Prev Next

Letter From The Editor: Brass Rings


Settled down. Not buying a house.

by Meg Keene, Editor-In-Chief

Letter From The Editor: Brass Rings | A Practical Wedding

I had a panic attack at the car dealership the other weekend. A panic attack over money, again. It’s something I’d hoped I’d outgrown as we got more financially settled, but apparently not.

Growing up, we were solidly in the middle for our working class community. As kids, we always knew that the mortgage was going to be paid, that food would be on the table, and that we’d have insurance. Beyond that all important bedrock of security, everything else was up in the air. When one of our tremendously old cars failed, the house would fill with palpable stress, as my mom tried to figure out how to find the money to fix it. I felt guilty when we’d go back to school shopping at Sears or Kmart, because I’d absorbed the visceral knowledge that we couldn’t really afford new clothes. Days we went out to get Happy Meals were rare, saved for, joyful, and still remembered.

It may be that kind of financial volatility never leaves you. That growing up tense about each purchase, knowing that your mom would cry when the car started billowing black smoke at the drive-through, anxiously clutching a sparkly new t-shirt wondering if you should just put it back, stays with you forever. No emergency fund, or responsible retirement savings is ever going to negate that feeling of just hanging on.

The weekend of my panic attack, we caught a Suze Orman lecture on public television. I (of course) find Ms. Orman’s talks calming. Financial lines to color inside of and tasks to cross off to avoid disaster is my idea of music to fall asleep to. That night, she was talking about money as security. She posited that the order of operations is: people, money, and then things. That money is a tool. It’s something to make us feel safe, and if it lets us buy things we want, well, that’s nice too.

Then someone stood up and asked about owning homes. She owned one, she said, and what she really wanted to do was sell it, pay off all her debts, and then use the rest for an emergency fund and go back to renting. Homeownership made her anxious, she said. Homeownership made her feel stuck. As Suze prompted her to think about what financial choices would make her feel secure, and urged her to sell that damn house already, something clicked.

I remember reading once about a Harvard graduate whose friend’s daughter had just gotten into Harvard. She said that what she really wanted to tell her friend’s daughter was to enjoy grabbing the brass ring, but not to put too much stock into it, because it was probably the last brass ring she’d ever feel like she truly got a grip on. We’re sold the idea that if you jump through specific hoops, you’re successful. But as life goes on, those rings get slipperier and slipperier; it becomes less and less clear what to grab, and catching hold of them doesn’t necessarily even make you happy.

In my adult life, I’ve gone through periods of ignoring the brass rings, and trying to grab them. I lived in a borderline dangerous neighborhood in Brooklyn with next to no money, worked in the arts, and I was happier than when I took the fancy-sounding job at the investment bank. I wrote a book (and loved it) but am ultimately more fulfilled by the less impressive day-to-day of running a website.

When I wrote a list of big amazing crazy goals for myself in my twenties, it came out looking eerily like my life. “Start a blog,” I said, “Have a baby.” There is only one goal on that list that I haven’t achieved, ten years later, and it’s “Buy a home.” For years, that goal seemed like something that just wasn’t attainable. I lived in big cities, I worked in theatre. Unless you’ve had a decade-long engagement on Broadway (and I know those people), you pretty much don’t own an apartment if you work in the arts in New York. Which is great, because it means the only possible pressure to buy comes from suburban parents, who you obviously ignore. (Have you seen Girls? It’s pretty much a documentary.)

But these days we live something like an urban suburb. We also have a kid, and we know a lot of lawyers and people in the tech industry. Which means there is suddenly social pressure to buy a house. A house that, given the Bay Area’s tech bubble, I’m not totally sure we can afford. Or should afford. Or even want. But if getting into Harvard is one of those unassailable brass rings, buying a home feels like another.

Like so many other brass rings, there are things about this one that trouble me. First, at this moment, in this market, it seems that no one we’ve met is buying a home unassisted (unless they made a tech fortune). Scrape the surface, and you find out that even the dual-income lawyer couple paid for the down payment with family money. Which makes sense, when your standard two bedroom transitional neighborhood is going for around half a million. Second, there is the half a million thing. Remember the last housing bubble? Yeah. We’re not too far off those prices a few short years later, and nothing about it makes me feel good. And third, while no one seems to argue about the fact that a home is obviously something you should buy, I’m just not sure that it makes sense to me. My motto has always been visit the tiger at the zoo, don’t keep him as a pet. (Or: call your landlady when the water heater goes out.)

The other night, watching Suze Orman talk about money as security, it finally made sense. For me, security is not having to depend on anyone else for money. It’s knowing we can pick up and go if a better job opportunity presents itself. It’s knowing that I’m not going to be hit with a bill for the roof I don’t know how we’re going to afford, which then keeps me up at night franticly moving numbers around on paper. It’s knowing we can pay rent, even if there is an unexpected job loss. It’s not feeling pinned down by a mortgage that feels bigger than the house we were able to buy.

In the year since we’ve had a baby, we’ve been asked a few times if we like Oakland, and if we think we’re going to settle down soon. The first few times the question was asked, I was puzzled. What did they mean, settle down? If marriage, plus two jobs, plus a baby wasn’t settling down, what on earth were they looking for? And then, by process of deduction, I realized the subtext: they wanted us to buy a house. Buying a house was the missing piece, the veneer of middle class success that we were lacking.

The unvarnished truth is that we can’t responsibly afford a house. The unvarnished truth is that, under their own steam, not a lot of people in their early thirties in this particular market can afford a house. And for me, financial security is finally not having to pretend. I spent my life pretending: of course these new clothes were no big deal; of course I’d gone out to eat a lot and understood this fancy restaurant menu; of course I didn’t mind that you got to have an awesome unpaid internship over the summer; of course I wasn’t envious of your trip to Europe. I’m tired. And I’m proud of what I (and then we) have slowly been able to build.

I want the day we buy a house to feel like the day I paid off my student loans. Hard earned. A long time coming. Worth it. Simultaneously a huge deal, and not that big a deal at all. Something I’m doing for me, not for how it looks. I want the day we buy a house to not be the same day I have a massive panic attack. So until then I’m practicing. One car dealership at a time.

Meg Keene

Meg is the Founder and EIC of APW. Her first book, A Practical Wedding: Creative Solutions for Planning a Beautiful, Affordable, and Meaningful Celebration, was published in January 2012, and has been a top three bestseller on the wedding bookshelf ever since. Meg has her BFA in Drama from NYU’s Tisch School of the Arts. She lives in Oakland, CA with her husband and son. For more than you ever wanted to know about Meg, you can visit MegKeene.com.

More in Marriage & More Recent Posts Staff Picks

[Read comment policy before commenting]

  • http://deird1.dreamwidth.org Deird

    When my fiance and I were planning our future, I discovered that he had enough money saved to pretty much buy a house outright – no mortgage. He, on the other hand, was stunned that I didn’t have savings set aside for a house.

    I tried to explain: expecting to be single, I also expected that I would never, ever, ever be able to afford a house. So I hadn’t saved money for one – because why would you?

    • Lacey

      You might not want to buy a house, but you should always sock away as much money as you can, because _medical debt_ is actually the #1 cause of bankruptcy. Cancer is hella expensive. Even just a bad car accident can financially wipe you out, and then what will you do when you want to retire? My cousin is still paying for his late wife’s cancer treatments, years after she passed. (And yes, they had decent insurance.)

      • http://deird1.dreamwidth.org Deird

        Only in America – I’m in Australia.

        • Meg Keene

          HAAAA. Point.

          Yes, it’s America where we let Cancer bankrupt survivors. Because we have FAMILY VALUES here. Sighhhhh.

  • Mrs SPB

    I find this so interesting as I felt totally the opposite when me and hubby found out we were having a baby.

    In the UK renting is sooooo expensive especially in London where we lived at the time. Plus with renting we had zero security with the longest renting contract we could get being 1 year and they can still give you 2 months notice to leave.

    We relocated so we could afford to buy a house and the mortgage is less than half our rent payments per month, which is insane. This meant the fact the returning to my job after maternity leave didn’t work out is not the financial disaster it would have been if we’d still been renting. The downside of this security is my hubby’s daily 5 hr commute to work but it feels worth it to us for the security for our family.

    • Cbrown

      It is insanely expensive. My partner bought our place a few months before we met and we pay less per month than he did renting. And we have a garden! I was living a nomadic academic existence beforehand so I’m totally freaked out about the fact the boiler is our problem but still…

      • Mrs SPB

        Totally with you on the boiler thing – ours stopped working in December and I was like ‘Hmmm no landlord… so we have to deal with this? ARGHHHHH’

    • kth201

      This sounds like a great example of examining your situation and making the best decision for family, regardless of what others might do. For you guys, it totally made sense to buy rather than rent. It seems insane to me that renting is so much more expensive, but my knowledge of real estate in London is nil. In NYC, where I am, renting ends up being so much cheaper than buying because of the huge up front costs (not to mention dealing with apt condo boards having to approve you, etc). Then again, the real estate market tends to be more stable and go more assuredly up in NYC (esp Manhattan) just because of scarcity.

      • Mrs SPB

        I have no idea about the NYC market or the American market for that matter. From what I do understand renting seems a much more attractive proposition than it is here – renting is just so expensive and people get trapped paying such high rent that they cant save for anything. Plus renting seems to be based on a short term model so renters have no security when it comes to length of tenancy – anything over 1 year is unusual and every time you renew it costs loads more money in fees etc. Plus you also have being given generally 1 months notice to leave – that’s what scared me most with a baby with money being a close second.

      • B

        The thing about London is that it’s not rent or buy in London, it’s rent in London or buy elsewhere. All the prices in London, renting and buying, are completely insane. I do have friends who have bought recently in London, but they’re on part-buy schemes or had family help, and have generally had to move farther out of the centre than I’d be comfortable with. We just moved to a two-bedroom and are feeling like it’s so enormous compared to the tiny one-bedroom we were in before in a neighbourhood we can no longer afford to live in. I love our new flat and can see us being here for 4-5 years if possible, but when we want to buy and “settle down”, I want to move to a different city. I love London but it’s getting to be just too much.

        • Mrs SPB

          I love London too – I’m a Londoner born and raised – but I found that as i got older and had a career I never had any time or money to do all the things that make living in London great and I never saw the flat I was paying all my money to live in! Plus once our son was born we’d have had to move anyway so we just decided to make the leap and relocate. Still cant believe we did it – I’d never lived outside Zone 4 before!

    • EF

      Ahhh that commute sounds familiar. I work in London a couple days a week and commute in from Oxfordshire…but we’re definitely paying about half-2/3 the rent we would in London. Gotta do what’s best for you!

      • Mrs SPB

        Its crazy what ends up being the best idea isn’t it?! Never thought that much of a commute with the extortionate train fares actually makes the best financial sense….

        • EF

          ugh, yep. I rarely take the train myself — there’s wicked cheap bus options instead — but then you have to deal with rush hour in London. Sigh. There’s just no winning!

    • dshay

      The rental market in London is crazy! My partner recently bought a flat and our mortgage payments will be half of our current rent payments, and we are letting the second bedroom for £100 less than the mortgage. While we don’t plan on staying in the city forever, he currently works in an office that provides beds to people who worked so late they can’t make it home, so we decided that living within a 30 minute commute was a high priority. With rents as ridiculous as they are, we can easily let the place at no loss when we decide to move, and only sell if/when the market is favorable.

      I agree that you just have to take a long, hard look at your finances and priorities and make sure the advice you are getting makes sense in your particular situation. Peer pressure has no place in a decision where your financial security is on the line.

      • Mrs SPB

        One of the things I do think is positive about renting in London is I really never felt any pressure from anyone – friends or family – to buy there. It is almost completely out of reach for most young people, at least the ones I know!

  • Anon

    Thank you so much for your frank discussion on growing up financially
    wobbly and its effects into adulthood. In this time, when many people my
    age are getting jobs in non-profits to change the world, my husband is in
    finance. He’s not some evil person. He just can’t shake the echoing
    cries of his mother sobbing in her room. Unpaid bills, debt,
    more debt, bankruptcy, moving into a home with a violent alcoholic just to save
    money, all in an area where many other families were comfortable (or at least, appeared so). He
    pretended and pretended as a child. I’m aware some people in our cohort
    judge him for his decision to go into whatever field was going to make
    him the most money rather than what his passion was. But those people
    don’t know the whole story, and not everyone’s comfortable sharing
    theirs.

    • http://thescienceoffood.info/ Cassandra

      I know this story all too well. Unfortunately it’s something that you can never shake (or at least I don’t think I’ll ever shake it). On the other hand, I can get by with very little. I know how to penny pinch and I can be happy doing it. There are certain luxuries that I just don’t need, and I don’t perceive my quality of life as being any different by not having them.

      I actually didn’t choose a career for the money, it wasn’t that important to me when I was young, but it just so happened that I earn good money. I still don’t want to spend it though. My partner (who grew up well off) keeps reminding me that I’ve changed social classes and that we can afford ourselves certain luxuries, but I have a hard time with it.

    • Jules

      As a kid, I was taught this was the ultimate ideal – “follow your passion”, “do what you love”, and so on. Prestige was still prestige (doctors and lawyers and Wall Street), but do it if you love it!

      No one ever told me it was okay to follow the dollar signs sometimes, because while money can’t “buy” happiness, it sure does pave a smoother road. Choosing a career because you love what you do is social privilege.

      To quote another article,

      “So a better goal than “follow your passion” is probably to do something that you’re good at, that brings you a reasonable amount of satisfaction, and that earns you a living. And know that it’s fine to save the things you’re truly passionate about for outside of work, if that’s how it happens to turn out.”

      • Ambaa

        I was told money follows passion. I think that’s b.s. I did what I loved and now I can just barely afford life.

  • Ana

    APW, timely as usual. I was just “home” visiting my in-laws and heard more than once “Well, when you guys get settled you can…have grandma’s bedroom set, have a baby” etc. We recently jumped on the trying to conceive crazy train and spent maybe 30 minutes on the drive home talking about how we could maybe, if we switched this this and this around, buy a house so that our baby wouldn’t have to spend his/her first year in a 2 bedroom apartment lounging on an ikea bed that doesn’t match the dresser. Because that’s really important to us? Oh wait, no, it’s not. The money many people our age have saved for a house we have saved to support my wife through her graduate degree, and to pay for the mansion equivalent of fertility treatments, should that become necessary. Those are our brass rings – the house can wait.

    • M.

      My fiance saw the same Suze Orman show that Meg wrote about, and it prompted similar discussions. No kids for us for now, but we’re about to get married, and for us, using that type of money to pay off loans, build a good emergency fund, rent a decently nice place, and have memorable experiences is so much more important to us. Someone said …somewhere, probably APW, to plan a wedding as though you’d never seen a wedding before, and I think that can be great advice for the social pressures of being “an adult.” Live your life like you would if you hadn’t seen “what’s done.” Go with your gut, bedroom set or not.

