Category Archives: Money

We’ve Found the Perfect Home for Us. Ours.

By | Live NOW, Local Phoenix, Money, Uncategorized | 2 Comments

moving - entryMost of you know we’ve had our house on the market for a while now. The first weekend, we had 8 showings and within three days, a contract! Then the contract fell through due to  the buyer’s financing. After that, we had plenty of interest and even offers but but no sale.

While putting a house on the market and not selling could be incredibly frustrating, Robert and I actually feel good about it. The experience has required us to take a close look at our income, our expenses and our goals for the future, including retirement and planning for our kids’ educations. We needed this!

Throughout the last few months, I’ve struggled with the idea of leaving our home.

Despite its small size and the things that have irritated me about it over the years, I love my little house. I love my neighbors and I love this part of town. I kept hearing this little voice in my head suggesting that we might not be “done” here yet.

And honestly, the homes in our price range were pretty dismal. Most would require a major investment of time and money just to make them livable. We’d be moving from a very beautiful, comfortable home into a place that would require more energy and money than we really have to spend in this stage of our life with young children.

We considered our options. Everyone kept encouraging us to keep going forward. And several people constantly encouraged us to spend more than we should so that we could have a bigger home in a “better” neighborhood, but –

The idea of buying more than we can afford goes against our value to live within or under our means and plan for the future.

To some degree, we follow the wisdom offered by financial advisor Dave Ramsey to save, buy when you can afford to buy and strive to be debt free. He offers a great plan for getting out of debt and on the road to financial stability (as much as that is predictable).

We don’t agree with Dave that a person should only buy a home when they can put down 20% to avoid PMI. This seems unrealistic for most people – depending on where they live. On the one hand, it makes a lot of sense to avoid the PMI of a loan for which you’d not put down 20% – especially because due to the loan shenanigans of the last several years, PMI is now permanent on some loans.

On the other, if you can buy a home that’s below market value it’s possible that it might appreciate enough in a few years to sell and put down 20% on a home of similar value. However, because the housing market is not exactly predictable, every buyer has to make this decision knowing that a home might not go up in value or at least not as much as they’re hoping it will. Plus, it requires some serious discipline and humility not to think you have to “move up” to something bigger and better.

We agree with Dave Ramsey that –

It’s not wise to commit to a mortgage when one can’t pay the upkeep or make necessary improvements without taking on extra debt.

The cost of upkeep is something buyers often overlook when considering the purchase of a home.

Upkeep can include anything from general plumbing, roof or electrical repairs to paint, landscape (trimming trees) and replacing major items like air conditioners, appliances or water heaters. One way to plan for this is 1% rule, which suggests estimating upkeep at an average of 1% of a home’s value into annual upkeep over the life of ownership. That would mean that on a $180,000 home, a buyer should expect they might spend $1800/year or $150/month. When considering a mortgage, PMI, insurance and property taxes, the extra $150/month is a significant additional expense. You can read articles about this on MSN money, Budgeting.about.com and the National Association of Builders.

Because of the major expense of annual upkeep, I agree with Ramsey that it’s ok to rent if owning a home would put a strain on monthly cash flow and not allow for savings.

But I also have a slightly different outlook from Ramsey, thanks in part to my husband’s “live now” attitude and my own life experiences.

While I believe in saving, being wise and planning for the future, I also know that life is unpredictable, short than we expect and should be enjoyed now.

We are learning to plan fun into our budget now instead of waiting for the future. We haven’t always done this, falling into the category of being so frugal I didn’t buy clothes for myself, makeup or get my hair cut. Rob and I also never went out alone just for fun. A wise friend said to us, “It’s great that you two plan and save so carefully. But what are you working toward? You need to enjoy your life now.” Wise words.

So, I don’t agree with Ramsey that paying $3 for a cup of coffee is a waste. I’m not paying $3 for coffee, I’m paying to spend time in a space I like, with people I enjoy and get a little breathing space away from the kids. In my book, that’s a well-spent $3!

Life is meant to be enjoyed and as long as I don’t have to go into debt to buy $3 cups of coffee, I’m going to budget for them.

That said, we needed to make a decision about our house after being on the market since April. Here were our 3 options:

1. Significantly drop our listing price, which would leave us short a good down payment or reserve cash. Although we wouldn’t make much on a house we’ve spent significant money upgrading, we’d still be free of the responsibilities of home ownership for a while. Also, we could probably rent somewhere inexpensive and save money we’d normally spend on upkeep.

We don’t mind the idea of renting but truthfully, our mortgage is so low now, we can live at our current home for less than renting a two bedroom apartment elsewhere. That includes upkeep.

2. Buy another home and rent our townhouse to someone else.  EXCEPT – we can’t afford to carry two mortgages PLUS upkeep on one income. We don’t have the reserves to go without a renter and it’s likely at some point we would lose the rental house.

