money matters...

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MrsWilliams2008 Posts : 1,431 Registered: 7/19/07
money matters...
Posted: Mar 18, 2009 11:35 PM

Hey ladies (and guys)! First off let me say sorry for being M.I.A. Work and life has me busy, but I sure have missed you guys. I promise to do better by stopping by more often. And yes I realize, some of you have no clue as to who the freak I am and the rest of you may vaguely remember me lol.

Anyway to the subject. DH and I, after almost 9 months of marriage, will make our last payment on a total of $5800 in credit debt (credit cards, furniture, medical bills, etc) at the end of this month hallelujah!. We are also in the market for buying a house, and the housing bill passed last month has us highly motivated to get (and close) on our first home by the end of november of this year. What I'd like to know is how do people save insane amounts of money like 20k, 30k, 40k in short periods of time, like a couple of years?? DH and I have good credit and we have only "normal, everyday" bills (rent, utilities, vehicles, groceries) we do alright in the finance department: we don't throw our money away on frivolous things and we aren't living paycheck to paycheck...we are right in the middle.

Until we find our house (and the final check for the debt has cleared), we have agreed to save at least 10% of our "take home" income which is about $440/month. That isn't necessarily so bad, but when it comes time for paying a mortgage, property insurance, home insurance, and mortgage insurance, how on earth is it possible to save??? Our savings is pretty much embarassing (under 1k). While paying off our credit debt, we did deposit at least $100/mo into savings and some months we didn't put away savings, we put the money towards paying off debt. I'd just like to know how and what do YOU save for a rainy day? Please only tell as much as you are comfortable with. Any suggestions are welcomed and appreciated!


Poster Formerly Known as beauti381

http://www.theknot.com/ourwedding/RyAnne Stafford&RobertWilliams, Jr

Happily Married since June 21, 2008

Happy Together since June 20, 1994

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NJ4Life Posts : 3,358 Registered: 8/10/07
Re: money matters...
Posted: Mar 19, 2009 8:44 AM Go to message in response to: MrsWilliams2008

I dont think very many people put down that much on a house. Especially their first one. There are several programs out there for first time homebuyers. I would start by looking at a couple banks and see what they can offer you. We went through Wells Fargo and they were great.

Now I bought my house almost a year ago so things, I am sure, have changed a little. But there are programs where you can put 5% down or 10% down. As long as your credit is good, I think the banks should be able to give you some options.

As far as saving, we did bascially what you guys are doing. Putting a chunk from each check into savings every pay period. It takes time to build it up. We used our wedding money combined with what we had in savings for our down payment.

I think you guys should talk to a realtor or a bank and get the full scoop on different scenarios. Then start looking around if you think you can make it happen. The first few months of all this SUCK. It's stressful and you become poor for a little while but it all evens out!!

Good luck! :)

New Jersey: We have dumps, bays and cement boots and we know how to use 'em

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CaribbeanBride08 Posts : 1,474 Registered: 6/13/07
Re: money matters...
Posted: Mar 19, 2009 9:53 AM Go to message in response to: MrsWilliams2008

Hi RyAnne! I haven't been around much lately either so I won't hold it against you for being MIA!!

When I bought my first house back in 2001, I did an 80/15/5 loan. This meant I put 5% down and had two loans: an 80% first and a second mortgage for 15%. Doing it this way allowed me to avoid having to pay PMI. The interest rate for the second was considerably higher but I was able to refinance quickly and consolidate it into my first mortgage since home prices were on a steady rise. HOWEVER, in order for me to qualify for this type of loan, in addition to a high FICO, I had to show proof of having a considerable amount of savings in the bank. I had about 20k savings after putting about 14k down on a 280k mortgage.
With today's credit crunch I'm not sure if these type of loans are still available, plus being able to consolidate your second may take a little longer due to the decline in home prices but if you can get one of these loans, that's what I'd suggest you do. It's much easier to pay down your second quickly instead of having to come up with a huge chunk of cash up front.

Congratulations on taking your first step to homeownership!!