      [Sidebar: I am a totally normal happy healthy adult who was raised my whole life in a 1-bdr apartment with mismatched furniture! ;-)]

  • Meg

    I really needed this!

  • La’Marisa-Andrea

    I’m a fan of Suze Orman, especially the way in which she discusses money as it relates to women. As I’ve gotten older, especially into my 30s, my focus is on living authentically, which includes being honest with myself and others about money. Sadly, that is something I never learned to do because I grew up mostly poor (welfare, section 8 etc) and it wasn’t until I got into high school that my parents started to earn something of a middle class income. Not having money was always a source of embarrassment in our home; thus I went out into the world in my daily interactions with people feeling like not having money was something about which I should be ashamed. I went through great lengths to hide how poor my family was. I had no problem lying to people about receiving Christmas gifts I really hadn’t etc. I can remember going grocery shopping with my mother and the horror I felt when the courtesy clerk was a classmate of mine and witnessed us using food stamps. I was terrified that the lies and image I had built would come tumbling down as he would surely make fun of me or tell everyone and the secret would be out. Amazingly (to me), he showed nothing but compassion and never breathed a word of it to me or anyone else.

    So as a very grown up adult, I am ok with rejecting the badges of security everyone else says we should have (our friends and family, too, think owning a home is the ultimate badge of security, settling down, etc), being honest about our finances and being honest about what is important to us financially. If I can’t afford something, I say that I can’t afford it. I don’t apologize for it. I don’t explain my finances and get into why we not only can’t afford to buy a home where we live, but we simply are not interested. It is so liberating to just be and embrace who you are.

    • Meg Keene

      Nodding.

      When you end up in a “without” situation (which for me was college, our base of security was fine at home, not having any disposable income whatsoever made me FAR FAR FAR outside the mainstream at a place like NYU) you get really good at lying and covering up. It’s an exhausting way to live.

    • http://cuvikingadventures.blogspot.ca/ Jenny/Adventures Along the Way

      Your story from the grocery store when you were young and encountered the classmate made me teary…

  • http://readingandthensome.blogspot.com/ Martha Smith

    As someone who’s house buying prospects are a long way off, this is a wonderful post. Perhaps were we not expecting a baby and looking down the barrel of full-time daycare for a few years we would be in a position to buy sooner. But as you said – the (un)expected costs of homeownership are something we can avoid for a good long while.

  • Another Meg

    “Financial lines to color inside of and tasks to cross off to avoid disaster is my idea of music to fall asleep to.”
    This, all day.
    While we can most certainly afford it, anything close to a big purchase scares the the ever-loving shit out of me. It took me a long time to figure out why buying a small flat-screen created such a stress knot in my stomach, and why I frantically check my (pretty dang nice) retirement savings when I’m stressed about seemingly unrelated things. I grew up scared about whether we’d be able to keep our house and if we’d be ok. I had no idea this would follow me into adulthood. We’re years from buying a house (if we do) but I’ve set some pretty firm lines about how much we have to save in order to do it. And I’m not sure if any amount of savings is going to make me feel completely comfortable spending that much money on one thing.

    • HannahESmith

      I do this too! I’m constantly logging into my Mint.com account to look at my emergency fund and 401K. It helps me feel better. Even though my Mom was really careful with our money, we never had much of it growing up, and my Dad was getting laid off from his mill job regularly. Spending any semi-large amount of money stresses me out no matter how much I have in the bank.

      • Meg Keene

        Yeah. It’s the fear of layoffs that really makes you careful. REALLY. CAREFUL. And for damn good reason. We live in a economy where jobs are not so steady anymore.

        • K_

          I was laid off five years ago (when I was single), and I’m not really worried about it now. Having been through a layoff with no financial scars, I feel more prepared. For each of us (me + husband), I have several back-up job strategies for if we lost all of our income at once – ways that we could stay in our fields and possibly move into slightly different roles that are always hiring, though at a lower pay rate. These aren’t long-term plans, but these are “pay the bills for 6-12 months while we figure out a longer-term plan.”

        • MDBethann

          My DH and I are both feds and have been in our (fairly secure – auditing & patent) jobs for awhile, so even government downsizing shouldn’t lead to unemployment for either one of us. However, the threat of government defaults or another shutdown do frighten us, and we make sure we had a HUGE emergency fund built up before we even considered our addition. And we’ve declared one account completely off limits to the construction budget, so that cost over runs have to lead to cuts elsewhere instead of raiding the emergency fund.

    • Meg Keene

      Yeah. Agreed. To be clear, I won’t buy without six months to a year of emergency funds left over after the downpayment, and knowing we can pay the mortgage on one income, should someone get laid off. And without touching retirement.

      It might be awhile ;) But at least I’ll feel like I covered my bases.

      • Another Meg

        I have so many rules for where we have to be finacially before we can look for a house. I used to work in finace so I handle our long-term stuff for that, and we’re on target so far…but we’ll be renting for at least another 6 years. Our friends are miles ahead in home buying, but that doesn’t bother me. The worry of taking more than we reasonably could afford would bother me so much more.

      • Emily Layman Perkins

        I desperately wish we could buy a house right now for emotional reasons, but the practical side of my brain requires all those things you just listed. The housing market in Hawaii is much like the Bay Area, only it’s Japanese millionaires buying vacation homes/investment property instead of new tech millionaires buying primary homes, so it’ll be a while for us too.

        I’m so glad you bring up the point about people having help for a down payment too- it’s been so frustrating to me to feel like we can’t afford to buy a house when everyone I work with owns one but like you said, when you dig, you find out they had help. Either family helped with the down payment or they had a VA loan that doesn’t require one.

    • K_

      We are very careful with finances and bought a house (6 months in cash savings, household income could drop >50% and we could still make the mortgage payments), and I still struggle with the expenses. Should we re-do the deck this summer, even though the cost exceeds 4 extra principal payments? With a new deck, I won’t have to worry about kids falling on protruding, rusty nails and getting gigantic splinters. I’m leaning toward the deck, as much as it kills me to not pay off the mortgage faster.

  • Nora

    It is funny how the echoes of childhood continue to pop up in so many adult decisions. I had a happy, secure middle-class childhood with many weekends spent helping my parents with repairs and projects around our house, an old fixer-upper they bought when they were dirt poor in their mid-twenties. When my older sister was born, they were cooking on a hot-plate because they had no working appliances in the kitchen, but now after almost 40 years of fixer-upper-ing, the house is gorgeous. I think probably because of this history, the sequence for “becoming an adult” in my mind has always included getting married, followed by buying an old shambly house, having a baby (or two) and building our family (and our home) slowly together. I guess, all practicality aside, I like the way home-making can mirror the process of building a marriage and a family- you choose a place to plant yourself, and then commit to putting in decades of hard work.

    • Jenna

      This is exactly what we’re doing, too!

      We just got the old house…and promptly ran out of oil, had to remove moldy boards behind cabinets in the kitchen, found mouse nests and squirrel nests (yes, plural–eep), and had to have pretty much the enitre electrical system rewired. My hands feel like sandpaper from all the plastering and painting. We will never be rid of demo dust. We will always be working on something, saving for something, fixing something else.

      We have never been this happy, or this fulfilled.

      • http://werewritingabook.com/ Breck

        This sounds wonderful!

      • Nora

        Congratulations on all of your progress- seems like you’re well on your way! Some people are happy renters and others just really need to get their hands dirty for it to feel like home; I’m definitely the latter and it sounds like you are as well. Your renovation sounds very romantic to me- my fiance and I met at Habitat for Humanity and spent most weekends early in our relationship helping a friend update the electrical system in her mother’s house, so thinking about rewiring makes me wistful for our early dating days *insert bad puns about sparks flying* Wishing you many years happily covered in demo dust!

        • Meg Keene

          Well, some of us do like to get our hands dirty, but don’t have that luxury for ourselves, I’m afraid.

          • Nora

            Absolutely, being able to DIY renovate is a luxury in many markets, especially large cities, where the cost of the land alone is totally prohibitive for non-millionaires (like the no contingencies cases you were discussing above). I lived in Oakland for years and felt that even being able to afford an apartment with enough area outside to grow some potted plants was a huge luxury. We have family in the Bay Area and the Midwest, and ended up deciding to move to the Midwest in part because of this issue. We would never be able to own in the Bay Area, and as two people who would really like to work on a house together, we’ve made the option to own one of our top priorities in selecting a place to live, even though we’ll take a pay cut compared to jobs we could get in SF (not that it is the right trade-off for everyone, certainly). I think the important part is that neither owning nor renting should be considered a luxury or a waste… the wisdom of the rent/own decision depends entirely on your flexibility, your market, and your priorities for your own life. I totally agree with you that people should stop judging each other’s “adulthood” based on this decision as if there were some universal best solution for everyone.

    • Alyssa M

      It really is amazing how our parent’s lives when we’re children effect our view of “home.” When my elder sister was born, my parents were a couple of 19 year olds, living in married student housing, and working at k-mart. We were around for all of their renting years, as they worked their way up the financial ladder. I was 8 years old when they bought their first place, and 12 when they finally “settled down” into the house they still live in now.

      Everyone else seems to see home ownership as being trapped, but I can’t help seeing it as a kind of freedom (probably because my parents waited until a house WASN’T a financial burden on them). The first house they owned was the first house where my sister could use tacks instead of unreliable tape on her posters. It meant freedom for my mom to paint a chair rail in the dining room. The freedom to plant a garden in the yard, and build a treehouse. It was the first place that was OURS to do with as we liked.

      To me, renting just reminds me of waiting on landlords to fix things instead of daddy just doing it. Living with cockroaches while we waited on them to call an exterminator. Don’t dig holes in the yard! Watch that you don’t scuff the walls! None of those places were ever really HOME to me. It’s the reason my partner and I are pretty eager to buy a place. Has nothing to do with “settling down” or even having “made it.” We just want a place that’s ours…

      • lee

        I think this is really important. As with many things, home ownership fuses finances and emotions, and sometimes emotions trump perfect logic (which, as long as it’s not financially disastrous, seems reasonable to me).

      • Bets

        My parents’ experiences really shape my worldview on home ownership, too. My parents bought a house right before I was born and had to sell it several years later to relocate, losing a lot of money. They rented for a few years and finally bought another house when I was 7 (and that was definitely freedom for me as a kid – we could paint my room bright pink!) and have been there ever since. So while my friends are starting to buy houses and have babies, mostly in that order, and even though I would so love to have a house to renovate someday, I’m wary of doing so at this age, because life and real estate markets can be so unpredictable.

    • sara g

      We have this dream too… we are just unsure about how to know when we are at the point where we are ready/able to settle down. To pick a town, buy a house, and stay there for 40 years. I mean, that’s a big commitment. I would love to fix up a house and make it truly our own, I just want to make sure it’s in a place we want to plant ourselves.

      • Nora

        Agreed- it’s a huge decision. We’re both 30-ish (give or take a few years on each side) and have differing feelings on this subject. I’ve moved around a lot and am ready to plant myself somewhere for the long run, while he stayed in the same area for most of his life (until he met me) and would like to explore more new places. We’re compromising by settling down in a large city near my hometown, so I get to plant myself near family and he gets to explore a new city where he’s never lived. Might not work for everyone, but hopefully it’ll allow both of us to meet our needs for roots/exploration.

  • Sara

    Two dear friends of mine are expecting a baby in July. When they found out that they were expecting, the first thing they did was start house shopping. Now, these two are 25 years old, with about $200,000 of student debt. They just took out a loan for a brand new Prius last year. She is a part time line cook, and he just got his first full-time job. To me, this screams “DO NOT BUY A HOUSE!” The idea that if the roof leaks, or if the furnace goes, they’re on the line for it — it gives me panic attacks FOR them, and for their child. I feel like their financial security is balanced on the edge of a knife. But they felt strongly that they weren’t “settled down” and ready to have kids unless they were homeowners. To each their own, and if they feel more secure this way, then I guess it is what it is. But the idea of putting myself into hundreds and hundreds of thousands of dollars of debt in order to feel secure, or grown up (which is what I suspect this comes down to)… I just don’t get it.

    • jashshea

      I feel like I should picket in front of mortgage lenders and offer to counsel young people against home buying. My husband and I are older, more established, and already own properties from our single days (we rent these at a minor loss). HOWEVER.

      When we bought our house last year it had a new roof, new AC and recent appliances. Well. Dishwasher seal was not done correctly and ended up flooding the (fully finished) basement. While investigating all that water, we discovered that the garbage disposal was also dead and the kitchen sink was leaking where we couldn’t see it. All told we ended up with 3 holes in the ceiling in the basement that were thankfully fixed at cost by my husband and FIL.

      And then we got our escrow “adjustment” which was equal to 1.5% of the purchase price or a year’s worth of property tax.

      They might be able to afford the payments, but can they afford the House?

      • sara g

        “They might be able to afford the payments, but can they afford the House?”
        THIS. Exactly. With renting, your rent payment is pretty much your only payment (other than the piddly ~$13/month I pay for renter’s insurance). With home ownership, your mortgage is only the beginning. There’s property taxes, insurance, maintenance, utilities, yardwork…etc. No one tells you about those costs when they’re trying to get you into a mortgage.

        • Abby

          While I agree with your overall point that there are additional costs associated with owning rather than renting, I take exception to the last part of your post: “No one tells you about those costs”. As a potential home buyer, isn’t it YOUR responsibility to research the purchase and understand the costs before signing the deal, not the bank’s?

          • sara g

            Oh, I totally agree with you. Just like I would say it’s the customer’s responsibility to know how to use a credit card before signing up for one, etc. But I don’t think we can deny that customers are purposely misled/manipulated by banks/CC companies/etc. And there’s a woeful lack of education on how to properly manage finances.

        • MDBethann

          I agree that maintenance & utilities are definite extras in home ownership, but my property taxes were included in the mortgage payments for both the condo I sold last year and the house my husband and I share. And while the insurance wasn’t included in the condo mortgage, the mortgage for our house includes the insurance too – I think it is something lenders started doing (possibly as a result of the housing bubble bursting?) to make sure their investment is protected. The downside of that is it is a pain to change homeowners insurance because you can’t just change companies – you have to notify and get approval from the mortgage company too.

      • A-L

        I understand this point. About 40% of what we pay to the bank every month goes to our escrow costs (insurance & taxes, no PMI). The mortgage (w/20% down at 3.25%) is the “cheap” part. It’s also one of the reasons why we ended up renting out part of our basement that we originally thought we’d use for ourselves. We can use the extra money as a cushion against the rapidly escalating insurance costs.
        This is also a plug, though, for buying a multifamily property. Living in a high cost of living area, having someone else help pay the mortgage (or escrow costs) can be the difference between being able to afford a place and not. (Assuming, of course, you have extra reserve funds for additional repairs and realize that there will be times of vacancy or renter issues.) And that extra money can help buy your financial freedom earlier…the mortgage paid off earlier and income coming in regardless of whether or not you are employed.

