“My wife and I are both 28 years old and both enjoy good jobs. In total we earn just over $140,000 each year. We’ve been saving for our first home and have nearly $40,000 toward the down payment we need. We want a nice home, but we don’t want to be overwhelmed with the expense and not be able to enjoy ourselves. Of course, some day we also want to start a family.
What guidance can your 780 years of experience offer us?”
Thanks for noticing all my experience – was it the grey hair that gave it away? Or was it the fact that I repeat that so often on our More than Money Radio Show?
My first reaction to your question was an enthusiastic – good for you! You and your wife are already doing and planning lots of very wise things. You both have good jobs – a real blessing. You’re been seriously saving – an unusual action for a young copy these days. This tells me you are already seeing the big picture (or you’re already getting some sound financial counsel – maybe from your parents?).
Your goal of a nice home that won’t also be a burden is a throwback to my parents’ generation (the greatest generation as they’ve been called). Intelligent people have always taken two important steps in buying their first (and often second and third) homes. First, they budgeted to buy their home based on only one income. Though lenders will be happy to offer you lots more money based on your joint incomes – don’t do it. Use only the income of whoever will continue to work after you’ve started your family. Notice I didn’t say you – you might be the stay at home dad as mom goes off to work. Pretty up to date thinking on my part – don’t you think? Borrow only as much as you can support on one salary.
Second, they always lived on one salary. Not just with their home purchase, but with everything. They lived on one salary and banked the second. This allowed them to get their budgets and financial choices in line long before they signed for their home. It also allowed them to save far more than they thought they could. Of course, it will require that you make choices and spend wisely. It will also allow you to grow more and more confident in your financial future. If it turns out that you are fortunate and continue to enjoy two incomes for your careers – fantastic! That simply means your wise spending choices and disciplines will allow you to save even more for your bright financial futures.
Good luck and come back to us often with your questions as your lives unfold.
If you have questions or comments, please send them to Gene@AskMtM.com