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I am new to this forum. I will start off saying a bit about myself and my situation and family.
I am 22yrs old. Work full time in a factory. I have two children, son just turned 4 on the Dec 2nd. (Yesterday) And my daughter was born Aug. 30th. My girlfriend is 20, working part-time @ Wal-mart. Going to school full-time for a finance degree.
We are really wanting to buy a home, but want to get some opinions on if we should try and do just that, or rent for a few more years.
Our current situation is...
Car Payment :296, Truck Payment:212 (Less than 5k left, will be paided off in Feb (THANK GOD!) )
Insurance: 147$ a month (I have shopped around, can't find anything cheaper with the same amount of coverages we have.)
Cell: 165$ (3 lines my family member pays there own portion.) (We don't have a home phone,so cells must stay.)
Avg. Utlities cost are 350~ a month. But we live in a tiny 16X60 Mobile home right now.
Rent WAS 400$, landlord informed us last Jan that this year in Jan if we wanted to resign the new rent was 525$ a month. (They upped all there rents, also did a pretty decent makeover of all properties)
We avg. 300-350 a month for food if we can stay away from fast food. And roughly 300$ in gas when shes out of school and about 500 when she is in school. Selling the truck or car isn't an option as we need both vehicles. I thought of selling the truck and down sizing to a car, but I only have 35k miles on the truck so I have no intentions of getting rid of it.
We are looking at purchasing a mobile home threw an FHA program. The total cost of land,home, and all other fees is about 115,000. The payment would be roughly 670 a month with PMI for the first 6-8yrs then 625~ ish after that. Down payment is a minimum of 3.5% (Which is what we will have.). So any and all opinions or options are open to the floor. We are young, and I don't want to make any more mistakes.. I know you live and learn, I've just been lucky enough to stay afloat with some of the dumb moves I've made. We have bought 5 new cars in 3 years, 2 used cars, and 6 cash cars. (I have a prob holding onto a car normally.) My credit score is about 720~ I've been told it'd be better if I'd stop trading cars in, and getting new loans. The home we have picked out that brings us to the total we are seeing is one we could see ourselfs living in for the next 20-30 years easily. Have an area of land picked out near our family. SO please let the opinions flow!
Myself:368 after all deductions. 480 Before. (Weekly)
Girlfriend:roughly 350-375 after all deductions. 475-500 Before (Bi-weekly)
Family Member: 75 (Cell monthly.)
Myself:368 after all deductions. 480 Before. (Weekly)
Girlfriend:roughly 350-375 after all deductions. 475-500 Before (Bi-weekly)
Family Member: 75 (Cell monthly.)
How does your girlfriend (who works part-time) make more than you, who works full-time?
How does your girlfriend (who works part-time) make more than you, who works full-time?
He listed his girlfriends income bi-weekly and his weekly. He makes more.
Does your GF pay for school? Where is that in your budget? When will she be done with school?
Stop buying new cars. Once the car is payed off in Feb, take everything you were paying towards the car and start saving it. Your utilities look a bit high. I'd start to look there for savings first.
I wouldn't do it right now. You need more earnings and a larger down payment. Forget all the instant gratification of buying more new cars, bad investment.
You are young, make yourself a goal to save X# of dallars over the next 2-3 years, cut all needless expenses, put a larger downpayment on a home and keep some additional money aside for emergencies.
There will always be another home and another lot available.
She gets grants for school, we pay little to no money out of pocket and sometimes get money back. She has 2 years left. I agree buying new cars was a bad idea, we were living for free and thought we'd take advantage of that and get two new dependable rides for years to come, but then couldn't quit trading (We are done now though.. lesson learned!) It's going to be hard to cut bills... around here ours are actually low compared to most. For examply my parents have a 1200sq ft home and there light bill alone is 300-400 a month depending on a/c use. We really do want to cut bills down, once our contract with the cable company runs out we are going to shop around for a basic tv/internet package elsewhere. We must have internet for her schooling, and tv... well is my only enteritament normally. Thanks for the advice so far guys and gals. Keep it coming.
Yeah, I actually thought the $350/month was pretty low for utilities. But then it depends on what you include for utilities. To most people, "utilities" just includes {power, gas, sewer, water, trash}, but I also include {tv, internet, phone}, because those are still utilities, they are just optional ones. I see you listed phone separate, so I assume your "utilities" includes all 7 of the others. If so, $350 is pretty good.
