need to buy a home to save money but can't

[Anonymous]

Anonymous wrote:

Anonymous wrote:ALSO, your math doesn't add up. Borrowing 300k could easily make your mortgage payments $2000/month once you add in taxes and insurance. I see no way that you'll pay LESS than renting if you buy a $350k house. And you don't even have the $50k to put down.

I agree. Sounds like they are in too expensive of a rental. Need to move farther out and spend a year or two saving money and repairing credit.

So let's say she finds the $50K. Would you recommend it then?

[Anonymous]

You can save on cell phones. I switched from Verizon to Straight talk. $45/month plus taxes and fees so closer to $50 if I can't find a promotion. Includes data. So that would be $100/month. Evey bit counts. I use the sim card that uses the AT&T network. No problems, except I had to call customer service a few times to get my number transferred.

[Anonymous]

Not OP but I think home owners are out of touch with rental prices. 2,000 per month sounds about right for any space large enough for a family (like a small 2BR) in a reasonably safe neighborhood.

[Anonymous]

Looking at your budget, your spending is reasonable, but there are definitely ways that you can cut down. You probably could eat more cheaply - more beans, less meat for example.

Sometimes it takes major sacrifice to break out of the cycle of debt and build personal equity. I am a child of immigrant parents. When they came to this country, they had their educations and eachother, but not much else materially. My dad worked 3 jobs and my mom took care of the kids. They became part of the upper middle class after years of doing this and spending very carefully. At DC's daycare, I talk to teachers who have recently immigrated. They live in basement rentals and watch every penny in order to secure a better future.

I'm sorry that you had to go through such an ordeal with a sick child. I hope your DC is better now. Having to worry about the financial stress when all you want is to have your child recover is so painful.

[Anonymous]

Anonymous wrote:Not OP but I think home owners are out of touch with rental prices. 2,000 per month sounds about right for any space large enough for a family (like a small 2BR) in a reasonably safe neighborhood.

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Yeah any rentals less than $2k are in far exurbs. Gas will quickly eat up that modest savings. Rental market is much flatter than versus distance.

[Anonymous]

Realistically, you probably can't get a mortgage with that credit score, even if you could afford the downpayment and mortgage payments (and when you figure those, don't forget to account for property taxes and the PMI you will have to pay since you don't have enough for a downpayment -- those weren't mentioned in your OP, I believe). Maybe try some local credit unions, if you can find one that will work with you more individual basis to understand your whole financial situation. Sometimes if they can see that your score is due to one bad period, but you've paid off all the debt and are current on your payments since then, they'll be willing to take a chance on you (although it'll still affect the interest rate you can get). Even if you can find one that will work with you on the mortgage, though, you pretty much don't have cash for a downpayment (not without wiping out your savings and leaving you with zero cushion, a prime position to end up exactly where you were two years ago).

I would accept that you're going to be renting for another five years until your credit improves, and find anything you can do (cut expenses, get a second job) to boost your savings in the meantime.

[Anonymous]

Anonymous wrote:Rent: $2,000
Utilities: $180 PEPCO, $110 Washington Gas, $165 City of Rockville, $75 Verizon
Childcare (for 2 kids): $2,000
Student loans: $185
Credit card payments: $280
Car payment: $317
Insurance (life/renter/auto): $185
Cellphone: $140 (for both)
Food: $800
Gas: $240
Savings: $125
Clothing/incidentals: $100

Take home after taxes: $7,000

Any way to adjust your car payment?
How much longer until you pay off your credit cards?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Rent: $2,000
Utilities: $180 PEPCO, $110 Washington Gas, $165 City of Rockville, $75 Verizon
Childcare (for 2 kids): $2,000
Student loans: $185
Credit card payments: $280
Car payment: $317
Insurance (life/renter/auto): $185
Cellphone: $140 (for both)
Food: $800
Gas: $240
Savings: $125
Clothing/incidentals: $100

Take home after taxes: $7,000

Realistically, you need to get a cheaper cell phone plan and get rid of the smart phones.
Also is there any possible way you can move to an apartment of the same cost and not have to have a car? You're spending 600 a month on your car. If you save an extra 100 from getting rid of the smart phones. The utility bills seems really high.