Member and Co-Founder of POOP: "People Offended by Offended People"

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kwidener21 Posts : 98 Registered: 1/26/09
Re: money matters...
Posted: Mar 19, 2009 9:54 AM Go to message in response to: MrsWilliams2008

I bought my first house last year and I didn't save any money! I rolled everything into the loan, espically since the intrest rate was really good.Depending on what your plans are I would highly suggest it! We even rolled the first years Home Owners insurance and Taxes into it!! So I havent had to worry about anything other than the monthly payments. And we tend to pay extra every month to try to pay it down quicker!

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DoesntPlayNice Posts : 809 Registered: 12/17/08
Re: money matters...
Posted: Mar 19, 2009 10:04 AM Go to message in response to: kwidener21

First you need to do your research and I would not recommend an 80/20 loan or an ARM...both bad ideas.

Second: Unless you plan on living in the first home you buy for the rest of your life keep in mind your first him is your "starter" home. Don't look at your parents houses or older relatives houses and think you need what they have NOW! Unfortunatly we live in a "now" world and everything wants instant gratification. Remember it took your parents/relatives YEARS to get where they are and have the things they have. Start small.

As far as saving...here is what I found out while doing my budget. First I have my entire years budget on an excel spreadsheet. Once I started pluggin in numbers I realized where we were spending too much and found we can cut back. We freed up $400/month by going on a strict budget and have been able to pay down credit cards and put more money into savings.

Previously Posted as Military Bride.

Back from Iraq and ready to switch out the ACU's for a Wedding Dress!

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DoesntPlayNice Posts : 809 Registered: 12/17/08
Re: money matters...
Posted: Mar 19, 2009 10:24 AM Go to message in response to: DoesntPlayNice

I'm sorry I didn't see the last part of your question on how we saved.

First we pay our savings 1st! I make sure to put at min. $100 a month into savings. I also have broken down things that come up at the end of the year like Home owners association dues, flood insurance, registration and inspection for vehicles, Our dogs annual check ups. I created a spreadsheet for that and divided the totals for those by 12 and put that much into savings each month. I call that savings account "bill pay savings" because we are saving to pay bills.

Also if you get paid weekly or Biweekly there are a few times a year where you get an extra paycheck. This year I get one extra paychack in May and In October (i get paid biweekly) and my husband gets one extra paycheck in May, July, and October. Anyway we make sure to save all of the "extra" paycheck.

Previously Posted as Military Bride.

Back from Iraq and ready to switch out the ACU's for a Wedding Dress!

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CaribbeanBride08 Posts : 1,474 Registered: 6/13/07
Re: money matters...
Posted: Mar 19, 2009 11:24 AM Go to message in response to: MrsWilliams2008

Sorry, I too didn't see your question about savings. Roth and 401k aside, for our liquid savings, I currently transfer a little more than 10% of my gross pay to ING every pay period (biweekly).





Member and Co-Founder of POOP: "People Offended by Offended People"

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We2Heart Posts : 452 Registered: 10/11/07
Re: money matters...
Posted: Mar 19, 2009 11:29 AM Go to message in response to: MrsWilliams2008

Congrats on being able to finally pay off your credit card debt! That's a huge accomplishment.

Well DH and I are at a similar position - trying to decide if we want to buy a house. The answer is contingent on several factors but we've been trying to save up money in case we decide to go forward. We're pretty close to a decent down payment (20k) too but that is only because I have a significant amount saved up from childhood and DH has been putting a ton into his 401K. He found a way that we could take money from his 401K to put towards a down payment for our first home and not be penalized for taking money out. Yeah, that's kind of a risky way to go about it by draining your savings like that, but it wouldn't be everything and we figure we can make it up (our retirement funds) since we're still young. That part of it is still up for discussion though.

Have you checked both your credit scores lately? Or know what you'd get pre-approved for in a loan? This was the first thing we did when we started looking and it helped to estimate the costs for the mortgage, which then we were able to determine how much we really needed to save how much we'd have to spend every month on bills based on our current budget.

