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Old 02-11-2008, 10:48 PM
 
36 posts, read 41,383 times
Reputation: 14

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Quote:
Originally Posted by Dave1215 View Post
You pay rent for $1350 two bedromm apt.... I pay $1000 (including taxes and insurance) for 2,000 sq ft 3bed, 2 1/2 bath home, I'm building equity, and my property taxes have been stable for 5 years. I couldn't afford to rent.
That home in my neck of the woods would be $3500 a month. or $42000 a year. That's for a 2000 sq ft home 3 bed, 2 bath priced at $399K with 11.5K in taxes per year.

Yes... I can afford to rent... or go broke trying to own.
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Old 02-12-2008, 07:29 AM
 
Location: Papillion
2,589 posts, read 10,519,291 times
Reputation: 916
Quote:
Originally Posted by Dave1215 View Post
You pay rent for $1350 two bedromm apt.... I pay $1000 (including taxes and insurance) for 2,000 sq ft 3bed, 2 1/2 bath home, I'm building equity, and my property taxes have been stable for 5 years. I couldn't afford to rent.
Quote:
Originally Posted by thunder88 View Post
That home in my neck of the woods would be $3500 a month. or $42000 a year. That's for a 2000 sq ft home 3 bed, 2 bath priced at $399K with 11.5K in taxes per year.

Yes... I can afford to rent... or go broke trying to own.
I couldn't afford to rent - it would cost me more
You can't afford to own - it would cost you more.

No wonder I haven't moved out of the midwest the several times I've had the opportunity.
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Old 02-26-2008, 08:51 AM
 
1,623 posts, read 6,505,863 times
Reputation: 457
This is where the term "reality check" comes in...My wife and I were both making around $50K when we married...and we both had student loans and car payments to the tune of $1000 a month...and she had paid rent since the day she graduated, I paid my parents $100 a month or so to live there and ate out/did my own groceries...we had a whopping $3K to put down on a house...which we did...we paid $71,500 for that house and had to run out and buy all the maintenance stuff that a house requires...

We continued making better money, paying down our debt, and remodeling the house on our own, on the cheap. We could have easily afforded a more expensive house, but ours was fine for us and the mortgage was like $850 a month...less than the cars and student loans combined!

Our wedding put us into hock a bit...it was worth it but it definitely was no fun repaying the small loan from my 401k. I'm pretty sure we didnt clear $15K in gifts either...

I lost my job and there was no problem covering the mortgage, esp after we refinanced it down to $530 a month!

I stay home with the kids and we sold the place last year for $144,500! And we essentially doubled our money...we surely put less than $10k into the place over the years...so with that money we paid off my new/used $21K car and walked away with $40 sum thousand dollars to put on the next place...

Now had we bought a little better of a house we could've made more in appreciation, but we also eat out/take out quite a bit and do Disney pretty high on the hog each year, and shore trips, buy the kids pretty much whatever they want...we each have about $90K in our 401ks....we could save more but that's for when I go back to work in a few years....

And that's how you do it...you buy the cheapest house that you can live with in the best school district/neighborhood you can find. You fix it up yourself, you buy used cars, you don't run up credit card debt, but you use the card and pay it off monthly to build good credit...and you live a little because you never know when you could be hit by a bus
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Old 02-26-2008, 10:23 AM
 
Location: Philaburbia
41,737 posts, read 74,692,347 times
Reputation: 66673
Buying a house was the easiest thing I've ever done in my life!

I bought my first house the old-fashioned way: I saved money until I had 20 percent down.

I told the bank what I could afford, not the other way around.

I didn't buy the biggest house in my neighborhood, or a house in the most-desired neighborhood. I looked and waited, and found a great house well within my means.

Since my house payment was lower than my rent, I used those savings for home improvements rather than viewing it as discretionary money.

Oh ... btw ... when I bought my house for $50,000 in the early 90s, I earned $18,000 a year. My salary is now in the mid-40s, and paid $185,000 for my current house. You don't have to earn six figures to own a home.
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Old 02-26-2008, 11:18 AM
 
25 posts, read 23,613 times
Reputation: 13
Much of the above advice is golden... but no matter how much you save, how much you live beneath your means the market will dictate if you can afford it. In my area the average household income is $71K yet the average starter is $275K. Many people can't even qualify for a starter. So renting is the more affordable option.
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Old 02-26-2008, 04:03 PM
 
339 posts, read 1,515,122 times
Reputation: 240
Quote:
Originally Posted by orrmobl View Post
we paid $71,500 for that house

we sold the place last year for $144,500! And we essentially doubled our money...we surely put less than $10k into the place over the years...so with that money we paid off my new/used $21K car and walked away with $40 sum thousand dollars to put on the next place...

