7 years ago we bought our first home as a family. I had previously owned a home, and had a fairly bad experience when I rented it out ... this is the story of two different homes and the two very different stories that accompanied them.
Our First Home
This post will primarily focus on our first home and the story surrounding it. As you will quickly notice, this series is about personal finance - not technology or privacy. We've had such a journey with our finances that we really wanted to share our experience so that we can express our thanks for what we've learned and give hope to others that financial peace can actually be a thing!
Well, let’s just say I was a genius. I “knew” that buying a home would be cheaper than rent, even though the payment was just a tad higher. I did know, though, that we’d be making an investment. I found out that there was a lot that I didn't know.
Lots of justification went into this purchase:
- My job was 1 mile away, so we’d be saving money on fuel and eating out.
- The home was new, so there’d be nothing to do to it for a while.
- My tens of thousands of dollars in debt was going away “soon.”
- Rent is bad, mmmkay
What’s funny is that we were so broke that we didn’t have any money to put down, so we borrowed money from my brother for our downpayment. We put down 3%, rolled some appliances into the loan, and suddenly we were home owners. Oh, and we also got a tax write-off for mortgage interest and PMI - #winning.
We were in the middle of paying off consumer debt, and still had approximately 50% of my annual salary left in debt about the time we purchased the home.
"They said" and "I heard"
So all the things "they" tell you are wrong. We needed so much stuff for the house. Thankfully, we were somewhat frugal and continued using my furniture that I bought before marriage - but we did need a lawn mower and other "finishes" for the house to make it ours. During this time, we ended up replacing her engine and then shortly after my engine died. This time, however, I justified purchasing a 2 year old car with a payment, because I "needed something reliable" and I "deserved" a car - I was, after all, an IT executive at a healthcare company at the time.
We were making progress on our debt during this time, as I was moonlighting and doing some consulting, so this helped us progress paying off the remaining non-mortgage debt.
When we got married, neither of us wanted to have kids. We were adamant that we’d never have children, so space in our home should never be an issue for us. 3 years later, we’re overjoyed with our baby boy and we bring him home to our house. By this point, we’re mostly consumer-debt free and feeling much better about our progress in financial lives.
This is where the house started getting small. Not only did we have a child, but I started a new job working from home - meaning our "guest" room was now my office, and that was exciting at times with our little one. For context, the house was a 3 bedroom ranch commonly found in our area - all one level - with no basement. So while we were grateful for our home, we were feeling cramped and it was stressful having to keep a baby / toddler quiet during the day while working from home.
I'll discuss this more in my next post, but basically after about 5 years of living in this home we were debt free and had an emergency fund in place. This allowed us some breathing room and allowed us to cash flow some major improvements to our living space and re-finance our home to get rid of PMI and a much lower interest rate. Shortly after the re-fi was complete, we decided to start looking at homes to see where we might want to move next.