    • Meg Keene

      We live in a country with a cult of homeownership. Which… is good for our housing market (mortgage lenders, construction workers, home builders), and possibly not so good for actual people’s finances.

      • Class of 1980

        We would still employ mortgage lenders, construction workers, and home builders if more people rented. It’s just that the buyers would be people intending to be landlords.

      • lady brett

        or sanity. even in places where owning is the financial winner, the difference is usually small enough that there’s really no financial incentive if you don’t also love the idea. i adore owning my home, because i had *fun* ripping out the rotted-out kitchen floor and replacing it. and i like the freedom of being able to remove half a wall because it was a bad design. if i felt like i had to call in a professional for all of that? well, i’d rather just call the landlord and not deal with the worry of it being my problem.

        (on the other side of the sanity thing – my biggest financial daydream/goal is to own a home outright, because the sanity that would come with that kind of financial freedom is worth a lot to me =)

        • Meg Keene

          We actually do like that sort of renovation project (hi, we used to build sets together). So we’re just trying to find ways to do it that won’t leave us hundreds of thousands of dollars under water, post tech bubble ;)

          • lady brett

            ha, truth – there are better ways to find stuff to build!

            also, all my construction knowledge comes from my dad, who was a set builder for years.

        • http://werewritingabook.com/ Breck

          We’ve basically only been looking at fixers because I *love* ripping out walls, and Chris finds hanging drywall soothing ;)

          • Sarah E

            That sounds like a dynamo partnership.

        • http://brokensaucer.blogspot.com/ sera

          That’s the other reason we bought a house. We love tearing shit up! Before we moved in we took out a wall and refinished the floors. What is it about pouring yourself into your home that makes it so much more amazing?!

      • carolynprobably

        I was raised to value home/land ownership. I think it was borne of one part WWII era grandparents wanting to own land and be free etc and one part accountant parents who (at least in the early 90s) taught me rent = wasted money.

        So I’ve struggled, now entering my 30s, to realize that home ownership isn’t in the cards for me now (or maybe ever) but more importantly that it isn’t the financial and personal freedom disaster that I’ve been raised to believe.

        • Meg Keene

          I think times have changed. For our parents and grandparents, owning a home was a steady financial investment, with slow and steady returns. Now, in many markets, it’s possibly the most volatile and unpredictable place to put your money. (Particularly scary since you LIVE there. I don’t live in my mutual fund.)

          Why that change has happened, I don’t know.

          • lady brett

            i feel like that has less to do with changing and volatile markets and more to do with changing and volatile lives, perhaps. in previous generations the idea was that a home was a sound investment not because you could buy it for $$ and sell it much later for $$$$, thereby making cash – it was a sound investment because you could buy it now, pay it off, and live on a vastly lower income in your old age by not paying for housing. in that regard it is still a sound investment assuming you’ll be living in the same place when you retire. the difference is that is a pretty wild assumption now.

          • Meg Keene

            But in a lot of markets, it’s the markets themselves that are changing (possibly because of those changing assumptions). IE, now, in this market, buying a home isn’t something you can necessarily buy and afford to pay off (mortgage payments off the charts). And the investment is so volatile that if the market crashes and you’re underwater, you’re trapped and can’t move.

            IE, I think the reality has changed drastically in a lot of places. But the reality make have changed because the perception changed, and people started playing the housing market like ever so many house shaped slot machines.

          • lady brett

            that’s so crazy to me, living in a super low cost-of-living area.

            but also, i guess that’s my point about the financial investment vs. lifestyle investment – you’re only “trapped” in an underwater mortgage if you want to move (obviously there are a lot of other financial, not to mention psychological, concerns there too.)

          • Meg Keene

            Well, possibly lifestyle, but not like that. You’re trapped if you loose your job, and the only new job you can get is out of area. Then your options are rent out your house if you can, and move (possibly losing more money than you can afford as you do that), or end up unemployed, possibly losing your house. That was a widespread problem in CA a few years ago. Lots of people were financially ruined by it.

          • lady brett

            yes, absolutely (and i should definitely have said “need” as well as “want” above!).

          • carolynprobably

            Right! Crazy!

          • Class of 1980

            Monetary policy changed. And the market reacted and is still reacting to that.

          • Meg Keene

            Oh you mean THIS: http://www.mortgagenewsdaily.com/mortgage_rates/charts.asp

            Mortgage rates dropping from 17% to 2.5%?? That might have freed people up to play the housing market like a game of craps?

          • Class of 1980

            Yes. Low interest rates actually cause prices to rise. All driven by the Federal Reserve. Nothing happens in a vacuum. There is always a reason; you just have to find it.

            Also, in the Bay Area, local regulations make it very tough to build new housing, which keeps the prices higher than they would be.

            Honestly, we as a country are RUINING the lives of young people. It’s slck.

          • Class of 1980

            Typo: “sick”

          • Meg Keene

            Yeah. No shit. There are times I’d like a little more shame and sadness from the babyboomer generation, since it feels like the shook down the system for every last penny and left us with the bill. I don’t mean that in any sort of political way (I don’t even think that’s political one way or another). But our parents have homes they could afford, pensions the state is struggling to pay for, social security we figure we’ll never collect. Not to mention minimal student loans, if they had them.

            Those of us born around 1980 are worlds better off then those born just five years later, since our student loan debts are on average far less crushing. But the American dream of a generation ago just isn’t on the table. That part, I try to not even think about, because it’s a lost cause. I have no idea how we’re exactly supposed to navigate forward, so I just figure we’ll do the best we can?

          • jashshea

            Agreed. I remember my boomer mom talking to kid me (so…sometime in the 1980s) about how much harder it was for them than their parents. I have hope that us Catalanos and Millenials can sort it out a bit better than they did.

          • Class of 1980

            Frankly, I don’t think most baby boomers have a clue why everything changed. It takes a lot of reading, which requires time to absorb the information … that’s if you are even able to find it.

            As far as I’m concerned, the whole debacle begins and ends with our gov’t. End of story. Policies matter and many people support policies that sound good, but have unintended effects.

            You also have to look at who is benefitting from bad policies. Someone always benefits and it’s not some middle-class boomer. It’s people very high up and often out-of-sight.

            Look at student loans. It used to be that a bank would only loan what the student could reasonably pay back. Then the gov’t got involved and once they were willing to back the loans, the banks no longer had to worry about losing money and could lend exhorbitant amounts … and like a domino effect, the schools raised tuitions. The market is no longer based on reality. Bankers and colleges benefitted at the expense of the greater society.

            I recently read that many colleges have taken that extra money and poured it into sports programs and physical amentities, but not actual education. Surprised? I’m not.

            As a late late boomer, I don’t have shame because I didn’t create the policies. But I certainly have sadness. There is no benefit to society to screw over an entire generation. Do I really want to be elderly at a time when the younger people who will care for me are in dire straits? Hell no.

          • Class of 1980

            If young people are the seeds of our future, we are burning our seeds.

          • Class of 1980

            And I should add, many retirees are suffering too by having their retirement funds eaten up in the economic collapse. My mom was set and she lost it all. I know others in the same boat. And this at an age when working to recover it is not an option.

          • Rowany

            I wouldn’t say that the link between policy and effect is that straightforward. While the government subsidized student loans, financial support for institutions has been lagging considerably behind inflationColleges may invest in sports programs because its can be a reliable source of income when government support is lacking. (other factors can be seen here: http://net.educause.edu/ir/library/pdf/ffp0005s.pdf)

            I would go so far to say that it’s not the individual policies, but how our legislature has evolved to ping pong between two very different ideologies as opposed to working together towards continuous [more or less] compromise over time…it results in times of huge promises of support and then a pushback from the other side removing the means to pay for them. It’s no longer a matter of checks and balances, but checks and checkmates with more and more pawns off the table.

          • Class of 1980

            I’m sure there are other factors, but colleges could NEVER raise tuition to the levels we see today without students being able to gets their hands on larger sums of money. If the money isn’t there, you can’t demand it.

            Banks don’t care if students default, because the loans are guaranteed. Add to that, newer regulations that make it impossible to include student loans in bankruptcy.

            They can defer payment, but will end up paying even more. The graduates are caught in an impossible trap that didn’t exist in my day.

            And it’s not just sports programs the money is going toward, but things like resort-quality swimming pools for students, more luxurious dorms, etc… and such. One school even built a textile museum! Many colleges are going into debt to build these things to compete with other schools, and raising tuition accordingly.

          • MDBethann

            Re the university with the textile museum: If you mean George Washington Univ. in DC, the Textile Museum existed pre GWU; it’s relocating to a facility being built by the university but I think it’s a partnership with the university, not the university taking it over. From what I’ve been reading in the Washington Post, I think GWU is trying to build up its arts program, as it is acquiring the Corcoran College of Art & Design as well.

    • sara g

      Sounds like a couple of our friends. They are late 20s, at least 100k in student loans, just bought a new Toyota, have at least 10k of credit card debt, and a couple years ago stupidly bought a house “because it was a good deal.” No, really. Who impulse buys a house?

      They have finally moved into it (2+ years later) because it was a piece of crap and needed so much work done, and they didn’t get it properly inspected.

      They eat out constantly, shop constantly, but are always complaining that they are broke. I just don’t get it, and it makes me sad that they have been suckered in by our culture of consumerism and “keeping up with the Joneses.”

      I’m really grateful for our small apartment, our lack of debt (other than a few thousand left on my fiance’s student loans), and our shared views about finances. We would like to buy a house someday, but it’s not something we NEED to feel complete. We’d rather be able to put our money into savings and our retirement funds while waiting for our lives to get to the point where it would be responsible/practical to buy a house.

      • Meg Keene

        You want CRAZY? In the current bay area market, lots of homes can only be bought “no contingencies.” Which means NO HOME INSPECTION. There are so many new millionaires in the market, that they can get away with it. It’s not always true in Oakland (though you’re starting to hear about it cropping up). But on the peninsula, it can be hard (if not impossible) to buy if you can’t make an all cash offer above asking with no contingencies. Just. Think about that for a minute.

        • sara g

          That’s just a whole new level of crazy. Good lord.

        • http://werewritingabook.com/ Breck

          The previous 2 houses we bid on in Berkeley went 20% and 12% over asking, respectively, and both had no contingencies. Crazy is a serious understatement.

        • http://www.wrightremedy.blogspot.com/ Addie

          Your entire paragraph gave me hives.

        • Sarah

          That’s crazy! I can’t imagine putting up that much cash and having no protections for the condition of the house.

        • lady brett

          what.

        • http://brokensaucer.blogspot.com/ sera

          That just scares me. Like recoiling in horror. And also, I am not sure I could be neighbors with those sort of people.

        • Rachel

          That tells me – if you aren’t forced to live in that area by your job – LEAVE NOW! That is completely insane.
          For some, the culture and amenities outweigh the crazy high cost of living. For me, that is 100% not worth it.

          • Meg Keene

            Ah, but we have a lovely rental :) And we could leave if we wanted to.

            I’m a city girl. I’m going to live in a city (I’d like to be in a bigger one). That means I might not own for a long long time. I’m mostly ok with that.

            (Also, I spent my formative years in NYC. Cost of living isn’t that bad here, comparatively. Though I’ve never seen a market like this, OMG.)

        • BeccaC

          This reminds me of my house buying experience in a similar market. In October me and FH bought our first house. It was the scariest thing we have ever done – we bought our house in Toronto, Canada and our house hunting experience was terrible (other than Vancouver it is the hottest market in the country). Our house hunting took more than 5 very aggressive months – there was some inventory but it was all selling in days after listing and way over asking.

          In Toronto it is common for multiple people to bid on homes. The first house we bid on went for more 60k above our offer and had several other offers. We were flabbergasted (our offer had already been well above the listing price). In these bidding wars you will lose if you put in any contingencies – so if you want a home inspection you do it on your dime before you place a bid. If you lose in the bidding war there goes the money you spent on home inspection. On the second house we bid on we saw the listed price and had a good laugh – it would never go for anywhere close to that price. We bid for more than 80k above the listed price against 9 other offers…and we only won by 3k. Our house was on the market less than 6 days and had more than 120 tours in that time. After winning the bidding war and getting all the paperwork signed Eric and I wondered if we had really “won”.
          I found out a month after buying the house the second highest bidder had been woman pregnant with her first child – I will always wonder if she ever found her house. The price we bought our house for will forever affect the price of other homes in our neighborhood – driving out even more people searching for a house in a city where the inventory of detached homes is becoming very small. Nobody wins in this situation.

        • Caroline

          And the houses will often close in a day or two, all cash, no contingencies, with offers 100k or more over asking price.

          • Meg Keene

            True story. A friend in a not fancy party of Berkeley (bless, bought at the bottom of the market, earned every penny in our shitty corp job) had a house on her street that was a tear down. It got flipped IN TWO DAYS. A contractor on the street asked the flippers point blank what they did about the fact that it was dry rot straight through. The flippers said “What dry rot?” Went on the market for something like $600K, was gone in a day for something like $100K over asking.

            GET THIS: beyond the cosmetic finishes THE HOUSE NEEDS TO BE TORN DOWN TO FIX ITS PROBLEMS. Oh yeah, that’s right. Not a bit of dry wall, no, it’s rotted through. And the owners don’t now, because NO FUCKING CONTINGENCIES, so no home inspection.

          • MDBethann

            That’s NUTS

        • jess

          This is what it is like in Toronto as well – bidding wars, and no home inspection clauses if you want to ‘win’ the house.

        • Beelitenotfab

          Oakland is starting, I saw an article last week. Things are nuts. Its a lot of people my age with no dependents who are suddenly magically rich, most of whom started out with money and went to Stanford. I keep saying to them: “what will you do when the teachers, and police officers, and waiters, and nurses, and chefs etc. etc. can’t live here anymore.” Things are nuts out here.

        • MDBethann

          That’s nuts. I would NEVER again buy a structure without an inspection. I know that was happening here in the DC/Baltimore area in the early 2000s before the housing bubble burst. I admit that I bought my condo without an inspection, but it was a 2nd floor garden-style unit, and I was only responsible for the drywall on in – if the roof or other things had problems, it wasn’t my issue. Yes, I did end up replacing the windows (they were old and leaked air) and the HVAC unit during my 5 years there, but it was pretty obvious even to inexperienced me that those things had to be fixed.

          Our house was a different story. If there hadn’t been a home inspection contingency, I would have walked away. As it was, there was a termite problem that no one knew about, but aside from contracting an exterminator, my husband was handy enough to fix the damage himself. If it had been just me, I don’t know how much that repair would have cost me.

    • http://cafeaubride.blogspot.com/ Catherine

      yeah…i just got stressed out reading that.

    • http://brokensaucer.blogspot.com/ sera

      This makes my stomach turn. When we bought our house, we had no other debt, no student debt, no car debt, no credit debt. We were lucky. I know if we were making other payments, we would never have been able to swing it, nor would we have felt like we could.