With regards to saving in general, we've yet to come up with a good system. We both have personal IRA accounts that we throw in extra money from time to time, we share a Sharebuilder account which we've been using to play the market (which we've not really lost all that much but I hate losing money), he's been dumping into his 401K, I've been puting the minimum into mine, I have my savings account I don't touch (just let the interest get paid to it), etc. Basically, we just kind of put away money into random places right now. I even have a private cash stash (every time I withdraw cash, I put 10 or 20 away in a jar for emergency money). We're still trying to figure out a good way to organize it since based on our checking accounts it doesn't seem like we're saving at all.

Keep putting away a certain amount from your paychecks every pay period. You are saving money, it might not be as much as you'd want to save right off the bat, but with bills and how current state of the economy it's going to be kind of hard right now. Slowly and surely you'll build up your savings. Just don't touch it unless it's an emergency. Good luck!



~~~~~~~~
together is a perfect place to be because it's there that you can be delightfully imperfect. and there's nothing closer to perfection than being loved just because you are. 

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BirdLover Posts : 2,834 Registered: 3/30/06
Re: money matters...
Posted: Mar 19, 2009 12:07 PM Go to message in response to: We2Heart

You sound more like me - wanting to have a bigger chunk of money put down on a house before buying....is that true?

We plan to do this, because we feel that we need the monthly mortgage payments to be lower, and we don't want a 40-year mortgage, we'd rather go no longer than 25 (apparently, here, if you sign up for a 40-year mortgage you end up paying for your house TWICE with all of the interest)

We are planning to have 50,000$ before buying a house - not don't freak out...30,000$ of that is inheritence from grandma, lol. We're figuring about 30,000 for the down payment, and the other 20,000 will go to "fixing up" the place we get, to be saved for home repairs, and just put aside in case the house falls apart :P

How we are saving: well, I figured out how much is realistic to take from each paycheck (as opposed to per month...not sure if this makes a difference). After bills and other necessities are paid, this amount goes STRAIGHT into the bank. If it's a higher pay week, I put in a bit more. This money gets put in the account before I even have time to spend it on non-essentials. Obviously, you want to leave yourself some spending money, so be realistic with the amount - make sure it's something you can stick too.

More importantly - emergencies aside, once the money goes into the account, it DOES NOT COME OUT. I consider it money that we don't REALLY have.

It's growing slowly, but it's growing. I should have 4,000 saved before maternity leave...after my mat leave, we should be able to start adding more quickly.

Try not to feel pressued. Like others said, you don't HAVE to have a huge amount saved if you have trouble. But I definitely would recommend having a bit set aside that doesn't go in the down payment, for "unexpected occurances" that are connected to new home ownership :)

Lilypie Expecting a baby Ticker

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MrsMcCain Posts : 580 Registered: 10/24/07
Re: money matters...
Posted: Mar 19, 2009 12:31 PM Go to message in response to: MrsWilliams2008

MrsWilliams


DH and I bought our first home together and put down zero dollars. We still got a pretty decent interest rate at the time. The only thing that is really different is we have to pay PMI insurance until we reach a certain % in equity of our home (in our case, it's 20%). It's an additonal $145.00 per month but overall our mortgage is still pretty reasonable. We would never ever be able to buy a home if we had to save up 20K (That is seriously 3/4 of a years pay for me) and with the cost of living so high we can't save for anything right now!


Look into what options you have as a first time homebuyer. Good luck!

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MrsWilliams2008 Posts : 1,431 Registered: 7/19/07
Re: money matters...
Posted: Mar 19, 2009 2:40 PM Go to message in response to: MrsMcCain

Thanks to everybody for their response. I think the biggest problem is DH and I are state workers and we get paid ONCE A MONTH...and our payday is on the same day (the last working day of the month). I've been at my place of employment for four years and DH started last July. Let me tell you, it's budgeting hell. The two paychecks we get at the end of the month has to last us an entire 30 days, so we really have NO choice but to spend wisely to make sure we have enough to last. Fortunately, I am required to do some travel on state business so I'm guaranteed a little more money by mid-month--this extra tax-free cash could range from $100-1000/mo, and average lately has been about $400/mo. I do think a spread sheet is a good way to go in our situation.

