What I could have done better
Hindsight is 20/20. I didn't really become interested in current events, investing or prepping until after I bought my house. When I was young and in the army I took my bonus and put it in a mutual fund. Then within 6 months I lost $1000 in it. That put a very bad taste in my mouth toward the stock market and I steered away from investing for a long time. I tried to follow the mantra that if I can't pay cash then I can't afford it. The fact that I had no credit made it easy not to bother applying for it. This went on for years. Eventually I wound up with a good job, in a cheap apartment and a good sized bank account. Then I met my wife.
While we were dating she received a good chunk of cash from an inheritance so we decided to buy a house. This, of course, was at the top of the real estate market. We put our 20% down and got a payment that we could easily afford. We still have the house and we still love it. We're still living well within our means. We bought the house with the intention to live in it forever. It's big enough that I don't see us growing out of it unless we have a 3 or 4 more kids which will not happen. It's small enough that we're not going to feel like it's "too much house" when we get older. It's in a great neighborhood. If we decided to sell it tomorrow we'd probably lose a little but we wouldn't be upside down. So what did I do wrong? I got a mortgage.
We could have bought a small condo or townhouse outright or even just taken out a small mortgage. Of course, the idea of an HOA always turned me off. I was also sick of moving. Still, though, we could have lived in a place like that debt free for just a few years and then either rented it out or sold it when we could afford something bigger. At the time I couldn't have imagined spending 10s of thousands of dollars to live in a place equivalent to my apartment just to save a grand or so a month. Now I'd love to have that opportunity.
So what the hell am I rambling on about? Having that big mortgage hanging over your head really changes your perspective on debt. While it's more than I can hope to pay off "quickly" it's also manageable. As long as I can keep making that payment then no one will bother me. If I can pay a little more then it will shave a few years off of how long I have to pay. With a concerted effort I could probably pay it off before my kid gets old enough to start worrying about money but it would involve some major sacrifices that I highly doubt the wife would be onboard with. If business continues as usual then right about the time I start thinking about retirement it'll be paid off. The world will be completely different by then.
So before I go ranting about things like investing in the stock market, managing credit cards and things as simple as using storage food before the world ends (future posts maybe?) I wanted to put my personal situation into context. What works for me won't work for everyone. I base my financial decisions on my personal situation. Keep that in mind whenever you're reading any of my posts. I'm no expert on anything. I just know enough about the important stuff to feel qualified to weigh in. If I mention something that you think is completely off then I encourage you to call me out. You might just have a point that makes me reconsider my whole take on the situation.
While we were dating she received a good chunk of cash from an inheritance so we decided to buy a house. This, of course, was at the top of the real estate market. We put our 20% down and got a payment that we could easily afford. We still have the house and we still love it. We're still living well within our means. We bought the house with the intention to live in it forever. It's big enough that I don't see us growing out of it unless we have a 3 or 4 more kids which will not happen. It's small enough that we're not going to feel like it's "too much house" when we get older. It's in a great neighborhood. If we decided to sell it tomorrow we'd probably lose a little but we wouldn't be upside down. So what did I do wrong? I got a mortgage.
We could have bought a small condo or townhouse outright or even just taken out a small mortgage. Of course, the idea of an HOA always turned me off. I was also sick of moving. Still, though, we could have lived in a place like that debt free for just a few years and then either rented it out or sold it when we could afford something bigger. At the time I couldn't have imagined spending 10s of thousands of dollars to live in a place equivalent to my apartment just to save a grand or so a month. Now I'd love to have that opportunity.
So what the hell am I rambling on about? Having that big mortgage hanging over your head really changes your perspective on debt. While it's more than I can hope to pay off "quickly" it's also manageable. As long as I can keep making that payment then no one will bother me. If I can pay a little more then it will shave a few years off of how long I have to pay. With a concerted effort I could probably pay it off before my kid gets old enough to start worrying about money but it would involve some major sacrifices that I highly doubt the wife would be onboard with. If business continues as usual then right about the time I start thinking about retirement it'll be paid off. The world will be completely different by then.
So before I go ranting about things like investing in the stock market, managing credit cards and things as simple as using storage food before the world ends (future posts maybe?) I wanted to put my personal situation into context. What works for me won't work for everyone. I base my financial decisions on my personal situation. Keep that in mind whenever you're reading any of my posts. I'm no expert on anything. I just know enough about the important stuff to feel qualified to weigh in. If I mention something that you think is completely off then I encourage you to call me out. You might just have a point that makes me reconsider my whole take on the situation.
Comments
The mortgage isn't a mistake, but taking forever to pay it off is.
First, you and your wife need to get on the same page. You need to get her onboard with making some sacrifices now, so that you can win later.
I actually recommend Dave Ramsey, not because his financial advice is so good, but because he's a great motivational speaker. If anyone can get your wife on board with getting the house paid off, it's him. Sign up for his Financial Peace University (FPU) class. If you are religious, check your church. If not, check online.
Second, before you worry about the mortgage, get a hbig chunk of cash. You can make 10 extra payments, but then if you miss just one or two, you can be evicted. It's seems wrong, it seems like the 10 you made should count as credit, but it doesn't. So instead, keep at least 6 of those extra mortgage payments as cash. If something happens, you can stay current. After that, then you can pay down the house as quickly as possible.
Get it done, life without a mortgage is everything you can hope for - so much extra money. And it's a perfectly safe return. No risk like in the stock market.
The extra cash of having no mortgage will make a huge difference in your life, it will enable so many things. If you can get it down while your children are still young, you will be able to provide them with so much more, like meaningful vacations they will remember forever. Quality time when it matters most.
Sacrifice now and win later. Research the "Marshmallow experiment"
Anon, you make great points. I'll have to introduce her to Dave Ramsey. I've had several talks with her and she knows that it's a good idea but then when it comes time to act she'd rather go out to dinner or get that new jacket. I'm guilty of some of that myself so I can't throw stones.
i wanted it thirty years ago... i might have had it paid for by now.
i'm no better off for having rented. renting in a decent neighborhood (ruined me) doesn't leave much for the savings account. if you don't buy your own shelter, you may find yourself resenting your landlord. (i have) i think the world of Mayberry, but i don't agree with him on this.
the older i get the less happy i am with what i pay for shelter. i can't stay where i am, on what my pension would be, if i was retired (involuntarily) today. so i hang onto my job by my fingernails.
a house is shelter. it's not an investment. ownership allows you to live more by your own rules, than those of the landlord or HOA. ownership gives you somewhat more control over your cost of shelter, than if you rent.