Debt Dumpers 2021

[FQLover]

@Tygerlilly I understand about how a community might be affordable but unsafe vs. a community that is safer and has good schools but is not affordable. Very frustrating. Maybe now is just not the time to be trying to make it happen, given that it is currently a seller's market.

I always like comments and advice given by @ruadisneyfan2. I think she raises some good points that I hope make you feel better that the right season for home ownership will come for you. Right now you are growing your family, reducing your debt, trying to up your savings and yet still make happy family memories. You have much to be proud of!

 

[pblack]

We bought 3 years ago and didn't put anything down. But because of that we do have PMI. When we refinanced for the first time last year the amount we had to pay for the PMI reduced with our monthly payment. We're once again in the process of refinancing again (thats a story all on its own) and this time we'll be getting rid of the PMI thanks to value of our home going up considerably.

 

[sara mom]

My DH and I have been saving up for a bathroom remodel for the master and kids bathrooms. Slowly. Then talking with my aunt who leases her cars and her lease is up in early 2022 and her car has 7000 miles on it thanks for Covid and her really not going places to begin with. So our new plan is to take the remodeling money at the end of her lease, buy out the car for $12,000 and viola- grad present for our son who has been driving our old car. And he will have a reliable newer car to take to college. And if the college he chooses does not allow freshman to have cars, due to the nature of his disability, he will be able to have one.

There are some benefits to Covid.

 

[ruadisneyfan2]

@Tygerlilly Right now you are growing your family, reducing your debt, trying to up your savings and yet still make happy family memories. You have much to be proud of!

Yes! When I was pregnant with our youngest, who will be 21 next week, we were no where close to worrying about debt. We loved having credit cards and said to ourselves, "No problem! We make good money; we can just pay that _____ off in a year or 2." and kept on charging. Online shopping was just becoming a thing. We refinanced from 30 years to 15 and would have had our mortgage paid off just as our first child was entering college. Perfect plan.
After our cc debt got so overwhelming that we refinanced again and cashed out some equity to pay it off, that took our mortgage to $186k instead of 123k that it was originally. Pathetic. Still our cc debt continued to grow. We couldn't refinance and I didn't know how to get things under control. Then I found this thread. It has turned our lives around.

So the fact that you're here focusing on budgeting, saving, reducing debt, etc while still in your childbearing years is wonderful! That is something to be proud of for sure. We are late to that party; I'm almost 54 and dh is 63 so this is why I'm frantic to pay off the house because it should have been done years ago. I want it gone before dh retires. Including the time we owned the condo, I've been paying on a mortgage since I was 26. I'm sick of it and just want it gone.
Just explaining all of this so you see, it's not that I've made all the right choices and you didn't. We are simply doing major/expensive life events in a different sequence.

 

[Gr8t Fan]

For those who own their homes:
Did you actually put 20% down when you went to buy? More? Less?
I'm trying to make an achievable goal for home down-payment, but 20% down on the houses around here is roughly $60k. We barely even MAKE $60k a year, so I'm just not thinking that is realistic.

Is it a massive frown upon to put less down?

We put 10% down and needed PMI until we achieved 20% equity. It was about $63 a month added to our payment. About 3-4 years later, we had our house reappraised to have the PMI removed.

And to put things into perspective for you, I'm 52, DH is 56 and our kids range in age from 13-24. We paid off our house ten years ago and refinanced 2x during that time - from a 30 to a 15 year mortgage and then to a 10 year mortgage.

 

[jen7233]

For those who own their homes:
Did you actually put 20% down when you went to buy? More? Less?
I'm trying to make an achievable goal for home down-payment, but 20% down on the houses around here is roughly $60k. We barely even MAKE $60k a year, so I'm just not thinking that is realistic.

Is it a massive frown upon to put less down?

Don't currently own, but have. First time zero down payment but some minor fees, had a VA loan. Second time we purchased a home, used a VA loan again, but we did do a 20% down payment that time to sit at a monthly mortgage cost we were comfortable to see paying. That house also had specials, that was a downside, on the tax.

