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

[Anonymous]

Anonymous wrote: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.

Is that one day a week from home (with required internet) something they wanted, or something you wanted? Could you switch to full time in the office? I realize that may not be something you want to do, but if you want to improve your financial situation to be able to buy a home eventually there have to be some sacrifices, and I'm not sure it sounds like you're willing to do that.

[Anonymous]

How much credit card debt are you carrying for that monthly payment? That will affect your ability to get a mortgage as well.

[Anonymous]

Anonymous wrote:I'm assuming your stellar financial reasoning has gotten you to the point where you have a 591 FICO. Perhaps you should start listening to people who manage their finances more successfully?

The clear consensus is that you cannot afford to buy.

+ 1

[Anonymous]

Anonymous wrote:

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.

I just signed up for 2 years of FiOS for $29.99/month. Prior to that (last year), I called Comcast about 10 times in a row asking for a $29.99/month rate until I got a customer service rep who was willing to cut a deal. You don't need to pay $75/month, you need to shop around for the cheapest rates and be persistent. That's $540/year you could be banking. You can do this with your cell phone, too (find a cheaper deal). I also have to work from home, so I have to have high-speed internet, but we don't pay a penny more than we absolutely must.

DH and I, and DD when she was born, lived in a 1BD apartment for 7 years to save up a DP (DD was 2 when we moved). The apartment was the cheapest one we could find and had no amenities and was old and sort of crappy. But we saved a ton (rent was $1300 and it was in a very good neighborhood with a good commute). You need to find ways to actively improve your situation and be willing to sacrifice for several years if you want to become a homeowner.

I also started a business and work full time at my regular job and earn extra by working nights and weekends for my business. Every little bit counts. You have to want it and not be complacent about your debt or your spending levels.

Good luck!

[Anonymous]

OP, I feel your pain. But I would also agree that now is not the time to buy. Buying comes with a lot of unexpected costs that currently are your landlord's problem. I know it feels like you are throwing away money, but what you are really buying is freedom. Freedom to say "the toilet is clogged, come fix it." Freedom to say "eh, the DC area isn't for us, or Rockville isn't for us anymore, let's move to [wherever]." That kind of freedom has a value that shouldn't be dismissed.

I'm in a similar situation. I have a kid in daycare and I can't see any way I can save up enough money to buy *anything* while the daycare money is flying out the door. Yes, yes, you can go to the library and trim your cell phone bill. There's always, ALWAYS someone here who'll tell you to take public transit everywhere (I wonder if it's the same person?) I have a two year old and I work far away from where I live; a life without a car is not feasible for me and I assume it's not feasible for you. I get that.

To make a big difference in your day-to-day finances, you have to tackle your biggest bills. Looks like that's rent and daycare. I live in the Tysons area in a two-bedroom for $1585. It's a nice condo complex and I rent from the owner. Similar two bedrooms are renting for around $1650. This is not what I'd consider the "far exurbs," but granted, I don't know what three-bedrooms might cost. I would take a really hard look at what options are available to you in terms of rentals.

I would also pare down the other costs that you can--the car and the Internet you need for work. Anything else you can squeeze?

And honestly, after that I would just wait till your youngest is in school. You'll still have after-care (and before-care?) costs, but I don't think it'd be running you $2,000 a month. I don't know how old that kid is, but by then, maybe your credit will have been rehabilitated to the point where you can get a decent interest rate. Plus, maybe by then you will have finished paying off your credit card and your car, or be close to doing so? That would free up a cool $600 a month right there.

Patience, friend. The houses will be here when you're in a stronger financial position.

[Anonymous]

Anonymous wrote: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.

+1

[Anonymous]

Anonymous wrote: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.

+1. No one will lend to you with a 591 FICO even if you have 20% down which you don't.

[Anonymous]

Anonymous wrote:

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.

That's fine, but your current lifestyle won't allow you to save enough money for a home or help you get out of debt. You need to do the math. You need to save around 900 more dollars a month, if not more. If you simply can't cut things out and have to have your car, then fine but you won't have a home anytime soon. My parents made insane sacrifices when I was a child and now they have millions in savings. Wouldn't have happened if they said they have to have two cars (lived in a city with no transit), had to have cable, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

That's fine, but your current lifestyle won't allow you to save enough money for a home or help you get out of debt. You need to do the math. You need to save around 900 more dollars a month, if not more. If you simply can't cut things out and have to have your car, then fine but you won't have a home anytime soon. My parents made insane sacrifices when I was a child and now they have millions in savings. Wouldn't have happened if they said they have to have two cars (lived in a city with no transit), had to have cable, etc.

Also - you can order paper goods and cleaning supplies from Walmart. Even some dry goods. Take the bus to the grocery store with your husband and have him help you carry stuff. Even taking a cab home from the store once a week would probably be less than what you're currently spending on gas per month.

[Anonymous]

Anonymous wrote: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?

Could you sell your car for more than you owe on it? If not, then you're pretty stuck with the costs. If not, though, the math might make sense to sell it.

Every year you are paying $3,804 in car payments, $2,880 in gas, and some fraction of $2,220 in insurance (let's assume $1,000). So that's $7,684 per year to own a car.

Peapod is $7 a week for grocery delivery (and I'm willing to bet you would save at least that much by avoiding impulse purchases. Amazon Prime is $99 a year. So for your every day shopping errands, you could cut your costs down to $463. Let's throw another $100 on there for shipping for things you can't get in either place, and can't find a free shipping deal on. So $563.

