5 Reasons Why Home Ownership Might Not Be For You
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The following is a guest post from Jen of Happy Little Homemaker.
My husband & I are in the midst of trying to sell our home. In Michigan. We’ve wanted to sell it for years…and we only built it six years ago! Before we built, we were in the cheapest apartments in town. It wasn’t the greatest neighborhood (nothing like a big city, but annoying nonetheless)– the apartment was small and dark with a tub that wasn’t deep enough to cover my thighs. We couldn’t WAIT to get out.
Now we can’t wait to sell! Over the last 6 years, we have learned that home ownership isn’t (and probably shouldn’t be) for everyone.
Do you have a nest egg?
Most importantly, you need to have a nest egg before you purchase a home. Dave Ramsey says that you should be debt free and have 3-6 months of living expenses before you start saving to buy a home. You should put down at least 20% and the remainder shouldn’t be more than 25% of your take home pay on a 15-year mortgage. Do you have $50,000 in the bank? If not, the timing isn’t right.
What is your 10 year plan?
When we were in college, we didn’t know what we wanted to do or where we were going to be in 10 years. So why buy a piece of property in a place you might not be in? Do you have kids yet? Will you both work when you have kids? These are all factors that might lead you to decide that owning a home might not fit into your long term plans.
What do you do for a living?
I read an article recently that the average person in my generation changes jobs every 3.5 years. I have listened to Dave Ramsey talk to people who have a house, move for a better employment opportunity, and are stuck with a house in a state they no longer live in. Worse yet, some people repeat that mistake and have several houses they can’t get rid of. Who wants to miss out on a great opportunity because you are chained to a house?.
Elderly Family/Parent’s Illness
Many fall into the “sandwich” generation; those people who are taking on the monumental task of caring for their burgeoning family, as well as their aging parents. People frequently move back to take care of their parents or bring mom or dad to live with them. If you do not own a house, you can go to them, or get a different place, as circumstances dictate.
Travel
It truly IS a small world and it’s no longer a once in a lifetime event to travel halfway around the world. What if God calls you to mission work on other continents? What if you decide to move to Italy like Rachel @ Small Notebook? It’s also not out of the question to go somewhere to visit and love it so much you would like to move there. Why saddle yourself down to a house if that is an option you are open to or actively looking for?
This world is full of options and possibilities and it’s impossible to know what your life will look like. I try to be able to embrace change and adventure by keeping my life as simple and flexible as possible so when the opportunity comes up, I can say “YES!”.
What would you like to be able to say “YES!” to if the opportunity arose?
Jen writes about simple living and the nitty gritty details of embracing her vocation at Happy Little Homemaker. She has also started a new product review blog (Happy Homemaker Reviews) focusing on ways to save your time, money and sanity! Jen is a proud wife and mother to two little girls…so far.
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My husband is a pastor of a church. When we moved to our current town, we were blessed to be able to move right into a home, the parsonage of the church. When we moved here about 5 1/2 years ago it was just the two of us, we now have three children. Our house is about 2200 sq. ft. We do not pay for our home, however, if we chose not to live here and wanted to buy our own home, my husband’s salary would increase around $750 to cover rent/mortgage. We have been struggling with the decision to purchase a home for the last two years. It is hard to know what to do. There are several improvements we would like to make in the house we live in but feel like we would be throwing our money away if we did this because it is not our investment. Somedays I think we should be content to live in a free home, but then I remember that its not really free because my husband’s salary is decreased while we live here. Any advice for this situation would be greatly appreciated.
@Kristi, we rented a 200 sq ft cottage (yes, really) when we were newlyweds. It was the cheapest thing we could rent in Santa Barbara and it was in an excellent neighborhood. Even though we were renting, we chose to make some improvements that made living there that much easier. We lived there for four years. Making some changes to the place made living there so much nicer which helped us be more content with 200 square feet which saved us a lot of money in the end.
We should all remember that our personal value is not tied up in what we own or have. Our personal value is who we are and the relationships we have in our lives. Our net worth, on the other hand, is directly related to how much we own and owe. (For non-number people: net worth is value of everything you own minus everything you owe.) It is certainly possible for a couple making less than $50,000/year to save $50,000. But it won’t happen in one or two years, and maybe not even in 10. I’ve also seen people who live in million dollar homes who have less net worth than a family making $50k. The key is to save for a rainy day, because rain always happens. And always buy less than you can afford.
Just so you know: this isn’t just talk. We are walking this walk. If I gave the details, the post would be too long. Suffice it to say I am not ashamed to say when necessary, “we cannot afford that right now.”
@Kathleen K, very true! I am trying to get in the habit of telling my kids that we are choosing not to buy that. It doesn’t send signals that could get misconstrued by family, and tells them that some things are better than others.
Interesting thoughts. However, I want to share that home buying works for us, and we do not meet most of your criteria. When we bought our home two years ago, we had only $10000 in the bank at the most after a 5% down payment on a $80,000 house. We bought below our means and shopped around for a good deal. We are young, in our twenties, and don’t always know what the future holds, except we are dedicated to staying in our home. We live paycheck to paycheck–yet pay our bills, something we were not able to do in this area while renting. I don’t mind paying for a mortgage, even with interest, as it is less than anything we could rent in the area.
We are not wealthy, or even considered middle class. We don’t make combined with two f/t incomes $50000 a year. Putting this stipulation on owning a home excludes everyone lower than the privledged. Not everyone is the same, and while you may call your principles “common sense” I disagree. Everyone lives their lives differently and needs to do what is right for them–not Dave Ramsey. I found this post to be written in a very condescending manner.
I don’t think anyone meant to condescend to anyone else, and I am sorry to hear that you felt that way.
It is true that these factors can all vary depending on where you live, what the housing market can bear, and how much you make. In your situation, if buying is cheaper than renting, then it probably does make sense to do that.
When we bought our first house, we did not have an emergency fund, zero cash, and we lived paycheck to paycheck. We were frugal, but we lived speculatively, counting on the next paycheck to squeak us by. We continued that way for about ten years. But, life happens, babies come, health fails, and unemployment comes our way. One day we found we were in the hole. We had to sacrifice a lot to get back on our feet, but we paid it off. That feeling of being in the hole is one of the worst feelings I’ve ever had.
I love owning a home. But, it’s not worth risking my children’s security in an unstable market. I disagree that it is only the “privileged” that could buy a home while still having an emergency fund. I think that if we want something bad enough, we’ll sacrifice to make it happen. But, again, it depends on which housing market you live in.
@Laura Evans, I totally agree with what Laura said, word for word!
@Laura Evans, I’m sorry that you felt it was condescending. I didn’t intend for it to come across that way.
I do, however, stick by my original assertion that you need to have money to weather a storm & make a down payment however those numbers look in your situation.
@Wendy (The Local Cook), Or because everyone tells you it’s what you need to do :).
I’m also from Michigan and currently trying to sell my house. Not for any major reason, just a lot of little ones. We built it 4 years ago and made sure that we could afford it based on my husband working 40 hours per week – then he was working 50-55. Thank goodness we did! He was pulled back to 40 hours per week the month before we were able to move in and has stayed there since. Now the market is such that we can afford to buy in town instead of out in the boonies – which will save us both money and time each day for travel. And we’ll be looking for a more inexpensive home as well – so that we can properly fund an emergency account all while saving on a mortgage each month. Though we also kick around the idea of renting for awhile as well – so for us it really comes down to what’s on the market when we’re able to sell. if we find “the house” we’ll buy, if not – we’ll rent!
Now to sell the house……. 😉
@Donielle @ Natural Living Moms, Good luck on selling!