 

[barkley]

our first home was bought with 5% or less down. we did an fha loan. we had to pay pmi the first few years but we bought during a pretty flat market so when it started to heat up a bit we were able to re-fi, get a better rate and drop the pmi. it's crazy to think that when we got our first home the 11% interest rate we paid was considered really good.

the housing market is bat-s... nuts here. people have gone crazy for anything rural.

 

[DisneyHardin]

Bonuses and overtime account for less than 3k total between the both of us per year.

Sorry - I must have confused with with one of the other "regulars" on the debt dumpers thread.

 

[Tygerlilly]

I didn't mean for it to sound like I was ungrateful. I am pretty thankful for what we're achieving and doing in life. I just feel like we're so far behind on everything. We're not as young as I think most think we are: I'm 35 and DH is 50. We're scrambling to get some kind of retirement going and while I feel lucky that even if he does need to stop working, I still have many years of working before I do.
It's just frustrating that instead of paying off our own home, we're paying off someone else's by renting. $1300/month for rent could be $1300/month towards my mortgage instead.

 

[FQLover]

I get it. Question: could you look at smaller homes for now, as in a 3 BR with two rooms to split between your three kids and one for you and your hubby? Growing up, we were a family of 8 (six kids) and we lived in 4 bedroom houses. We always shared bedrooms, from babyhood on through college (since we mainly lived at home for that). That might knock a lot off of the asking price, although I don't know your area.

 

[afan]

I didn't mean for it to sound like I was ungrateful. I am pretty thankful for what we're achieving and doing in life. I just feel like we're so far behind on everything. We're not as young as I think most think we are: I'm 35 and DH is 50. We're scrambling to get some kind of retirement going and while I feel lucky that even if he does need to stop working, I still have many years of working before I do.
It's just frustrating that instead of paying off our own home, we're paying off someone else's by renting. $1300/month for rent could be $1300/month towards my mortgage instead.

While that's understandable, it's also good to remember the difference between the two. You're landlord/apt owners are responsible for the maintenance now, you'd be responsible in the house. If the rent covers any utilities like trash or cable etc those would then be on you. There's a lot more to it than just an even swap of rent vs mortgage. And the last thing you want to be is house poor because so much of your money is going to your mortgage, utilities and upkeep. I totally understand the reason for wanting to buy, but I also think with the way the market is at the moment that it really is better to continue saving and wait. A lot of houses are going over list price, mine sold for 20k over list and it was under $200k. So even what you are looking like isn't likely to sell for what it's listed at.

 

[MissBritt]

For those who own their homes:
Did you actually put 20% down when you went to buy? More? Less?
I'm trying to make an achievable goal for home down-payment, but 20% down on the houses around here is roughly $60k. We barely even MAKE $60k a year, so I'm just not thinking that is realistic.

Is it a massive frown upon to put less down?

We bought in 08 when everyone was so desperate to sell that the listing agent and our agent split a 1% commission to get it sold. I know we put down far less than 20%. If I recall, it was more like 8%. Refinanced a few times over the years to drop the interest rate.

 

[piglet1979]

We bought our house in 04. A month after we got married. We did not have a down payment. We did a 20% loan to pay for the down payment so we didn't have to pay PMI and the an 80% loan for the house. I don't think they do these any more and I think this is what caused the housing issue in 08. The house lost tons of value in 08 and we ended up stuck in this house. It is a nice house but small. We had planned on this being a starter home. When we bought the house I worked at a daycare making about $20,000 a year and DH just started where he is now in IT. He didn't make much either. We quickly had 2 kids and were not able to pay anything down on the house. Just the monthly payment. Kids are now 13 and 15. I changed jobs when DD was 6 months and have moved up to being a manager and DH has continued to move up where he is at. We never really saved though. If it wasn't for the pandemic we would not be where we are now. Not being able to go on vacation, not paying $100 a month to park for my job, not paying for gas, and the stimulus checks is what helped us. After seeing what we were able to do this year has changed the way we are thinking. We are more focused on paying down the little bit of debt we have had (mainly the house). We will move but it will be a few years. We will not move unless we can have the house paid off though before we retire. We are 41 so we have time.