3. Take our home off the market, refinance it (due to market fluctuations, we have been unable to do this until now) and sit tight a little longer.

And for now –

We’ve decided to go with option three and stay in our current home.

We spoke with trusted, wise friends who, respecting our values, goals and situation, offered us their thoughts. We’ve decided to refinance and put the little extra monthly into savings and upkeep on the house.

And the experience clarified my current thoughts on home ownership, which have changed significantly over the years. Here they are.

A house is not an investment.
A house may or may not go up significantly in value. While over time, houses tend to go up in value, the timing is not predictable. If the crazy housing market of the last few years hasn’t taught us that, we’ve not been paying attention.

A house is a place to live.
Choosing a mortgage that fits well within our means is a way of ensuring (at least to the best of our ability) that we’ll have stable housing expenses and a place to live in the future.

So, here’s where we are.

We get to stay in a house that is familiar, in our favorite neighborhood, with neighbors we love.
It might be small but we can make it work. After all, many people in the world would consider our home a mansion.

For those of you who prayed for us and encouraged us, thank you.
We felt it and know it contributed to our decision. We feel good about where we are!

We’d love it if you’d share your experience and wisdom in choosing a home, purchase or rental!

And as always, if you liked this – share it.

Read: Keeping Your Cool in a Hot Seller’s Market.

Read: How Knowing Your Family Values Will Help You Rock Your Life.

 

 

 

Keeping Your Cool in a Hot Seller’s Market

By | Money, Uncategorized | 5 Comments

Going house hunting can be an emotional experience. You walk into a listing and suddenly you can see your children playing in the yard and imagine waking up every morning to the perfect mountain view. Add granite countertops and the ultimate man cave and before you know it, you’re committing to a monthly payment that is way out of your budget.

Rob and I are looking for a single family house after 12 years of living in a townhouse. And, we’re still living on one income. So we know firsthand what those emotions feel like. In my previous post, we talked about how knowing your family’s values will help you rock your budget. Today we’re talking about how to practically apply those values to navigate the path to home buying without getting in over our heads.

So let’s get started. How do we find the discipline to define and stick to a reasonable budget when facing a hot seller’s market – as a buyer? Approaching the decision thoughtfully and putting the emotion in the right place will move us in the right direction!

Four walls and a roof do not a home make.

Let’s start here. If you have the means to buy a house – ANY house – you’re already living better than a majority of the inhabitants of planet earth. Rob and I have been in the homes of people all over the world who have had so much less than us. It wasn’t their beautiful surroundings but their kindness and hospitality that made their houses – home.

Remember, Pinterest worthy spaces don’t make a home. They simply provide shelter. The spirit, attitude and love you create within those walls are what really make your house a home. My parents never had much money and they worked hard to provide it. But the memories I have of my childhood are rich with laughter and love.

Choosing to buy a house that is not within your means will tax your relationship with your lover and take you away from your kids because you’ll have to spend so much time working to afford it.

Is there any other way? We think so.

We remind each other of our goal in buying this particular house.

We’ve been in a townhouse for the last 12 years. And, let’s face it. Most of the time, single family houses outpace townhouses and condos in the appreciation department. So, we’re not looking for a “dream house”. We just need to make the jump to the single family market. It does not have to be perfect!

We’re flexible with regard to size.

We don’t plan to live in our next house forever. From now on, we’ll move up slowly but surely. This means we may very well start our foray into single family housing in a (gasp!) two bedroom house. We’ve been doing it this long, what’s a few years more? Our kids don’t take up much space yet and it’s good for them to share!

We’re focused on location.

While we probably won’t be able to afford a single family house in the neighborhood we’ve enjoyed for the last twelve years, we want to stay close enough to Rob’s work that we don’t lose extra time and money commuting. Our value of being together makes this an easy choice. Another family might have a different value and that’s ok.

But staying close also means we will probably land in a “working class” neighborhood rather than a hipster one. We’re willing to work on our house and even help our neighbors if it will raise all our house values. It fits our core value of serving our community.

We want our expenses to be LESS THAN our income…

not at the edge and certainly not exceeding it. No dream kitchen or remodeled bathroom is worth risking our financial stability. While it’s impossible to predict what will happen in the future with regard to jobs and other expenses, as much as it depends on our decisions, we want to be wise and give ourselves margin to live and to deal with life’s unexpected twists and turns.

Speaking of Margin – We want some…

in our finances and also our time. We don’t shy away from hard work. But we don’t want to spend so much time working just to buy four walls in the “coolest” neighborhood that we miss out on fun moments with our kids.

I’ll never forget that when my strong, beautiful mom realized she was going to die at the young age of 54, she said to me, “I thought I was finally going to get to slow down and enjoy my life!”

