Comments on: Home Body

By: peechie

peechie — Tue, 17 Mar 2009 16:28:53 +0000

Good points everyone, and those are some great links Derek. They remind me of another calculator I’ve seen from the New York Times – cost of renting vs. buying: http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?_r=1 and when it makes sense, depending on how long you plan on staying in your location.

By: Derek K. Miller

Derek K. Miller — Tue, 17 Mar 2009 05:37:37 +0000

Here was an interesting, heavily-Dugg article from 2007 about why it was a good idea to rent until the bottom dropped out of the home market, i.e. that buying after the bubble bursts (like now, I guess) is a better idea:

http://efinancedirectory.com/articles/This_is_Why_I_Rent%3A_Median_Incomes_Do_Not_Support_Median_Home_Prices.html

There’s also this argument to rent forever, as many people do, especially in expensive cities:

http://www.bargaineering.com/articles/rent-forever-dont-buy-a-home.html

By: Nicole

Nicole — Sun, 15 Mar 2009 02:10:53 +0000

Hey Jen… I just started reading your blog when Jen (Closs) recommended it. I’m always interested in money/budget talk. With a grad student income, it’s impossible not to have to budget well, and I’ve actually made it a bit of a hobby over the past few years. It’s actually fun, if that makes any sense. Anyway, three things: 1) I’m sure you’ve read it, but I REALLY liked ‘Smart Couples Finish Rich’. That book kick-started our grown-up money management and I think it’s saved us thousands, which is saying a lot because we’re fairly pragmatic people when it comes to money in the first place. 2) In terms of a mortgage, my advice is to base your affordability on once a month payments with a 25 year mortgage, then when it comes time to make the payments, switch to 2x a month (that’ll take a few years off right there) and bump up your payments as much as you possibly can (of course, you’ll need a flexible mortgage to do this, but I think most are these days). We did this very gradually, adding $50 or so a month every few months once we got used to the reduced cash flow until we eventually got to our max allowable payments. It took more than 10 years off of the mortgage, saving 10s of thousands in interest. 3) Use a mortgage broker! In our experience, real estate agents are useless (to be fair, we had a particularly incompetent one), and the mortgage broker was amazing, especially given that it was our first purchase and we had no clue what we were doing.
OK, sorry for the long-winded comment… just feeling wordy today
Nicole

By: Jean-Luc Picard

Jean-Luc Picard — Fri, 13 Mar 2009 20:05:57 +0000

It can’t be easy for first-time buyers at this time, Jen.

NetChick sent me here.

By: Sue

Sue — Fri, 13 Mar 2009 18:25:37 +0000

Oh yeah, and people shopping for houses ALWAYS forget to calculate the property tax as part of the cost of home ownership!

By: Sue

Sue — Fri, 13 Mar 2009 18:24:58 +0000

My father-in-law told us that you should always be prepared to budget 1% of your home’s purchase cost (or current assessed value) per year towards repairs and maintenance. Whether you spend that in a given year or you put it aside for when the roof goes or the hot water tank blows… that’s the annual cost of keeping up a property.

If you’re in a strata, you should find out what % of your strata fees go towards actually maintaining the property (or a contingency plan) vs. miscellaneous fees or management. If only 75% of your strata goes into real repairs and maintenance, and that represents only 0.5% of your purchase price, then you’ve got to pony up the other 0.5% of your purchase price either on current expenses, or save it for the future.

It’s an interesting rule of thumb. I’ve tested it out by asking everyone I know who owns property, and they’ve either said it’s accurate or the figure is more like 2%/year.

By: airdrie

airdrie — Fri, 13 Mar 2009 17:59:29 +0000

I like Gail. I watch the show and she tells it like it is. I’ve recently started a family budget. Even the kids are in on it. It is very transparent, and the goal is to do less impulse buying, more eating at home, and saving up an emergency fund for a rainy day (or future trip to Hawaii??).

Some people feel that blogging about money (personal finance) is tacky or inappropriate. I believe that we should ALL talk about money more. It’s such a neglected topic. I wish I had been better educated by my family and friends about budgets etc. as a young adult. I might have worried less over the years.

My current budget allows for $300 per week to cover food and entertainment (Family of Four). We take out cash on Sunday, and only spend cash. So far the only problem has been when I forget to take the cash from the cupboard to my wallet, and end up using debit anyway…..hmm.

By: Laura

Laura — Fri, 13 Mar 2009 17:19:38 +0000

This is an awesome post with a good link to Gail Vax Oxlade’s blog which I will be checking out later on when I’m not at work. I feel like I’m a bit behind the curve compared to my peers when it comes to home-buying, considering that I am now single so I’m dealing with saving on one income instead of two, and I spent all my savings in Europe last year so I’m now starting over from scratch. But I’m determined that I will get there if I’m smart about it. This will give me a good, realistic way to set up my budget. Thanks!