Easy Come, Easy Go

[ladysprite]

No house for me, apparently. Woe.

It seems I heinously overestimated what we could afford to buy. While we do have enough saved up for a sizeable down payment, our monthly allowance for a mortgage is not quite up to a large, friendly house in the suburbs of Medford. It's more along the lines of 'large friendly house in the suburbs of Ohio or New Jersey,' or 'small ramshackle fixer-upper in the suburbs of Dorchester' level.

I find it patently ridiculous that two adults, working full-time at decent-paying jobs, with no children, can't afford a house in this neighborhood, but such is life. On the other hand, we're also two well-paid adults with monthly student loan payments that total more than most people's rent in this corner of the country.

Darn it, if only I had skipped out on education in favor of becoming a hairdresser at 18, I'd.... well, I'd be making a lot less money. I'm damned, either way.

I know this doesn't mean no-house-forever, but right now it feels like that. I don't want to rent forever, but I don't want to give up the neighborhood here that I love. I've spent the last day or so pouting, doomsaying, and kicking my bed, and I've finally moved on to the point where I'm willing to do something about the situation.

Of course, now I just need to figure out what that is. Short of a magic hand coming down from Heaven to wipe out our student loans, our financial situation isn't going to change anytime soon. And if the hand of heaven isn't going to fix our debt load, it's not likely to whisk up a house in Medford that we can afford with our current funds, either. I could drop all my hobbies and work six days a week for the next couple of years, but.... a house isn't that much of a priority to me right now, that I'd be willing to drive myself that hard for it. And I don't trust the stock market enough to invest our current savings in anything that has a chance of significant payback on that time scale.

I want things the easy way, it seems. And that's just not likely. I need to beat my head against the situation until another answer becomes visible....

Comments

[mermaidlady]

And I don't trust the stock market enough to invest our current savings in anything that has a chance of significant payback on that time scale.

Do you have an ING account? They're currently offering 3.80% -- better than many banks. And the customer service is actually good.

[ladysprite.livejournal.com]

It's one of the things I'm spending today looking into - that, and CD's from my current bank. The CD's tend to pay better, but the money is less accessible.

Thanks for the recommendation, though - one of my concerns about ING was my lack of any references for them.

I'm not used to having to think about money. I've always just stuffed it into my savings account and assumed I didn't have enough. This is a new experience, and one I'm still figuring out how to approach.

[rufinia.livejournal.com]

I also have an ING account, and I like it.

[tpau]

i love my ing account and have had it for over a year now. if you wnat one let me know if i recemnd you you make $25 and i make $10 (same for the other peopelwho mentioned they have ING, get one of us to do it, so you/we make moeny :)

[quietann.livejournal.com]

how are your savings invested?

I am seeing rates for CDs ranging from ~3.75% for short=term to 5.5% for long-term... This is not great but it is not terrible, if you can afford to put the money into CDs and leave it there.

Also have you considered a condo? Really, in and around your area, the number of people who can actually afford to buy a single family house without going through condo-ownership first is vanishingly small...

[dreda.livejournal.com]

Although a condo is running about $350K...which for a lot of people means a mortgage of >$2500/month...

[ladysprite.livejournal.com]

Condos hold less appeal than renting for me - I don't like apartment building living, and I can't live without a yard. Given a choice between that and the six-day-work-week, no-hobbies for two years, if those are my only options for home ownership, I'll take the latter.

On the other hand, I do need to look into CD's. My savings aren't as much invested right now as they are stuffed into the banking equivalent of a sock drawer....

[meranthi.livejournal.com]

Condo doesn't necessarily mean apartment building or no yard. We have a townhouse. 2 floors, plus finished basement, and it has a yard (of sorts). However, we can't really do anything with it, which doesn't work for the vegetable garden.

That said, the housing market up north is *why* we live in Dorchester. It's not that I wanted to, but the prices were MUCH better, and still doable from a commute standpoint.

[goldsquare.livejournal.com]

meranthi is giving good advice. There are plenty of Arlington 2-family units that have gone condo. But with shared back yard, gardening space, and so forth.

Also - look at some of the money market mutual funds from places like Fidelity (http://www.fidelity.com). They may not make you rich. but you want to have your savings earn above inflation rates, or it shrinks as it sits there.

[sonata960.livejournal.com]

I agree with this - we live in a 3 family, with a nice back yard that none of the units care to tend, so this year we planted a whole bunch of bulbs, and I'm thinking of maybe ripping some stuff out and putting in hydrangeas. It's a nice compromise, as we can't afford a house, but didn't want to keep renting.

Good luck!

[dreda.livejournal.com]

Oh, I hear you. We love living near Davis Square. Hahahaha! <-- the sound of realtors.

Have you considered hiring a financial advisor? Ameriprise (to pick an example) can hook you up for about $400 a year, and advise you on investing that savings in something moderate-yield/moderate risk. It means a couple of years of that - probably at least five - but it could significantly increase your return.

I know I don't know enough about investing to get the most bang for my buck. I also know that I don't have time to learn it as well as I would like. But I know that I can find time to meet with an advisor, who will know this stuff better than I ever can. There's no shame in not being an expert in everything (as I have to keep telling myself...;).

[new-man.livejournal.com]

I had a VERY bad experience with Ameriprise and would never go back to them.