Now, if you knew my mom, you know she was a FORCE. She did enjoy life. She had a great sense of humor and fed more people through dinners and parties in 2 months than a lot of people do in their whole lives. She was also a focused, hard working person who didn’t have any other speed but breakneck. But, she still expressed this feeling of regret and her words have haunted my thoughts and decisions since her death.

She wished she’d had more margin in her life. I want to learn the lesson from her experience.

We want to have spending money…

As in – cash – not credit.

This is something that we thought was superfluous for a long, long, long, long, long, long time. Yeah. Way too long.

I know this sounds crazy to some of you. But, for the majority of our marriage, except for the very beginning when I had a job at a Fortune 500 company, we’ve been on one income, first a church intern income and then a “real job” income (still at church!). So, we know how to pinch a penny, squeeze blood from a turnip and generally stretch money 7 ways since Sunday. And, with help from family and divine intervention, we’ve made it without incurring any debt.

But recently, when we sought financial planning counsel from a wise, long time friend, we realized that we’ve not done a good job of enjoying the money we’ve made. A huge chunk of our lives slipped by us and we were still saving every penny for the future and not giving ourselves the freedom to enjoy now.

Our friend said, “If you don’t take a little money to enjoy each other and the children God’s given you, you’re going to start wondering why you’re giving up so much for ministry. Don’t just save for the future. Enjoy your life now.” He was a dear friend of my parents’ and their deaths helped define his philosophy in this department. He encouraged us to save still but also to spend some of those windfalls on fun.

Not only do we want to enjoy time with our children, we want to spend time sharing life with our neighbors.

One of our primary family values is to connect with the people in our ‘hood on a regular basis. So, based on the above point about enjoying life in this moment, we now make it a point to go to our local coffee shop, ice cream spot or breakfast joint to enjoy great food and to meet the people in our neighborhood, “Mr. Roger’s” style.

We’re realistic about the “real” cost of potential houses.

You’ve probably heard the term “house poor”, right? Well, I don’t want to live there.

Yeah, I might have long for that light-filled fixer-upper with the pool (which also needed to be re-plastered) but in the end, I knew that while the list price was technically in my price range, the costs of repairs were not. As my wise sister reminded me, “The list price wasn’t the REAL cost of that house. Include all the repair costs, then add another $5k and you might be a little closer.” Or as my awesome real estate agent Keslie says, “It’s a money pit, Monna! Don’t do it!” Gotta love an agent who truly looks out for your best interests.

Speaking of Keslie, her words of advice are,

“You’re not allowed to fall in love with a house till you get the keys.” 

It’s an important concept to not get emotional about a house till close of escrow. It will allow you to approach the decision with a clear head and to forego a lot of heartache! By the way, I couldn’t recommend Keslie more highly. She has been amazing through this process.

In conclusion, the perfect house for your family is the one YOU can afford 

in money and time. It’s not necessarily the one being featured in Home and Garden magazine, it’s the one that still allows you to have the life you want to enjoy with them. If you’re working so hard to keep a building that you miss out on a life, you might just be missing the point of “home”. Don’t let friends or family or a real estate pressure you into getting something that doesn’t fit your budget or values. 

So, that’s how we keep our cool when it’s hot out, housing prices are rising and we’re feeling tempted to overspend. And, not only does it work for houses, it works for pretty much everything else.

Share your wisdom in the comments!

How do you stay in your budget when you’re shopping fora major ticket item?

Read more: We’ve Found the Perfect Home for Us. Ours.

Read more: How knowing your family values will help you rock your life!

 

A Quick House Update and How Knowing Your Family Values Will Help You Rock Your Life!

By | Money, Uncategorized | 2 Comments


Some of you have asked how the house sale/hunting is going. Well, here’s a quick update!

First – we received a solid offer on our townhouse – which we’ve accepted.

Yay! We’re in the first ten day period right now so we’re doing inspection stuff and moving toward a close date. Of course, having a move date means the family and I now have to face the reality of moving from our safe, sweet little place to a new one that’s unfamiliar and unknown. Ah, change. More on that later!

In the meantime…

Our Real Estate agent, Keslie Halonen, and her team and I are diligently searching for a house that will fit our needs and budget.

It’s not that Rob doesn’t participate. But the daily searching is my department and I like it.

When we first started looking for a house, we did the typical pre-approval process for a loan and compared it to our budget. We decided right away that we didn’t want to spend as much as the bank thought we could. But after a few months of searching Phoenix’s smoking’ hot real estate market, we sure were tempted to up the ante.

With a very low number of houses on the market and previously low interest rates starting to climb, buyers are jumping on houses the day they hit the market and creating mini bidding challenges for each other. It’s a great time to sell but challenging to buy when you’re bidding against cash investors and people who can outbid you.

