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housing question


Forum: Financial Planning and Budgeting

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  #1  
January 20th, 2007, 08:36 AM
3Xblessed's Avatar Platinum Supermommy
Join Date: Dec 2004
Location: Southern California
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Okay so this is something dh and I talk about....(although its not something that would happen for the next 2 years....have to wait until childcare cost decrease)

Do we stay in our shoebox but have enough money for toys (a toy hauler and dirt bikes) and vacations or do we get a real house but not be able to afford anything but the house??
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  #2  
January 20th, 2007, 09:30 AM
~Jess~'s Avatar Platinum Supermommy
Join Date: Oct 2005
Location: Central California
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That's really your call. I have friends who have 3 kids and a 1200 sq foot house. They make great money, but have decided that their house is really just the place they store their "stuff." They take lots of vacations, the wife is a SAHM, the kids are in private school, etc. That's what is important to them.

My mom has a friend who only works so that they can eat out. Literally. She hates cooking, and would rather work and eat out every meal than have to cook. That's their priority.

We're the opposite. Our house is nothing spectacular (we ARE in CA after all, lol), but our home is 2000 sq. ft on 1/3 of an acre, in a nice, safe suburb. But our house payment is literally over 60% of dh's salary, so we have very little extras. I'm VERY unmaterialistic tho, so this works for us. We don't have an eating out budget, AT ALL! None of us get new clothes unless we have a gift certificate. I buy mine from Goodwill and I have friends who give me hand-me-downs. I get the kid's clothes off of ebay. We rarely go on vacation. I get $80 a month spending money and I usually have money left over!!!! I just don't crave "stuff" like most ppl do.

If you're wondering if you can do it, then give yourselves a year of living as if you're already in the house and have a higher payment. Put the extra money you'll spend on your new house payment into a savings account and don't touch it. or use it to pay down existing debt to make the new house more affordable If you can live without that extra money for a year (without going in debt), then the house is probably a good idea. If you find yourself wishing for a smaller house payment so that you have more fun money, then staying where you are is probably the best bet.

GL in whatever you decide!
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  #3  
January 20th, 2007, 10:43 AM
Mega Super Mommy
Join Date: May 2006
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Great advice from Jess. Just remember too, if you buy a bigger house you not only have the bigger payment, but more maintenance, furniture, insurance, utilities, etc. etc. So if you think you can BARELY afford a bigger house, you're probably wrong. I'm sorry to say this, but I think it's true and most people don't realize it. That's how a house becomes a curse instead of blessing.

I personally think most people can make do with a smaller house than they think. In other words, I think it's better to have a house that is "too small" than one that is too big. In a smaller house you may feel cramped and crowded, but in a bigger house you'd probably feel broke and worried, and I'd personally rather feel a little crowded than feel broke.

Just my opinionated ramblings, for what they're worth.
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  #4  
January 20th, 2007, 10:52 AM
nmiracles's Avatar Mega Super Mommy
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Great advice Jess. I would have never thought about the 1 year trial.

We have a very small house and I sometimes wish we had a bigger one, esp. since my friends are buying/building big, but then I think about how I was able to stay home at least for a bit, and how they aren't getting that chance because they are locked in. It is worth the tiny house.

Good luck, whatever you decide!
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  #5  
January 20th, 2007, 11:46 AM
~Jess~'s Avatar Platinum Supermommy
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Quote:
Great advice from Jess. Just remember too, if you buy a bigger house you not only have the bigger payment, but more maintenance, furniture, insurance, utilities, etc. etc.[/b]
Especially property taxes! About a year ago, we were going to move closer to dh's work (he commutes an hour each way) and the savings in gas was going to make up for the increase in our payment. But then when we found out that our property taxes were going to go from $166 a month to over $600 a month, there was no way we could afford it! And that's an expense that you're stuck with for life. Even after the mortgage is paid off, you still have to pay taxes.
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  #6  
January 20th, 2007, 07:38 PM
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Oh my! I can't believe that your taxes are only $166/month. Ours are $485/month and we are praying they don't go up again! They went up $1000 just last year alone!

We talk about wanting a bigger house sometimes too...we don't have a formal living room or dining room, just an eat in kitchen and family room and we only have 3 bedrooms. We'd love to have a play room but the basement is the office area/workshop so there's not really room. It's nice to think about it but then I think about how much a payment would be and I quickly decide to stay put!
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  #7  
January 20th, 2007, 08:53 PM
~Jess~'s Avatar Platinum Supermommy
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Quote:
Oh my! I can't believe that your taxes are only $166/month. Ours are $485/month and we are praying they don't go up again! They went up $1000 just last year alone![/b]
Here in CA they have strict limits on how much property taxes can increase since housing has a tendency to appreciate so rapidly here. The assessed value starts out at the purchase price of the home. Each year, the assessed value is increased by 2%. When an improvement is made (add-on, swimming pool, back patio, etc), they only assess the value of the improvement.

So, since we bought our house for $141,000, that is what it is assessed at (+ 2% for the last 6 years). Even tho our home is now worth nearly $400,000, we only pay taxes on the assessed value. So, yeah, it would be a huge jump in taxes if we were to buy a different home.
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