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British Pilot · April 12th, 2006, 10:16

Let’s understand the first fundamental lesson of personal money management. Do not buy or invest in anything unless it makes financial sense for YOU, unfortunately everyone you meet likes to play financial advisor. Just because interest rates are at an all time low, or house prices are falling does not signify an opportunity for you if you are still living cheque to cheque or close to that. Equally beware those who bring you the clichés associated with house purchase vs. renting.

Contrary to popular belief, renting is not throwing money away, if it’s enabling you to save money or keep your head well above water, what are you throwing away? If renting vs. buying, affects your monthly housing payment drastically then you need to consider its merits, and building equity really shouldn’t be one….

I agree almost entirely with B767Driver, however the 20% down, 15 year term is somewhat tricky for most major metropolitan areas I should think. I live in Boston proper, where the average 1 bedroom sells for $300-$350k minimum. Not many young people have $60-70k down and can afford the $2,250 plus real estate taxes and condo fees.

The emergency fund B767 speaks of is key. 6 months of emergency fund is an absolute must. In my opinion, unless you have a 6 month emergency fund, less than a 20% balance to available credit ratio on your credit cards and zero student loan debt, you should not be out shopping to increase your monthly housing commitment beyond what is necessary at this point….especially in this industry.

“Building equity” is a great concept, but never grows at the rate you expect, and like money on the stock exchange is an uncertainty. Equity built in 2006 can disappear in 2007, and equity means less than nothing until you come to sell or refinance since today's market conditions suggest what your house is worth,not what it used to be worth.
Conversely, the savings you had stuffed in your mattress or earning less than 1% in your instant access savings account with Bank of America, will still be there in their entirety.

April 12th, 2006, 10:16	#12
British Pilot Junior Member Join Date: Feb 2006 Location: Boston, MA Posts: 110	Let’s understand the first fundamental lesson of personal money management. Do not buy or invest in anything unless it makes financial sense for YOU, unfortunately everyone you meet likes to play financial advisor. Just because interest rates are at an all time low, or house prices are falling does not signify an opportunity for you if you are still living cheque to cheque or close to that. Equally beware those who bring you the clichés associated with house purchase vs. renting. Contrary to popular belief, renting is not throwing money away, if it’s enabling you to save money or keep your head well above water, what are you throwing away? If renting vs. buying, affects your monthly housing payment drastically then you need to consider its merits, and building equity really shouldn’t be one…. I agree almost entirely with B767Driver, however the 20% down, 15 year term is somewhat tricky for most major metropolitan areas I should think. I live in Boston proper, where the average 1 bedroom sells for $300-$350k minimum. Not many young people have $60-70k down and can afford the $2,250 plus real estate taxes and condo fees. The emergency fund B767 speaks of is key. 6 months of emergency fund is an absolute must. In my opinion, unless you have a 6 month emergency fund, less than a 20% balance to available credit ratio on your credit cards and zero student loan debt, you should not be out shopping to increase your monthly housing commitment beyond what is necessary at this point….especially in this industry. “Building equity” is a great concept, but never grows at the rate you expect, and like money on the stock exchange is an uncertainty. Equity built in 2006 can disappear in 2007, and equity means less than nothing until you come to sell or refinance since today's market conditions suggest what your house is worth,not what it used to be worth. Conversely, the savings you had stuffed in your mattress or earning less than 1% in your instant access savings account with Bank of America, will still be there in their entirety.