So I have discussed in previous posts how I got to my current financial position. When I initially realized the position I was in early 2013 I created a rule for myself: I was going to pay off all of my consumer debt (e.g. cars, credit cards, etc) before I even considered buying a house. And for the first few months of that rule I was successful. I paid off our car. I paid off a couple of credit cards, but I still had about $20,000 in credit card debt. I paid off about $15000 in just over 9 months. Not bad, could’ve been better, but I thought a good start.
Then January of 2014 hit and I began to think about where I was in my life. I was a tenured faculty member at a university, which basically means that I am going to be living in this area for a while because it becomes very difficult to leave my type of position when you are tenured. I have recently gotten married and we have expressed interest in starting a family. And I have lived in this area for over 8 years and I didn’t feel like I had any roots. I felt like a gypsy.
All of these factors, combined with the constant drumbeat that interest rates were going to rise and I think I got a little bit of house fever. A lot of my friends were buying houses. People who were younger than I am were buying houses. Some people who were younger than I am were close to paying off their house. Here I was 40 and I had never owned a house. I guess I felt like I was behind in life.
So I decided to break my own rule, which probably wasn’t the smartest thing to do in the world. I guess I bought into the notion of the American dream with the family, dog, white-picket fence, all of that stuff. Now you don’t need to have a house to be happy. In fact, by most reports most of my students don’t want to own houses, at least this point in their lives because they prefer the conveniences of living in a city or close to where a lot of the action is. I decided differently.
Also, Mrs. ROB did make a great point when she constantly said I don’t like paying someone else’s rent. Why pay and rent something when you can own and build an asset over time? Well that was my thinking. So in late January 2014 I began saving money like crazy. I paid all of my bills on time, but I basically made minimum payments. I consolidated some debt so that I could reduce the payments to save more money. And I saved. And I did a lot of things over summer to increase my spending. We didn’t go out as much, take trips, and/or indulge in a lot of extracurricular activities so that we could begin our house search.
By the end of July I had enough money saved for a down payment, at least that was what I was told by various lenders that I went too. Mrs. ROB and I had been looking at houses on a passive basis for about a month or so, but then we started to get serious. We set a budget and looked in some towns where the houses were less expensive. We would’ve loved to have bought in higher cost areas, but I just couldn’t do it financially. My parents paid off their house early and I wanted to do the same. I didn’t want to be 70 and have a mortgage.
We kept looking and actually made an offer on a house, which was rejected (another post for another time). We were really disappointed that we lost that house, but within a couple of weeks I convinced Mrs. ROB to go to an open house. We went and Mrs. ROB was in love. She wanted the house and I have to admit it wasn’t a bad deal. We negotiated a bit and we got the house. Mrs. ROB and I are homeowners, even though we haven’t officially moved in yet.
I write this post partly because we are officially moving into the house this coming weekend. We have been buying furniture to fill the house and we are taking a step forward in our lives. I am still not sure how I totally feel about it. Financially, it isn’t a bad move. We got instant equity in the house. The payment isn’t much more than our rent. I got a great interest rate and a mortgage where I will be able to pay off the house earlier. The house also has potential where we can expand in some areas of the house and add value.
I am excited about becoming a homeowner, but I can’t help be somewhat disappointed in myself that I broke my own rule. I am supposed to be more fiscally disciplined and owning a house isn’t cheaper than renting. Maybe I am feeling this way because I am scared. The idea of doing my own home repairs and/or hiring someone to do it isn’t the most pleasant thought. Maybe I am just apprehensive about the financial responsibility. But that is why I have been treading water on my debt payment over the past nine months. We bought a house. I broke my own rules and now it is time to get back on the horse and begin again.