Thank you for writting such an interesting column.
I enjoy them very much. Each one teaches me something. I often forward them to others when they are in similiar situations.
Keep up the good work.

Ellie

Please don’t buy a house right now. Nobody knows for sure what the market will do in a year’s time. It could be even better for buying a house, or it could be worse.

If you buy a house without a down payment and the market DOES get worse, you could quickly be owing more on your house than it’s worth. If you had a loss of income or were met with a costly medical expense (say, a complicated pregnancy), you could really be in trouble.

With your debt situation and low down payment, you probably won’t qualify for a decent loan. Your payments could be a lot higher than you thought, and you won’t have much equity.

I know it really stinks to move a lot. I’ve moved about five times in the last five years–all apartments.

Once you get rid of your $30k in debt, you’ll free up a LOT of your income. You’ll be able to set up a comfortable emergency fund and saving for a decent-sized down payment.

My husband and I are living in an apartment (with much to be desired). We’re having our first baby at the end of this year. Our only debt is a car loan, which requires payment of $277/month. We have almost $8k in emergency savings, with the goal of having a six-month emergency fund soon.

I’m not thrilled that we’ll be bringing home our baby in a car that’s not paid for, but having no credit card or other loan debt will be the best thing we can do for our baby.

Stay the course! Keep paying off your debt! And keep looking for a better place to rent. It isn’t a forever situation, but if you buy a house now and get in trouble with it, it could take you many years to dig yourself out.

Myhusband and I currently rent half of a house that is frankly, too small for us to have a family. In addition to that, our landlord keeps getting these letters from a bankruptcy lawyer, so it makes us a bit nervous that we could lose our home with very little notice to find someplace new.

We’re hoping to start a family soon, and we’re sick and tired of moving. We’ve been keeping our eyes open for another place to rent, but there’s currently nothing available.

We were recently offered a rent-to-own situation by one of my husband’s current customers. Unfortunately, that house is not going to work out because it’s really not suitable for kids.

Just for kicks, I decided to see what houses are going for around here in this troubled market. A year ago, $300,000 bought you a trailer, but now, I’ve found 2 nice little houses in our town for less than that – one for $275k and one for $229k. They’ve both been recently updated and really won’t require much work or money on our part to make either of them livable.

The problem is that we weren’t quite planning on buying a house just yet. See, we’re about $30,000 in debt. We’re aggressively paying it down – 18 months ago that number was $52,000, but we’re still far from the finish line.

Our original plan was to wait on buying a home until our debt was gone, but give our current situation, I wonder if it would be better to buy a house right now.

We currently pay only $950/month in rent(mega deal), allowing us lots of extra money each month to pay towards our debt. If we end up renting another place, we’ll pay at least $1500 – $1800/month, taking a huge chunk out of our extra debt payment money. Plus, that money will be gone forever, since we’ll be paying someone else’s mortgage.

Using a few of the online mortgage calculators, and figuring in things like taxes, insurance, and home repairs, we could quite easily afford to finance that $275k house and still have a few hundred dollars left every month to add to our minimum debt payments.
(I lean more towards the $275k house because the taxes are only $5000, as opposed to the $229k house with taxes of $10,000)

Our problem is that we don’t really have much for a down payment. We weren’t really thinking about buying a house right away so all extra money was going towards the debt payments. We have about $2500 in an emergency fund.

I’ve heard that getting a mortgage with no down payment is not a good idea, but what about in a situation like this? The market is so low right now that we could actually afford to finance the entire $275k, and if the maket goes back up to what it was a year ago, the house will be worth almost twice that.

What’s your opinion on this? Should we rent someplace else and lose all that money just to have to move again when houses are much more expensive?

Or should we buy a house right now while they’re cheap, without putting anything down, and still having that $30,000 over our heads? If we get a house that chea, it’ll keep our mortgage payment lower for the next 30 years.

Thank you for the website. I will study it and compair it to others I have seen, there have been quite a few differences in the calculations even with the same numbers.

!wanda (#56)

Thank you for your support, sometimes people tell you things so often you wonder if you are making the right decisions. I’m an wanting a completly debt free retirement, but just because I leave this job doesn’t mean I won’t get another, just something I enjoy and many people don’t understand if I am not happy why I just don’t quit now, “You could be hit by a bus tomorrow”. What a thought!!!! And if I am hit by a bus, what difference will all of their comments make anyway. But to walk away with only 8 years left seems stupid, guess I’ll just have to wait for that bus. The others just think I’ll die from overtime. LOL If I’m at work I’m not spending money, the lights aren’t on, the TVs not on, the temp in the house would be unbearable if I were home, either to hot or to cold. Many joke it’s just a warehouse for my stuff, well it’s a darn nice warehouse. I’m willing to shop at goodwill for my clothes, eat whats onsale, bring my meals to the office, and drive my car till it drops, my last one was 16 years old and full of rust, but got me from point A to B.

Trent,
So many of your thoughts/suggestions and comments from others reading your blog really made be buckle down and get to work getting out of debt. So many people still believe debt is a way of life, very sad. Sorry I babbled on, but yes I just got off work and have to be in at 6am, but only for 12 hours.

Again thank you for letting me know I’m not crazy.

Ask the thousands of “old” people who went to schools that didn’t provide lunches at all & you’ll find food poisoning never comes up! Plus there is a better chance to learn bargaining skills with packed lunches :)

I packed lunch for my daughter for 6 years of elementary and often stopped to calculate the cost – about 75 cents was the average. And she was thrilled to take lunch – you should see what some of these cafeterias pass as food – oh the smell – shudder!

Save money, save the environment – use re-usable containers in your kid’s lunch :)

re knives — I like the idea of buying whatever you want in the best quality, but a lot of the time, I don’t know what the best quality is, and I don’t seem to be very good at researching that. Similarly, we want to start replacing our third and fourth hand falling apart furniture, but I am paralyzed by the thought of buying something and then deciding later that I don’t like the style etc.

re cloth diapers/homemade laundry detergent — homeade is probably better than commercial for baby. The most important thing is the good rinse at the end to get the detergent out of the diapers.

I know there are a lot of retirement calculators on the net, but I’ve found this one from Bloomberg to give you the clearest no-nonsense look at whether you’ve saved enough or not:
http://www.bloomberg.com/invest/calculators/retire.html

It’s not as pricey as you might think once you consider all of the grants, tax credits, etc., and it is well worth it. There are definitely a variety of ways to go about the process, some of which ensure a baby (vs. a toddler/older child).

Our twins are Ethiopian and we’re at the very beginning stages of a domestic infant adoption – feel free to shoot any questions you feel comfortable asking a complete stranger.