Blonde moment

And the silver spoon.

Tuesday, February 26, 2008

Home buyers journal take three…

As most of my friends and family know, I don’t give unsolicited financial advice. I’m not licensed to do so, and I can’t offer a professional opinion. When I’m asked to provide economic research, budget input, and COLA research for friends and family, I do so with the above disclaimer and I give people a bunch of options rather then say, “This is what you should do.”

So, here is the longer version of Josh and my home buying journey. It’s what Josh and I have done, not necessarily what you should do. And odds are good you probably won’t be able to do what we’ve done because people have different tolerances for certain situations, and get themselves in trouble at different stages.

It is the universally accepted truth that buying right this minute is always preferable to renting right this minute regardless of the financial circumstances of the people you are talking to. I don’t buy that universal truth.

Shelter is a basic need. And shelter is provided through voluntary and mutually beneficial financial transactions. The above listed universal truth does not consider that renting may be beneficial in some circumstances.

When Josh and I got married, we did not want the mortgage we would qualify for, nor did we want the shelter such a mortgage would provide. So, we rented in a “dive” apartment. We rented and lived cheaply so we could aggressively pay off our debt and save. For the past couple of years, we’ve actually rented in a more expensive apartment, but that was more for my safety during the deployment then anything. But, we still aggressively paid off debt and saved.

Let me restate that. We had a goal in mind; get a starter home that we actually liked. Not our dream home, but a home that is not a money pit. And we knew where we were starting, so we needed to take the steps that would get us to our goal. Kind of like a flow chart or Shoots and Ladders or whatever.

Our steps were: rent cheaply, aggressively pay off debt, and aggressively save. Then, when it came time to apply for mortgages, we chose the option that would allow us the most financial flexibility (turns out to be a VA loan, but that is neither here nor there). Other choices we made before we met helped, but for the most part, those were the basic steps.

A friend of mine said, “But Liz, you’re missing out on the equity you could have built.” OK… but we didn’t want the house we could have afforded five years ago. Furthermore, we don’t have debt. So, for Josh and me, it was the right choice to do what we’ve done. We priced financial freedom higher then the several thousand in equity we could have theoretically had. And we are financially free to pursue the type of house we had in mind when we pictured a starter home… and actually, due to the current market conditions, probably a nicer house then we had in mind.

Again, I can’t give anyone advice; and if most of my friends asked me to help them with serious financial issues, I’d refer them to my financial advisor. But, if you’re about to start college or are freshly out of it, do yourself the favor and think: Where do I want to be when I’m thirty and what am I willing to do to get there? Odds are good that excessive debt will hinder you as you work for your goal. And odds are good that the ability to save money will help you as you work for your goal.


  • At 11:37 PM , Blogger pianomomsicle said...

    May i please plant basil in a shady spot in your yard? There is not a good way for me to grow plants where i live, and basil is almost necessary for living. i'll let you have as much of it as you want!


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