If I Were Debt Free…#82
Buy a House
We have been renters since the beginning of our marriage. And we’re ok with that. Come to find out, Dave Ramsey advises couples to rent for the first year of marriage anyway. Now, with 7 crazy years behind us, I think we have a good track record, and commitment is not a question. Finances have always been the question though. We got married in the middle, maybe at the early stages, of the BOOMing house market. We were kids, with no careers established and one year of college under our(my) belt. Buying a house was out of the question. But we didn’t use wisdom or seek counsel in dealing with our money to put ourselves in a position to buy one any time soon. Right now would have been a great time to buy. However, we buried ourselves in debt, believing two dangerous lies–that we couldn’t make it without a little debt, and that we deserved things that we could not afford.
We’re finally starting to understand this money things (by no means have we “arrived”), and we can actually begin to see where we could own a house one day. Strangely enough though, it has dropped in priority. I definitely want a place to call home and a yard for my kids. But as our mission takes form, our 5 and 10 year outlooks look a little different than they did last year.
If and when we do buy a house, we will not bury ourselves. We want it to be a blessing rather than a burden. The mistake that so many people made was thinking they would just be ok if they could own a house and be covered by the equity. Then the bubble burst and all those people that couldn’t really afford a house woke up to a nasty reality.
Here are some guidelines we will follow:
- A 3 to 6 month emergency fund in place
- At least 20% down to avoid PMI. (Although, if we could pay for a house outright, I wouldn’t complain. And yes, it can be done. And yes, if I put my mind to it we could do it.)
- A 15 year fixed rate mortgage. Not 30 years, and not adjustable rate.
- Payments no more than 1/4 of our take-home pay.
Oh, and keep those ideas coming!
Photo by terren in Virginia
Have you ever had that nagging feeling that there was something more to do with your life? I don’t remember exactly when it started for me...
This is a great way of looking at buying your house.
I think if you follow your guidelines, you’ll be well prepared and able to easily face 99.9% of the financial challenges that may come your way.
I like especially the way you put it: “We want it (our house) to be a blessing rather than a burden.”
We did things the “right way” when buying our house(s). We always had 20% down & did a short term loan. It was pretty hard considering everyone else had smaller loan payments or no money down, but we knew what we were doing.
So far it’s worked out. We’ve bought & sold several houses and made over150k doing it. We are so excited for when the housing market picks up & we can sell our rentals in Oregon. The rent we make covers the payment, but doesn’t make us anything. =/
Even when you purchase the right way, the 3 – 6 months is a necessity. That’s the one thing we DIDN’T do and now that our industry is struggling BIG TIME, the first thing we felt like we have to do was sell the house. We won’t borrow against it, but we did consider selling.
Great job thinking ahead. Planning where your money will go so it doesn’t leave you!
I love the blog and your story. I do wonder why buying a house has been low on your priority. I hope and believe it’s God changing your priorities. That’s one thing Dave and other Christian financial gurus forget is that a Morgage is also debt. “owe no man anything accept to love..” No comprimise. God will honor that. Consider some alternatives to house debt:
- Rent. Perhaps you can find a situation where you can rent to own or do like myself and a set of my friends, do maintenence for the landlord to offset the cost.
- Take a job where housing is provided. We also did this for a year working for a group home. There are various other job ops where housing is provided.
- Build a small cottage. Rebekah and I actually looked at some very small housing plans. There’s some really good designs out there that make the most of the space. Plus small houses don’t cost much to run. Remember, God has delivered you from $20,000 within a short amount of time. It wouldn’t be that much longer to save up $80,000 or even $100,000. From my experience, God will honor that. With a small, simple build you can ad on as your family grows.
@Justin thanks for the awesome ideas. with the perception of houses in general (and a little pressure from the in-laws…hi, mom), I know it will take a little discipline and commitment to not give in and just buy to have a house.
but like you said, debt is debt, mortgage or student loan or credit card. and we want to be done with debt.
I will say, Dave does encourage people to do it completely debt free, and before him, I had never heard of the idea.
this world is a temporary dwelling for us, and too have all we own be subject to the debt of a house is sounding less and less appealing!