Greetings!

[isaac]

Hello savingsadvice.com people!

I am Isaac, 25, from WV

Married, wife is in college / works part time after school. We'll probably bring home $45,000 this year after tax. Our income is expected to increase quite a bit in the next couple of years when she graduates and gets a real job, and I get hired on full time vs working as a temp at local factory.

My wife and I only recently stopped living like we're "jersey shore kids" and started spending responsibly.

~ stopped eating out, discovered ALDI grocery store - this saves a ton of $

~ canceled our DirecTV and got HULU, went from $90/mo to $7.99

~ more but i'm not going to bore you =D

In just a few months we paid off $3,000 in credit card debt and opened a Savings account.

We currently owe $4,000 on my car (which we have increased payment from $125/mo to $500/mo)
& $10,000 on her car ($150/mo)

We currentl Rent an apartment, $575/mo

I have saved so far, since i started saving this summer, about $5,000.

I am wondering: I qualify for a VA 100% financing Mortgage loan. Should we start looking for a home or continue renting and improving our savings habbits until we're more ready?

[Blessed]

Hi Isaac and congrats on that debt you paid off! This will pay off in big ways starting such good habits at your age!

I know nothing about VA mortgages so take my advice for what it costs ( nothing ). I wouldn't personally be looking to buy a home until you are out of debt, can put 20% down ( to avoid pmi and have a more manageable payment) on a 15 year mortgage. You also in my opinion want payments at 25% or LESS of your monthly income.

Come on more details aren't boring! Toot your own horn. Your ideas may be just what someone needs to help them make a change or learn a new way to save some money. Congrats to you and your wife again.

[UnknownXV]

I would first pay off your remaining debt, starting with CC debt if you have any left, then the cars. When you're free of debt, build up your savings first. $5,000 for two people isn't going to go that far. I suggest a emergency fund of $10,000.

At that point, you can consider a mortgage, although I would first wait until your income increases.

Good luck.

[isaac]

I would first pay off your remaining debt, starting with CC debt if you have any left, then the cars. When you're free of debt, build up your savings first. $5,000 for two people isn't going to go that far. I suggest a emergency fund of $10,000.

At that point, you can consider a mortgage, although I would first wait until your income increases.

Good luck.

Yes. Thank you for your reply. We no longer have CC debt or personal loan. We created a "SmartyPig" to manage our savings goals. As of now we have an Emergency pig with a goal of $10,000 and a House pig with a goal of $30,000.

I realize $5000 is nothing like you say, but we're brand new at this 'being responsible' thing. Lol!

I got an email from a local Realtor telling me how wasteful renting was and that every month was money thrown down the drain, if yall say to wait though, I guess I will..

I'm loving the site so far, especially the Frugal sections. However, after working with a guy who uses homemade laundry detergent & smellin his stinky clothes... I'm 90% sure I'll still be buying Tide..

[Blessed]

$5000 is a good start and I think very good considering you two are young. We personally didn't buy until we had a minimum of a 3 month emergency fund just to be safe. Owning a house you get stuck with repairs, taxes etc and it can add up fast. When we bought our first home we found out our less than a year old roof had a fatal flaw and we had to pop for that right off the bat.

Renting right now you know all you have to pay is rent. The agent wants to sell you a house regardless of if it makes sense for you now. That is how he gets paid. Also when you do buy make sure you use a buyers agent.

I don't personally think you need a bigger income to buy as long as you stick within the guidelines. Our income was very low when we bought our first home. Never go with what the agent or the bank says you can afford but what you know you can afford.

[UnknownXV]

Renting can be, it honestly depends.

When you buy a house with a mortgage, you pay interest on the loan. Over the course of the life of a mortgage, in some cases you can pay almost the entire value of the house in extra interest. There is also a chance that houses will depreciate in value even more. Although I do think we're near the bottom, so this isn't the worse time to think about buying.

As an example, if you got a mortgage for $200,000 on a 25 year term at 3.09% interest, you'd end up paying over $86,000 in interest over the course of the mortgage.

That's a lot of money.

Finally, when you buy a house, it makes you far less mobile. It's much harder to sell a house with a mortgage than it is to just end a lease. So if you do get a house, make damn sure you want to stay in that spot for a while.

Here's what I recommend you do. Go to a few online banking sites where you can get a no strings mortgage quote ( a lot of sites offer calculators for this ) and find out what the most you can borrow is. You want to be able to put down at least 20%.

Then use a calculator like this:

Mortgage Payment Calculator - CanEquity Mortgage Canada

It will let you know what your payments would be like per month, and how much interest you'd end up paying in total. Remember, the longer the mortgage term, the lower the monthly fee but the more interest you end up paying.

One more thing to note, there are property taxes to factor in. As well as home maintenance. Also, a home is much larger than an apartment, so it costs more to heat and cool it. Bigger bills.

Finally, calculate how much you'd end up paying in Rent over the course of the mortgage period. If you'd pay more in interest on the mortgage, renting isn't wasting money.