  • jashshea

    Tons to unpack here (in a really good way), but wanted to say this:

    I lived in a similar area in my early 20s. I’d already missed the early part of the bubble where things were affordable-ish. Over the 3-5 years I lived/worked there after college, condo/housing prices in desirable/semi-desirable areas probably doubled? That really scared me, that I’d never be able to have that particular brass ring. In my late 20s, I moved to a much cheaper area of the US just so homeownership wasn’t a crazy dream.

    I bought my condo a few months before my 30th birthday riiight before the bubble burst nationwide. While I was happy and proud on the day of closing (I did it, all by myself!), my general feeling for 12-14 months after was that I was trapped. My industry was tanking and I couldn’t reasonably talk to recruiters about other jobs because I was stuck in this wee-baby city. It was not a good feeling.

    Fun fact: I’m still over 25% underwater on that condo. Lesson learned: Don’t buy homes because you think it’s what you’re supposed to do. Wait until you’re ready to actually put down roots!

    • Class of 1980

      Bingo.

    • Meg Keene

      But even being ready to put down roots is enough. We’ve put down roots, but that doesn’t mean we can responsibly afford anything (or that we wouldn’t end up tragically underwater when this bubble bursts).

      • jashshea

        Yes, excellent point. Roots + financial plausibility.

        My issue stemmed from not really having roots and having terrible timing. In most cities*, if you’re going to stick with a home for 15-30 years, a downturn of even 2008-2009 proportions isn’t that bad, economically. Very tough emotionally/intellectually, for sure. I beat myself up big time during the worst of 2008/09.

        *I know there are areas of NV, AZ, and FL (and probably CA?) that will take longer to recover because of a double knockout punch of building boom + bubble burst.

      • Caitlin

        So we have been trying to buy a house in Oakland for 6 months now. We keep coming in second. Yes, it is crazy. $70,000 over for a 2/1 in a transitional neighborhood is not enough?! I am curious as to why you think this is such a bubble though. Is it really all tech or more because there just is not enough inventory in the Bay Area due to restrictive building regulations.

        • Meg Keene

          I’m pretty sensitive to this, because I made my living writing research on the subject the first go round, so keep that in mind. There are a variety of factors: first, there is a broader tech bubble here that’s going to burst at some point, and that’s going to have widespread fallout in the Bay Area at large. Second, there is AGGRESSIVE flipping going on, which is never a good sign, it overheats the market. Third, I’m starting to hear sketchy loan ads pop up on the radio, along with flipping ads, and even worse sign. Fourth, Wall Street is playing in the market again in a big way, this time buying up homes to hold and rent out, which is pushing up prices. Fifth, the way the market has reacted in the past year, and the rate at which prices have soared is not the sign of a healthy market. Sixth, cost to value numbers no longer line up, let alone the rent to buy ratios.

          I could be wrong, of course. I definitely could be wrong. But the real estate market is volatile as shit right now, and I don’t like putting my money in places that volatile. I’d rather have it other places.

          That said, if I had the capital to buy to rent, I would do that in a second. It’s capital intensive, but I think it’s a smart play right now. I wouldn’t buy to own though.

    • Sarah

      “Don’t buy homes because you think it’s what you’re supposed to do.” THIS. Be honest with yourself about your finances and challenge the notion that you’re not grown up if you don’t have a mortgage. Lenders only want to close the deal, not help you make a huge life decision.

    • anne

      I have a very similar experience, though I’m lucky to not be underwater. Buying in my late 20s is not a decision I’m very proud of, and I therefore keep pretty quiet about buying my place. I think I knew at the time it wasn’t an awesome move, but the combination of family pressure, terrible rental situation (a terribly tight rental market where places were hard to find and pricy), and reasonable financial logic made it happen.

      I’m not sure buying was actually the worst decision, it’s more the particulars of the place and buying process — a rushed timeline that included a bad real estate agent (who could not explain local property taxes well, something I only realized in hindsight), poor advice about how to handle certain things that came up in the inspection, and being unprepared for emotional anxiety that beset my very frugal self when repairs and other issues needed to be handled.

      On good days, I say I’ve learned a lot. On bad days, I want to pull my hair out and change the past.

  • Jessica

    And again, APW coming up with something just as my life starts in on that subject. I recently got a raise at work (yay!) brining my yearly salary up to a place that I previously thought wouldn’t be possible for another 3-4 years. My husband made jokes about me being the breadwinner and how he’s going to sit back and enjoy it, and I then I said something about us being able to afford a better apartment for the next year. He then countered “why not a house?”
    Nearly gave me a heart attack. Houses are expensive, they are a lot of work, and I like that I don’t have to do jack on maintenance around my apartment. He’s still in the military for 5 years when he gets back from his current deployment (a period in which I do not want to have kids or do a lot that would put pressure on me alone for a 2-person responsibility if he gets deployed again). It all seems like too much, but then again, so does moving from apartment to apartment and having to deal with the rising cost of rent in the Twin Cities.
    Long story short, we’re going to talk more about it and figure out how to lessen the anxious feelings in me and figure out if it’s cheaper to pay a mortgage than rent in this city.

    • M.

      There are calculators out there online that can help you figure out when a house becomes “worth it” financially based on the rent you pay. Interesting to play around with and very educational (doesn’t of course count things like maintenance/emergencies.)

      I will say, not as advice to you per se, but advice we were given by my FIL last year, is to think hard about the impulse to “upgrade” your life as you earn more money. Of course sometimes it’s a good/right thing to do, but as we start to get raises here and there as well, or have less debt, we have also been feeling the urge to get a more expensive (nicer,closer) place, spend more frivolously because “We can!”, but it bears a cost-benefit analysis. If we used our “new” money for that, we’d be in the same place debt/savings/spending wise. If we have more money, but the same rent, we can save and prepare for a more stable future. It was one simple sentence from my FIL that has really shifted our thinking as we work on saving and thinking about the future, if we’ll have kids, moving cities, etc.

      • L

        That is awesome advice! I think it’s so smart. When we did one meeting with a financial advisor she said something in a similar vein…but more that the habits you establish as a younger couple in terms of routine spending will shape your financial life as a couple, more often than not. Many people who start not earning much (and so not spending much) tend to remain more frugal throughout their lives as opposed to those who “upgrade” constantly.

      • EllaByNight

        I love your FIL’s advice. My husband and I try to put it into practice whenever either of us gets a raise by putting half the raise into savings and letting the other half improve our standard of living. It’s helped us increase our retirement savings considerably without feeling like we can’t enjoy our raises. When I started contributing to my 401k, I was only able to contribute 4%; now I’m contributing 15% (and so is my husband).

        • M.

          That is a rad compromise! Go you guys! We are still dumping every last penny into loans/emergency, but this is a great idea for a few years down the line.

      • Jessica

        That is good advice, and I just took a look at a calculator someone else posted. Because of a signing bonus from the Army, we could pay a huge chunk off in the down payment and it would apparently be worth it to buy if we’re planning on staying for 6 years. It still feels weird to me to be considering, though.

  • Outside Bride

    I guess I would not expect less, but it sounds like most of the APW community has not bought into the idea that a house is always a good investment. When I got my first “permanent” (as opposed to seasonal) job a couple years before the bubble burst. I heard from all sides that I really needed to buy a house NOW before the prices went up even more. Also, my internal message was that I desperately wanted a puppy, and that was going to mean getting kicked out of my cute, cheap, little apartment. But I also knew I really didn’t want to stay in that job or town, and I had internalized the Elizabeth Warren personal finance book’s explanation that a house wasn’t always the best idea in every circumstance. Long story short, I ended up getting the puppy, because after I met “the one”, when I would rationally go thought the reasons I could not have him it made sense, but when I imagined not having him, I would burst into tears. My landlords had been very firm on the no-pets, but when I told them I needed to leave (not in a bitchy ultimatum way, just in a sorry-I-messed-up-looking-for-another-place-now fashion), to my surprise they told me to stay. A couple years later I got a job in the place I had been mooning over for a decade. I did get a house here, in part because I know my short temper and I really wanted something to make it really hard to leave something I worked so hard to get. I had a nice little downpayment saved up from living cheap in the years before, and we were able to get a place that really suited my new situation, which by that point included the man plus another dog.

    So, while I am completely in favor of home ownership when it makes sense, I’m really glad to hear people fighting against the cultural narrative that buying a home somehow makes one an adult or secure or any of that other financial nonsense. Making the best decisions for you, with the knowledge that only you can have of your fiances and your psyche, along with working really stinking hard and some help from the universe, is what makes you a financially secure adult. There simply aren’t any shortcuts, not even purchasing a home.

    • jashshea

      “most of the APW community has not bought into the idea that a house is always a good investment”

      Yes yes yes yes. Sometimes a house is just a place to live. It may make you rich, but you have a gold-rush-level chance for that happening in the short term.

      • Class of 1980

        In order for a house to make you money, either your timing has to be great or you have to buy a short sale or foreclosure. It can happen.

        My sister bought a short sale house, put about $25,000 of upgrades into it, and still made a profit of more than $50,000 in about four years. Used that for a down-payment on the next house.

        However, it was the housing bubble collapse in Florida that made this possible. She bought the house for less than it was worth even after the collapse and sold during the recovery.

        • anon

          yeah, it can happen. I bought a condo at the bottom of the market because that happened to be the time that was right for me. My upstairs neighbor just sold, which gives me a real comp to use to figure out the value of my place. Turns out I have a $100,000 equity after owning for 5 years. There have definitely been negatives to owning, and I know this is a lucky situation, but I wanted to present the other side.

          on the other side, my bf owns his place too and is WAY underwater since he bought at the height of the last bubble.

  • Laura C

    I go through phases where I look at real estate websites like they’re porn. I graduated from college 16 years ago and I’ve lived in 10 apartments, not counting the two months I spent in a friend’s basement and the months here and there I’ve spent at my parents’ house when there was a gap between one apartment ending and the next one beginning. That’s just a whole lot of moving. I’ve associated buying with getting to stay in one place, getting to replace the Ikea couch chosen to move easily, getting to choose the color of my walls. (And, yes, I have family money amounting to more than a down payment, so thinking about buying has felt like thinking about security in that way, also.)

    But the Ikea couch won’t make it through one more move, and while we’re going to be in the same place for two years running after the next move, it’s still probably not going to make sense to buy a permanent couch then — there might still be two more moves in the next few years. And my FMIL is saying she might downsize and have a couch for us in a few years, anyway. And my fiance and I still have a few things to work through about the conflict between my desire to always be able to walk places and his gut-level feeling that you raise kids in Newton. So while I don’t want to move the kind of couch that takes three people grunting and straining and that you’re always a little worried won’t fit through the door, I also don’t want another couch bought to be temporary. After all, I’ve had this temporary couch for like 12 years now, and I’ve never liked it much.

    • Mezza

      This is so funny – my partner and I have always said that we’re not buying a new couch until we move again, even though our couch is currently stained and shredded by cat claws, because right now we don’t have the space for the kind of awesome couch we want. But over the weekend we just had the discussion of how much we like our current apartment and how we very well might stay in it (barring unforeseen issues) until we are financially situated to buy a condo. And I told her that I was totally fine doing that and that I agreed we should save for a baby before saving for a condo, but I might have to insist we buy a new couch.

      I think sometimes you just have to buy the permanent couch, because wherever you are is permanent until it’s not. And as much as it sucks on the day you move, the rest of the time you have a couch you like!

      • Laura C

        Yes, we’re going to need to get at least an interim couch — probably Ikea again, but hopefully something we like a little more. This one…even where it’s not cat-shredded, the fabric has just started splitting on its own. The cat likes to hide under the couch, but he’s a little fat to get under there and has actually rotated one of the support bars so that it’s not in the position it should be. The mechanism for turning the couch into a bed is iffy, so if we want to sleep two people on it, we just have to remove the mattress and lay it on the floor. I would love to stage a ritual burning right now, but since we’re moving in three months, it would be crazy not to wait. We’ll move without a couch, and a new one will be the first purchase.

        But having moved as much as I have, there’s no way I’m getting the permanent couch until we’re in a place where the next move isn’t visible. That’s not to say the next move after that won’t come, but I can’t be able to see it as a certain thing. But there has to be an interim couch out there we can live with and even like for a few years.

        • Mezza

          Interim couch! That’s really what it would be for us too, because I am determined to have a sectional someday and there’s no way that would fit in the apartment’s living room. I’m vicariously excited for you and the interim couch.

          (Also I’m taking the fact that I’ve turned a post about houses into a discussion about dream couches as an indicator of how NOT ready I am to own a house.)

    • Hannah B

      I feel the exact same way about our Solsta from Ikea (it’s like, not quite as big as a loveseat)…I was just saying how one day we’ll get a “real” couch and then made the offhand comment that we’ll probably never get rid of it and it will end up in the future kid(s?)’ room(s?).. But we did put it together the first week I moved in here, so I feel a bit sentimental about it.

    • http://cuvikingadventures.blogspot.ca/ Jenny/Adventures Along the Way

      I decided that an IKEA couch was right for me as my long-term couch (to replace the IKEA couch my ex took with him). After doing research, I just found comfort in the washable covers and reasonable price. Kinda like renting versus buying I guess. But buying that couch was an act of putting down my new (single) roots and building a new life for myself…in my rented apartment. :)

  • Class of 1980

    May I recommend this “Rent vs. Buy Calculator” from the New York Times?

    http://www.nytimes.com/interactive/business/buy-rent-calculator.html

    I honestly can’t understand why supposedly educated people still believe that buying is always superior to renting. I’m ashamed for them! It depends on where you live, what your market is like, and how mobile you want to be. In some markets or time periods, you will not come out ahead financially by buying.

    There is no blanket answer.

    • Ariel

      Thank you for that! I should pretty much never buy in my area, haha… if only I could get a yard for the dog…

      • Class of 1980

        We are living in a large house that was a spec house that never sold. We’ve lived in three spec houses over the last several years.

        Our rents have ranged between $850 and $1,200 for brand-spanking-new houses – all of them upscale. This is a small town in the mountains, so you get a lot for your money. Rents have edged up, but are still reasonable for what you get.

        However, as reasonable as houses are here, according to the calculator, I’d have to wait 30 years for a house to be a better deal than renting! Even if I play around with the numbers, I still would have to live in a house for a long time to come out ahead.

        I will buy a house. But it will happen once I’ve made up my mind on exactly where to live. Even then, I will buy for emotional rather than financial reasons – not least that I won’t have the energy to move again. ;)

    • Eh

      This is very true. We bought our house recently and another huge factor is what is the market doing to do vs. how long are you planning on staying (e.g., the interaction of the two factors). Where we live house prices are expected to stagnate over the next few years (maybe even drop). When our real estate agent met with us she asked us how long we were planning on staying in the house (I hate moving so we don’t plan on moving any time soon – I’d be pretty happy to die in our house). Our agent said that if she didn’t feel confident that we were going to stay of a while that she wouldn’t have shown us the house that we ended up buying. She made it very clear to us that if we sell in the next five years we probably won’t make any money.

      • Class of 1980

        At least you considered everything!

