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Joined: Dec 06 2007 Location: Connecticut Posts: 11244

Just over a month ago I bought my first home. It is a nice house in a nice area with windows, doors, a roof and several other nice features.

What I prepared for, but still have not gotten used to is the instant debt that comes with a house.

I would like to share with you guys what my financial profile looked like before the purchase, during the purchase, and after the purchase.

I won't be using actual figures, but rather percentages and relative terms to show what went on.

As you can see, during the last year I have been saving. The blue represents my saved money while the red is my bills and debt. When I have more blue than red, it means that I am in the black and life is stable and happy. When I have more red than blue, it means that I am in debt.

To prep for the down payment of the house, in June I slowed my credit card payments to have cash in hand. In August a deposit was made and in September the full down payment was applied. In October the mortgage kicked in and OMG HOLY SHIT WHAT THE FUCK DID I DO!!!!

I'm kidding. I expected it too look like this. For the next 15 years I will be working hard to increase the blue and slowly eat away the red. The hardest part is that everything about owning the house requires money. From fixing, to cleaning, to just surviving is like a bit sponge that only absorbs cash. In 30 years, the red will be gone and hopefully the blue will be a nice high bar... well that is the dream.

The price of the house compared to my income puts the mortgage at a reasonable rate and I am living well within my means. It still feels terrifying to look at charts like this though.

Thank you Bank of America for ruining my day with your metrics.

Posted: Oct 26 2009 11:24 am

I understand you to an extent. Due to bad credit, I won't be buying anything except rent on an apartment for another couple of years, but my boss is the spendthrift type. He makes like $40,000 a year and is the type who likes listening to music over watching TV, so he doesn't even have cable. So doing the math, the guy made roughly $3,000 a month and his only bills were rent he shared with his (now ex) wife, an electricity bill and an extremely limited cell phone plan since he's of the type that if he has phone calls to make, he will come to the store to do it.

Then he bought a house and suddenly he's paying a mortgage of at least $1,600 a month.

Posted: Oct 26 2009 11:25 am

Geez, that is unnerving to look at. Shocked

But at least you're a home owner! Wink

Both my sisters bought houses this year, so go economy with your 'time to buy a house'-ness. I am nowhere near close to being able to buy a house or in a position to realistically plan paying one off...

Posted: Oct 26 2009 11:27 am

Scary to look at on a chart, but what do you expect? You made a purchase that, given that you live in CT, probably cost a minimum of $300,000, if not more. Of course, you said you were expecting it, so I guess the solution is simply "don't look at that chart".

Posted: Oct 26 2009 11:40 am

Dr. Jeebus wrote:

Scary to look at on a chart, but what do you expect? You made a purchase that, given that you live in CT, probably cost a minimum of $300,000, if not more. Of course, you said you were expecting it, so I guess the solution is simply "don't look at that chart".

Instead, make a fund raiser-type chart so you can fill it in as you get out of debt. Then the red will be the color of victory!

Posted: Oct 26 2009 11:42 am

ah, i remember when i first bought a house and my debt was increased a hundred-fold, just like GP. it takes a while to get back in the blue, but you'll get there

Joined: Dec 06 2007 Location: Connecticut Posts: 11244

Jeebus, you are 100% correct. The chart is evil!

Heh, I knew what was coming, but I figured that this might be educational/entertaining for anyone who was interested to see what a first time home buyer's experience was like on the fiscal side of things.

Here is another chart, this one is a lot more hopeful!

The red line shows the price where I purchased. The green shows the price over the last 10 years. I bought at the 2004 price, so I do feel like I got a great deal.

Posted: Oct 26 2009 11:46 am

Here, I hacked B of A and hooked up your portfolio. No need to thank me.

Joined: Sep 18 2009 Posts: 132

You can't really look at your house as a liability, like you said, you need to view it long-term and as an investment. My wife and I love historic houses, but that means that we're essentially always renovating something. We've put about 30% of what we paid for the house into a new bathroom, new kitchen, new floors, new ceilings, and a loft. Its expensive, but long-term owning a house is great. If you can afford it, I think you made the right decision. Little side note about your graph... it makes the point, sure, but without any kind of number or percentage on the y-axis its pointless. /stat gripe.

Joined: Sep 18 2009 Posts: 132

GPFontaine wrote:

The red line shows the price where I purchased. The green shows the price over the last 10 years. I bought at the 2004 price, so I do feel like I got a great deal.

