HappyLifestyleJournal
So it’s time for you to get a new home?
Whether it is because you are getting married, expecting a new member in your family, or you just won the lottery, there are things you should consider before spending too much money just because you can afford it at the moment.
Buying real estate is investing in the future but it is also planning your expenses for that future. Keep in mind every aspect of your purchase in order not to end up regretting it. Here you can read some tips on how to buy everything you need in a home and still spend a reasonable amount of money – and not all you can afford.
- Housing prices do go up sometimes, but they can also drop!
So, when buying a house, most people think that its value can only rise over time and if at any point they decide to sell, they will earn more than they gave. This does sound reasonable – the population is growing fast and everybody needs a place to stay, but against all logic, in the past years the real estate market has shown that not only do houses not gain value, they lose it. In 2007-2008, most of the U.S. faced a huge drop in housing prices. While some regions remained untouched by this, in total, the prices dropped by 30% nationwide. Even if you are planning to live in your house forever, you never know what might come your way and whether you will be forced to move. In fact, according to the National Association of Home Builders, an average family stays in their home for around 12 years. So think ahead, even if there seems to be no way you would ever move, keep in mind life happens and that maybe you will get much less if one day, for who knows what reason, you decide to sell.
- Think about the utility bills.
Say the housing prices do go up – great for you! Still, there are some expenses that will go higher depending on the size of your home. First of all, utility bills. It is simple math – bigger property requires more heat and electricity, ergo more money invested. Also, with a nicer and more expensive home, you can expect higher property taxes and insurance premiums. And that’s not it. Size does matter, and this is a widely familiar fact. With a big house, you need more windows, tiles and carpets, bigger roof and… well, more of everything. If you want to live big, you have to pay big. That’s just the way it goes. Think about whether it will pay off.
- Do you think about your kids’ college fund?
If you save up on all the costs listed above (and many more that weren’t), you may be able to stack the money away in a bank, whether it is for your children’s college or your retirement fund. To be honest, it’s not just college, and it’s not just retirement. Think about all the things your kids will need as they grow. Will living in a bigger house and having a room for themselves mean much if you can’t afford the school trip they wanted to take, or sign them up for piano or ballet lessons. One day they will want a car of their own, and let’s face it, you are all used to taking at least one family vacation – these are the things you may be forced to cut back on, because you gave the money on a few extra rooms that weren’t necessary and a pool that stays covered for 6 months. Yes, it’s great to have a big house and a pool, if you can really afford it, but can you? Let’s leave the kids aside for a moment and think about your “golden years”. You WERE planning to retire at some point, right? What happens when that day comes and you realize you were always planning to start saving but you never actually did, because of all the expenses you had, many of which related to your big and fancy home?
A poll conducted by Harris Poll, which was published in USA Today, included 1,001 middle-class adults ages 25 to 75, showed that around 55% of participants planned to save more for retirement when they’re older to make up for any shortfalls. The thing is, the later you start saving, the less power it will have. It takes time for compound interest to start making a difference, and as you grow older that time is shorter and shorter. Buy a smaller house that fits your needs and save for your future self – you will be thankful one day!
Because one day, you may not be as healthy, young, secured and wealthy as you are (or think you are) right now. One day life may happen and ruin all your plans. A study from 2014 showed that around 25 million middle-class families are living paycheck to paycheck, meaning they might only be one illness — or one job loss — away from facing their worst nightmare. Are you sure that you want to risk your and your family’s wellbeing by going through this? Think about how much your family earns and then think what would happen if one of you lost your job. Would you be able to survive until things get back in place? Or would you be at risk of losing literally everything? The thing is, tragedies happen every day – it may not happen to you and that would be amazing, but in the world we live in, you just have to be prepared for the worst.
In the end, the secret is in calculating how much you are willing to sacrifice for the house of your dreams, and putting on paper your priorities. Try finding a balance between getting all you want and saving some of your hard earned money for the future, because you can never know what it holds.
