New Goal: I want to buy a house with cash! (or, I hate debt)
I feel somewhat hypocritical talking about debt as a bad thing, seeing as I never went into it. It’s a little like a skinny teenager lecturing a Weight Watchers group. True, I have no debt… BUT my parents paid my college tuition. BUT my parents let me live rent-free while I was in grad school. BUT I grew up in middle-class, affluent America, with all the comforts and privileges therein, and I didn’t pay for them.
The truth is, if I had had to pay for all the blessings I’ve been given, I’d be indebted up to my eyeballs. From orthodontia to college to eating out to my car, there’s no way around it: I’ve been given a lot. But instead of asking me to pay for it, it’s as if someone’s wiped my slate clean, forgiving all I could have owed. I get to be debt-free, not because of hard work, but because of grace. This is true in other areas of my life, too, but I digress.
What I’m getting at here is that I know I’m no expert, no authority. I know people in debt have many reasons and situations that have gotten them there, and many times, it’s the same kinds of things I’ve done. No judgment here, OK?
But I HATE debt.
I hate that it traps people, I hate that it takes away people’s homes, I hate that it makes us spend more than we should or buy things we can’t wait for.
After more than a year in the PF world, I’ve only just now read Dave Ramsey’s Total Money Makeover. I’m not saying I see eye-to-eye with him on everything, but a couple things he writes really, really clicked with me. Things like paying off all debt with gazelle-like focus. Things like having an emergency fund in place. Things like not buying a brand-new car unless you have the liquid funds to do so. Also:
*Our society accepts debt as normal.
*Going into debt = paying interest = a larger purchase price at the end.
*There are a lot of things I don’t need; it’s possible to live on less.
Which leads me to the culminating announcement: I’ve made a change to my future home-purchase goal, and here’s my new plan:
When I buy, I’ll put down the largest down-payment I can afford (formerly aiming for 20%, now thinking closer to 50%, though 100% would be ideal and obviously would not require a mortgage).
If I do need a mortgage, it will be a 15-year. I will not purchase the home if my monthly mortgage payment is more than 30% of my monthly take-home pay.
My sidebar goal will stay at $50K, as that’s my 2008 goal. But I’d secretly like to get it up to $60K by December. A lot of people would say this is crazy, that going into debt for a home is not wrong (I agree!). But I’m thinking this: I’m still young, I have a great living situation, I have few expenses.
Why not set higher goals like these? Why not dream of a life with no debt?
Filed under 9-5, budgeting, buying/renting |
18 Responses to “New Goal: I want to buy a house with cash! (or, I hate debt)”
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There is no problem with setting your goals super-high like you are - it’s to be commended. If i had the money, I would be doing the same thing! However, most people can’t afford to do so. Also, when you get married it becomes two people that have to agree on how to save and spend…so even though one of you may love Dave Ramsey, the other might think he’s off his rocker.
BUT - since you have this FAB situation…take advantage of it! AND invest invest invest!!!
I’m envious.
I say go fot it, if you can swing it. I’ve also never been in debt…and the idea of it scares me. But with going to school and having to pay for it myself, I will have to incur some debt.
I think it’s great that you have such a high goal for a downpayment. Smart.
I totally agree, and am basically in the same situation. If it weren’t for Ry’s student loans we’d be debt free. I also had college paid for, orthodontics paid for, got a car, etc.
We are also saving for a house (after loans are paid) and want to have at least 20-30% down in cash.
I admire your goals, good luck!
Great goal! Good luck!
I think it’s a fantastic goal, too. I am in debt right now, despite the fact that my parents paid for my college education and bought my current car (my dad gave my brother a small down payment for his house and wanted to give me the same amount, hence the car). It’s embarassing, really, to know that I have credit card debt when I don’t have as many bills and loans that other people have. Back to you, though–if you’re happy living with your parents right now, then why not save as much as you can? Go for it.
Well, I don’t know why I was bracing myself for criticism on this post; you’re all very encouraging.
Doris: Good point–that would be the big reason I’d have to change, and that’d be fine. Right now, though, it’s just me.
Go for your goal! If it feels right in your gut, its the right thing to do. I don’t regret taking on debt to attend college, but I do realize, I’d be farther ahead financially if I didn’t have this monkey on my back. I want to be like you when I “grow-up” and have no debt. Good luck to you!
I’m swimming toward the debt-free ideal as fast as I can. I have a 15 year mortgage that I’m paying off early. Though security is an illusion (who knows what emergencies, tragedies, and unexpected disasters one may encounter?), having a well-stocked emergency account, several months’ salary quietly oribiting in a flotilla of CDs somewher, and a paid of house is about as close to safe as one can get.
People often say “that’s a pipe dream, no one can get those three things done when they’re young”, but of course one can. And once you’ve got them done, you’ll be in the position to work (or play) only for your own reasons, not to pay the rent or pay the credit card bills. You won’t have to worry about losing a job or to change career directions or to do something else entirely, because you’ll have the freedom to plan. I think that’s worth a lot.
[...] GradGirl at This Writer’s Wallet has set a new goal. [...]
Wow! Way to go, FGS! This whole idea of shorter mortgages and aiming to pay off faster is new to me, so I’m especially impressed by people already doing it. You are someone to pattern after, for sure.
That is an awesome goal! If you and your parents are okay with your living situation, then stash your money away. It’s very ambitious but you are proving that it’s manageable. Good Luck!
[...] I was reading Total Money Makeover, Dave Ramsey pointed out the Biblical principle at work here: Proverbs 22:7 [...]
Interesting post, like a lot of middle class people, your attitude to debt is very similar to my parents. They have never been big fans of debt, as they feel it traps people. I think the longer you can live frugaly and save money by living at home, the better. Though one thought to bear in mind, the housing market may be falling right now, but when it does start to rise again, your strategy may come up short, as the increases in property values will be far greater than the increases in your monthly savings…
I definately agree with you on debt. I am working to pay mine off as fast as I can. Once most of your debt is away, your cash flow is freed up. The better your cash flow, the more you can live you life and not rely on wages!
Two things…
1) Spend some time and find the right home for you
2) Get a 15-year loan and plan on paying it off in 7-10 years
Emotionally, I understand the desire to be debt free but is your goal to be debt free or to build wealth? Paying cash for a house is not the optimal way to build long-term wealth.
[...] New Goal: I want to buy a house with cash! (or, I hate debt!) at This Writer’s Wallet — I can understand the theory of debt is bad, but buying a house with cash is a bit extreme in my humble opinion. [...]
Good Post.
I can understand your desire to pay off your mortgage fast. This is a dream of mine too. I currently don’t have a mortgage as I am renting but wouldn’t it be amazing if you could buy your own place outright with cash?
Think about what you could do with the money that otherwise would have been going towards your mortgage.