Bingo, its a great buyer's market out there if you can get the loan.

Posted: Oct 26 2009 11:58 am

Yeah, seriously though, the best advice that I could give anyone is that owning a house is going to be more expensive than you think, but at the same time it is a great choice if you can afford it. I think the rule of thumb is that your mortgage/taxes/insurance should equal no more than around 35% of your gross income, otherwise you are setting yourself up to sink.

Posted: Oct 26 2009 11:59 am

it used to be that you should get a car that is worth 33% of your annual income and you should buy a house that is worth 3 times your annual income to stay afloat. i read that in some MLK speech or essay once. i dont know if thats still the standard or not

Posted: Oct 26 2009 12:00 pm

the car thingy maybe, the home thingy would be impossible on the eastcoast

Joined: Dec 06 2007 Location: Connecticut Posts: 11244

jerknut wrote:

Little side note about your graph... it makes the point, sure, but without any kind of number or percentage on the y-axis its pointless. /stat gripe.

The mortgage is 41x our gross monthly income.
The payments are 27% of our gross monthly income. (In the State of CT, taxes and insurance are held in escrow, so I already factored them in.)

I lease my cars because I don't believe they are worthy investments and our home cost us 3.5x our gross annual income.

Joined: Sep 18 2009 Posts: 132

Gotcha. I love the NE corner of the US, but fuck me housing rates are ridiculous.

Interesting comment about the car... I don't know a whole heck of a lot about leasing, but I own my car in full, no payments. I guess when you lease, you get all repairs and stuff covered, right? Do you own an insurance policy also, or is that through the dealership? I figure that I'm going to basically keep my car until it stops running, and at that point I'll purchase another car maybe a year old or so. I like not having car payments.

Joined: Dec 06 2007 Location: Connecticut Posts: 11244

Car payments cost less than car repair over time. Once a car is over 3 years old, it needs more and more work each year. Granted, some people get lucky with a Toyota Tundra and it lasts for 20 years with no more love than an occasional oil change. The average car however needs things like timing belts, wheels, struts/shocks, and all sorts of other stuff fixed and replaced. Leases allow me to drive worry free.

I do pay for my own insurance, and I also pay taxes on the car while I lease.

Posted: Oct 26 2009 01:36 pm

Oddly enough, if you want houses, go to Texas. Here in Louisiana, a two bed, two bath house ranges anywhere from $150,000-$500,000, not counting the rich neighborhood which is slowly eclipsing the entire city.

Meanwhile, my brother in law in a suburb of Houston just bought a SEVEN bedroom, FIVE bathroom, two story house... for $215,000.

Joined: Dec 06 2007 Location: Connecticut Posts: 11244

Undeath wrote:

Oddly enough, if you want houses, go to Texas. Here in Louisiana, a two bed, two bath house ranges anywhere from $150,000-$500,000, not counting the rich neighborhood which is slowly eclipsing the entire city.

Meanwhile, my brother in law in a suburb of Houston just bought a SEVEN bedroom, FIVE bathroom, two story house... for $215,000.

What the?

Does it actually have walls or just a frame?

Posted: Oct 26 2009 02:08 pm

Thing about a house, is that it needs CONSTANT attention. You need feed it oats every day. Sometimes twice.

Posted: Oct 26 2009 02:41 pm

GPFontaine wrote:

Undeath wrote:

Oddly enough, if you want houses, go to Texas. Here in Louisiana, a two bed, two bath house ranges anywhere from $150,000-$500,000, not counting the rich neighborhood which is slowly eclipsing the entire city.

Meanwhile, my brother in law in a suburb of Houston just bought a SEVEN bedroom, FIVE bathroom, two story house... for $215,000.

What the?

Does it actually have walls or just a frame?

It'll have walls and everything. When I was in Houston I saw all the housing developments going up on in the outskirts of the city. Soooo cheap.

Joined: Dec 06 2007 Location: Connecticut Posts: 11244

Syd Lexia wrote:

Thing about a house, is that it needs CONSTANT attention. You need feed it oats every day. Sometimes twice.

Wait... oats? I thought only red houses ate oats. I have been feeding my tan house corn. Oh man... maybe that is why it has been having so many stomach aches.

Posted: Oct 26 2009 04:42 pm

since the house market imploded here in AZ, there are a ton of new developments for cheap as well. its ridiculous, but since i have that foreclosure on my credit, its rather hard for me to get a new house. and i dont have a need for a house at this juncture of my life