Tuesday, March 5, 2013

Preparing to act

Tonight is week 8 of 9 of Financial Peace University.  We'll be learning about real estate and mortgages.  I am a lover of house hunting.  I love all the reality shows out there that follows a buyer on their home purchasing journey.  I also look at houses on realtor.com in my spare time.  I look for myself now, my future self, my friends, family and the ultimate dream home.  For me it would be on a body of water, at least 2000 square feet, have at least 4 bedrooms, at least 2 bathrooms, a fireplace, hot tub, double sinks, an awesome kitchen and lots of closet space.  Then, on a decent lot with a garage for the hubby.  I find these dream homes from time to time but rarely in my future self budget ($200,000).

As for mortgages, I am in a love-hate relationship with my current mortgage.  It loves that I pay it nearly half our income each month and I hate doing that.  I have a fair amount of guilt for buying my condo.  I was 24, didn't have a down payment and basically bought it so I "wouldn't be throwing money away on rent".  If I had just stayed in an apartment I wouldn't have lost more than half of my home's value and be stuck paying off a mortgage that is due in 2015.  I could have put that money towards many other things but mainly my husband's student loans.  I have no doubt we would be debt free right now if I hadn't gone and bought a condo I couldn't afford when I was 24.  Alas.

My hope is that tonight we'll learn all the ins and outs of doing it the right way.  GJS and I ran a bunch of numbers this weekend to see if we'd be able to afford a $200,000 house once we pay off all our debt.  I ran the numbers using our current salaries, which we know we won't have in 5 or 6 years when we expect to buy a house (but we needed to base our calculations on something).  We also ran numbers for just hubby's salary, with and without expect pay increases (in case I ever become a stay at home mommy).  We discovered that with a $40,000 down payment and 2 incomes we would be able to easily afford a 15 year 4% standard mortgage.  With GJS alone we'd have to bring $95,000 down to make payments on a 15 year 4% standard mortgage.  We calculated 15% of net household income for retirement, $2,000 per year towards college savings and all our normal expenses.  GJS put all the data into excel and played with the numbers to see exactly how many weeks it would take us to pay off the house. 

The bummer is we're still so far away from this future, a future we both really want to enjoy NOW!  But the baby steps are getting us there.  I keep praying for a big influx of money to get us through baby step 2 and onto baby step 3.  From there, our dreams really will start coming true.


  1. Don't be so hard on yourself for the house. It's your home and you can't turn back the clock now. No one expected the market to crash like it did. Millions are in the same fix as you but you're handling it with determination and grace. Just be proud of yourself <3

  2. Thanks for the words of encouragement Carrie :)

  3. I'm looking and if we put down $85,000, we can pay off a $200,000 house in 178 months with 25% of my salary