Hang in there you will get to where you want to be.

 

[Jen and Ashwin]

I put down 20% on my house because I did not want to pay PMI. I saved really aggressively once I finished college and started working. Probably close to 50% of my income. It was just me and I didn't really need that much, so I was able to keep expenses low. I specifically rented in a cheaper area a bit further from my job so that I could save an extra $600 per month on rent. I didn't eat out much at all and only spent $200 a month on food. I mostly played video games for entertainment, which cost a $15 per month subscription fee. It was all very frugal. I can't imagine being able to save like that now that I am married and have 2 kids. Looking back, it seems almost crazy. But I was super determined to buy a house as soon as I could.

 

[ruadisneyfan2]

our first home was bought with 5% or less down. we did an fha loan. we had to pay pmi the first few years but we bought during a pretty flat market so when it started to heat up a bit we were able to re-fi, get a better rate and drop the pmi. it's crazy to think that when we got our first home the 11% interest rate we paid was considered really good.

the housing market is bat-s... nuts here. people have gone crazy for anything rural.

We thought the 7% we had in 1993 was phenomenal!!

 

[ruadisneyfan2]

I put down 20% on my house because I did not want to pay PMI. I saved really aggressively once I finished college and started working. Probably close to 50% of my income. It was just me and I didn't really need that much, so I was able to keep expenses low. I specifically rented in a cheaper area a bit further from my job so that I could save an extra $600 per month on rent. I didn't eat out much at all and only spent $200 a month on food. I mostly played video games for entertainment, which cost a $15 per month subscription fee. It was all very frugal. I can't imagine being able to save like that now that I am married and have 2 kids. Looking back, it seems almost crazy. But I was super determined to buy a house as soon as I could.

That is awesome to be young and so frugal. I was so into spending at that age. You don't mention any student loans which a lot of young people are really overwhelmed with. Some new grads owe more than a mortgage.

I'm not trying to sound snarky. We're all in a different boat in same rough seas trying to stay afloat.

 

[Jen and Ashwin]

That is awesome to be young and so frugal. I was so into spending at that age. You don't mention any student loans which a lot of young people are really overwhelmed with. Some new grads owe more than a mortgage.

I'm not trying to sound snarky. We're all in a different boat in same rough seas trying to stay afloat.

I have always been quite a saver. The money that I put down on my house included money that I saved from birthdays, holidays, my bat mitzvah, and high school, college and law school graduation gifts. I also had some sort of job since I was 11, except for my first year of law school because outside employment wasn't allowed. Most of that money got saved as well. I have always been pretty goal focused. Not necessarily cheap because I like to buy nice, high quality things, but I am good at prioritizing what I want and then saving for it before I buy.

And yes, I didn't mention student loans because I was extremely fortunate and my parents covered my education completely. I worked hard to get scholarships to reduce the cost to them. And when I got accepted to several top 20 law schools, I choose the one that would give me in-state tuition after the first year because it was the best financial package. I am so grateful to them and realize that their gift put me into an amazing position so early in life and allowed me to save much faster. If I had loans, I would have gone through the loan forgiveness program and would have likely just discharged them, so I am sure things would look really different for me right now if I had loans.

When my husband and I got married, the first thing that we focused on financially together was to be ultra frugal and pay off his student loans. He went to college in Canada and lived at home all 4 years, so his loans weren't anything like most people in the United States. We managed to eliminate his $25k in loan in just over a year after our wedding.

