I just started a Down Payment Fund! November 6, 2009

Well, I decided to do something with my checking account balance.  Most personal finance people I know have the bare minimum in their checking accounts, keeping as much money as possible in interest bearing accounts/investments or using excess to pay off debts.  I’m a bit of a nervous nelly, so I keep more in checking than I need to.  I suppose if I watched all of my accounts very closely, I could figure out the minimum amount to keep in there.  But I think I just need to pare it down.  I’ve decided to do something about that.

I opened a “sub-account” with ING Direct.  To be honest, it’s not actually a sub-account at all, it’s a new account with the bank (and I already had a savings account with them).  But I hear a lot of people referring to them as sub-accounts.  Anyway, I transferred $1000 into my new account (named Down Payment!), and have set up monthly automatic contributions from my lame-o checking to my awesome down payment fund

Why a down payment fund?  Because I realized I have just been saving for the sake of saving, and if I have an actual “goal” in mind (i.e. buying a house), I might be more motivated to save.  And, well, my older, married sister just closed on a house today.  And that’s pretty darn exciting.  I know I don’t want to buy a house just yet, but I don’t want money (or lack thereof) to be the sole reason for my decision in the future.  Granted, I’ll probably need a pretty high goal amount.  If I want to put 20% down on houses around here (which are at least $250k), I’ll need to stash away $50k.  Well, it’s a start!

Yes, the interest rates on savings accounts aren’t what they used to be.  But just moving that money to an account that provides some interest, and getting into the habit of putting money towards that big goal in the distance is a good start.

(As always, if you’re interested in opening an account with ING Direct, let me know.  I do still have ING referrals. If you open an account with at least $250, you get an extra $25, and I get an extra $10. Free money! Leave me a comment or shoot me an email if you want one!)

Sticking around another year August 2, 2009

Yesterday was the first day of our 4th year-long lease at our apartment.  Yep, by the time we (presumably) move out at the end of July 2010, we will have lived at the same place for four years.  That’s like an entire college career!

We decided to stick around here for a few reasons.  We really like this place, the rent is reasonable, it’s close to the highway for the commute, but a decent walk to the T.  It’s a lot more spacious (and cheaper) than places closer to the T.  And above all, we’re lazy, and would much rather stay in a place we like than have to go find, and then move to, another place.  The one drawback right now is we’re looking for a 4th roommate, so we’re paying a little extra per month to cover that missing person (splitting the rent 3 ways instead of 4).  Anyone looking for a place to live?

Even at the higher rate we’re paying, it’s still a pretty good deal, and I like our place a lot!

I mentioned before that I was debating buying a place. I’m very thankful for all the feedback I’ve gotten (both here and at my crosspost at qvisory). The general feedback is that, if you’re not ready for a house, don’t by a house.  Sounds like some pretty obvious advice.  I shouldn’t feel pressured by “everyone” (the media, realty “experts”, financial gurus).  Especially these days, when housing prices continue to fall, and I don’t want to get financially “stuck” in a place if I end up wanting or needing to move, which might require me to sell the house at a loss.  I’d like to save up a bit more money in the meantime, while looking a bit more casually at the real estate market.  Besides, there would have been extra pressure to find a place quickly, since I didn’t start looking at places until a bit earlier this year…and I’d much rather keep my apartment than worry about finding a place ASAP, which would force me to perhaps settle on a place I wasn’t a fan of.

I also realized I don’t have a good idea of what I want in a place.  I should make a list of “must haves”, and then a list of “would like to haves”, to get an idea of what I should be looking for.  When we went to a few open houses, we realized that there’s a lot of things to *not* like about a certain place!  I think I’ll compile ideas as I go.

So, here’s to another year at my apartment!

I want to buy a house…maybe May 6, 2009

About a month ago, I started scrolling through listings at realtor.com to get an idea of what is out there:  What can I get?  How much will I have to spend?  I started fantasizing about owning my own place.  Took out a few books on home buying from the library.  I even went to a seminar hosted by work for first-time home-buyers, where I got a better idea of what the home buying process entails.

I’m hearing a lot these days about why now is the “perfect time to buy a house.”  Interest rates are low, there’s the first time home buyer tax incentive, and house prices have dropped significantly.  We’re also reminded that you claim points and paid interest on your taxes, likely providing yet another tax incentive.  Sounds like nothing should hold me back, right?