I have a good financial advisor at Edward Jones who is free. I'm happy to connect the two of you if you want. I'm sure he'd do better with your somewhat more traditional income structure than he does with my weirdness.

[citabria]

You think you could buy something nice in NJ for substantially less than Medford? Ha!

Ahem. Seriously, though, I'm not a huge fan of condos, but with a condo you're putting most of each month's money towards something you own, not just giving it away. That *does* make a difference; it also helps you build up a good record for buying your house. And as folks have said, some condos are actually quite nice -- you just need to be willing to do the legwork to find them.

[ladysprite.livejournal.com]

You think you could buy something nice in NJ for substantially less than Medford? Ha!

Hm. My mom just sold her three-bedroom house in Toms River for less than $200,000. And is buying another fairly new, quite nice two-bedroom house (admittedly, in a senior community) for about the same.

The average house of that size here in Medford appears to be over $400,000.

Condos.... just feel wrong to me. I don't like the thought of buying something that I won't control, I want a big damn vegetable garden, and I don't want to pay $300,000 for something I don't plan on keeping for a long, long time. If that's the only way to afford a house I'll have to accept it, but I'm going to at least try to look for another option.

[jducoeur]

but with a condo you're putting most of each month's money towards something you own, not just giving it away.

To be fair, this is only true if you're living in a place for a long time. For the initial years, you're putting only a teeny-tiny fraction of that money towards equity -- the proportion going to equity doesn't start to amount to Real Money until you're a good ten years into the project.

Condos *have* been a good investment, but that's mostly because of appreciation -- that is, since the prices keep going up, you get a lot more equity out of that than you do from the monthly mortgage payment. But my confidence that that's going to continue to be the case is pretty low -- the market is ridiculously frothy right now, and set to drop...

[vettecat.livejournal.com]

I sympathize completely. We've been dealing with this exact issue for a while now... very frustrating.

Money....

[pamelina.livejournal.com]

Hmm... is your problem that you couldn't afford the mortgage payments for the house you wanted, or that you just don't qualify for that mortgage loan? If the latter, talk to me.

If you have savings money to invest, it's much more important that you be well diversified than that you pick particular investments. That's why no-load mutual funds have traditionally been the best investments for savings of small investors.

But now there are excellent things called Exchange Traded Funds, which are groups of stocks from a particular market segment (like industrial stocks, or energy stocks, or the stocks of the S&P 500) which are treated as if they were a single stock that is traded on the stock exchange. For a small investor, these Exchange Traded Funds (ETFs) are much better than mutual funds for several reasons, (like their low management costs, as well as having capitol gains/losses tied to the investor rather than the mutual fund) but chiefly because they allow you to be very diversified with very little money.

If you're interested, I can tell you about financial advisers and recommend a good book to help with your finances and investments.

[madamruppy.livejournal.com]

You said that you have enough saved for a sizable downpayment. So I'm looking at this differently. Can you keep enough in savings to cover emergencies and then use a chunk of your savings to make a big payment on one student loan or another to drop your debt load? Then start compiling again. Just a thought.

[mindways]

Random reactions and thoughts, to both post and various comments:

1. *hug*

2. You probably already discovered this, but on the off-chance not: There are towns adjacent to Medford that have cheaper home prices (Malden and Somerville, at least), as well as cheaper parts of Medford (NE Medford, up near the Fells).

3. Good instincts on the stock market - high returns go hand-in-hand with high risks. (There are certainly ways to use the stock market that are lower-risk... but they're not going to make you rich quick.)

4. I'm not a financial professional, but for a layperson I do know some things about this sort of stuff, and have talked through it with friends before. If you (and/or umbran) ever want to talk about it (or exchange emails) just drop me a line. And I've got a good book on the subject that I can loan you, too - "good" both in its advice, and in not being a dry, impenetrable tome.

5. madamruppy has an excellent point - if your savings aren't making you as much money as your loans are costing you, putting money towards paying them off early may well make you more in the long haul.

6. From what I've seen, short-term CD rates these days aren't really any better than what you can get with ING or Emigrant Direct. (And long-term CDs tie your money up for way too long.)

7. Another strike against condos is that in addition to the cost of buying the unit, there's the monthly condo fee. (Not always significant, but often so.)

[dagibbs.livejournal.com]

You could hope for the economy to crash, cause house prices to drop precipitously, and both of you to be lucky enough to continue working. ;)

[greenman65.livejournal.com]

...or there's got to be a ready market for all that ketamine you have lying around at the office ;)

We're currently in the pain of having to run *two* houses because we've had to rent in Shrewsbury (Deb starts her new job next week) before we can finish decorating and sell our existing house.

Ouch !

[jducoeur]

Hug and sympathies. If it's any comfort, now isn't a good time to buy anyway: the market is stupidly inflated, and set for a drop. The only reason msmemory and I bought our house this year was because we had one to sell at the same time, so we got the inflation both coming and going. And even there, I had a couple of nervous months wondering if the bottom was going to fall out before we managed to sell the old one. Bear in mind that we bought our old house the *last* time the market was like this, and got to watch its value plummet by about 25% in the first two years. Not fun.

(Obviously, I Am Not A Financial Advisor. But I've been spending a lot of time lately examining how this stuff really works...)