        We rented our current house through a real estate agent. We were told the man who owns the house is a very disgruntled homeowner. He was talked into building a spec house during the bubble, and it never sold in spite of him dropping the price far below what it cost to build.

        Our rental is really a millstone around his neck.

        • Eh

          I used a calculator similar to the one you posted before we decided to buy our house. The one I used only used ten year projections (it assumed that you would sell after ten years – it was a weird assumption). According to that calculator we would break even at about 10 years. This one suggests we might break even a bit sooner depending on how much the market stagnates (based on my real estate agents comments – ten years is probably accurate).
          I will say that having an awesome real estate agent makes a huge difference. I had thought of lots of things but she knows the business and things that people forget about.

      • Chop

        Ha, when our mortgage officer asked us how long we planned to stay in the home we’re buying (once we finish freaking out about the inspection report) I said, in all seriousness, that I planned to live in it until I die 60 years from now. Moving across the state and across the country as a kid was devestating and I honestly never want to do it again. I want to pour my heart into fixing up this little how and yard and have it be mine forever. I don’t feel trapped by it. I feel at home.

        • Eh

          I don’t feel trapped by our house either. The other day someone asked me how long it took for our house to feel like home. Honestly it felt like home right after closing, even before we moved anything. I spent three days in the house preparing for the move and it felt like home.

          I have not seen our backyard yet so I can’t wait for the snow to melt. I am really excited to have a backyard.

          • Chop

            Oh, don’t get me started on the yard. I can’t help squeeing with joy when I think about it. Our little 1930’s fixer upper feels more like home than out apartment of 3 years ever has. And we haven’t moved in yet. I spent 3 hours looking at dishwashers Saturday and loved every minute of it. I almost cried in the paint department I was so happy to have a canvas to work with. I’m so glad you feel the same.

        • MDBethann

          I’m so with you on this. We refinanced last year after owning our house for 2 years (mortgage rates dropped THAT much) and now we’re putting on an addition over our garage. That may seem nuts, but we’re between 2 major cities (Baltimore & DC), our families are within a 3 hour drive, and the majority of our friends live within an hour of us. Short of some sort of national or familial catastrophe, we fully intend to be in our home until we retire, which is at least 30 years from now. We’ve been cultivating a garden & flower beds, put in a bed of blueberry bushes last year, and my husband is seeding some heirloom apple trees this year (from an apple tree on his grandparents’ farm). Would I have spent that much on a house I was planning to live in for only a few years? No. But we loved the place and saw ourselves making it home, which it has been since we moved in. I’m 100% with you in not feeling trapped by it, but it was a very conscious decision on both of our parts.

    • Meg Keene

      Oh, lady, I know. I used to write research about the housing market for the investment bank. The numbers for us are absurd(ly bad).

      • Class of 1980

        You and David are SO doing the right thing for where you live. I wouldn’t be a bit surprised if you took off to another city in the future too.

    • ElisabethJoanne

      I don’t need a calculator. When I moved into my apartment on the Peninsula in 2009, condos were selling on the same block for $600,000. The mortgage, HOA fees, taxes, etc. for those condos were easily 2-3x my rent.

      “Build equity” / “Don’t throw money away on rent” has gotten into my parents’ DNA, like so many upper-middle-class Americans. They were willing to help me with a down payment. But every time we crunched the numbers, it was substantially cheaper to rent.

      • http://werewritingabook.com/ Breck

        “Don’t throw money away on rent”

        This is my rage phrase. We are trying to buy, but I will lose my shit if I hear this one more time about renting.

        • HannahESmith

          Me too! I wonder what people would do if you said: “I don’t want to throw my money away on ___(Insert anything that they currently pay for that isn’t rent).” I’m guessing they would get pretty defensive. It’s so weird how people think about renting as throwing money away, while in any other context it is paying for a good or service. Plus, if people are worried about throwing money away they don’t realize that for the first several years, almost nothing goes toward your principle. “Throwing money away” is such a false concept that people get stuck on.

          • lee

            I’m also not a fan of the language, but to be fair to an older generation, there was a time when a house was a great investment. In the 1960s, my grandfather bought a house for $25K that he sold 8 years later for $80K without renovating or changing a thing. So for him, getting and paying that mortgage (and he thought houses were the only thing one should even consider buying on credit) was an amazing investment. Paying rent during that period would not have been as financially sound. The problem is applying that hindsight logic and experience to 2014.

          • HannahESmith

            Exactly. My parents actually bought a house in the early 80s for $30K. Can you imagine? Their downpayment was only $3,000! Then they sold it for $130K 15 years later. Yes, by that logic a house is an incredible investment. It’s amazing how the housing crisis didn’t fundamentally change how people think about home ownership.

          • ElisabethJoanne

            Yeah, Leslie. The last time I saw my grandfather, we had this great conversation that was basically about how lucky he got with investments, especially homes. Twice, the real estate agent was a friend of his and he got a great deal – even for the 1950s and early ’60s. Then there was a time when he escaped a bust ’cause his investment capital was just in the bank, awaiting a change in investment strategy. What was meaningful to me was he admitted he was lucky, rather than that it was all a matter of hard work or research. He’s usually a really hard-nosed guy (famous line: “If you’re hurt, just be sure not to get blood on the carpet.”).

            What I like about Olen’s book, “Pound Foolish,” which I mention above, is that she’s examined the role of luck and timing and market trends. If you get a big bump early as an investor, you can be set for the rest of your life.

          • Erin E

            This is a really good point. It’s easy to look around at a lucky real estate investment and say “wow – this is going great – I’m really good at this!”. It’s probably good to remember that real estate is inherently risky – no matter who you are or what experience you’ve had in the past.

          • http://werewritingabook.com/ Breck

            “What was meaningful to me was he admitted he was lucky, rather than that it was all a matter of hard work or research.”

            I love this. There is no shame in admitting you caught a lucky break, though you would not know that by talking to most people.

        • Megan Summers

          A commenter on a different site on a similar topic had a great response to “Throwing your money away on rent” — Mortgage just means your renting your money from the bank.

    • http://brokensaucer.blogspot.com/ sera

      That is fascinating! It proves we bought at the right time!

    • Glen

      Numbers still agree with our decision to rent in the greater Los Angeles area — it would take about 20 years for buying to make sense. A comparable home in our neighborhood is around a half million, too.

      If anyone has a way to explain that to someone in the baby boomer generation, let me know. I’ve tried to explain this to my mom many ways, but she still looks down on us for renting and also thinks we’re “over-paying” for our rental house. At one point, my then-4-yr-old nephew asked where we lived, and my mom insisted upon telling him that we didn’t own our house. Once he figured out that we did have somewhere to live and were not out on the streets or something, he didn’t care. Thanks, mom.

      • jashshea

        Holy cats?! Why does a 4 yo need to know the distinction?

        Not much help, but a little commiseration. When I was renting, my parents were always aghast at how much I paid since it was, obviously, quite a bit more than the 35k mortgage they’d had for 20+ years. Even in the high interest-rate 80s, they were paying maybe $350/mo whereas I was paying $600-900/mo for a shared apartment. I’d wager that my dad was supporting a family of 4 on roughly the same salary I was making at the time. I think it made them feel old and out of date that things had changed so much in just a few short decades.

        They’ve come around quite a bit. My mom routinely mentions that things like her staying home with my brother and I were so much easier to do “back then.”

  • emilyg25

    I find owning a home to be the opposite of security. I see it as being STUCK. We rent a lovely house right now, and while our rent is more expensive than a mortgage might be, we pay for the freedom to move wherever we want at a moment’s notice and the freedom to avoid surprises like a leaky roof or a broken water heater.

    We’re perfectly happy renting right now, but it is weird because most of our friends are really into buying homes. It’s the first really big time I’ve realized that my values don’t always match up with the crowd.

    • http://www.wrightremedy.blogspot.com/ Addie

      Although I obsessively watch “House Hunters” and the like I always get confused when people search for their “forever home.” I’m always like, why? Why on earth would you want to have to stare at the same walls for 40 years? What if you hate your neighborhood in 10 years?

      Clearly the fact that my family moved 14 times by the time I was 18 has greatly influenced how I feel about houses. I want to live in Alaska and California and Seattle and Vermont…but none for 40 years.

  • http://werewritingabook.com/ Breck

    As someone currently trying to buy a house (our 3rd offer is away right now, in fact) I love this. After working really, really hard and a bit of luck and circumstance, we have a down payment all our own that I’m beyond proud of. So proud, that there is no way we could go about this process without being truly honest and authentic about what we want. Even with a large chunk of family members downright angry at us for looking in Oakland (how dare we put their future grandchildren at the risk of attending a public school there??? Uhh, we aren’t married, and kids are really far away), and even though the market is nowhere near a buyers’ paradise, we are ready for homeownership, we can afford it, so we’re going for it.

    • Eh

      We moved into our house two months ago. In the fall when we were looking at houses my FIL kept telling us not to jump into it (we just got married in October). He has no clue what our household finances look like. He knows that my husband has debt because he just finished school but he didn’t realize that I have no debt and that I’ve been saving for a downpayment for the last five years (since I finished school), and he has no clue how much money we make (I have made it clear to my husband that how much I make is not his parents business). My husband and I sat down and determined what we could afford and what were were comfortable with. That is between me and my husband (I know my FIL wants the best for my husband, but he doesn’t get a say). Oh and my in-laws also had tons of opinions on where we should live. Including that we could buy their house or move to the town they live in (over an hour from where we work when there isn’t traffic – not to mention we didn’t even own a car at the time so we would have needed to buy two as we work opposite shifts). Houses where they live are less expensive, however it would mean a long commute and I would see my husband even less than I do now. When we decided on which neighbourhoods we were willing to live in we did consider how easy it would be to get to my in-law’s house (we now living 15 to 20 minutes closer to them then we used to).

      • http://werewritingabook.com/ Breck

        It has absolutely been another exercise in drawing boundaries and being patient with ourselves and others. Fun stuff, as usual.

    • http://werewritingabook.com/ Breck

      We just got our first counter!! We’re still very far apart, but it’s nice to hear something other than “no way!”

      • Caroline

        Exciting!

  • Hannah B

    I live in NYC, so basically we’ll never own a house as long as we’re here. I did describe my dream apartment to a friend (2 bedrooms, 3rd floor of a walk up or a 2nd floor of a two family home, 1.5 bathrooms(!), a yard(!) for the Future Puppy, and not a zillion dollars a month)…and he, shocked, asked “In New York?!” Essentially, I want the apartment I had in Chicago, but located where FH needs to be. We’d have to move off a Metro North stop or somewhere in Queens. I suppose when buying a house is just not even a question due to your region, you have the same aspirational thoughts towards nice (affordable?) apartments. But then I realize our NYC rent is almost double a dear friend of mine’s mortgage in Pittsburgh, and I start to wonder what the hell we’re paying for.

    • Violet

      Yep, I hear you Hannah B! This is still an interesting discussion to me (and lots to learn overall about what we set our sights on, how financially secure do we each personally need to feel before making a big purchase) but the idea of “buying a home” in NYC is so laughable, I just don’t even have to think about “To Buy or Not to Buy?” at all…

    • Kelly Mine-His

      Hey, don’t hate on Queens! We moved out to Astoria and cut our East Village rent in half, and while it’s different it’s not like it’s the boonies. You should go visit some Queens neighborhoods before you start poo-pooing the middle class borough.

      • Violet

        Obviously I’m not going to speak for Hannah B, but I would say that commutes are tough, especially depending on working hours (eg, if you don’t work 9-5). As a current Metro-Norther who’s experienced crashing trains, week-long power-outages, night-long power outages in sub-zero temps, debris on tracks from East Harlem housing explosions, yeah… commutes can be rough even if the neighborhood you’re commuting to is lovely (as Queens is!).

      • Hannah B

        I consider Astoria Near Queens! I meant no offense…I live in Wash Heights, which is plenty far from everything. I assumed to find what I want I’d have to go wayyyy out (1.5 hrs from midtown), and my job is at the very bottom of Manhattan ( I can see the WTC from where I am). Seemed impractical. I walked by a two family in Queens that I thought was gorgeous. I just thought it’d be so far from work, and at this point anything further than WH would just be too much. It could still happen, though. I’ve loved Queens when I’ve been there. And I really want a dog. :-)
        Wasn’t trying to sound snotty.

        • Teresa

          Also consider that Queens isn’t actually that much cheaper–it takes me 15 minutes to get to midtown east from Astoria and a 2 family home in my neighborhood costs close to a million dollars. Go a few stops closer to the city, you’re in Long Island City, you get 1 bedroom apartments for $2,800 a month…so, no matter where you are in NYC, shit is just expensive!

  • Caroline

    When we started to think we were planning to stay in the Bay Area, instead of fleeing high costs of living for the Midwest, we had some frank discussions about homeownership. I just can’t see owning a home any time soon here. A lot of our friends but houses when pregnant or a baby is just a little time away, and I don’t know how. I just can’t imagine affording a half a million dollar house. So we talked, and our expectations changed on when/if we buy a house. Maybe we will someday. Or maybe we’ll rent a house here and buy a vacation house somewhere. Or who knows. But buying is just not on the table any time soon. Definitely not in our 20’s, maybe by our late 30’s to 40’s but who knows. We decided that we wouldn’t feel like we had to buy a house to have kids. It would be nice rent a house at least before we have multiple kids, but we probably won’t buy a house. It’s just not do-able, unless, as you said, you have some family money, or are able to live rent-free for a while, or umm, that’s about how the people who I know who have houses and are young bought them.

    • Mezza

      This! My partner and I have decided to tackle the financial issue of kids before the financial issue of real estate, because our current NYC apartment is perfectly serviceable for us plus a baby/toddler/young child. Maybe even a young child and another baby. Then way down the road, maybe we’ll be able to buy a vacation house while still renting in the city (as my boss does). Or maybe we’ll buy a Brooklyn condo in our late 30s after having kids (as my manager just did). It’s hard for me to imagine being in a 2br Manhattan apartment with, like, multiple teenagers, but until that point there doesn’t seem to be much rush.

      • EF

        A good friend of mine grew up in a rent-controlled 1-bed (big though, say 800-900 square feet) apartment in the village. her sister and she shared the bedroom, her parents had a murphy bed in the living room. by staying there, the parents could afford to both work in the arts/tourism, and still save for the kids college educations. They’re a wonderful family, so you know, all sorts of things work!

