Current Rent ----- | 1 Bedroom Condo ----- | 2 Bedroom Condo/Townhome ----- | 3 Bedroom Townhome | |
Total Purchase Price | N/A | ~$65,000 | ~$105,000 | ~$120,000 |
Ideal Down Payment | N/A | ~$13,000 | ~$21,000 | ~$24,000 |
Closing Costs | N/A | ~$2,600 | ~$4,200 | ~$4,800 |
Monthly Payment w/ Ideal Down | $460 | ~$250 | ~$400 | ~$450 |
Monthly Payment w/ Min Down | $460 | ~$289 | ~$470 | ~$533 |
Tax/Ins per year | N/A | ~$1680 | ~$2040 | ~$2160 |
PMI | N/A | ~$65 | ~$95 | ~$110 |
HOA Fees | N/A | ~$150-$250 | ~$150-$250 | ~$150-$250 |
Moving Expenses | N/A | ~$2000 | ~$2500 | ~$3500-5000 (finding this size of property for this price would mean replacing carpet/painting/repairs) |
Potential Income/Mo | N/A | N/A | $500*11 months = $5500 | $1000*11 months = $11,000 |
Initial Costs* | $0 | $9600 | $11,700 | $14,800 |
Total Cost over first 12 Months** | $5520 | $16,848 | $18,020 | $16,676 |
Total Cost over second 12 Months*** | ~$5520+? | $7248 | $6320 | $1876 |
No offence, but with low income like that I would NOT buy. You would be leveraging yourself for more than 5 times your annual income in mortgage debt. That is not good. Real estate is a questionable investment anyway. Look at the recent financial crisis. Over a trillion in net worth was wiped out in America due to home values dropping.
If you buy a house, you will be constantly spending money on upkeep and maintenance. You will also deal with renters which can be a really annoying.
My advice.
Find a new place to rent that is in better shape to improve your quality of living. Invest in a balanced portfolio. Just go over to the investing part of this forum, there's lots of great advice. The best thing about investing is you never incur any debt. A mortgage is on the wrong side of compound interest.
My take home is around 24k, and my husbands is less than mine, somewhere around 17-20k, even though he worked two jobs and far more hours over the last 10 months. We don't share bank accounts and I don't tell him what to spend his money on or save his money for. We each pay half of the bills, and then I save what I have left over. That being said, he paid off about $3500 in debt over the summer, for which I am proud of him. DH is still using his excess to pay off debts, but his excess is currently only ~$100 more than his bills (~25 hr/wk @ $8.50/hr, retail). This year, I also paid off about $2000 in debt, and put about 7-8k into my savings account, but 2-3k was spent on car repairs, medical bills and new phones to switch to Republic with (estimated to break even in ~6 months on Republic). So, 5k is what I have now, and $800-1000 is what I am able to save each paycheck.
As someone who is trying her hardest every day to beat the odds of life's lemons and break down the psychological, financial and social barriers against a cycle of poverty, not just for myself, but for my DH and my closest friends - my idiot friends that are my entire reason for blogging on financial consciousness - I really, really don't appreciate being told that I am just not trying hard enough. If that's all you've come to tell me, please bite your tongue.
KaylaEM - I took a quick glance through your blog.
First, congrats on starting down the path towards financial independence. The road ahead may be long but the goal is worth it. And keeping a blogged record of it is a great way to keep yourself on course. Plus it is nice to get the non-college educated female perspective on this.
Second, remember that you are just starting. You should not expect to go from in debt to an accomplished mustachian in two months (you said you started cutting expenses in September). You definitely should not expect to go from zero to hero on just your income, which brings me to my third point.
Third, you need to decide if financial independence will be for you or for both of you. If for both of you, then you need to get your husband onboard (I realize you are already trying). Your blog made reference to you individually purchasing both of your phones and getting the expensive ones.
If you are currently subsidizing your husband's phone and by extension lifestyle (at him only working 25hrs per week), you can hopefully realize you are not in a position to buy a house, yet. If your husband increases his workload to 40hrs per week, that would bring in an extra ~$6400 per year, and the phone cost can come out of his earnings. A big increase in earnings, and that should increase your collective ability to buy after a couple of years of saving.
Lastly, consider renting closer to one of your jobs and ditching a car. You talk about saving $40/month on gas. But the real cost is a lot higher than that, as evidenced by the car repair bills. Call it 25cents per mile (Well below what the IRS calculates). 32 miles per day is 160 miles a week or $40 PER WEEK ($2000 per year). I'd bet that still understates the car cost.
You've taken a couple of great initial steps, but you have a ways to go before you are ready to buy a house. But if you keep this up, you should get there, especially with your husband onboard and pooling his income.