Curious how different people can read the same thing so differently. I saw 3 sorta equal categories of responses. One (the smallest I think) benefitted from gifts, inheritances, etc. Sure would be nice, but not available to all of us. The second benefitted from lending policies none of us are likely to see again anytime in the near future. An the 3d - which you seem to ignore or discount - involves economizing and saving - either for a number of months or a number of years.
I have no idea what you make or your lifestyle. But in my experience, many couples can easily get away with one - or even no - cars, especially if living and working in a big city. I sure hope you aren’t making 2 car payments or carrying other consumer debt. What is your rent? I know NYC is crazy expensive, but how much could you save if you moved to a smaller place, perhaps with a longer commute. Eat out much? Travel?
In the abstract, $5k may not seem extravagant for a wedding. But you know you could choose a small civil ceremony, and immediately nearly double your house savings… Have a nice vacation on your 5th or 10th anniversary, when you can better afford it. This fall my wife and I are taking our nicest trip ever - for our 25th. Just depends on your priorities. Very few of us can afford to have it all.
Don’t mean to pick on you, but it seems as every year goes by, people get further and further away from the concept of going without today in order to be able to afford something tomorrow.
Honestly, it’s not clear to me that buying makes any sense at all, if prices are running that far ahead of rents. If you can rent for significantly less than what your payments would be, it might well make more sense to plan to rent indefinitely and sock the difference into some other sort of investment. Investing in a condo/house is one form of retirement savings, but it doesn’t make the most sense in all markets. I wouldn’t assume it’s the best plan just because it’s what people do.
In Canada, I believe, if you don’t have a 20% down payment you are forced to buy mortgage insurance (which protects the bank, not you) - an extra and added expense to you. This is an added incentive to save first.
Fact is, I sorta agree with Dinsdale - folks these days are not very savings-minded, and sorta expect to have the lifestyle they want without scrimping.
It doesn’t help that there are now a plethora of expensive consumer gadgets that most people feel are more or less indespensible, that simply did not exist a few decades ago - these tend to eat up income that ought to go to savings.
I’m a relatively high earner (I’m a lawyer at a major Toronto lawfirm) and I have trouble saving as much as I need, to fund retirement, to pay for mortgage, childcare expenses, etc. I do without a lot of stuff to save money. How some people live high off the hog and can afford everything they want is beyond my understanding (not saying anyone here is doing that, but I’ve seen it in my friends - I know they are not earning more, yet they have new luxury cars, much larger homes than us, etc. I assume the answer is that they are racking up debt and not saving for retirement). We have one (used) car, don’t buy much in the way of electronic goodies, etc.
Way I save money is simple: every month I automatically deduct a certain amount from my pay, right off the top, by having it transfered into a different bank account used only for savings. Thus, I get used to living on a reduced income.
We put about 35% down on our first home… about $80,000 which we had saved. Of course our car was 25 years old and we spent less than $3,000 on our wedding. We also had no kids, no cell phones, no cable. It is easy to save if you are willing to give things up.
Seems that it stands for “Private Mortgage Insurance”. The borrower makes the payments on the insurance, but it actually protects the bank from default.
I used an inheritance of $10K to buy our first home at 22. We put 5% down. The boom hit and three years later we were $70K richer. We paid off our debt and put 10% down on a new house. Lived there for a year, sold again and had $100K in the bank. Paid off our vehicles and put 12% down on our current house. We got very lucky though.
I know very few people my age who pay more then about 5% - 10% down unless they are on their second or third home and have gained equity.
True. My brother lives in Palo Alto, and intends to rent for the foreseeable future, since purchase prices there are still insane (even after the crash). IMHO buying is desirable at least for the freedom to mangle/improve the property at will, but if the costs are out of sight, then you do without.
I hear this said a lot, but I don’t get it. My parents retired 10+ years ago and continued to live in the same house they had owned for 20 years prior to that time. They recently moved, and their new house cost about the same as their old house sold for. I suppose they could have bought a much cheaper place instead, but even if they had, the proceeds would not have funded much more of their retirement.
True, but keep in mind that a big difference between now and then is that higher education expenses, even at state schools, have increased in a manner that is totally out of whack with inflation and salaries, and this has a significant impact on recent grads’ (or even not-so-recent grads’) ability to save money for other things. If you’re $30k in educational debt, that’s hundreds of dollars a month that aren’t available for a down payment, or anything else. And not everyone is fortunate enough to have parents who are willing and/or able to pay for their postsecondary education.
We’ve got one 13-year-old car between us, a 10+ year old 20" TV, bought much of our furniture used, etc., but let me tell you, the $350+ a month I pay on student loans would come in mighty handy for other things.
pbbth said in a previous post that $1800 mortgage payment would be “far more than her current rent” – that means she’s within the realm of VERY economical rent for NYC.
I pay $1350, for a 1 bedroom in Queens with an almost 1 hour commute to my job. I am required by my work to reside within the city limits of NYC. To shorten by commute at all I will most likely have to go above $2000/mo. Stuyvesant Town Apartments – the mega middle-income housing complex in Manhattan (which has been partially deregulated), starts at $2600 for a 1 BR.
Typically, kitchens in NYC apartments are microscopic (I have a 3/4 size fridge, sink, stove and ONE SQUARE FOOT of counter. For reals. We supplement with a free standing IKEA kitchen island.) and if you try going smaller you end up with a virtually unusable kitchen space. That’s a false economy in the end because cooking & cleaning up is such a hassle, you end up ordering out.