  • KEA1

    breaking my Lenten fast on reading comments on websites (even APW!) to say EXACTLY TO ALL OF THIS. :)

    • Meg Keene

      I should take that Lenten Fast. <3 <3

      • KEA1

        well, trust me: it was NOT motivated by APW. <3 ;)

  • BD

    Husband and I bought a house two years ago… it’s already paid off. BUT, it’s in an isolated area (cool with us), isn’t very big, and needs some fixing up, which we are already in the process of doing. This was our way of going against the cultural norm – all our friends were throwing down on big houses in nice neighborhoods, or even building brand new homes with all the bells and whistles, putting themselves into huge debt for the next 20 years. We wanted a home but also didn’t want to be burdened with a huge mortgage. So we tried to think outside of the box. Our situation is such that buying a house for cheap and fixing it up was the best option for us. As far as being stuck, our line of work doesn’t require us to be close to any particular city or office, and in the end it didn’t matter much where we settled. We’ve had many people question our choice (“But you guys make such great money, don’t you want the big fancy house with the picket fence in the gated community so you can keep up with the Joneses??”), but it feels right for us, and we’re secure, and that’s all that matters. If anything, it’s been wonderful learning how happy I can be with less – the house we were renting before was much bigger and fancier, but also very expensive to live in.

    • lady brett

      *that* sounds like living the dream to me!

    • M.

      One of the greatest things I ever heard about buying a house was “Don’t buy as much as you can afford, buy as little as you can live with.” More fiscally sound, and I personally am a big fan of smaller, simpler living. We too dream of a small, out of the way house we can buy outright. Next step is unhitching our earning from our location. Dreams!

      • kth201

        Great advice!

    • Meg Keene

      I love this. Sounds like the dream. Now if only I can get David to quit his job ;)

  • Lawyerette510

    Thanks for such a great articulation of what it’s like to be a 30-something Bay Area professional who hasn’t been part of a tech IPO. The part of people asking about putting down roots is especially true with our family who aren’t in the Bay Area, as even when we explain the math doesn’t make sense, or a lot of people buying a home is an emotional decision.

  • Kelsey

    Where my fiancee and I live, it generally makes a lot of sense to buy, assuming you have a reasonably stable job, and a down payment (those, “should you buy or rent” calculators usually tell me I’d have to stay 5 years–just enough time to finish school, get settled in our long-term careers, and start thinking about kids). We could buy a house that has three times the space of our apartment, on a 15 year mortgage, and come out paying 100-200 dollars less a month than we do on rent. And when it comes to things like the water heater going out, my parents are willing and able to help. Oh, and my dad has worked as a construction superintendent for over 40 years, and could fix by himself or by help of one of his best friends about 95% of the problems that any given house would have. Despite this, we signed a year lease for an apartment, not for financial reasons, but for practical ones. If the water heater goes out, we’re going to be too busy entering a new job (me), finishing student teaching (him), and generally caring for our new baby family to go buy and put in a new one. We fully intend to buy a home next year, when we will have less going on and have been blissfully married for a little while. I have to defend this explanation endlessly to my parents, as they don’t understand why I don’t want to just go look at this foreclosure they saw online.

    • Meg Keene

      As much as renovations seem so fun to me… roofs that suddenly need replacing seem less fun/ terrifying.

  • Anon For This

    Buying a house scares the daylights out of me…but we’re under contract and moving forward towards closing. My wife and I have reached the place where we can afford to make the step and we’re ready to add fur babies and a garden to our family….And to my complete surprise, these things make the fear subside to a manageable place. The process so far has pushed us as a couple, in wonderful ways.

  • Anne

    My husband and I also live in the Bay Area. We both make reasonable salaries working for ourselves, but the housing prices here are really outside of our comfort zone. BUT we’re also seeing the rental market go nutso, so that scares me too. Apartments in our complex are now being rented for DOUBLE what we rent per month. Our low-key neighborhood suddenly has luxury cars parked on the street. Gah! Does anyone have any suggestions about managing worries about the rental market?

    • Meg Keene

      I know. It’s really really bad. Other than MOVE (Right? Pathetic. I’m starting to worry about escape hatches), or hanging on tight to what you have, who knows? What’s happening in the Bay Area right now is so deeply unpleasant, I can’t even.

      I would caution, in a bubble like this, against just deciding that rental prices going nuts over night means the housing prices are fair. I think that’s how you really get in trouble. The good thing about rentals is at least you can get free of them. (I could be wrong, but having written research on real estate in an investment bank last time around, that’s my deepest gut instinct. If numbers feel like they don’t make sense, they probably don’t make sense.)

      • Anne

        “The good thing about rentals is at least you can get free of them.” Yes!

        I like your insights and it makes me feel better about our decision to stay in our apartment. I grew up in the Bay Area and it’s bizarre to feel alienated value-wise. The modest suburb where I grew up is now super fancy pants. Chic restaurants and boutiques are lovely, but what about those great mom-and-pop businesses that were there for decades?

        The other thing we’re thinking about is risk. Buying a home seems like a huge financial risk. It seems like a more manageable (and perhaps controllable) risk to own our business and invest in new directions within the business.

  • HannahESmith

    We live in Portland, and we’ve recently seen rents sky rocket. Portland still has one of the lowest vacancy rates in the country, making finding a place nearly impossible. We still have the same month-to-month apartment we had when we moved to Portland, which is now almost $200 below the going rate. Even though we often wish for more space or a back yard, I know that being able to have the freedom of having a place we could afford even if I lost my job really helps me feel better.

    I feel like we missed our chance to buy a home. A few years ago, prices were ridiculously cheap, but we weren’t ready. Now, prices are out of control, and most homes have a bidding war. I know that eventually we will probably need to do some sort of upgrade when we want to have kids (we live in a one bedroom), but I do try to convince my husband that we could convert a closet into a kids bedroom like Jordan Ferney did: http://www.apartmenttherapy.com/how-to-fit-two-kids-in-a-close-139391

    • Leslie

      Former closet-dwelling baby here. I am the third child in my family, and when I was born my parents were living in a small two-bedroom house. My sisters shared one bedroom, and my parents took the doors off their closet and made it a little nursery for me. We ended up moving when I was two because they could afford it and knew they couldn’t fit a bed in the closet. If it helps, I am a well-adjusted adult nonetheless :)

    • Meg Keene

      We almost did closet bedrooms, but then we did a really really aggressive rental search that turned out ok (hope?). For the record, Jordan’s kids are some of the happiest and most well adjusted I know. I really admire the way they’ve prioritized experiences for those kids, over the things you’re ‘supposed’ to do.

  • Beth R

    I grew up in a similar financial situation. Both parents were teachers and by the end of the summer, especially, things were always a little rough. It seems true that these money fears become ingrained in a different way when you watch your parents being financially responsible but still struggling. I have always been a crazy saver for this reason – my husband, too. This has actually served us well, in that now we do have money saved up for a down payment, but it still leaves me worried and guilty about every purchase I make, even if it is just a couple new shirts.

    I’m in Oakland, too, and my husband and I are currently looking to buy a house. We’ve been looking seriously for about two months and are just now facing the reality of the kind of house we can get for the amount of money we feel comfortable spending (which is hard when homes are going 10-20% over listing). We’ve definitely had to expand our thinking in regards to the neighborhoods that we can make work (which ain’t no Rockridge, lemme tell you). It’s been eye-opening and depressing, but after poring over the numbers and making lots of spreadsheets, I am finally coming to terms with the fact that we can afford it without hurting, which has brought its own “do I deserve this kind of privilege?” stress that I did not anticipate.

    We’ve been in our current one bedroom apt for 3 years and I also realized that if we ever even want to rent something with 2-3 bedrooms, we’re going to be paying practically the same amount in rent as we would for a mortgage, which makes me feel ill, but also more like buying may be a good idea for us (at least we get to have a yard and equity and choose the paint colors…..right?). I love the Bay Area so much and don’t know how we would leave, but it’s hard not to feel like a schmuck living here. I know that half of what I’m paying is for the privilege to have access to everything the Bay has to offer, though.

    • http://werewritingabook.com/ Breck

      Solidarity fist bump from another house hunter in Oakland/Berkeley!

  • A-L

    We’re homeowners, and occasionally I get the feeling of being stuck (normally when we get our insurance premium renewal, which has gone up 25% each of the last four years…we have some of the highest home and car insurance rates in the country).

    But overall, I like our house and where we live. Among my college friends we’re the “poor” ones (two public school teachers in a low-paying southern state but in a high-cost metro area) and we have a 2-BR house where risking having a second child (if it’s not the same gender as our first), or hosting guests for an extended period of time is just not really in the cards. But there’s just no way that we can afford it, and we’re happy with what we have. But dealing with the differences in expectations can sometimes be difficult.

  • Sarah

    I grew up much the same way Meg did, and I thought that if I went to the right schools (and took on a lot of debt) that everything would be fine and I’d end up with a great job and a house. Of course, that was much more naive than I realized. Fast forward 6 years since college and I have more debt that I imagined, an entry level job in the mortgage industry (never thought that would happen!) and friends who were able to get great paying jobs right out of college that are now buying homes left and right. It’s tough to have to answer “when are you going to buy?” because it’s just so expected and “the next step”. We probably could make it work with the little savings we have and a still stagnant Chicago housing market, but honestly I’m just suspicious of the idea that if we take on hundreds of thousands of new debt that we’ll automatically be better off. My work with mortgages has taught me that you MUST wait until you’re ready to buy. Don’t get pushed around by talking heads speaking in broad terms about the “market” or you’ll drive yourself crazy. Now I’m just working on a polite way to answer people that want to know all about our finances…

    • Meg Keene

      I was just talking about this to someone. Part of the problem (I’ve noticed again and again) of growing up in a poor area, is that you’re really sold the idea that if you just work hard, and get the scholarship and get out, you can work your way up, and at some point it gets fair. (Full disclosure: I think this idea is sold for really good reasons. Because the only way out IS to bust your ass and get into school, and telling people the whole truth might just leave them stuck forever.)

      It’s weird that I’m dealing with the fallout of that NOW, but I am. In my 20s, when people with family money had all kinds of perks, I filed it away under, “We’re all young. Once we’re full blown adults, it gets fair, and hard work will pay off!” To hit my 30s and realize that, in fact, the story we were told as kids in a poor high school just wan’t true… and that it NEVER gets fair, even if you work The Very Hardest… that’s tough.

      I’m watching this play out with the younger generation right now, with High Schoolers I know, and it hurts my heart. What I know, that they don’t, is they can work harder than anyone on the planet, hustle and hustle and get into the top schools… and they’re still never going to catch up. That’s hard. The flip side is, of course, that you get a kind of scrappiness money can’t buy. But… sometimes… the easier way sure does seem nice…

      • Sarah

        I feel like my entire 20s up to this point has been spent figuring out that I can work the hardest at any given thing and still come up short against those who had a better head start. I thought grad school was this huge investment I was making in myself (and maybe it was?) but there are many days when I wished I had put it off for a little while longer (both to save money and re-evaluate how important it even is). So yeah, I’m not where I thought I’d be at 28… but so what? I have a wonderful husband, a job that pays the bills, a cute apartment where I can walk to Lake Michigan. Those are all great things! Maybe a house will be in our future, maybe not. Maybe I’ll stay at this office job for a long time and “move up” to make more money, but maybe I’ll get my website off the ground and do what I’m really good at instead. That’s the exciting part – we get to write our own stories.

      • http://www.wrightremedy.blogspot.com/ Addie

        The hardest lesson I have ever learned was that some playing fields can never be leveled. No matter how much you want them to be.

  • Erin E

    We went through a lot of soul-searching and back and forth thought before we bought our house. Honestly, it was a lot like wedding planning in that I kept running headlong into other people’s fierce opinions about how home ownership figured into perceptions of success and of growing up. It seemed like, particularly for my parents generation, homeownership was nearly ESSENTIAL in order to start our lives and “make something of ourselves”. We got a lot of pressure from the older folks in our lives – which I thought was really interesting. And it makes me wonder how this generation’s definition of success is going to differ.

  • http://www.earningmytwocents.com/ Alice @ Earning My Two Cents

    Amen, amen, amen. I have been obsessing about buying a home ever since we moved to Louisiana out of the DC area (which is extravagantly expensive) and realized we could actually/theoretically afford a home here. We have been so excited and then just found out we have to wait a number of months due to money/lease issues. Bummer. But I agree that it is not just about checking boxes to feel settled (or nested). But that I want to buy a home with joy. Not with stress and excitement. But calm joy where I know we are making a decision we both want, that we can comfortably afford, and that we have saved and worked hard for. Yes.

  • H

    I too have fond memories of special occasion happy meals! We had a similar upbringing…never exactly “lacking”, but lots of birthday parties at the local park, toys from the “toy library”, and maybe a once a year sit down meal at a real restaurant.
    When I was a teenager, The Sims came out, and even though I knew the cheats and could have built a lavish mansion for an eight person family if I’d felt like it, I always wound up playing as a single career woman in a small but well-decorated two bedroom. To this day I think The Sims said more about my ingrained sense of financial volatility than anything. Even in a world without consequences, I chose the work and the small house.

  • ElisabethJoanne

    Anyone reading/following Orman and/or Ramsey should also read “Pound Foolish” by Olen. The author’s crunched the numbers nation-wide for things I’d long seen play out in my own finances. For example, “You’ll never be able to afford a house when you’re wasting $5/day on fancy coffee drinks.” Really, such small luxuries are just a drop in the bucket of rising housing, healthcare, and education expenses.

    Second, I bookmark all the stories about Bay Area real estate prices so I have them on hand any time someone tries to shame me about (not) buying. SFGate had one several years back about “homes” in San Francisco for $100,000. $100,000 bought you one month in a time share for a nice condo, or a burnt-out shell in the Bay View.

    What I’m working on now is rethinking our “emergency fund.” Housing is expensive here, and my professional salary is proportionately higher. But everything else – food, cars, even healthcare – is pretty much the same around the country. This makes “six months expenses” mean something different here in the Bay Area. It’s far more than we need to cover any emergency except job loss. But what I’m reading about job loss is you either get a new job at a pre-recession pace, or you’re unemployed for more than 3 to 6 months. I’m finding that “emergency fund” is a name that doesn’t fit for me. It’s an “unemployment fund,” or it’s a “peace of mind fund.”

    • Violet

      Woah, agree so much with your statement. I think the rule of thumb is supposedly spend no more than 1/3 of your income on rent, but living in a pricey area means most people can’t get away with spending less than half, at least where I am. This makes the idea of saving for 6 months’ worth of an “emergency fund” (aka, RENT) ridiculous to me. Or in the very least, that’s not the kind of saving that can be done by abstaining from paying $2.10 for coffee in the morning. Honestly, the idea of saving that much had me feeling a little demoralized. So I saved as much as I thought I could, and I am now making ongoing payments to that but also began with my Roth IRA (already had my employee retirement account sorted and making contributions).

      Basically, if I waited to save for retirement until after I had 6 months’ of rent, I’d be eating ramen at 70.

      • ElisabethJoanne

        Insofar as you can withdraw principal contributions from a Roth IRA penalty-free, I think they count as part of an emergency fund.

        What’s been hard for us is the tax issues. Had we moved a chunk of our “emergency fund” into a traditional IRA, we’d have gotten several hundred dollars more in our rebate. Because of (otherwise really great) changes in income, we don’t expect to be able to claim the IRA deduction in later years. It was hard to leave that money on the table, and from what I read, Orman and Ramsey and even Olen don’t have pep-talks about forgoing tax rebates.

