Goals for 2009
So I’m a little late to the party but I still wanted to list out my goals for the year, both financial and otherwise.
Financial:
- Buy a home
- Work part-time after baby and still save money (at least $400/month)
- Take lunch to work at least 3 times a week
- Develop a regular contribution program for giving to charity
General:
- Complete the New Jersey State Sprint Triathlon on July 26, 2009
- Write everyday
- Make concrete steps towards a new career (contact potential employers, take classes, volunteer)
Emotional side of buying (or not buying) a home
Now that we’re staying in DC and had already saved up a substantial amount of money for the move, we are seriously considering purchasing a home. I’ve been wanting to buy for several years now, but since we were always planning on moving to London, it never made sense. Of course, I’m very glad we didn’t buy a couple of years ago since it would have been at the height of the market.
So being a first-time buyer, I sought out friends who had recently bought a home, did some research online and started moving forward. First, I submitted an online application on lendingtree.com. That seemed to bring in a lot of offers, but I was a little concerned that I hadn’t heard of any of the companies. Next, I submitted a pre-approval application to Bank of America, where we have our large checking account. We were approved for their No Fee Mortgage Plus Loan, which seems pretty good. Closing costs are low, but you pay for it with the points. Even still, the loan seemed to work well for us.
A friend had recommended her realtor. After some email exchanges on what type and price of home we were looking for, I spent Sunday looking at 10 places. Five at open houses and five with our realtor. Out of the 10, we saw one viable option. By viable I mean somewhere that was in our price range, close to public transportation, didn’t need too much work and was in a safe neighborhood. Unfortunately the one viable option was at the very top of our price range.
However, our realtor thought a low offer within our budget might do the trick. So for two blissful days, I really thought we might actually end up with a three level, two bedroom townhouse that was in excellent shape. Everything I could have wanted! While the loan numbers worked out to pretty much what I had estimated, the ridiculous condo fees completed busted out mortgage payment. Well that and the fact that our dream home’s zip code was labeled as a “declining market” by Bank of America meaning that we could could no longer use the No Fee Mortgage Plus Loan. I’d like to know just how many markets in the US right now would not be determined “declining”!
While the more expensive mortgage was annoying, it was really the condo fees that sunk the deal. Condo or home association fees could be an entire post by themselves! While the property that we were considering was a townhome, the community is organized as condominiums. The fee was almost $400 dollars a month. A huge amount considering that it wouldn’t go towards building equity and couldn’t be written off as a tax deduction. The fee covered some utilities but also went to landscaping, snow removal, and exterior maintenance of the townhomes. While I appreciate that it’s great that someone else will fix the roof if it starts to leak, I’d much rather be the one deciding the timing and extent of such repairs.
In the end, we couldn’t justify the huge chunk of our monthly income that would go towards all our housing costs and ended up not making an offer.
I, however, was truly upset. I had imagined us living there already with plenty of space for our growing family, no other dogs in the building to upset our dog, room for guests and entertaining, a chance to buy some real furniture, and no more ridiculous rent increases.
While I had not “fallen in love” with the townhouse, I was seduced by what it represented. Fortunately, my sensible husband and I spent a couple of evenings looking hard at the costs and our monthly budget. If not, I might have been tempted to go ahead and hope for the best.
Adjusting to huge changes
When I started this blog, my husband and I were just a few short months from moving to London after living in Washington, DC for 4+ years. While I knew the move was going to wreak huge changes in our lives and be very expensive, I was still looking forward to it. London is an amazing city and I was also planning to make a professional move that I’ve wanted to do for some time. A sort of fresh start. It was going to be hard, but worth it in the end.
After the holidays, my husband told me of the reservations he’d been having about the move. Bear in mind that our first child is due to arrive in 6 weeks, so we have a A LOT going on right now. Given that we both have stable jobs in DC and a network of friends, he feels it would be irresponsible to move a few months after the birth of our son without definite jobs, place to live, etc. I completely agree that the plan to move so soon after having a baby was never going to be easy and possibly a tad irresponsible, but I was ready and willing to do it. After all, we saved up plenty of funds for the move and months of living expenses, planned for over a year, and begun to wade through all the paperwork.
So we’re staying. It makes sense. But I’m having a hard time adjusting. I’m a planner. It’s hard for me to recalibrate when we’ve already gone so far down the path. In a lot of ways, I’m relieved. The move, a new baby, new jobs, new city was going to be tough. It’s much easier to stay. But I’m also disappointed. Granted, it was far more exciting for me. I didn’t grow up in London, so it still has an exotic appeal to me.
The weirdest thing, though, is that I don’t feel comfortable making the same big changes in my life now that we’re staying. I have a very secure and well-paying job in DC. I’ve been wanting to change careers for several years, but could never bring myself to take the necessary huge pay cut. By moving to London, I was starting fresh anyway, and thought is was the perfect time to enter this new field. I know this is ridiculous, but I just can’t bring myself to cut the ties yet. Plus everyone keeps telling me that starting a brand new job as a first-time mother is a recipe for disaster. I still can’t help thinking that I’m letting fear hold me back.
And lastly, I started this blog thinking I would be juggling savings, investments and taxes on both sides of the pond. It’s now going to be several years at least before that happens. Do I keep writing on the topic? It seems to be of interest to a lot of people or do I refocus given my changed circumstance?
How much of a house do you need?
I’ve been out of town for the holidays and haven’t had a lot time to write. However, being away did inspire this post. Due to the nature of my family – divorced parents and grown-up siblings – we’ve stayed in several homes this visit.
Each of the three has a very different space. One has a huge finished basement where they entertain most nights. Another has a much smaller house but they use the space very well. And the last has a large house that is far too spacious but is tough to give up.
As my husband and I currently live in a one bedroom apartment outside of Washington DC, space is at a premium. Things can be tight but we make due and we don’t really need extra space right now. That’s going to change once the baby comes, but we are mostly happy in our 700 square foot apartment.
Back in my hometown, real estate is far cheaper. My little brother owns two houses – he rents one out – but his primary residence is a spacious and comfortable 4,100 square foot home. Given that my husband and I may never own a home this size, it really points out how our choices (location, occupation, etc) affect how much house we buy.
The average square footage of a US single family home in 2007 was 2,521 sq. ft. Two of the three houses we stayed in are larger than the average. It’s been over a decade since I lived in a regular home. With college, grad school and then living in a pricey locale, I think 700 sq ft is the high water mark. To us, 2500 sq ft would be luxury!
Now that we’re moving, I really want to upgrade to at least two bedrooms but three would be great. With the baby and the increased visitors, three bedrooms would provide all the space we could ask for. However, a three bedroom apartment or house in our area could easily set you back $2000/month or $24,000/year. A mortgage would be a similar amount or potentially more.
To me the increased space comes with a high opportunity cost. Paying such a high amount in rent significantly decreases the amount of saving, travel and little luxuries that we can afford. Is it worth it to have the extra space all year instead of saving for the future or nice trips? Paying high rent also delays our buying a house. Given the market conditions, I and our potential lenders will feel much better if we have a hefty deposit.
So what it really boils down to is how important are marginal space and luxuries on a daily basis versus making progress on long-term goals?