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So me and my fiance (mid twenties) are on track with achieving our goals. Those goals are:
1. Live in a different country (probably Nicaragua) within 3 years.
2. Pay off all debt prior to achieving #1.
3. Have 6 months expenses in savings prior to achieving #1.
4. Have 30K in combined retirement accounts prior to achieving #1.
5. Save enough for travel expenses of leaving the country.
6. Continue to pile on savings after everything else is achieved until our leave date.
We were convinced to NOT buy a home, since we could only afford FHA and it didn't really "feel right" to take on a mortgage without a proper EF. Also, it would have been contrary to the various financial self-training and behaviors we've taken on in the previous couple years (many many books read, and also pay close attention to this community).
But NOT buying? OMG!!! That is contrary to what pretty much every other person we talk to tells us. her parents, my parents, coworkers, the government (8k tax credit, tax deductible low interest rates), realtor, mortgage company, etc, etc. We were approved for a substantial amount of money, which surprised us. Apparently, everybody thinks its the perfect time to buy except us. But then again, nobody knows our finances and goals as well as we do!!!!
So I am proud to say that we decided NOT to buy, despite all of the pressures we felt from everyone else! And after the decision was made, we felt a great weight lifted from our spirits. I suppose that's because the mortgage creates uncertainty, in an otherwise well-thought, near-fool-proof, plan of attack on our goals above. The mortgage meant taking on home ownership, a loan, higher cost-of-living, slower repayment of debt, slower accumulation of savings, a lot of risks, etc, etc. The risk/reward ratio wasn't in the favor of buying, as you will clearly see from the scenarios below.
Here was our breakdown and thought process that led us to the final decision.
Best-case scenario if we BUY
The other great thing that lifted our spirits was my sister will be coming to live with us, which may give us less privacy, but will decrease our cost of living by ~$500/month, and will also help her too! In addition, my fiance just landed a new job which will gross and extra $600/month for achieving goals above!
1. Live in a different country (probably Nicaragua) within 3 years.
2. Pay off all debt prior to achieving #1.
3. Have 6 months expenses in savings prior to achieving #1.
4. Have 30K in combined retirement accounts prior to achieving #1.
5. Save enough for travel expenses of leaving the country.
6. Continue to pile on savings after everything else is achieved until our leave date.
We were convinced to NOT buy a home, since we could only afford FHA and it didn't really "feel right" to take on a mortgage without a proper EF. Also, it would have been contrary to the various financial self-training and behaviors we've taken on in the previous couple years (many many books read, and also pay close attention to this community).
But NOT buying? OMG!!! That is contrary to what pretty much every other person we talk to tells us. her parents, my parents, coworkers, the government (8k tax credit, tax deductible low interest rates), realtor, mortgage company, etc, etc. We were approved for a substantial amount of money, which surprised us. Apparently, everybody thinks its the perfect time to buy except us. But then again, nobody knows our finances and goals as well as we do!!!!
So I am proud to say that we decided NOT to buy, despite all of the pressures we felt from everyone else! And after the decision was made, we felt a great weight lifted from our spirits. I suppose that's because the mortgage creates uncertainty, in an otherwise well-thought, near-fool-proof, plan of attack on our goals above. The mortgage meant taking on home ownership, a loan, higher cost-of-living, slower repayment of debt, slower accumulation of savings, a lot of risks, etc, etc. The risk/reward ratio wasn't in the favor of buying, as you will clearly see from the scenarios below.
Here was our breakdown and thought process that led us to the final decision.
Best-case scenario if we BUY
- House has no problems.
- 8k tax credit.
- tax deductible interest so big tax refund.
- We keep our jobs and maybe even get raises.
- House appreciates at a rapid rate, and we can sell before me move for a fantastic return.
- We are able to leave the country comfortably, having achieved all the goals I mentioned above, and then some.
- House becomes a money-pit, one problem after the other, eating away at our savings and debt payoff goals.
- Lose our jobs and with little savings are forced into foreclosure / financial ruin.
- Housing market goes down and we are unable to leave the country, because we can't sell for profit, or rent for the same amount as we'll have to pay on our mortgage.
- None of the goals above are achieved.
- We achieve all the goals above and then some, having plenty of wiggle room in the budget for debt repayment and rapid savings accumulation.
- Housing market in our area drops substantially, potentially creating a new entry point that we are more equipped to capitilize on.
- Mortgage rates drop more.
- Government puts in even greater incentives for first-time buyers.
- We potentially fall in love with whatever country we visit and can easily stay there without having to worry about what's going on with our house on the other side of the globe.
- Lose our jobs and get evicted. Forced to live with our parents, but at least we don't have to face forclosure.
- Don't achieve goals mentioned above.
- Housing prices appreciate at a rapid rate in our area, leaving us feeling like we "missed the boat".
- Interest rates climb to 15% (worst-case, and I think that's happened before?)
- Government gives no incentive for buying (no tax deductions, not tax credit, etc.)
The other great thing that lifted our spirits was my sister will be coming to live with us, which may give us less privacy, but will decrease our cost of living by ~$500/month, and will also help her too! In addition, my fiance just landed a new job which will gross and extra $600/month for achieving goals above!
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