It's been quiet here at Cavemen Go. I've been plotting out the course of my future since the end of summer and work work working to make things happen. In November, I began outlining a novel tentatively titled 1999, and just before Thanksgiving I began writing freelance for the Lowell Ledger. It is not for lack of words that I've been gone: it is for lack of time and lack of focus. For some time this blog just puttered along without purpose, content for the sake of content, but I intend to change that.
My financial obligations stand between me and my dreams. I expect that you have much the same problem. But money doesn't have to be as much of a deterrent as it is: we can join together and talk about how to save money and reapply it elsewhere. Let's start with the rent.
Finding the Right Place
Amy and I had a stroke of luck while looking for our current apartment. There are two apartment complexes in Lowell, and if either has an opening it is seldom at best. Beyond that, there are a couple independent property owners who rent to the public. When we were looking for a place to stay, Harold Ball the owner of Ball's Softee Cream was looking to fill a vacancy.
I don't want to tell you exact figures, but we have just about the cheapest rent in Lowell. The apartment is the upper story of a homey duplex and we absolutely love the place. But rent is still our most expensive single bill.
What is your experience with housing/paying rent?
Government Aid
When we first moved in, I had no idea how we were going to pay our bills. I was underemployed and encumbered with debt. In my first attempt to understand my options, I stumbled upon government assistance options. I don't like being dependent on state or federal assistance, but at the time it seemed like a possibility. My research lead me to an e-mail address and a non-response. I imagine we wouldn't qualify, but I know that some of you out there do.
Government assistance exists because we pay for it, but I still don't think people should become dependent on it. If you need help, you should apply, but I challenge you to go in with an escape plan. If you're saving money, put it away toward something that might help you reach the escape velocity from your circumstances: technical training, an interview outfit, etc. But most of all, act inn such a way as to minimize the amount of time thou rely on the benefits.
How do you feel about government assistance and access to government assistance?
Equity
Currently, Amy and I are renting. That means that my entire monthly payment goes to staying in this place for one month. After a year, if I discontinue this payment I own nothing and have accrued zero equity. It would be nice if we had something more to show for our payments, so we're looking into buying a house.
The main trouble is that my debt is great and my income is not. If we are to buy a house we will need via co-signer, and even with one it may not be enough. My goal is to pay the equivalent of our current rent toward a mortgage, and with said mortgage to gain equity enough to have other financial options.
To me it is a long and confusing process. Has anyone out there recently bought a house? What was it like? What are the tips and tricks that people should know about the process and the market?
We don't need to be under anyone's thumb financially. Let's talk about this. Let's free ourselves by degree.
There are other factors to consider. Owning a home has costs associated with it that's not included in mortgage (but typically included in rent). Some examples:
ReplyDelete1) Lawn care (snow removal, lawn mowing, etc)
2) Appliance repair/replacement
3) Other home repairs (electrical, plumbing, etc)
4) Home insurance
5) Property taxes
6) PMI (for those who don't put at least 20% down payment)
7) Higher moving costs versus renting
Obviously there are benefits like the interest deduction on your income tax which would have to be factored in.
But what if you were to save and invest all of the extra above money instead of dealing with all of the above costs. Which avenue would give you a greater savings: building equity in your home or saving the money and investing it in, say, high grade bonds?
For some perspective, if buying costs you $200 more per month than renting, and you earn absolutely no interest, you could save $12,000 in just 5 years.
And to plug a recent post of mine on the topic:
Is Housing an Investment?
I think in your situation, you should probably focus on getting your house in order before you buy a house (pun intended). Try to get an emergency fund in a savings account and start putting money in a tax-free retirement account (you can actually use $10,000 of it for a down payment on a house without penalty).
Love your article!!!
DeleteThanks, Samuel. I really enjoyed reading your post and a few of the other posts on your blog. I have a philosophy degree, but I don't have nearly as much economic background. It's refreshing, my friend.
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