please review my 12 month financial plan?

[Frugal Guru Jenny]

So even though I will have money to save once I get in the house, with the low rates they are at, and how my mortgage would be 200 cheaper than my rent, still dont try to buy a house? I guess I feel as if I should get in a house because rates are so low. Since my job is secure, then i could build up an EF.

Not a chance. You have forgotten PMI, insurance, and property taxes, never mind maintenance and higher utilities.

[Frugal Guru Jenny]

No I appreciate the advice you guys have given. It makes sense what you are saying. But 20% down? 6 months expenses? Those are just personal opinions...I respect those, but even the top financial experts disagree on how much you should save. I mean why wouldnt you just suggest that I dont buy a house at all unless I have cash, doesnt that make the most sense? Why is 20% the magic number, why not 30 40 or 50? Or what if the house went up in value by 25%? I would have made 40K. What other investment lets you put 3% down with a chance to make 10x your money....

This is what I am seeing in my situation, and I am sacrificing already.

1: Cancelled gym membership
2: Keeping track of every expense this month to see where extra money goes to tighten budget and reduce spending
3: Looking for another part time job
4: not going to get a new car
5: A mortgge would be 300 cheaper than rent
6: By the time I buy a house, I will have $8000 towards down payment (5% on 160K house), paid off $5000 in debt, resulting in about $700 extra each month. Plus the $300 savings from the rent cost, Thats $1000 each month to replenish my EF, pay off debt, and put towards house repairs and maintenance.

I dont understand what is bad about buying a house at the low interest rate, given that I am paying off debt and creating cash flow? I will still have all my debts paid off within 2 years whether I buy a house or not

No, you're not going to have all your debts paid off in two years. I can pretty much guarantee that any person who says, "Why wouldn't I get a $500 TV with 0% financing?" is going to have brand new debts in two years. I actually groaned aloud when I read that the gym was the only fun thing in your life when I could see the internet, phone, DirectTV, TV, engagement ring, and wedding funds. Those expenses are very much out of line with a lifestyle that has "nothing but bills." And then you count not buying another car as if it is a savings. Not spending money isn't saving anything. You have to actually cut expenses to save.

Your desire to not make your fiance uncomfortable keeps her from being an adult. Grownups take responsibility for their actions and contribute to the family together. Does your fiancee do the food shopping? Then she needs to contribute $75 of her "fun money" and the full value of her $60 in tanning toward the family, one way or another. Either she needs to cut clothing and food costs through smarter shopping or she needs to do more modeling on the side to make up that money. Again, this is about being a family and an example to your kids.

You've never owned a house before. A dozen homeowners are telling you that your budget is not going to cut it. It's quite likely that you'll need to buy a lawnmower and other yard tools, a fridge, curtains or blinds, and a washer and dryer within the first couple of months. Already, you've burnt through most of a year's house budget. And you haven't faced a single ACTUAL repair or a utility bill. Don't expect to save over renting. It is very, very unlikely that you will.

[LivingAlmostLarge]

What happened? Did you find out what interest rate you could get for a mortgage?

[hehateme000]

Honestly I bought a house but I dont regret it. Interest rate 4.75%, fixed 30 yr.

I decided to do it because we are a family and that took importance rather than looking at it 100% financially.

However, now that it is out of our way I feel that we have different financial goals and are actually quite close to being able to stop living paycheck to paycheck. The only reason we were able to afford this house was because I am OCD about budgeting.

In about 6 months after paying off debt we used to get in the house and just cc debt, we will be able to save a good amount of money every month from then on. As long as we dont pile on more debt.

I know I didnt listen to what most ppl said about buying a house but that doesnt mean i didnt agree with you guys or thought what u guys had to say didnt mean anything. I just chose to buy the house based on family and emotions rather than financially. I hope I can still come here and ask for financial advice. Just wait and see if I ever get divorced, then ill really have some questions LOL

[Eagle]

However, now that it is out of our way I feel that we have different financial goals and are actually quite close to being able to stop living paycheck to paycheck. The only reason we were able to afford this house was because I am OCD about budgeting.

In about 6 months after paying off debt we used to get in the house and just cc debt, we will be able to save a good amount of money every month from then on. As long as we dont pile on more debt.

From what I've read I'm not sure if you could afford this house. But I totally understand wanting a home for your kids (we have 2 as well). We took the plunge last year and bought a house as well due to the low interest rates. But we had paid off all CC, consumer debt, and both cars. We were, however, debt free at the time.

As far as piling on more debt... Yes this will be key. You have about 20k more debt today (60.7k) than you did in April of 2013 (40.5k). Plus you have a mortgage payment and balance.

You have to actually cut expenses to save.

Yes, cutting expenses is key. That means that Mrs. Hehatme000 may need to cut some of her luxuries as well (fun money and tanning for example).

[LivingAlmostLarge]

I noticed that they somehow increased debt by $20k over the past year, buying Car 2 with a $20k loan.

I'm not sure how that works into paying down debt, but seriously you are planning for 2015 to have $12k cash to "save". You need to "Save" that into debt instead of accruing more debt so you can get back to 2013 debt levels.

[hehateme000]

Yes we have more debt, but as a family we also have everything we need now. We felt pressured to buy a house because we wanted our kids to have a place they can call home, not some apartment. The mortgage payment was the same amount as our rent was, and so far we havent had any major expenses for the house, except for putting stuff on the Lowes card and getting furniture.

But the good thing is that my fiance and I are on the same page financially. I handle all the bills and I have let her know that we need to get out of debt. The good thing is that we have everything we need at this point. We do not need to get into debt again. The only thing we need is to get out once in a while so I feel that we still need to have 100-200 a month to just go out to eat once in a while, or go on a date night. We both work full time and hardly see each other and in order for us to stay happy we need to have some alone time. But besides that, I have told her that every extra dollar needs to go to us getting out of debt.

The hard part will be telling her that we should cut out her tanning, get rid of direct tv, switch our smart phones to some regular old phones, and cutting her spending money. BUt I will explain the big picture to her and hopefully she will get it. If she doesnt, well then I guess she can just be mad lol