Assuming an average $4 Metro fare each way for each of you, Metro costs of about $4000 for the both of you. I know you'd prefer to avoid mass transit, but you didn't say it wasn't possible to take it to work. Saving money to own a home will mean some sacrifices. So now we're up to $4563 per year to give up the car.

That leaves you with $3,121 in savings for the year if you give up the car. I realize you probably do more with the car than run errands and go to work, though, so have you looked into zip car for other driving needs? $85 for application fee and annual fee on the no-monthly-fee plan leaves you with $3,036. At $76/day (assuming you do it in whole days and not shorter, cheaper increments), that's nearly 40 days of zip car before you hit even with the annual cost of owning a car.

[Anonymous]

Anonymous wrote:

Anonymous wrote: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?

Could you sell your car for more than you owe on it? If not, then you're pretty stuck with the costs. If not, though, the math might make sense to sell it.

Every year you are paying $3,804 in car payments, $2,880 in gas, and some fraction of $2,220 in insurance (let's assume $1,000). So that's $7,684 per year to own a car.

Peapod is $7 a week for grocery delivery (and I'm willing to bet you would save at least that much by avoiding impulse purchases. Amazon Prime is $99 a year. So for your every day shopping errands, you could cut your costs down to $463. Let's throw another $100 on there for shipping for things you can't get in either place, and can't find a free shipping deal on. So $563.

Assuming an average $4 Metro fare each way for each of you, Metro costs of about $4000 for the both of you. I know you'd prefer to avoid mass transit, but you didn't say it wasn't possible to take it to work. Saving money to own a home will mean some sacrifices. So now we're up to $4563 per year to give up the car.

That leaves you with $3,121 in savings for the year if you give up the car. I realize you probably do more with the car than run errands and go to work, though, so have you looked into zip car for other driving needs? $85 for application fee and annual fee on the no-monthly-fee plan leaves you with $3,036. At $76/day (assuming you do it in whole days and not shorter, cheaper increments), that's nearly 40 days of zip car before you hit even with the annual cost of owning a car.

NP here. You're forgetting that eventually the car payment will go away and OP can keep the car for another 8 or 9 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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?

Could you sell your car for more than you owe on it? If not, then you're pretty stuck with the costs. If not, though, the math might make sense to sell it.

Every year you are paying $3,804 in car payments, $2,880 in gas, and some fraction of $2,220 in insurance (let's assume $1,000). So that's $7,684 per year to own a car.

Peapod is $7 a week for grocery delivery (and I'm willing to bet you would save at least that much by avoiding impulse purchases. Amazon Prime is $99 a year. So for your every day shopping errands, you could cut your costs down to $463. Let's throw another $100 on there for shipping for things you can't get in either place, and can't find a free shipping deal on. So $563.

Assuming an average $4 Metro fare each way for each of you, Metro costs of about $4000 for the both of you. I know you'd prefer to avoid mass transit, but you didn't say it wasn't possible to take it to work. Saving money to own a home will mean some sacrifices. So now we're up to $4563 per year to give up the car.

That leaves you with $3,121 in savings for the year if you give up the car. I realize you probably do more with the car than run errands and go to work, though, so have you looked into zip car for other driving needs? $85 for application fee and annual fee on the no-monthly-fee plan leaves you with $3,036. At $76/day (assuming you do it in whole days and not shorter, cheaper increments), that's nearly 40 days of zip car before you hit even with the annual cost of owning a car.

NP here. You're forgetting that eventually the car payment will go away and OP can keep the car for another 8 or 9 years.

It will cost them money they don't have.

[Anonymous]

We are stuck in this lease for one more year. So I guess we won't really be able to get started until then.

My husband and I have both tried for years to get second jobs and it's harder than one would think.

We have one car -- not sure where the idea that we had two came from (sorry for any confusion) and we owe more than we could sell it for but are on an aggressive payment plan to own it in a few years.

We don't see that moving somewhere less expensive would help. Places with inexpensive costs don't pay the salaries we make here (for our fields) so why move and have the same struggle somewhere else?

You all confirmed what I already know: we are stuck.

It is what it is, I guess.

[Anonymous]

If money is tight, DO NOT BUY. A leaky roof or the discovery of mold in your basement could put you underwater. Trust me, renting is cheaper in this area.

[Anonymous]

Anonymous wrote:We are stuck in this lease for one more year. So I guess we won't really be able to get started until then.

My husband and I have both tried for years to get second jobs and it's harder than one would think.

We have one car -- not sure where the idea that we had two came from (sorry for any confusion) and we owe more than we could sell it for but are on an aggressive payment plan to own it in a few years.

We don't see that moving somewhere less expensive would help. Places with inexpensive costs don't pay the salaries we make here (for our fields) so why move and have the same struggle somewhere else?

You all confirmed what I already know: we are stuck.

It is what it is, I guess.

The problem is you need to make lifestyle changes regardless of wanting to purchase a home. You have credit card debt, student loans and a low credit score. These are problems that need to be addressed and may require drastic measures. If you made major changes in three years you'd have better credit, no credit card debt and the opportunity to buy a home. If you keep renting at that rate, keep your car, spend all that money on utilities....well you'll be in the same place you are now.