Buying a House - Our Budget - Please Help

**DebbieL** · 07-10-2009, 03:04 PM

Hi! I will offer my opinion on a couple of things. DH and I have a similar net take-home (~$6,500). We aren't home owners (property is ridiculously bubble priced here - we won't buy unless it corrects about 40-50%). A mortgage the size you are talking about would be a big jump in expenses from what we are used to paying in rent (currently $925), but would be definitely doable (is that a proper word?).

The categories that seemed to stand out to me were the fun money, vacation and home maintenance. These are probably just personal preferences, but I would rather put more towards vacations and less towards fun money. If travel/vacations aren't a major priority for you, then that is understandable why it is so low.

I might go something more like:

$150 each for fun money, and divert the additional $300 to vacation funds

I don't own a home, so I'm not sure about this, but I thought the $100/month might be on the low side for maintenance, etc. Unless you are buying brand new, I think it should be more than that.

Good luck to you!

**ms_businesswoman** · 07-13-2009, 07:41 AM

Thanks! Good point. Yes, it is a new construction home.

Anything else, anyone? Does our budget look too tight or if we are stretching ourselves too thin?

**Radiance** · 07-13-2009, 08:10 AM

I am pretty much surviving home onwership.

If I had to do it again, I think I would buy in a development without HOA.

It increases every year and, to top it off, I have to make special payments to cover for those who don't pay. The latter should be less and less as the economy recovers, but it has been painful.
Of course without HOA you need to take care of your own lawn and have no access to the club house, and other goodies (like me who didn't know basic cable was included, oops)

Also, if you are buying new, Id consider buying one of those protection plans for all your big appliances, it is cheaper when the house is new. I think that is like $300 a year. I never did it, but I have friends who have saved a lot of money with it.

I am no expert, but it seems to me as if you have your expenses well covered to be comfortable as a home owner...I like the baby fund... lol
My baby is over $1000 a month, but $840 is the preschool.
What do you mean remaining -6%?? You are on the red? How will that work? I guess you need to save less of his income...

oh, and I would do a FIXED mortgage and never a interest only mortgage
Also, why don't you budget to make one extra mortgage payment a year? That speeds up building equity
And, if I had to do it again, I would have never refinance to cash out money to pay debt :-(

**tmvijai** · 07-13-2009, 08:14 AM

Hello ms_bizwoman,

After reviewing your budget, you only have 2% debt to income ratio which is good to get your mortgage but after loan you DTI goes to 25-28%. It is not bad but on the border. You do have 6 months EF and good savings pattern if you put all your spouse income to savings. I would think about not putting money to the new vehicle at this moment. No new purchases when you are planning to buy big home. I have 12 year old truck which is running smooth. Unless you really need a vehicle now, I wouldn't put money to it. You can save that $300 car fund to get to the break even point.

Also you might be underestimateing the home maintenance charge unless you live in very low cost of living area or a green customer. Next cellphone expense, $150. I am guessing you both have iphones. You might be able to switch to better plan and reduce $75 atleast. I earn similar to you but only have $40 plan which suffice my need. I know everybody need is different but you can evaluate that area. Last one, fun Money $300 for each seems to be on the higher end which can be cut down.

Hope this helps.

**ms_businesswoman** · 07-13-2009, 08:28 AM

Thanks Radiance & TMVIJAI

Yes, we can switch the phones to a better plan. We have verizon and our family plan is higher because of data usage but we can change that easily.

Also my fiance will have 2 extra checks a year as (he is paid every other week), but I didn't include those in the monthly calculation.

Good point on doing an extra mortgage payment a year or either bi-monthly payment (i forgot about that).

**whitestripe** · 07-14-2009, 03:50 AM

do you have taxes or property rates? we pay $900 twice yearly.
i would suggest that you leave a little more for house maintenance expenses - just speaking from experience!
i dont get why you've listed your remaining as negative though. why not adjust it and say you're saving X amount of His Income, instead of all of it?
personally for two people we spend over $100 a week on groceries - but if you guys can do it for less that's good.

house insurance? contents insurance? health insurance?

medical expenses? clothing?

**graceful** · 07-16-2009, 09:15 AM

Thanks OP for posting this. We are contemplating buying a house also so we are going through the same budgeting thoughts.

Things I noticed:

Would you need to pay for oil for heating or is that covered in your utilities/gas?

You may not have or need life insurance right now but you may need to consider it at least on your future DH once you do buy a house because if anything happened to him, your salary alone will not let you be able to pay for the house on your own. So, you may need to add in cost for term life into your budget.

Good luck.

**maat55** · 07-16-2009, 04:09 PM

If your looking for areas to save, you can downsize the fun money to half, look at liability insurance on the truck.

You should consider your car payment money as an car fund to pay cash. With the amount you will be saving, you can fund them without payments.

Your payment is in line with your income, just make sure you invest at least 10% towards retirement, stay away from expensive cars(total of vehicles should not exceed 50% of your yearly income in value, 40% preferable).

Stick to your plan and you will be fine.

**scfr** · 07-16-2009, 05:32 PM

As far as where to cut back, the fun money seems the most obvious place. If each of you shaved $100 per month off of that you'd be half way to where you want to be.

Also the insurance on the 10yo truck seems high ... If it's not worth much, why not just switch to liability only coverage?

Have you included the cost of trash pickup in utilities?

You will have "new home purchases" (unless you currently own a lawnmower and all the other goodies that owning a home require & unless the house comes with a fridge and washer & dryer). I'd switch the new car $ to the home maintenance fund until you have enough to cover those things.

Buying a House - Our Budget - Please Help