I realize some people will think it’s a little crude to discuss a housing budget publicly.

But when has that ever stopped me from tackling a somewhat taboo topic? This is something people don’t talk about enough. It’s why so many people got in over their heads when the market went cuckoo bananas a few years back and then crashed.

Readers often ask me how we manage to live on our income, afford a house, buy healthy food for our family and avoid debt. So, I’ve decided to start talking a little more about how we make financial decisions for our family. I’m gonna open up and tell you our secret.

The secret of maintaining our budget isn’t all that big a secret!

We know our life values and we live within our means.

Our culture and our generation expect to live at a certain level of income and social status, particularly if we have acquired a college degree or two. However, that expectation isn’t always congruent with the other choices we make. Something has to give. Rob and I are committed to being transparent about our feelings and in sync with each other about what we value in life. Then we set guidelines we’re both willing to follow in approaching financial decisions.

In a lot of ways, the above pic is a perfect example of how we have known our values since we got married and stuck with them. A lot of people counseled us to buy ‘more house for the money’ when we were first married. But we knew we were going to be on one income so we bought well within it at the time. If we hadn’t, we’d have lost our home when everyone else did. Sure, there are things we wish we’d done differently with our house with regard to selling at the right moment etc, but we don’t regret picking a home within our means and our values.

In our case, our values are:

Enjoying our family now, in our “youth” (hey, RELATIVE youth)

Making a living as artists

Serving our community

Along with those values, I stay home with our kids while they’re small. To do this, we live on one income. While I sometimes think I’m gonna pull out my hair over the challenges of the budget that comes with that choice, I am willing to make the trade off for now because I don’t want to miss these very short moments with my small ones. It helps that Rob pushes me out of the house regularly to get a break from the sound of small whining voices.

In later posts, I’ll explain how a little more about how these values guide our financial choices. And, I’ll be honest. We don’t always do it right – but we try to give ourselves grace and learn from our mistakes. But we are also learning how to enjoy life on the budget we have right now – instead of waiting till we reach a higher financial threshold.

Knowing our values helped us to set realistic expectations for what we need in a house and helps us stick to our guns as we shop for it.

Next – Keeping your cool in a hot seller’s market!

Read more. We’ve Found the Perfect House for Us. Ours.

Organic Holiday Savings!

By | Money | No Comments

As the holidays approach, I find myself spending a lot less time writing and a lot more time balancing regular life with a crazy holiday schedule. Also, I’ve been thinking a lot about saving money where I can I so that I have a little extra for those special treats and gifts we associate with the holidays. Here are some of the tips we’re using this holiday.

1. Plan ahead and shop with a list.
First of all, planning means less “emergency” trips to the grocery store. Plus, you’ll be less likely to grab impulse items as you’re coasting through the store.

2. Make it from scratch now and freeze it.
This works for a number of things, from poultry stock (chicken stock) to cookie dough and even pie crust (keeps frozen up to a month).

3. Plan some simple, healthy and inexpensive dinners that will allow you to spend more at the holiday.
We are making a lot of bean soups right now. Our kids really like them and we can include a lot of veggies to boost their little immune systems. We use our homemade chicken stock as a base and go from there. Soups can also be frozen and thawed for a quick meal with corn bread or a crusty loaf of sourdough.

4. Take advantage of good warehouse or bulk deals.
While we shop local whenever possible, we also take advantage of bulk buying clubs like Costco to stay within our budget. This is how we can be an organic family in a big city where access to affordable, local and organic products are not always so easy to find.

This week’s great buy was dairy products from Costco. We make it a point to try to go organic on dairy products like butter, cream (for Robert’s coffee), and eggs. Here’s a great example of warehouse savings. This week, I bought 64 oz of organic whipping cream for $2.99! That’s 1/2 gallon of cream. We’re all set for pie.

Compare that to the Land o’ Lakes non-organic canned whipped cream selling just down the aisle – 3/14 oz cans for $8.89. I’m not sure how to fairly compare these because one is already whipped but if you just do a oz to oz comparison, I saved about $10 on whipping cream alone.

Isn’t it amazing to know that for some items, you could actually buy organic for less than you’d spend on conventional?  It’s not too late! Get out that list and shop smart this season. Costco also carries organic veggies like spinach, lettuce and carrots as well as frozen organic veggies like corn and green beans.

Last year, I showed you how to make your own homemade whipping cream.  It’s super easy and takes just a few minutes. The video is kind of funny because we decided to do it on my husband’s droid – and we didn’t have a way to edit it at home to take out the noise. Hope you get a kick out of it – but most of all, I hope you give making homemade whipped cream a try.

We had trouble uploading the video this morning but you can watch it over at my old blog.

Once you learn to whip it, you will never go back!!
Bwahahahaha!!!