heard 10 years ago.  Dave stressed how important it is to buy a house in the right order of things.  No one has any business buying a home until they are completely out of debt and have 3-6 months of expenses in a fluid emergency fund.  Then you need to bring at least 10% for a down payment and get a 15 year conventional mortgage that has monthly payments no bigger than 25% of your household income.  That's it.  So frickin' simple.  But this information came much too late to save me.
His other big push was for people to buy homes in cash.  In theory I am all about this idea but practically, I don't see how it would work unless we have no children or only one.  I think we'll outgrow the 1000 square foot, two bedroom condo as soon as child #1 goes to kindergarten.  Of course if we got some huge influx of money, I'm sure GJS and I would be all for putting it toward the future house fund, if that is the baby step we're on.  Save for mortgage is baby step 3(b), after baby step 3, 3-6 months emergency fund, and before baby step 4, save 15% of household gross income towards retirement.  As things currently stand I envision us doing steps 3(b),4 and 5 all simultaneously as long as we have two decent incomes.

Next week is our final lesson with Financial Peace University and I can honestly say it was well worth the $95 investment.

No comments:

Post a Comment