[isaac]

So yesterday I was talking to a lady at work about how I've decided to wait to buy a house until my "Down Payment" and "Emergency" SmartyPig goals were met, about $30,000. So I would be staying at my apartment for a couple more years.

She tells me there's a much nicer apartment on the other side of the river (2miles away), it's 1 bedroom instead of 2, but has bigger kitchen/livingroom/closets/bathroom and it's just me, wife, dog, for $125/month less than what I'm paying.

It is a much newer building so I'm assuming that means newer AC/fridge/water heater. So I should save on bills as well.

I'm looking at it today in 90 minutes from now, but the landlord is already showing it to a few people ahead of me. People that work at the Toyota plant have a pretty high reputation in my little community so I hope that me being a temp there pays off and he picks me.

[Blessed]

Hope it works out!

[isaac]

Well... My wife loved the place. Huge living room and kitchen. I don't like that its 2nd story and the landlord was very fidgety and unprofessional, almost seemed like he was on meth or something, had to pace back and forth the entire time I filled an application.

I guess I should move there, learn every way to save every penny and get a house ASAP...
Which leads me to my first question:

All of the lightbulbs in the apartment were incandescent, would I see a return in only 2 years if I were to replace them all with fluorescent?

Should I ask the landlord to buy the energy efficient bulbs for me? (Assuming I get the place)

[UnknownXV]

Well... My wife loved the place. Huge living room and kitchen. I don't like that its 2nd story and the landlord was very fidgety and unprofessional, almost seemed like he was on meth or something, had to pace back and forth the entire time I filled an application.

I guess I should move there, learn every way to save every penny and get a house ASAP...
Which leads me to my first question:

All of the lightbulbs in the apartment were incandescent, would I see a return in only 2 years if I were to replace them all with fluorescent?

Should I ask the landlord to buy the energy efficient bulbs for me? (Assuming I get the place)

That depends. Incandescent can range from 40 to 100 watts. If it is the latter, you may see a return, it depends on the cost of the more efficient bulbs.

It is fairly simple math to know how much it costs. One 100 watt light bulb costs, on average, about 10 cents every 10 hours to be on. This is derived from the Kilowatt hour rate from your area, which may be different. (Here it is 6 cents per KW hour). What does a KW hour mean?

Look on any appliance or device, you will find a wattage on it somewhere. For example, a microwave typically uses about 1,000 watts, or one joule of energy per second. So, to hit 1 KW hour, you have to be running enough devices so that you are consuming 1,000 watts for one hour. Run a microwave, and only a microwave, for one hour, and that is one KW hour.

[jpg7n16]

Yes. Thank you for your reply. We no longer have CC debt or personal loan.

Good work

We created a "SmartyPig" to manage our savings goals. As of now we have an Emergency pig with a goal of $10,000 and a House pig with a goal of $30,000.

Do you have a "Retirement Pig" too? Retirement savings is kind of a big deal. I'd encourage you to consider starting that along with your other goals.

Use this free calculator to get you started there: (it's from the AARP)
AARP Retirement Calculator - How to Retire, Plan for Retirement

I got an email from a local Realtor telling me how wasteful renting was and that every month was money thrown down the drain, if yall say to wait though, I guess I will..

You mean the guy who makes a living selling homes is saying you should buy a home??

Glad he considered your overall situation before providing the advice

[isaac]

Good work

Do you have a "Retirement Pig" too? Retirement savings is kind of a big deal. I'd encourage you to consider starting that along with your other goals.

No Retirement Pig, I know sooner is better than later but he only pays 1% interest.

I am 75% sure I'll be hired on 'full time' at my plant within the next 12 months and I'll get 401k with 6% company matching, some sort of pension, and a hefty pay raise. That is when I plan to start contributing to retirement.

You mean the guy who makes a living selling homes is saying you should buy a home??

Glad he considered your overall situation before providing the advice

LOL Good point. His point seemed valid too though, or so I thought at the time.

[joshuaking]

Hello savingsadvice.com people!
Sounds like you are doing a lot of things right at your age-congratulations!

~ stopped eating out, discovered ALDI grocery store - this saves a ton of $
What is Aldi and how does it save money?
~ canceled our DirecTV and got HULU, went from $90/mo to $7.99
This is so very smart-I am amazed that the cable companies and satellite can charge as much money as they do and people pay it. I am very happy with my netflix for 7.99 a month. All the movies and tv shows I care to watch. And I can watch them when I want.
~ more but i'm not going to bore you =D
It is inspiring to read about someone managing money so well.
In just a few months we paid off $3,000 in credit card debt and opened a Savings account.
Congrats!
We currently owe $4,000 on my car (which we have increased payment from $125/mo to $500/mo)
& $10,000 on her car ($150/mo)

We currentl Rent an apartment, $575/mo

I have saved so far, since i started saving this summer, about $5,000.

I am wondering: I qualify for a VA 100% financing Mortgage loan. Should we start looking for a home or continue renting and improving our savings habbits until we're more ready?

It doesn't have to be either/or. You can continue renting and improving your financial habits while looking for a home...if you find a great deal you may want to buy now rather than wait. All in all you are doing great. I wish I had been so smart when I was in my twenties.