My concern with the current American economy and the current real estate market in my local area is that home appreciation will not compare to what it did in past years or the past decade, etc. So I am not convinced yet that first time buyers today will have as much luck trading up in the future as other had in the past.
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Old 02-26-2008, 05:35 PM
 
1,960 posts, read 4,643,233 times
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exactly. People speaking of their purchasing power in the early 90s need to realize what faces an individual today with today's house prices in today's economy... It DOES require a nominal six figure income to own in the same fashion (same percentage of disposable income after inflation adjustment) as it did back in the early 90s. To put it in other terms, my father had more purchasing power when he was my age with a lesser income than I do today, adjusted for inflation. That's a fact, although you'd find it hard to get most baby boomers to acknowledge such paradigm shifts (my father has finally admitted it at least).
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Old 02-28-2008, 12:53 AM
 
Location: Cary, NC
2,407 posts, read 10,655,604 times
Reputation: 1380
Quote:
Originally Posted by ocnybuyer
Much of the above advice is golden... but no matter how much you save, how much you live beneath your means the market will dictate if you can afford it. In my area the average household income is $71K yet the average starter is $275K. Many people can't even qualify for a starter. So renting is the more affordable option.
Purchasing a house is a commitment and not for everyone. It has upsides and downsides. Saying that we have less purchasing power than the baby boomers--while it might be true--it doesn't present the whole picture.

Nonetheless, many people can afford a house today the same way they did a generation ago. Save save save. I live in an area with numbers similar to what you described. I make do on a very average income and owe money on a home similar to what you've described as well. Approximately 25% of my gross income goes toward my mortgage and utilities, 5% for food/clothes/gas/medicine/doctors, 12% goes toward my donations to religious, charity and nonprofit organizations. 15% goes toward savings/investments and 10% goes toward retirement goals.

Some of us learned to do without new trendy clothes each month. Make coffee at home instead of buying that latte from the trendy koffeehaus. Brown-bag lunches while peers would eat out. Purchase used vehicles. To go without a cell phone, the text messaging and data package, a new computer, cable television, high speed internet. To shop sales, discount stores, and purchase grocery items on sale and in season. To be conscious of extra energy/utility costs. To do without going to the movies or buying theater popcorn. To go to the library instead of the bookstore. To realize that gas getting to the library was also an added unnecessary expense (and a luxury).

Sure, you can get that extra soda or candy or popcorn at the theatre and it might not make a difference to your situation, but then again, every little bit will add up very quickly.
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Old 02-28-2008, 09:19 AM
 
Location: Papillion
2,589 posts, read 10,519,291 times
Reputation: 916
Quote:
Originally Posted by jinxor View Post
Purchasing a house is a commitment and not for everyone. It has upsides and downsides. Saying that we have less purchasing power than the baby boomers--while it might be true--it doesn't present the whole picture.

Nonetheless, many people can afford a house today the same way they did a generation ago. Save save save. I live in an area with numbers similar to what you described. I make do on a very average income and owe money on a home similar to what you've described as well. Approximately 25% of my gross income goes toward my mortgage and utilities, 5% for food/clothes/gas/medicine/doctors, 12% goes toward my donations to religious, charity and nonprofit organizations. 15% goes toward savings/investments and 10% goes toward retirement goals.

Some of us learned to do without new trendy clothes each month. Make coffee at home instead of buying that latte from the trendy koffeehaus. Brown-bag lunches while peers would eat out. Purchase used vehicles. To go without a cell phone, the text messaging and data package, a new computer, cable television, high speed internet. To shop sales, discount stores, and purchase grocery items on sale and in season. To be conscious of extra energy/utility costs. To do without going to the movies or buying theater popcorn. To go to the library instead of the bookstore. To realize that gas getting to the library was also an added unnecessary expense (and a luxury).

Sure, you can get that extra soda or candy or popcorn at the theatre and it might not make a difference to your situation, but then again, every little bit will add up very quickly.
Excellent recap - a great way to give the tangible side of "Priorities"
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Old 02-28-2008, 10:18 AM
 
1,408 posts, read 8,002,473 times
Reputation: 676
Quote:
Originally Posted by hindsight2020 View Post
To put it in other terms, my father had more purchasing power when he was my age with a lesser income than I do today, adjusted for inflation. That's a fact, although you'd find it hard to get most baby boomers to acknowledge such paradigm shifts (my father has finally admitted it at least).
Maybe your father did but mine certainly did not. Yes my parents bought a brand new home for what is considered by TODAY'S standards a ridiculous amount of money ($22,000) BUT his mortgage was almost HALF of his monthly pay. My parents struggled and they did without until they were able to afford life's luxuries. They started out with used/handme down furniture, one car and very little extra money. Eventually over time when my dad's salary improved they were able to enjoy themselves. Oh and they still live in that very same house. raised 3 children in it (GASP it's only 900sf with ONE bathroom and NO garage!) and at one point we even had a cousin live with us for 3 years.
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