We make about 75k/year together (which is considered middle class in the south). We both have applied for new positions with the state which could increase our pay at least 7k/yr. We have not yet gone to the bank because we are waiting to hear from the jobs we applied for.

We checked our FICO scores/credit reports in December; and while mine is close to 700, DH is mid 700s, so we know we are doing well in that department.

If at all possible, we really desire 100% financing with a 30 year fixed rate, but with the economy the way it is now, we hope we can qualify for that without an outrageous rate. We also plan to escrow our account that way we only have to write one check a month.

It's just all a frustrating process when people keep mentioning downpayments when the truth is we don't even have a decent one!! Yet we do have an idea of how much mortgage we can comfortably do without stretching ourselves.

Someone mentioned a starter home. Actually, I want my first home to be my last home if that makes sense. I'm not trying to move into a $200k house but I really don't see the purpose of moving into a starter home with the intention of moving in 5 years. My parents moved into my childhood home in 1986 with that same plan and 23 years later, they are still there. So I want to move into a house I absolutely love where I plan to have children, grandchildren and God willing, great grandchildren. I think a 130k (which will get you roughly 2000 sq ft here) or below house fits that bill. So while I do want that NOW, I don't think its unrealistic

Thanks again ladies and keep em coming!


                         Poster Formerly Known as beauti381

http://www.theknot.com/ourwedding/RyAnne Stafford&RobertWilliams, Jr

                              Happily Married since June 21, 2008

                              Happy Together since June 20, 1994

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BirdLover Posts : 2,834 Registered: 3/30/06
Re: money matters...
Posted: Mar 19, 2009 3:25 PM Go to message in response to: MrsWilliams2008

I don't think there's anything wrong with wanting to buy your "forever" home right away. I think other posters were just trying to say that you don't need to feel like you HAVE to if you are unable!

I would prefer to buy a house that we will live in forever, but it might not be realistic for us...we'd rather get out of renting/out of this condo sooner rather than later. So we'll have to see how that goes for us.

Another option is getting a "fix-er-upper" if your husband is at all handy with stuff like that. Not a piece of crap, but something that just needs a bunch of cosmetic upgrades usually sell for less money. And if you do plan to stay there forever, you don't feel as rushed to get it done all at once.

PS. for what it's worth, we make less than you guys...:P Just keep saving whatever you can and at least you are moving forward!

Lilypie Expecting a baby Ticker

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mrsJLA Posts : 445 Registered: 5/25/08
Re: money matters...
Posted: Mar 19, 2009 3:50 PM Go to message in response to: BirdLover

I wish we both got paid 1x a month.Right now I am a monthly salaried employee and DH is paid every two weeks. At the beginning of the month we pay the mortgage, one of the cars and all major bills. Then we space out the bills for the cable/water/phone/other car out (I really hate having to pay for two cars but I had no car when I left college and DH was leasing). I wish we could pay everything at the beginning of the month and then budget what was left over for spending/saving.

As far as forever vs. starter homes.......right now I really like our home but living in NJ when my job is in PA & DH can relocate eventually is just making me NOT want to stay in this house forever. Plus I hate the HOA and being attached to other houses w/o a yard of our own (we have a townhome). So def find out if there is an HOA involved...b/c I think they suck. I can't wait to move sometimes, but we need to pay our credit cards down (we consolidated on a 2-3 year plan, thank god) and want to wait for the market (luckily we haven't really lost value on our house, but still)... I think our next home will not be new construction and I will let handy man DH find the kind of fixer-upper Birdie mentioned....

 Jaime :)

Wedding Pictures and the Furbabies: http://web.me.com/me182a

 Lilypie Expecting a baby Ticker

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auntofthebride Posts : 9,354 Registered: 4/2/06
Re: money matters...
Posted: Mar 19, 2009 3:52 PM Go to message in response to: MrsWilliams2008

Ladies,

I've read all your messages and you are all doing GREAT!

Paying off credit card debt is ultra-important. That is a huge milestone and I congratulate Mrs W and the others who have that paid off. I cannot over-emphasize how important it is to avoid the trap of credit card debt.