        • Violet

          Oh, I didn’t know you could withdraw principle penalty-free on a Roth (though, now that you say it, it sort of makes sense). Well thanks for cheering me up on that one! Obviously I would try not to touch it, but there you go.
          The tax thing is so tricky because of the unknowns. What tax rates will be when retirement rolls around, changes in income, etc. Maybe mainstream financial advisers steer away from discussing because it’s so much on a case-by-case basis? I don’t know, but thanks for explaining your reasoning. It helps me to know more about what informed ladies are up to!

          • ElisabethJoanne

            I’m coming to a point where I think of all financial planning in terms of peace of mind (and doing my taxes correctly). My husband’s an investment banker, so I don’t worry about choosing our investments. The decisions I make have to do with how much to invest, how much to save, how much to spend on non-necessities like vacations. Also, what’s a non-necessity? Beef? Shoes? Shoes over $20? $50? How big of an apartment do we “need”?

            I find that no one else can answer these questions for my family, and that my personality is such that no one would ever consider my choices foolish. (To take a stereotypical example, I’ll never buy jewelry instead of paying the rent.) So whenever I read financial advice, I ask myself, “Will following this advice help me sleep better at night?”

          • Violet

            “Will following this advice help me sleep better at night?” This is my new litmus test- thank you!

      • Caroline

        Yup. I counted us lucky when we got below 66% of our income on rent. Then the landlord kicked us out illegally to get higher paying renters, and we found a new place we like a lot more (so we didn’t fight him) but are back up above 66% of income on rent.

        That said, we’ve had many many periods of un and under employment, many of them quite long. The thing we found most valuable was about 2-3 months rent in emergency savings. Since we pretty much always had one person working, and the other person was often picking up the occasional bit of work here and there, we could cut down expenses a lot and stretch it for 4-6 months of getting by.

  • EF

    Relativism:
    ‘Growing up, we were solidly in the middle for our working class community. As kids, we always knew that the mortgage was going to be paid, that food would be on the table, and that we’d have insurance. Beyond that all important bedrock of security, everything else was up in the air.’

    If my family had had all those things, I would have thought we were rich. I lived with my birth parents until my early teen years, and we moved whenever the rent got too much past-due. I was always hungry (literally the biggest memory from childhood for me), and I didn’t see a doctor until I ended up in the ER when I was 13, too weak to stand and delirious (it was a bad bout of mono).

    my partner’s family is pretty solidly British middle class, or what americans view as upper-middle-class, and they set aside money for him to someday use as a downpayment on a house. This freaks me out for all the reasons you mentioned, and sounds not so different from the lady Suz interviewed: I’m far more worried about paying off student loans and then just having a little bucket of savings, our little flat that is fine for just the two of us (and we’re not having kids), and being able to move as our jobs call for it…eventually.

    And that’s good enough, so long as I don’t have to panic about money to buy new shoes. Which I do. Or feeling like it’s okay to go try that new Thai place, a £20 dinner won’t break the bank. But for now I still can’t calm down about it all.

  • http://www.rachellerawlingsphotography.com/ Rachelle

    We bought a house last year but we live in an area where buying is cheaper than renting – we moved a little further out and got a nicer, bigger home in a good school district for several hundred less per month than the place we were renting closer to the city. It’s still hard though. We chose to move to an older neighborhood, into a house we can easily afford on one income while many of our friends are buying brand new places for 2-4 times as much either in the trendy neighborhoods right in the city or in the master planned community suburbs. We love our little house and know we made the right decision, but it still feels like people judge our choice of location of home – which is especially ironic because the same people scoffed when I told them we wanted to stay in the city a few years ago when we were both making a lot more money. For me it’s ultimately about owning my choices, knowing I made them for good reasons and trying to remember that the pressure is about THEM, not about ME.

  • BeeAssassin

    I see more of my friends questioning the “buy a house, American dream” we’ve been sold all our lives. Renting can be a smarter decision, both financially and emotionally, than buying. Almost every factor that made buying a home a “smart” decision has reversed. People choose to/have to switch jobs much more frequently making the “security” of home ownership more of a noose; other assets increase in value more than residential real estate; you’re stuck selling low or buying high in an increasingly cyclical market; etc.

    That said, my fiancee and I bought a house before starting wedding planning. But it took almost two years of figuring out where we stood on all the factors, and if our apartment had been a little bigger, we would have stayed renters. My parents would remind me (in my bummed moments when I succumbed to that American dream message) that they didn’t buy a house until their early 30s, and they’re doctors. *and* they had help (we had only minimal help in order to minimize taxes)! So I really appreciate that they helped me stay focused on being financially responsible instead of buying a house just to buy a house. But I have several friends who, the second they got pregnant with their first child, started getting intense parental pressure to buy in order to provide “roots”, even though their financial state they clearly weren’t financially ready for both a child *and* a house all in one go. And guess what, their kids are happy and healthy and well adjusted even though (gasp!) their parents are renters.

  • Meg Keene
    • http://brokensaucer.blogspot.com/ sera

      This was precisely what I couldn’t stay for. And Seattle is not far behind those kinds of prices. Every time I see something like this, I feel so lucky we bought our house when we did and I will be holding onto it with white knuckles to the very end.

    • Rachael

      That’s nuts. The housing market is still way below what it was here in Atlantaish. What we’re dealing with is a lack of inventory because no one wants to sell while they’re still underwater.

      • http://andshelovesyou.com/ Lucy

        Yep! We bought our house (in Atlanta) right before the upswing and subsequent drop in inventory. If we were looking now, I doubt we’d find anything livable in our price range.

  • http://brokensaucer.blogspot.com/ sera

    I grew up much the same, but it was just my mom and me. If I think about why I don’t eat a lot of meat to this day, I’m pretty sure it has to do with the fact that my mom couldn’t afford to buy us meat. But after a long, long time, my mom scraped together just enough to buy a condo in a North Seattle suburb and after that I saw that real estate meant security for us. We lived in a lot of different apartments over the years, all of which had rising rents and to purchase something on a 30 year mortgage where that monthly payment didn’t change much? That was golden. I guess moving around so much and living in so many apartments, I’ve always wanted to buy a house.
    When I lived in the Bay Area (Alameda specifically) I was going to Mills College and I would go on nice long walks through the victorian neighborhoods. This was back in 2005-2007 when the bubble hadn’t burst yet and homes were going for around $700,000. I knew then, no matter how much I liked it there, that I would never be able to buy a home if I stayed. And like I said, for me, that has always been a dream. Of course, fast forward to when I got back to Seattle in 2007 and it was the same here. Tiny houses going for crazy sums of money. And then, the bubble burst, and somehow we got really very lucky. We did get help from my husbands family, and I let go of some very hard earned savings that I had been white knuckling for a long long time. And we bought a house at the exact right moment. The house we bought is a fixer-upper. And we will be fixing for the next 27 years until we own it outright, but as we watch smaller houses in our neighborhood go for much higher prices than we paid, we sigh in relief. As much as it would break our hearts to just sell this house – we bought it to live here forever like the couple who lived here 40 years before us, it is worth a lot more now than it was three years ago. And I feel lucky every day.
    While I search desperately for a job that will pay me even as little as I made a year ago, I know that I’m doing it for this house which I love and I am fine with it.

    • Caroline

      Hey fellow Mills lady! (I’m at Mills now)

      • http://brokensaucer.blogspot.com/ sera

        Yay for Mills!!!! I loved it so much!

  • Rachael

    Wow. You really helped me understand a little bit where my husband is coming from, although he ended up deciding the other way (wanting a house). I grew up where we didn’t have the best things, but we had enough for what we needed and some leftover for a few wants. I am incredibly grateful for that upbringing, but it means I don’t really understand what a house means to my husband. He grew up on food stamps, and eating whatever his mother could grow in the backyard, because obviously food stamps aren’t enough. He got a job at 15 to pay his own tuition to go to the better city school rather than stay at the county one, because he knew education was the only way to “get out.” He made more his first year out of school than his father ever did. That’s not something I can ever really understand, but I’m trying.For him, a house means he can give me (and our future children) a better life than he had. At first I wanted to rebel against it because the idea of him wanting to provide pushed all my feminist buttons (I make my OWN money, hello!) but I’ve come to accept that this is how he wants to show his love. I don’t really get why we have to have a house for that, but it was so important to him that I wanted to try. I was dead set against buying a house right now because I didn’t think we could reasonably afford it, but we ended up settling on a budget we both felt comfortable with. It helps that we live in the South where the cost of living is cheaper (if the politics are crazy- life’s a trade off).

  • http://www.kandisebrown.com/ Kandise Brown

    I live in a place where home & car ownership are “within reach” and certainly considered hallmarks of success and seemingly the next stop on my current life track, but I happily have neither because I love money. Having it, spending it. Going on vacations, not having to budget for food, impulse-buying things I want, and having no consumer debt. (Those are my brass rings, I guess).

    Nonetheless I look at MLS listings like a kid in a candy store; how fun to imagine home ownership and the things we could do there that we can’t do in our current place (plant a garden! have a hammock! On the flip side, pay to replace the roof!). I’ve moved over 20 times in my life, so having a home that’s just mine certainly does have the ring of “stability” (that I didn’t have growing up)… but I know it’s at the cost of everything else that I love. I know that my life’s “stability” is not lessened by virtue of being in this apartment for 3 years and counting, rather than a house.

    I did that NYT home-buying calculator, and even if we could do a 50% downpayment in our market, it showed that *never* in 30 years does buying become better than renting. But just like we were told to “go to university, you’ll get a good job!,” we keep being told to “buy a house! stop wasting money on rent! put down roots!” The cycle of cultural lying never stops, but I’m glad that so many of us are taking notice.

    • Granola

      I love that NYT calculator. It’s my go-to rebuttal for why owning is NOT always better than renting.

  • Alison O

    Just wanna say…. so glad we’re getting more writing from you these days, Meg. Way to go, carving out the space for it and then doing such an awesome job executing! This website/community is such a special space and I really admire what you and the rest of the staff have created and continue to cultivate. It does not come easy.

  • Grace

    Long-time reader, first-time poster. Any advice for what qualities and qualifications to look for in a financial adviser? Or how to go about finding one in the first place? My barrier, so to speak, is lack of knowledge of how to go about investing. My family was on food stamps until I was 12, and my grandparents essentially bought my parents’ house that we grew up in. Having grown up concerned about whether our food stamps would stretch for the month and worrying in college about every $10.00 spent, I’m still pretty frugal and have a fairly easy time putting money aside (or maybe I should say, not spending money on things other than rent, food, and bills). I earn a decent income, have a 401k, and savings/emergency fund; I also, thankfully, don’t have much credit card or student loan debt. Unfortunately, I can’t go to my parents for financial advise or investing experience so I’m not quite sure where to begin. I want to do all I can to educate myself about finances and investing and, at the same time, I’m a bit worried about being taken advantage of, especially being someone who didn’t grow up seeing examples of how to manage a 401k or invest, etc. Any recommendations?

    • ElisabethJoanne

      Your 401(k) comes with an independent adviser of some sort. The contact information should be somewhere in your quarterly statements, or your HR department can give it to you. That’s the place to start.

      For stuff outside investing, it probably doesn’t matter much. You sound like you’ll make non-risky, prudent choices regardless of what you read. After several years of looking hard at the personal finance advice out there, I’ve determined it all just comes down to what helps you sleep at night. I’d begin at the library with a few books and the personal finance section of CNN.com.

      • Grace

        Thanks for all the ideas, all! I appreciate it.

    • abdouglass

      I don’t know how their investing advice is but the financial advisor I work with through learnvest has been helpful and while it isn’t cheap it does appear to be much more manageable than a lot of other financial planner resources. I would consider looking into their services, I think if you include investing it is a one time fee of $400 and then $20 a month, with no additional fees. So for example I did the five year planner and it is $300 and then $20 a month but doesn’t include investment advice. I loaded my information into a site like mint and then the advisor reviewed everything and came up with a plan for me which he walked me through, and he regularly adds new things I should read or consider to the site for me to look at. He will adjust the plan if my goals change or my financial circumstances change (new job, win the lottery, etc), or even if my fiance and I just plan on merging our finances more and want to include him on the plan. And I don’t believe the adjusting and additional discussions don’t cost anything additional.

    • Dawn

      Mr. Money Mustache is a useful web site with forums for questions. I have learned a lot there!

      • Reader47

        Really really want to second Mr. Money Mustache. His attitude and practical advice are both great!

    • Libby

      Just in case I want to put out there – if organization you work for happens to have an employee assistance program, they usually offer a certain number of free sessions with a financial advisor. This is what we are planning to do, it was pretty well hidden and most people don’t even realize their company has an employee assistance program, so just in case it’s something to look into!

  • Lindsay

    I really needed this right now. We got married last year, I just finished my PhD, he’s almost done his… and there’s no permanent job for either of us, which means no money for the house or the baby, even if we were ready or willing to deal with either right now. But I still feel… left behind, as though I should want those things now, because other people are doing them or are asking when we’re doing them. Thank you.

  • Sarah

    It’s posts like this that make me so glad to be where I am. Mean rent here is about 600 for a bland apartment and I only pay around 300 a month for my mortgage. Yes, things break and I’ve paid out of pocket but the money I have saved and the fact that I can paint stuff and not have to hide that I have cats is pretty refreshing. If I was somewhere else though I’d never buy, I’m always scared something better is going to come along and I’ll have to sell my little house or end up paying rent and a mortgage and that’s daunting.

  • Aj

    I LOVE the neighborhood we live in and we pay an exorbitant rent to live there (plus some nice amenities in our apartment building…hello pool, hot tub and roof top deck). To purchase in our neighborhood would mean to take a step down in terms of size and amenities for a condo apartment but for a mortgage equal to or higher than our rent. To purchase a house?!? we would need to rob a bank as most are 1 million, plus. We could afford to buy a home if we moved out of our neighborhood but to own is just not worth it to either of us. However, having grown up in Manhattan, the belief that home-ownership = adulthood was not part of the culture. Purchasing our first piece of non-Ikea furniture this weekend? That’s growing up!

    • Granola

      our first non-ikea furniture was *just* purchased this weekend. From Bloomingdale’s no less! (though on sale). Hurrah adulthood!

  • Saz

    Thank-you for this, APW!

  • http://www.missgiggles.com/blog Giggles

    In 3 years we are paying off our house and it gives me such a sense of security to know we won’t be paying our mortgage or rent any more. It’s interesting how we all have different things that bring us security, how settled looks different for everyone.

    After college I worked as a part time teacher & a substitute & a tutor & a house cleaner & did retail once a week. And I lived paycheck to paycheck. I still have that mentality and frequently ask my husband to show me our budget just so I don’t freak out about needing a new pair of pants.

    I think there are still plenty of brass rings to not just reach for but to securely grab. You just can’t let others define them for you.

    • Meg Keene

      OH LADY. If I could pay off a mortgage or buy a house free and clear, that would be security. I just don’t know how to do that when a “starter” home is half a million, you know?