And before we had childcare expenses, we were paying double on our mortgage for 2 years. It really reduced the principle quite quickly. But with 2 kids in daycare now, our money is very tight and we finished the basement so we have a HELOC that added significantly towards our home debt. I just can't make any extra payments right now. Our oldest will have at least another year in preschool, but once she is finished, I look forward to paying down our HELOC as fast as possible.

As you said before, we all go through seasons in life and our priorities and obligations shift. I definitely am much less frugal than I used to be when it was just me. I go to Target and I often can't help buying a cute shirt for my kids or some other extraneous purchase. And I definitely consider family vacations to be a must now. I am very much looking forward to our Hawaii trip in September since it will have been almost 2 years since we will have gone anywhere.

 

[DisneyHardin]

And yes, I didn't mention student loans because I was extremely fortunate and my parents covered my education completely. I worked hard to get scholarships to reduce the cost to them. And when I got accepted to several top 20 law schools, I choose the one that would give me in-state tuition after the first year because it was the best financial package. I am so grateful to them and realize that their gift put me into an amazing position so early in life and allowed me to save much faster. If I had loans, I would have gone through the loan forgiveness program and would have likely just discharged them, so I am sure things would look really different for me right now if I had loans.

I also didn't have any student loans and I'm realizing more and more here lately how fortunate I am when I hear about the insane amounts of money people had to borrow for college.

 

[Eureka]

I also didn't have any student loans and I'm realizing more and more here lately how fortunate I am when I hear about the insane amounts of money people had to borrow for college.

That's why we have reduced our retirement savings when we've needed to and, albeit late in the game compared to some people, started 529s for our kids. We've been able to pay for DS20's first two years of college without any loans and DH has planned it out so, barring anything unforeseen, we should be able to do the same for his remaining two years and DS18's four years. We both had loans for college and grad school and would like to be able to give them a fresh start in "real life" without those payments.

And to another recent thread I just caught up on - there's no way we would have been able to save enough to pay off our mortgage when our kids were small. We only opened the 529s seven years ago, when they were already in middle school and I went back to work full time (was freelancing part time before that). And we certainly didn't put close to 20% down on our house. We bought when DS20 was a baby and when we refinanced a few years later we were able to get rid of the PMI. We have five years left on the mortgage and our goal is to get it paid off before DH (who is nine years older than I am) retires.

Edited to add, it helps that DS20 got a renewable scholarship for part of his tuition and DS18 has already received a couple of one-time scholarships. I made them apply for EVERYTHING they qualified for. There's money out there, you just need to find it.

 

[CaptainAmerica]

That's why we have reduced our retirement savings when we've needed to and, albeit late in the game compared to some people, started 529s for our kids. We've been able to pay for DS20's first two years of college without any loans and DH has planned it out so, barring anything unforeseen, we should be able to do the same for his remaining two years and DS18's four years. We both had loans for college and grad school and would like to be able to give them a fresh start in "real life" without those payments.

And to another recent thread I just caught up on - there's no way we would have been able to save enough to pay off our mortgage when our kids were small. We only opened the 529s seven years ago, when they were already in middle school and I went back to work full time (was freelancing part time before that). And we certainly didn't put close to 20% down on our house. We bought when DS20 was a baby and when we refinanced a few years later we were able to get rid of the PMI. We have five years left on the mortgage and our goal is to get it paid off before DH (who is nine years older than I am) retires.

Edited to add, it helps that DS20 got a renewable scholarship for part of his tuition and DS18 has already received a couple of one-time scholarships. I made them apply for EVERYTHING they qualified for. There's money out there, you just need to find it.

This doesn't really apply to you at this point, but for anyone with kids who are younger and are still actively funding college savings, consider a Coverdell Education Savings Account instead of, or in addition to, a 529. This is more important in some states than others, but many states have lousy investment options in their 529 plans. The Coverdell functions in almost the same way but it lets you pick whatever stocks or mutual funds you want. It has a $2,000 annual contribution limit per student, so we fund our Coverdell to the max and then any extra savings we do goes to the 529.