It sounds like you actually aren't in that bad of shape, overall, to me. Most people your age are paying off tons of student loan debt, credit card debt, and car debt. You only have the car loans, and one of them will be gone in a few months. Now that you have reliable vehicles, stop buying so darn many cars. Take care of the ones you have, and they will last you a long time. New cars are a status symbol, but unless you are either independantly wealthy, or making 100k a year, they are one that young people just can't afford.
That said, I don't think you are ready to buy.
Sit down and make an actual budget, and figure out where all your money is going, because here is what I see. Based on your numbers (and figuring in that "weekly" does not mean x4 to get monthly, because of the extra few paychecks per year), you bring home about $2480/month. (Most months you are probably closer to $2300, $2480 is the average over the year, with the extra paychecks figured in)
For expenses, figuring at the high end of each number you said, I see $400 rent, about $500 for car payments, $500 for gas, $350 for groceries, utilites (all) about $515, and insurance about $150. That totals $2415/month, which is almost as much as you make. Even at the low end, you are still at about $2165. You are just barely getting by each month, and that isn't counting all the inconsequentials, like clothes, tools, school supplies, that come up in life, and really isn't counting things like dental work, (which I'm guessing your insurance doesn't cover, if you are only paying $150/month for 4 people).
You are talking about upping your house payment by $270/month, plus the increased cost of utilities, which it sounds like will not be insubstantial. Not to mention things that become your responsibility when you own the house, like yard tools, appliances, paint, lots of various repairs, and will you need to buy new furniture at the new house for the extra space? I'm not sure where that extra money will come from. You need to get both cars paid off, and then save for a little while before you are ready to buy.
Given the numbers you've listed, I don't know how you managed to save up 3.5%.
Personally, I don't think people should buy unless they have an emergency fund of at least 6 months expenses saved up in addition to their down payment, but that is just my opinion.
Yea the 350 is just water,lights, and cable. Our water runs roughly 38-48 just depending on frequency of clothes being washed, and showers and such. (Try to keep showers to every other day during this time of year since you don't really get nasty and sweaty.) Lights run 120~ right now and roughly 150-165 during the hotter months. Not really sure if theres anything else we could do to cut that bill down, but I'd love to get it down under 100 a month but prob not possible. Also when I do our budget I come out to this with all our current Bills.
Lights:150
Water:50
Cell:160
Insurance:250 (Going to 200 after I pay the truck off and 147 if my cousin does get his own insurance if not I still have his additional income of 120 a month so it'll make up the difference easily on its own.)
Car:296
Truck:212
Cable:120
Rent: 400 *Going to 525 next month*(Going to look for somewhere else cheaper lease is up next month.)
I get roughly 2413 a month on 4 week months. Outgoing <. > Incoming 2614. (That's currently. Not sure what my cousins going to do after the first of the year, he may get his own cell and insurance so I'll lose a small portion of that money then.)
I know it's not the right time for us a to buy, we just feel like renting is throwing our money out. And around here most places cost more to rent then It'd cost us just to buy a place. But thank you all for your words.
And I like your opinion on 6 months of reserve funds.. That's what I'd like to get. And our down payment was coming from our tax money, we fall in a low income bracket and last year filling just our one son we got over 6,000$ back between the two of us. Our Agent said if we both file single each carring a child we'd get around 8500-10,000$ just depending on the deductions we qualify for. When we get our tax money back in mid-late Feb. I'll only owe 4100 on the truck, so I'm paying it off in full first. Then the rest we are putting torward savings. She is also cashing out her stock purchase threw wal-mart we roughly have 5k in stock built up now. (She'll continue to add to it to rebuild it. Only took 1.5y to get that much as it was because wal-mart matches 100% up to 2,500 a year.)
Save 6 months expenses (mortgage/rent,utilities,car maintainance,food,etc)
Save 5-10% of the purchase price - trust me, even if it is 3.5% down, you will likely need money for furnishings etc. The more you put down, the less you will pay over time. Google mortgage professor.com, you will see what we are saying here. You have a long road ahead, the easier now, the harder later. Trust me.
As far as throwing money out the window, let's say your mortgage payment will be $450 a month, you will likely pay 75-80% in interest and about 20% or $90 will go towards equity. Even if you take a tax deduction against the interest, you will still pay about $300 a month in interest (completely thrown away, does not count towards equity). Over time the amount of interest paid will decrease and the amount of equity will increase, but only towards the latter half of the mortgage period. Owning a home costs $$$, time, maintainance, taxes - what it brings you is a place of permanance and stability/piece of mind once you actually own it.
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