This message thread reminds us all that there is no "one" way to financial security. For one, it might mean buying a smaller starter home, then moving up later. For another, it might mean waiting a bit, then making a move into a home that will last until it's time for The Old Folks Home fifty years from now.

I would like you all to go back and read Military Bride's note about annualizing bills. This is an excellent money management tool, and would be especially important for anyone with an irregular income as well. (Irregular income: paid by commissions, which are seasonal, etc)

People make up budgets based on some "average" cost or "average" income. Wonderful, because I'm glad they are making a good-faith effort to budget.

But... They can get caught with an unusually high bill, such as for air conditioning in the summer or heating in the winter. If the person works in retails sales, where commissions are highest in the holiday season, and if that person gets a giant electric bill following the July heat wave, they will be in trouble.

It's best to annualize everything. Take 12 months of electric bills, get a total. Do that for all your recurring bills. Now, total all that up and divide by 12. Add a fudge factor. (I'd estimate about 10% fudge factor.) That's your "bill budget" for each month.

In the months were the total comes under your "bill budget", put the difference in your "bill budget saving" account. In the months where the total comes over your "bill budget", dip into the "bill budget saving" account. Your fudge factor insures you will always be in positive territory.

If your income is irregular, do the same.

***

Next, the dreaded Cash Flow.

"I'll have plenty of money for XYZ when I get paid next Tuesday. So I'll buy it now."

Cash Flow is one of the things that trips up personal finances, as well as business finances. I will suggest a very simple way to get a handle on your cash flow.

Get a spreadsheet (Excel, Google, etc) and put dates down the left in Col A. Increment the dates by one day. (1/1/2009 1/2/2009 1/3/2009 etc)

Put Income in Col B and Outgo in Col C.

Put your beginning balance in the top row of Col D.

Col D will now be a running balance. Add contents of Col B and subtract contents of Col C. Notate in Col E what the item is. (Rent, elec bill, etc) The formula is something like

=D1+B2-C2

D1 is the previous balance. B2 is the income for row 2. C2 is an expense for row 2.

If you have more than one income or expense on a given date, just insert a new row and label that date appropriately. (Re-copy Col D formulas,)

Now, put in all your "fixed" income and expense items. I'm talking about the day you get your paycheck, the day your rent is due, etc. Add in your own payment to yourself, namely your regular savings deposit.

Recalc and see what happens to your cash flow balance.

*****

I could go on and on about how to save money here and there. You've heard it all, so I won't. The most important thing is to set yourself on a course of action that will take you to your goals, then stick with it.

I had an interesting conversation with a young friend of mine about Life In One's Twenties, and I'll share that with you in a new message thread.

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karebeartg Posts : 831 Registered: 6/25/08
Re: money matters...
Posted: Mar 19, 2009 3:55 PM Go to message in response to: BirdLover

FH and I are in the process of buying a house (like, we have an offer in and are 5K apart as of last counteroffer), so this has been on my mind plenty lately.

One thing we did that really helped us was to use an ING savings accounts. We already had our regular savings account there, so we set up a second account. You can "name" you accounts there - ours is named "Buy a house!" We made a spreadsheet of all our bills, the average amount, when the statement closes and when it's due, so we can look and see which bills come out of which paychecks. Our bills are frontloaded in the month, so we save very little out of the first paycheck and a good bit more out of the second.

One thing that will help is if you can get your credit score over 700. I think 700 is one of the "magic" numbers, so it should make the house more affordable if you can get there. One "trick" I use is that most credit card companies (not Amex though), only report your end of month balance to the credit agencies when your statement closes. So, even though it sucked one month when we paid twice, we now pay our major credit cards down to $100 before the statement closes, so it shows a much smaller credit utilization.

Savings is hard. Make sure you do leave yourself a bit to "splurge" at least once a month or so (even if it's going out for pizza), so you don't go crazy.

Your best bet may be an FHA loan - you only need 3.5% down (which is easier than 10). I think they've gotten a lot harder to get lately - so you definitely want to boost the FICO score if you can. (Check out the forums on myfico.com - there are lots of credit score increase threads and tips there.)

Alright, that's enough from me.

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