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Maybe Jersey really is different than other states?
Since when was 100,000 in income above average? In Nj that's smack dab in the lower middle income bracket.
What? $100K is certainly above average in NJ.
Essex County median household income is around $55K
I added up your listed expenses--there's a few grand missing per month.
So, you need 1 car. And insurance for that car. I'm not sure why you need 2 since your oldest child is 11. And seriously, that's a hefty lease payment. Spending that much money doesn't really make sense IMO. And as much as you're spending in gas, a hybrid would make sense.
Have you checked with an attorney about your IRS situation?
Have you attempted to spend less on groceries? My mom buys string cheese--at Costco it cost about 1/3 of the price. Bacon less than half. And so on.
You are living pay check to pay check, and that doesn't bode well for buying a house that could have tens of thousands of dollars in repairs, if you don't have a safety net.
Maybe you should check into a home buying class through the county (or a non-profit the county directs you to.) They'll go over your budget and know the particulars for your area. Some even have down payment assistance for completion. Homepath offers one for $1500 I think.
Essex County median household income is around $55K
It isn't. But then,you have Newark,East Orange,Irvington(poor cities) dragging down the median income for the whole county.
So,its not accurate. We already talked about this on the Nj forum.
When one car breaks down,I need to have a back up car. That's what the leased car is for.
I travel about 900 miles a week between homes,so something is bound to break down at any given time. Last week,needed breaks on the old car at $290. Before that,I replaced the engine at 3800.
The extra 2 grand was going toward the credit card bill and student loans.
Since that is fininshed,I will pay doen the Irs. Pretty much can't fight that now,as I already signed a form sayong I owed them the amount.
The home I want was 53,000 last year but shot up to by 10,000 this year. There are many more like this on the NjMLS.
Try to keep track of these homes. I bet you will see a bunch of cash transactions from investors
If you saw something for 53K last year, it doesn't mean you could purchase it for that amount. I was thinking the same way before I started submitting my offers and somehow I cannot buy even more expensive houses due to other cash offers. So, don't look back and say "I could get this house for 53K last year and it's 100K this year".
Read some threads about short sale story, bidding war and think.
I thought the whole purpose of buying a home was to lower costs,build equity,get tax deductions,and have an asset?
.
Ok.
I don't know where you got lower costs from.
Tax deductions? You want to spend a dollar to save 30 cents? Bad math.
Asset? In what respect? It's not an asset till you have equity in it. A zero down payment mortgage will have you paying for over a decade before you have any appreciable equity.
Your plan is a recipe for upside-down disaster.
Ok.
Your plan is a recipe for upside-down disaster.
+100!
OP had no idea that short sale houses might need expensive repairs, that people with lower credit scores have to pay higher interest fees... and thought the whole purpose of buying a home was to lower costs,build equity,get tax deductions,and have an asset...
Repair costs + taxes + insurance + PMI is like "whatever"...
So,why do people say owning a home builds wealth?
That renting is a waste of money? 1500 x 120 months= $180,000 that's a lot of money to never see again!.
Why do people tell me I'm giving the goverment more money by not owning a home?
OP, the one area I see you being able to cut your costs is your food, household, HBA spending. You need to spend some time (I know it's at a premium) learning how to coupon. You could cut those costs in half. I know some people with larger families than yours (teen boys included) who spend half your budget. You have the benefit of living in a high competition area where you have a choice of stores that double coupons: Pathmark (Ferry St), Acme, Shoprite, Whole Foods, Trader Joes, etc. You could make your list of sales on Sunday (Bergen paper has the best coupons), then shop at each of the stores you need during the week making a stop in between clients or at the end of the day to take advantage of each of the store's sales. PM me for info on what websites to use to learn how. And get your kids to help with this chore since time is a priority for you - make it a family event.
And there are other areas where you can cut down. I understand why you need 2 cars and why you prepay your repair/mainenance on the newer car, but as some have said, you need to cut your expenses and you need to look at each line item. New cars should need little repair, just maintenance for the first several years. Yes, you still need a back-up, but if you buy that car, rather than lease, your costs should go right down. BTW, there are good mechanics out there, but you need to do some investigating. I grew up in Kearny and still have friends there, so if you'd like, I can ask for recommendations for a reliable mechanic across the river from you.
Do you know how much money you will be paying on property taxes?
How much you will be paying PMI since you put less than 20% down?
What is the avarage price for the home insurance in the area you are looking for? Do you need additional flood insurance? If so, how much it will cost you?
Next time people will tell you home builds wealth, ask them why they think so in general and how it works for your situation.
In general it's a good idea to buy a house, but only if you can afford it!
You are not considering many little things that ends up in another good amount of money that you don't have and will not have. Your route is the direct way for being "house poor" if not foreclosure.
When you rent, you lose money more or less, but you also not responsible for anything like property taxes, insurance, PMI and in case something brakes, you call and it's fixed without you paying anything.
Renting is waste of money if you can afford a house. If you cannot like in your case, it makes sense.
How do you think people are ending up at short sales and foreclosures? Most people was wearing pink glasses and didn't consider other expenses that go a long with the house and look where these people are now.
Offtopic, have you ever consider moving somewhere else where you can get better quality of life without paying something like you do and live in better place?
0% down, no reserves, looking at low-end housing, etc. is not a great way to build wealth. The downsides greatly outweigh any potential upside.
Quote:
That renting is a waste of money? 1500 x 120 months= $180,000 that's a lot of money to never see again!.
Yeah, but you have to factor in all the costs of owning a home. Unless your rent is substantially more than your future interest payments, property tax, HO insurance, maintenance/upkeep, and depreciation on major components, then the risk is too high.
Quote:
Why do people tell me I'm giving the goverment more money by not owning a home?
Deductions are only a percentage (say, 25%) of what you're paying out. So if you spent $4,000 in interest and $2,000 in property tax (just making #'s up), you get back $1,500 on your taxes. But guess what - you still just spent $6,000 that you'll never see again! So you "lost" $4,500 on that deal.
Furthermore, the standard deduction is around $6,000 for filing single. So you haven't actually seen any benefit yet compared to currently. You'd only see an improvement on your interest and property tax that goes over 6K.
Also, instead of paying for two cars just in case one breaks - would it be more cost effective to just use a rental car on those days? How many days a year is your primary car out of commission? Having a backup car w/ insanely high insurance just seems odd.
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