Honestly, you need to find a two bedroom to rent for 1500. So 500 there, 600 car and 100 smart phone equals 1200 a month.

[Anonymous]

I found you a two bedroom at Braddock meridian in alexandria for 2000 a month. Near the metro so you can get rid of the car and save over 600 a month from that alone. You shouldn't have to spend what you're spending on utilities right now either. My husband and I live in apartment and spend a fraction of what you do on utilities and leave our air on for our dog. Depending on the age of your child, you could share a one bedroom and put up some sort of divider. People in NY do this often. I would never but you All are desperate at this point. Another option is simply to move to another city.

You have no business buying a home if you have credit card debt and student loans. You need to figure out a game plan for paying these off.

[Anonymous]

You also need to get rid of cable and verizon at home. Go to the library. Make drastic cuts for the next two years and pay this off. Another option is for someone to take on a second job. Use that money to pay down credit cards and student loans. Even 200 a week would help. Get a cheaper apartment. Sell the car. Cut down on utilities. Get rid of the smartphones. Cut 100 off the monthly food budget.

[Anonymous]

I agree that your food budget and cell phone budget can be cut. I think you could halve your food budget. I have a prepaid cell phone and I only spend $100/year.

I can't comment on the cost of the rental, but it might be worth looking into other places to live.

[Anonymous]

If home ownership is what you really want. Rent a cheaper place for a year, pay off all debt, save that extra money, fix your credit, then buy.

[Anonymous]

We can't save a dime because of the money we are dumping into a rental.

I get that home ownership is something that you really want, but I dislike the attitude that renting is "throwing away money." I mean, you need a roof over your head, whether you buy or rent, right? If you put a tiny percent down with a really awful interest rate, I kind of feel like that's "throwing away money" in a sense...to the bank. It takes a long time to build equity that way. Also, if you're counting on refinancing, what if interest rates go up?

On top of that, home ownership is more expensive than it seems. There are repairs, local property taxes, maintenance, and it all adds up. Sure there's the mortgage interest deduction, but unless you have a healthy emergency fund, I don't really know you would be able to handle home repairs. It is kind of nice to just call up your landlord and get them to take care of it. I personally also appreciate the mobility that renting allows, and the ability to move someplace with a better commute if you or your husband have a job change.

I would keep renting and rebuild your credit. The daycare costs are going to ease up in a few years (yes, there's camp and afterschool and so on, but it probably won't be $2,000 a month) and you should have a little more room to save. In the meantime, try to look on the bright side of renting.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:ALSO, your math doesn't add up. Borrowing 300k could easily make your mortgage payments $2000/month once you add in taxes and insurance. I see no way that you'll pay LESS than renting if you buy a $350k house. And you don't even have the $50k to put down.

I agree. Sounds like they are in too expensive of a rental. Need to move farther out and spend a year or two saving money and repairing credit.

So let's say she finds the $50K. Would you recommend it then?

Not unless they can get their credit score up over 700, no. The interest rate you'll get with a terrible credit score makes home ownership way too expensive.

[Anonymous]

Anonymous wrote:You also need to get rid of cable and verizon at home. Go to the library. Make drastic cuts for the next two years and pay this off. Another option is for someone to take on a second job. Use that money to pay down credit cards and student loans. Even 200 a week would help. Get a cheaper apartment. Sell the car. Cut down on utilities. Get rid of the smartphones. Cut 100 off the monthly food budget.

Part of my agreement with work is that I work from home one day a week. Not sure how I can do that without Internet.

And I'm also curious how I'm going to go to the grocery store and such in this super cheap rental without a car?

Mass transit isn't at all reliable (especially on the weekends) and we split one car between the two of us.