Why shouldn't I get a new house now?

In My Humble Opinion
1

By “new house” I mean a completely new house yet to be constructed.

Mrs. D wants it- I don’t. I’ve gone through some basic arguments with her. Our current house, built in 1978, is quite nice and is in an unbeatable location. It’s got 5 bedrooms and two baths for 3 adults and a teen. It’s walking distance from all schools and a C-store and 8 minutes from all shopping.

We have no liquidity- no savings. we exist from one month to the next. We have over $10,000 of credit card debt. We can’t manage to save any money. In case of emergency we would have to tap into our home equity and/or borrow from her 401k.

She says she will get another part time job in addition to her full time as a nurse to pay the increased mortgage. She could certainly do that, but for how long?

The monthly payment would go from $1387 to about $1900. Of course I explained what would happen if either of us couldn’t work for a while, but it went in one of her ears and out the other.

I told her that if she could stick to her proposed budget for two months I would have a less dim view of the whole deal. She just wants to do it.

Her favorite line when she wants to change something is “it’s not contemporary.” She watches too many of those real estate shows on the satellite TV.

This has been going on for months. Sometimes things get ugly. I used to have 1,000 excuses. Now I’m down to less than a dozen. Help me out, friends! Give me some convincing reasons to not get a new house.

Please?

2

Is your current house sell-able, as-is?

3

I’d say so. There are no obvious maintenance issues. This is a University town so property values have been flat the last year or two. Before that they went up 10% most years.

The real estate market here tends to be lively during Summers and slow in Winter time.

4

Google “Michelle Singletary”. Read everything she has ever written.

Increasing your mortgage payment - when you’ve got 10,000 of credit card debt that could increase at any time (with all the rate hikes) - is terrifying. If you can’t pay down that debt, you can’t spare 600 extra a month for a higher mortgage and you have no business taking on any more.

Suppose your wife injures herself at work. Sure, she might have workman’s comp covering her salary but it won’t cover the second income.

Or what if she takes the second job, and find she loathes it, or it’s just too much workload and she’s exhausted and can’t keep up with it?

That new house would require repairs too - if you’re hand-to-mouth now, you won’t be any better off with a higher mortgage.

You do have leverage. Your wife couldn’t qualify on a higher mortgage on her own, at least not while you guys own the current house, so she can’t get her way until you co-operate.

I’d say “no way, no how” can you “upgrade” with your financials in the state you describe.

Would your current house even sell for much? How difficult would it be to sell?

Now, if the wife were to take the second job now, and put the extra cash flow toward paying down the 10,000 and building up a bit of a cash reserve, then… well, you’re still not in a great position to move up, but at least it’s less insane.

What about redecorating / remodelling the house you’re in? Paint/wallpaper/new flooring / new lamps/light fixtures can make a huge difference. If you get that credit card paid down, you could even consider redoing the kitchen or other more major work. HELL of a lot less disruptive than moving, you can do some of the work yourself and “profit” on paper (increase the value more than the cost).

5

Oh… and while I’ve never met your wife, it sounds like she has zero idea of how to manage money, if she’s pushing for this sort of thing when you can so clearly NOT afford it. How did that debt get accrued anyway, hmmmm?

6

If your wife is so totally miserable where you are now- why not use that extra $600 a month to pay off the credit cards, then update your existing house? You’d be surprised how easy it is to do a lot of the updating yourself- cheap, too.

7

Excellent. This is exactly the sort of material I need.

From her favorite money quotes:
“This would be a much better world if more married couples were as deeply in love as they are in debt.”

  • Earl Wilson

Full disclosure: most of the credit card debt is mine. Mostly for business purposes. ::cringes::

8

Because you can’t afford it, that’s it, argument over. No, seriously thats it, that is all it comes down to. It doesn’t matter how much she wants it, you can’t afford it. Hell, you can’t seem to afford the house you are currently in, that much a more expensive one.

As a concession, tell her that if you guys manage to pay off all of your credit card debt and put together a rainy day fund of say 15k you can reopen the discussion of moving into a nicer house.

9

Unless she plans on holding a gun to your head to force you to sign loan papers, you can simply say NO, and repeat as often as neccessary. You don’t need to offer any excuses, and unless she has the means to do this on her own income and credit rating, it’s done.

10

Oh, and tell her to turn off the Real Estate shows on the TV. It’s just Porn.

