Paying Cash for a house.
Below I was talking (venting :-) about how people really need to just start paying cash for everything including their house.
I received this question about it below so I thought I would clarify myself.
"How is it possible for a married couple living on 30K to buy a house with cash? The national average for a house is right around $200,000. If you made 30K, didn't pay taxes on it, and did nothing but save it,it would take over 6 years to pay cash for a house. Where do you live in the meantime and what do you eat? It doesn't seem possible. Is it? "
Ok, Here's the deal. I mis-spoke. What I meant to say was a couple making 30K each could easily pay cash for a house. Yes, it would take much longer if you made 30K total as a couple.
If a couple made 60K, lived on 30K of it and then saved the other 30K they could pay cash for a 200K house in a little under 7 years and save about $400,000 in interest give or take. (that's just a guestimate:-) I would have much rather paid for a house in 7 years than 30!
I see couples who make this much and more out of college all the time but they are in hawk up to their eyeballs with new cars, new furniture etc. Even if you didn't want to wait that long you could still buy the house and pay off it early. I would at least rent for 2 or 3 years and save up 100K to have a sizable down payment in case someone lost a job.
The problem is people don't make financial security a priority. People complain when they have a lost a job, or want to stay home with the new baby that they can't because of all the bills. In reality most people can if they would just put living debt free in the top half of their list of priorities.
Although even if you just earned 30K there are ways. There are houses for under 100K all over the place. Yes, they are small but it's a couple starting out you don't need much. It would be great to have it paid off when the kids start coming along.
Anyway, sorry I mis-spoke I hope that clears it up!
Tawra
I received this question about it below so I thought I would clarify myself.
"How is it possible for a married couple living on 30K to buy a house with cash? The national average for a house is right around $200,000. If you made 30K, didn't pay taxes on it, and did nothing but save it,it would take over 6 years to pay cash for a house. Where do you live in the meantime and what do you eat? It doesn't seem possible. Is it? "
Ok, Here's the deal. I mis-spoke. What I meant to say was a couple making 30K each could easily pay cash for a house. Yes, it would take much longer if you made 30K total as a couple.
If a couple made 60K, lived on 30K of it and then saved the other 30K they could pay cash for a 200K house in a little under 7 years and save about $400,000 in interest give or take. (that's just a guestimate:-) I would have much rather paid for a house in 7 years than 30!
I see couples who make this much and more out of college all the time but they are in hawk up to their eyeballs with new cars, new furniture etc. Even if you didn't want to wait that long you could still buy the house and pay off it early. I would at least rent for 2 or 3 years and save up 100K to have a sizable down payment in case someone lost a job.
The problem is people don't make financial security a priority. People complain when they have a lost a job, or want to stay home with the new baby that they can't because of all the bills. In reality most people can if they would just put living debt free in the top half of their list of priorities.
Although even if you just earned 30K there are ways. There are houses for under 100K all over the place. Yes, they are small but it's a couple starting out you don't need much. It would be great to have it paid off when the kids start coming along.
Anyway, sorry I mis-spoke I hope that clears it up!
Tawra
posted by Tawra Jean at 10:36 AM
4 Comments:
Did you pay cash for your house???? Honestly, you have to enjoy life --- what you are talking about -- cutting corners to the point that everyone is miserable is totally unreasonable. I have yet to meet anyone who has been able to pay cash for a house!
Actually I'm not talking about cutting corners so that you’re miserable. We lived on 36K last year and spent 6K paying off our medical bills and car. We aren't even close to being miserable and we are a family of 5! A newlywed couple could live on 30K easy and not be miserable.
It's the "enjoy life now" attitude that sends people whining to me 5-10 years down the road when they want to have a baby and “can't stay home” with it or they get laid off and "don't know what to do" or get sick or injured and the "only way out is bankruptcy".
People don't make planning for the future and putting their finances in order a priority because they "want to enjoy life" or "they work hard so they deserve it".
It’s all about priorities and I'm just saying that being debt free needs to be at least in the top half of their list! (I think it should be at the very top but I will give them slack. :-)
Tawra
Hey mr or mrs anonymous.....its totally possible to pay cash for a house in 3-5 years....I've read a bunch of articles saying why its not a good idea to pay cash for a houe and take out a mortgage instead...i've yet to agree with any of them......
its like this, You stop using credit cards and loans to pay for your life and look what will happen..
You stop using car loans and paying on average of 5 grand a year on a loan...Stick that in a mutual fund and in 30 years you'll have over a half of a million dollars..
So, paying 100 grand today for a house is cheaper then paying 150 over 30 years?....That'll free you up 600 bucks or so a month to also put in a mutual fund or savings...
Credit cards are NOT emergancy tools...thats is such a stupid idea to use credit as an emergancy tool........There are people i know who make 36 grand a year and have saved 2 times there annual salary in 3 years.....
Im 23 years old, i vow never to live off credit...and on my plan i've got now...im gonna have enough money to BUILD my own house by the age of 26......
When you don't live off credit the only bills you have is utilities and insurance.....
And don't post anything dumb saying, well you won't have anything cool....Cause i'll have enough money to pay CASH for that flat screen TV while your still paying minimum payments on yours..
JP
When my husband and I married, we were both going into public school teaching. Some of our old teachers, married to one another, gave us advice that we followed. Live off of one income from the start. Put the other income away. We did it. Sfter just 5 years of putting my entire paycheck away, small as it was, we had more socked away than most people twice our age. And it gave us options most people don't have (we used it to quit our jobs and send my husband back to grad school). What was left after grad school became a big down payment on our current home. He still makes about what a public school teacher makes, but is very happy in his new career, and I'm able to stay home with our 3 children because we never learned what it was like to live on two incomes. I'm forever grateful for that advice, as without it we might have been trapped in jobs we didn't enjoy while my children were raised by daycare because I "had" to work.
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