The reality is, having looked at what’s out there, we’ve decided it makes no sense to buy. Apartments we can afford, have “maintenence fees” that are almost as high as our current rent! And that’s on top of the mortgage.
This is true, though I suspect it is worse in the US than in Canada. In my own field - law - in Canada, tuition has increased dramatically - when I was going in the mid -90’s, tuition was something like $5,000; by working summers and part-time during the year as a research assistant, and by living at home, I could afford that without borrowing (I’d say it put a crimp in my social life - but what social life? I was a law student ). Now, tuition at the same university is set at $21,000 for first year. Hard to earn that sort of cash in a summer/part timer …
Ditto, back in 2003. And we bought in a neighborhood that held its value well. Go us! We may actually break even when we sell this year!
We’re currently looking for house #2, and qualified for a FHA loan with 3.5% down. According to both our realtor and our mortgage broker, practically everyone who is buying in our city right now is using an FHA loan. Back in 2003, having an FHA loan was a total albatross, but now it’s par for the course. They’ve apparently drastically lowered the standards–I remember there being a billion hoops to jump through during inspection if you were dealing with an FHA loan back in 2003 (for example, the fact that our basement steps only had one railing was a no-no), but apparently that’s not the case anymore.
Not sure if you have already tried that route, but it might be worth it for you.
That is certainly true. I strongly believe that my wife’s and my ability to get out of school with no debt was EXTREMELY influential on our later standard of living. Of course, the decision to incur college debt does involve any number of choices…
Cool. I’m sure the cost of living and commutes in NYC are crazy. Of course rent alone is only one aspect of one’s lifestyle costs.
As others have said, maybe she simply will not be able to afford to buy in NYC. Nothing wrong with that. Or, if buying a home is all that important to you, look to change jobs and move somewhere with more avoidable housing. You can’t have it all.
Right, but now they don’t have to pay housing costs: if they had been renting all those years, they would have to continue to pay rent.
Where I am, buying a house is a sound choice: rent vs. my mortgage payment would be about the same (rent would be $200-300 more, but I’ve had to put some money into repairs), and this way I don’t have to pay when I retire (minus maintenance, obviously). And if I need to go into a nursing home for the last year of my life, I can sell my house to pay for it.
However, somewhere like NYC rent may be much cheaper than payments on a mortgage. That makes the calculations more complicated, and the choice less clear.
Fewer and more complicated choices than they used to be: the only way to “pay as you go” is to go part time, and cutting 4 years of earning potential is not a little thing–especially for women, who have that whole biological clock thing going. It’s even worse if you look at professional schools.
This isn’t to say people don’t have choices–for one thing, students often get fatalistic about debt, and probably accrue more than they have to because, say, 30K and 40K in debt both seem equally horrible, so why not live a little? In reality, obviously, there’s a huge difference that becomes apparent when you are paying it back.
Yes, students can make better choices (community college for the first year or two, for example, or pushing to graduate in 3 years), but the fact remains that even someone who made very sober and careful choices could easily come out of college with a significant debt load.
Oh I agree with you. Insofar as we are “saving for homeownership” is it is not for homeownership in NYC. It some future place, TBD, with a lower cost of living. I don’t think owning in NYC is really all that. Unless you’re willing to be a pioneer (ie move into a semi-sketchy neighborhood and hope it improves) you’re not going to see huge upsides, and its in general going to be more expensive than renting the same type of place, so if you only stay there a few years, there’s basically no upside at all.
Hell, I did graduate in 3 years (AP credit and summer school), and that was in 1989 - it was a private school, not state, but because they wanted me, I got a full scholarship which made my cost of attending the same as going to an in-state school. And I STILL had $10k in debt from undergrad. It’s even worse now - I think the average debt load of new grads is something like $30 - 40k, counting grads of state schools.
My husband had 20% down soon after he graduated college. No, he didn’t get the money from anyone. He never spent the money he earned in his teens, and he took a job that had him living on a ship for a few months. His favorite meal is rice and hamburger.
We both did 2 years at community college and graduated school with no debt. We both then ended up in cities where you had to have a car and got middle of the line used cars with some of our savings. Then we each moved to NYC and sold those cars for a much lower amount after adding 4 or 5 years of use to them. We both went through periods of 4-6 months unemployment (before we met one another) that drained our savings even further. When we met each other a little more than 2 years ago we both had about $1,000 to our names. I’d say getting from that point to being able to put our hands on $18,000 tomorrow if we needed to is pretty damn good!
To us owning a place in NYC has several purposes. The first is that since we have to pay rent every month anyway we might as well be paying into our own place where we could use that principle at a future time if we needed.
The second is because after living in various apartments with shitty landlords we want to be somewhere we have some control. 2 months ago our ceiling collapsed and we had to wait a month for someone to come out and fix it. Our landlord doesn’t answer our calls and we have near constant flooding that is in a perpetual state of repairs. If this was our place we could have invested in proper inspection and repair to guarantee we wouldn’t have the problem again but because someone else controls that we are at their mercy and they don’t seem to give a fuck about our living situation.
The third reason is because we don’t really have access to rent stabilised or rent controlled apartments so the $1400 we pay per month now will go up to $1512 at our renewal and it will go up to $1650 at the renewal after that. Owning a place would allow us to maintain basically the same payment every month for the next 30 years. We think ownership would be well worth it given the opportunity.
We did speak with the bank and they offered us a 3.5% FHA loan on significantly more than we thought we could get but we don’t want to put down such a small amount if we can avoid it and we also want to avoid PMI if possible.
). Now, tuition at the same university is set at $21,000 for first year. Hard to earn that sort of cash in a summer/part timer …