If she doesn’t, then tell her you’re going to start looking at real porn on the computer, and don’t be surprised if you want to trade her in for a newer model.:smiley:

11

As Suze Orman would say, “DENIED!” You can’t afford to buy a new house until you have an emergency fund and a good plan worked out for how you are going to pay the mortgage, with contingencies included. Any way you can switch her from watching real estate shows to watching the CNBC Saturday night lineup of Til Debt Do Us Part and The Suze Orman Show? They both deal not just with money issues, but with money and relationship issues.

12

Buying stuff we can’t afford is, both individually and collectively, is what got us in the mess we’re in. Don’t do it. And that’s a Realtor telling you not to buy a house. How often do you see that?

Now for those of you who can afford it - buy a freakin’ house! :smiley:

13

She wants to sell your house that has nothing wrong with it and fits your needs and buy a brand new, more expensive house just because your older house isn’t contemporary? That’s like having an affair because you’re bored (I know a woman who did that - messed up the lives of four adults and four children). My first reaction is to tell her to stop being so silly, but there must be more going on here than just her desire to be contemporary.

A house from 1978 is wonderful - I love that era of building. Our house is about that age, too, and they built them solid then. The yards from that era are usually bigger, too - the new 'burbs in Calgary have postage stamp yards - ours is five times the size of a new house yard. I don’t think your wife is watching the real estate porn shows right - I watch them to get ideas for fixing up my own house, not for ideas to wreck my financial life.

I like the idea of making a plan that you and your wife can agree on - when we bought our first house, we had a five year plan - we’d fix up the house for five years, then sell it and buy a house that we’d stay in for the foreseeable future (we changed houses last summer). Would she be amenable to making your old house more contemporary, rather than uprooting your whole family and undergoing the high levels of stress that a move entail? Fixing up the house you’re in can be done in stages that you can afford, one at a time.

14

This is what I’ll try to do.

Hey, I forgot to mention it’s theoretically 6 years to retirement for me.

15

With that credit card debt, no savings, etc- I doubt you would qualify for a loan. People with excellent credit now are not able to get loans, and based on what you laid out I honestly doubt you could get a loan now. Have you talked to a bank? Maybe that alone will make this go away.

Frankly you should be saving for your retirement.

16

How long until the teen is out of the house? Is the third adult a permanent longterm household member (i.e., not a grown child finishing grad school or a very elderly parent)? In other words, are you going to be looking to downsize in a few years? If so, it makes more sense to wait until then, working on debt retirement/nest egg building meantimes.

And how does the teenager feel about this? If a change in school is involved, they may put up a stink.

17

If she’s willing to take on another job just to get a more “contemporary” (contemporary to what?) house, then she should also be willing to take on another job to start whittling away at that $10,000 credit card debt. Getting out from under that debt will do a heck of a lot more to improve your life than a new house will.

18

I think JB put it perfectly. You can’t afford it. Period.

Rather than trying to come up with new ways to explain common sense to her, could you turn the tables and ask her to crunch the numbers and see exactly how you would pay for this? What your life/retirement would be like?

19

Yes, we could qualify for a loan because we have sufficient income. Of course you’ve heard that money talks… ours just says “goodbye.”

“Contemporary” means “currently fashionable.” which is whatever the whores on the real estate porn shows (I love that turn of phrase!) say it is. I’ve seen them contradict each other more than once.

The teen will start college in 4 1/2 years. She will almost certainly be getting sufficient scholarship money to get the job done and we have a very modest educational IRA going for her.

The retirement years will consist of winters in the Philippines and summers here in the USA. In the Phils we can live quite well on $1,200 per month. The Mrs. is planning to keep working during the 6-month stretches here in the US. Between Social Security, the money we should get for our house and my business and her wages we should be OK. Businesses such as mine typically sell for 2.5 times annual gross revenue and I have reason to believe mine will go for a premium price.

Last night I told Mrs. D there will not be a new house and once again went over several of the reasons why. I’m not yet sure how ugly things will get. She is still insisting on some renovations, for which she could borrow from her IRA over which I have no say. I may have to make an appointment for us with a professional financial adviser. Maybe a neutral third party could make a breakthrough. In the meantime I will read up on some Michelle Singletary in the hope that it will give me enough ammunition to get the job done without other outside help.

20

Well, since you’ve covered the grounds for your opinion, repeatedly, without making a dent, why not suggest she consult an actual qualified financial adviser?

(Not a mortgage broker, mind you, or realtor, but a certified financial advisor. Make a short list of your reasons for resisting, which she must present to any counselor she meets with.)

Tell her she gets to consult up to 6 counselors and if the majority agree with her you’ll consider it and if the majority agree with you it gets dropped.

If what you’ve laid out here is true, it’s difficult to imagine any adviser siding with her. She’s clearly stopped hearing you, perhaps she’ll listen to a professional.