Of course we know it’s not that simple.  Now is the time to buy IF you were planning on buying now.  I hadn’t really planned to buy anything until further down the road of my financial, personal, and professional life.  I mentioned a while back that my financial priorities are first to eliminate my student loans and car debt prior to getting involved in a mortgage.  My student loan rates have dropped pretty low, so a mortgage would probably be at a higher interest rate.  Plus I’d like to have more money for a down payment, which is counter to my desire to use extra savings to pay down student loan debt.  And I’m not super keen on getting financially locked into a place (it’s a relatively non-liquid asset).  I also figured I wouldn’t buy a place until I got married.  But more and more people are buying for themselves, or as unmarried couples.  And I don’t know if I’d have to move for my job.  And of course, we don’t know how much more house prices might drop.

I also know that right now, the place I could afford would be small…a “starter home”.  And I know I have an image in my head of what my future home should look like.  How easy would it be to sell the starter home to buy a different place?  It’s not as easy as it used to be…

Anyway, in the meantime, we’re going to keep looking at listings casually, and I’m going to default to saving/paying off debt for a while.  I’ll keep reading books, and check out websites with helpful information.

What’s your plan?  What do you think I should do?  Is now the time to buy?  Or should I wait to buy a bigger and better place in the future?  And where else should we be looking for information?

Thinking about housing April 5, 2008

At the end of my lease, I will have lived in the same apartment for 2 years. We have the top 2 floors of a 3 floor, two family house. I love how big it is, and how low the rent is compared to that of some of my friends. But it’s too far away. I complain, when I note that it takes me 20 minutes to walk home from the subway, when I’m walking quickly. And many friends complain that we live to far away to visit or come to parties. I’ve begrudgingly become used to the walk, knowing which buses to catch if I want to get a little bit closer to the T, shorten my commute by a few minutes to get out of the rain/cold/wind/heat/uncomfortable shoes. And I’ve noticed with such a large, open apartment in an old house leads to relatively high gas/heating bills. So that cost would be nice to lower…

So there are many things to consider:

Q. Should we move?

A. Technically, we could probably get another lease for the next year. We’d have to find a replacement for at least one of our roommates, since he’s planning on moving out at the end of the lease anyway.

Q. If we move, who should we live with?

A. This is a rather complicated situation for us. So, A and I have been dating for almost a year, but we’ve both been living here (with 2 other roommates) for the 2 years of the lease. And we’ve known each other since the begining of college. So we know each other pretty well. I wouldn’t mind living with some of our friends…in fact I think I’d still prefer that to just the two of us…I think it would be weird if it were just the two of us. Plus it would (most likely) be more expensive with just the two of us.

Q. Where should we live?

I very much want to live closer to the T. Both for the sake of shortening my commute, and to urge friends to visit more often. Plus I think living closer will help me get more motivated to be social and go out instead of being lazy and staying in. I’m thinking I’d want to live on the Red Line, perhaps Davis, Porter, Harvard, or Central Square.  I guess I could also live in Boston, but that would mean a bit longer of a commute (switching from the Green Line to the Red Line).  I love all the fun stuff to do in the squares, and living closer to at least one of them would probably get me out trying new things.

Q. Rent or buy?

A. With the current housing market, I keep thinking about buying.  But then I realize it’s a heck of a lot of money, and that I don’t know how long I’ll be around this area (hopefully a while, but who knows?), and well, owning is pretty darn permanent by comparison to renting.  I would like the ability to alter things more (I’ve been watching plenty of decorating shows!), but I figure I can wait a little bit longer and continue to put money away towards a down payment.

So, what am I doing about all these questions?  I’m browsing Craigslist, and discussing housing with friends, both to determine roommate possibilities and to learn more about some apartment and house hunting experiences and opinions.

Sorry for the large gap in postings.  I was having a blog-identity crisis and wasnt sure what subjects to post about.  I was thinking about what my friends blog about, and wondered if I should shift in that direction.  I think I’ll still stick with personal finance related topics and decisions that 20-somethings face.  But we’ll see where we go from here.  Any suggestions are greatly appreciated!