      • http://cafeaubride.blogspot.com/ Catherine

        um yeah, and in LA (i’m sure similar to SF) a half-a-millon dollar house means a “fixer upper”. It’s so depressing.

        • Meg Keene

          In a lot of places here these days, it actually gets you a “contractors special.” AKA, a tear down.

          • Sarah S

            Ugh yes! Just last night I was browsing a real estate website and found a home that was not at all actually in our price range but seemed really cheap after looking at the 750k homes, and the description said, “Fire sale!!! Literally….house has fire damage.” UGGHHHH

          • Caroline

            We literally looked at a half-a-million house in Oakland in a neighborhood that wasn’t great, with not very good schools, where the agent went to unlock the door and discovered it didn’t have a doorhandle, with several foot-wide holes in the floor, MAJOR water damage, and work needed one foundation. I agree that if we could pay off a house, it would be security, but while it might or might not be feasible someday, right now, in the Bay Area, it’s not imaginable.

        • Granola

          You still have to pay the taxes each year right? Those don’t go away once you pay your house off?

  • abdouglass

    The discussion of real estate is timely. This past weekend we saw a house and put an offer in, but ultimately our offer was not the strongest, and we will be sticking it out in my studio for a while later. I came from a very different background in that my grandparents owned a home that my aunt ended up buying (it has been in the family for almost half a century at this point), and my family lived in the home I grew up in for 15 years, their next home they had for over ten. My mom is now a realtor. And luckily for me, in DC it has so far been the right option, rents are so astronomical here compared to buying that even with minimal down it is the smart move for people that plan on staying in the area for at least a few years.
    We haven’t been looking with particular interest because I already own. We live together in the studio I bought during my single days. We fit, it is functional, and it is very much ours. We have more holes in the walls for pegs, towel racks, and other ways to deal with the lack of storage space then I ever imagined. The kitchen is painted kelly green and the “dining room” wall is painted bright blue. We love our studio, and since the monthly payment is so cheap it makes it easy for us to save for the wedding.
    But then we saw this townhouse. It is tiny, but seems palatial compared to the 450 square feet we currently have. It is two bedrooms and one bath, with a half finished basement. It was obviously well loved, the rec room in the basement was yellow, the kitchen green. It is bright and happy. It was built almost a century ago and they didn’t redesign all of the character out of it. It is in our current neighborhood, which we have come to really love. We would be further from the metro, but we could still easily function without a car. It was perfect. Unfortunately, it wasn’t meant to be, and I know we will continue to love living in our tiny little home, but it is hard not to get wrapped up in the what if. I know in the next few years we will continue to save, hopefully make more as we progress further professionally and even if the costs continue to rise in DC like they have been we will be able to buy the home of our dreams, it is just daunting when currently most homes seem to be at least half a million dollars, and still not what we would want.

  • CB

    The topic of pressure to own a home is a HUGE subject on money and financial independence blogs. In many large cities – including San Francisco – it’s a better bet for MANY people to rent rather than buy from a strictly financial perspective. There is absolutely nothing wrong with renting. I’ve got to say, I rent and I love it. It saves me a ton of money and frees my assets up to be invested in other ways.

  • Sara P

    Well, Disqus ate my comment, I think. But I wanted to say: my parents didn’t buy until they were in their late thirties, had two kids and a third on the way – we’re fine. Also, I never expected to buy until I was in roughly the same place, and here I am with a boyfriend that just about owns his second house (had to sell the first). It’s really important to him, and he’s already less stressed, which is great. Also, the market in the upper Midwest is so different it could be a whole other country. Amazing.

  • Sharon

    In a way, the craziness of the Bay Area real estate market has been a blessing in disguise for us — we *know* we can’t responsibly buy on our own yet (or ever, if the bubble doesn’t burst), so in a sense it’s been a lot easier to resist familial or societal pressure that home ownership is our natural next step. “We can’t afford it” ends a lot of conversations! (We finally convinced my in laws that buying a house was not in our near future by telling them that we know people in their 40s who are still renting.)

    I won’t lie though — I dream a lot these days of having a garden, or being able to DIY some home renovations. The way *rents* are skyrocketing stresses me out. We’ll need a roommate in order to make the leap from a 1 bedroom place to a 2 or 3 bedroom. Most of my friends back home are buying enormous houses because land and real estate is cheap. I get jealous. But then I remind myself that most of the world doesn’t live like this. It’s been an opportunity to examine how I feel about what a home represents (security? family? adulthood? creativity? etc) and for us to assess whether or not the dominant cultural narrative is or needs to be true for us (i.e. it won’t kill our kids if they have to share a room, etc).

  • http://iamdinarik.blogspot.com/ dinarik

    Love this – I’m a huge finance nerd (doing my PhD currently), and the reason I’m often uncomfortable talking about real estate, even though I will happily talk about everything else finance-related, is that people can’t separate out their emotions with this decision moreso than others. Buying a house/condo isn’t always a good financial decision – in fact, sometimes it’s clearly a bad one. Yet once someone wants to buy (because they want to feel adult, because it’s what you do, etc) it’s hard to bring that up, because you can’t really counter their warm fuzzy feel is of ownership/adulthood with math.

    On a personal level, I got fired from my first job (consulting) out of college. Made me realize how fleeting jobs, etc can be – I want to be prepared and ready to take opportunities or react to life by having very minimal fixed costs and FREEDOM and knowledge that I can take care of myself. A mortgage feels like a noose, especially since I don’t feel warm and fuzzy about home ownership, don’t like to clean, don’t want to do maintenance, and don’t want to sink my money into it.

  • Kara

    I love reading this post and all the comments. It’s great to hear that whether people are interested in home ownership now, in the future, or never, people are **thinking** about it. It’s not just, some impulse.

    What isn’t related, but always makes me think is–a kid costs about as much as a house (in some areas) from birth to 18. Yes, yes, they don’t need “all the stuff”, but they need food, shelter, care (either in home or out), schooling, and access to good health care.

    Lots of effort normally goes into planning for a home purchase (like putting aside extra funds for reno or things that break), but I rarely hear of people putting aside that kind of money in preparation for a kid.

    People always plan for healthy kids, but it doesn’t always happen that way. Some people have a $12,000 yearly health insurance deductible (yes, that’s 3 zeros) because of diseases or disorders their children have. Or how about your 3 day old child having a heart transplant. Just a thought….and I think about weird things.

    • Rowany

      I’ve always thought the same thing. We’ve started putting money into two separate savings accounts, one for up-front kid expenses and one for college tuition…and we’re years away from having kids.

      On a side note though – the sizable chunk of the ‘$200k’ cost of a kid is calculated from upgrading to larger homes – so they’re not independently comparable.

      • Kara

        True. I just find it interesting that people prepare for things to go wrong for a house, but rarely (do they mention) doing so for children.

    • ElisabethJoanne

      Well, to be fair, 1) What’s a nice way of saying, “What if your child is very sick?” There’s so much emotional and financial stress in having children, I don’t think well-meaning loved ones or strangers should add to it.

      2) We don’t prepare for very sick spouses, either. Some of us may take out long-term disability insurance, but in general long-term disability of any family member is considered one of those life-changers you can’t prepare for.

      That said, I’m making my husband read “Far From The Tree” by Andrew Solomon before we have kids. It’s about children who are very different from their parents – musical proteges, criminals, and children with severe physical impairments, among other circumstances. I figure if we have a child who will never walk or talk, paying for the medical care will be the least of our worries. I want to be ready to take things one day at a time.

    • MDBethann

      A friend of mine had twins last year come 4 months early. Due to excellent insurance, they spent $100 a baby for the original 4 months the twins spent in the NICU. The amount billed to the insurance company was easily in the 7 figures. And that doesn’t count expenses they had after the babies initially came home and needed some follow up surgeries due to micro-premie health problems. The babies are great now, but I hate to think what they would have had to deal with if their insurance hadn’t been excellent. Yikes!

  • http://www.confidenceboosttutoring.com.au Kate

    Oh my gosh! This is amazing. I have the same discussion with my partner almost daily. He wants to buy, at least one day, and I don’t see the point in trying to seize something we can’t afford. It’s like our parents taught us ‘only buy what you can afford…except for houses. You should saddle yourself with the biggest debt possible because, well, house’. Why not live without that burden, enjoy life and not stress about mortgage repayments and the panic of a leaking roof?

  • Emma

    “I spent my life pretending: of course these new clothes were no big deal; of course I’d gone out to eat a lot and understood this fancy restaurant menu; of course I didn’t mind that you got to have an awesome unpaid internship over the summer; of course I wasn’t envious of your trip to Europe.” SO MUCH THIS. Especially with a partner who grew up with significantly more money.

  • Chop

    Also, I have to say I’m glad for this today. We’re closing on our first (and only if I have my way) house in a few weeks and just hearing that other people freak out and worry and crunch numbers like I do was reassuring. So many people I know impulse bought a house: “Oh our lease is ending and we don’t want to apartment hunt so we bought the first house we found”. I on the other hand changed jobs and poured every penny more I was making into a down payment fund and research the market and neighborhoods and interest rates for years before deciding it was time and still agonize over it. It’s hard but it’s good to know I’m not alone if thinking so.

  • cassy

    This is a great discussion! It really hit home to read about your story of growing up not having much money, and having that mindset influence you significantly in your adulthood, even if you’re doing much better financially. My husband and I both grew up in lower middle class/working class families that had significant money problems, and that experience doesn’t really go away.

    I also just wanted to put in a plug for the “tiny house movement”, which my husband and I are strongly considering joining, or buying our own live-aboard boat (catamaran sailboat). A lot of people are building their own tiny houses, many of them mobile, for $20,000-30,000, which gets paid off in no time. Having a small, mobile home means that you own it quickly outright (unlike a regular home, where you always pay taxes on the home forever), and can move it to a new place if you want. Having your own home but the freedom to live in different, wonderful places has such great appeal. The same goes for living on a sailboat: you take your home with you when you want to explore a new place (along with your furbabies!). It’s a much simpler lifestyle, but there is a lot of freedom and you can put your resources towards saving for your future and other priorities.

  • Jules

    Houses and mortgages are brand new to me (a 2013 grad), and those were not among the money lessons taught by my parents. The idea of being in $100K, $200K, $300K of debt is still mind-boggling to me. My SO explained how his mortgage was a 30-year loan and I didn’t really believe him at first. How could we possibly have a debt that lasts until we are practically RETIRED?

    His job conditions were such that he was able to buy a house about two years ago, which has risen in value some 20% since then. When we talk about what we’ll do once I move in, I get little panic attacks when I think “But we could sell now and make $X and what if we wait too long and we get no return on investment and then we move and OMG?”

    My best friend (who is also a ’13 grad) told me last night she was looking at houses in the Baltimore area because it’s cheaper than renting, and if she got roommates, the house would basically pay for itself! I fell silent. While I don’t argue the logic if all the chips fall your way, it terrifies me that she’d be trapped in a mortgage for a 2- or 4-BR place and her roommates could decide to move out suddenly. I am supposing that no one will lend to you if they don’t see that you’d be able to afford the thing on your own though…right?

    I don’t mean to be house-negative here. I just haven’t quite adjusted to the idea yet.

    • MDBethann

      You’re right – lenders won’t lend you money if your CURRENT income & savings won’t let you pay the mortgage. My BFF has been looking into some property with her boyfriend up in SE Pennsylvania. There are some tenants involved in the property (it’s a farm) so they’d get rental income right away, but the bank wouldn’t consider it as income towards the mortgage payments until they actually owned the property. It sucks, but that’s the way it is.

      And I agree, buying in the Baltimore/DC area is often cheaper than renting, if you can afford the down payment. The condo I used to own was a rental property for a few years before I sold it. It was a good 40 minute commute from DC and I was able to rent it out for nearly $1,200/month, which was the equivalent of my mortgage payment. Closer in to the city, rents are a LOT higher than that – it’s insane. And while construction slowed for a few years, it rebounded back pretty well in 2012 or so and it seems like there are dozens of new apartment or condo buildings going in all over the place, both in DC and in its suburbs. My DH and I feel very lucky to have purchased the house we did in 2010 when interest rates were reasonable and the market hadn’t really rebounded yet. We’re in our house for the long haul barring a catastrophe, so we feel pretty lucky. But housing prices are definitely going up again and properties don’t seem to be on the market long, either.

  • Granola

    THANK YOU for this. My friends are starting to buy houses and its often talked about with that air of inevitability as if “of course this is a great idea” and all I can think is “But what if I need to move? Like I’ve done every single year.” Right now, staying in one apartment for more than one year will be an accomplishment. And even choosing a smaller/cheaper apartment so we didn’t have to kill ourselves to afford it felt like a very calming, secure, responsible choice.

  • http://sweetteaofftheg.blogspot.com/ Kate V

    Where Brooklyn at? Where Brooklyn at?
    <—–BK real estate passed pre-crash levels back in….wait for it…..2011. We bought a brownstone fixer-upper. Granted the home price was stupid (Actually more stupid now since BK has exploded since we closed). But we looked for 11 months and made over 12 bids (3 went to "best and final" which means=Tell me every single dollar you're ever willing to spend but I won't tell you how much others are spending. Its like EBay for housing). We got priced out of Bed-Stuy (a phrase I never thought I'd say in this lifetime), and found a 1938 fixer upper further out than we first considered in the borough. And we rent out the bottom level. I am cataloging the reno here if anyone is interested: http://sweetteaofftheg.blogspot.com/

    We worked it out with a contractor that we would provide the materials, he would provide only the labor. This means going to Home Depot (or equivalent) every single day of my life. But that's how you do it. (Oh yeah, and spend the money for the wedding on the downpayment. Hows THAT for A Practical Wedding?

  • Andrea Graham

    My fiancee and I are in the same boat as many of you. Early thirties, good jobs, but living in an expensive NY metro area, and saddled with student loan debt. Needless to say, with a wedding next year, we are quite a ways from being home owners, but to be honest we are really okay with that. We rent a really great 2-bedroom pre-war apartment walking distance from a vibrant town, filled with a great variety of restaurants, pubs, shops, art cinemas, and galleries. We also have access to state parks, public former-estate grounds, and beaches. If we moved further east, we might, *might* be able to afford a starter home, but we would be absolutely house poor, drowning in property taxes, and have no time or money for a little fun.

    That being said, we do love the idea of being homeowners one day, but are happy to sit out on the search for now and I encourage you all to consider the same. I am a generational researcher focusing on Millennials and have been paying close attention to research on the US housing market and the impending mass retirement of Boomers. What the studies show (and you have to filter out all the fluffy real estate and bank-funded research) is that there is a major housing crash approaching in the next few years. And what’s going to cause this crash, is the massive Baby Boomer retirement wave kicking in right about now. Many older Americans will be putting their houses on the market soon. The problem is however, that many Millennials and the upcoming Generation Z (who are even worse off than us), are still marred by the economic downturn, and will not be able to meet their asking prices. With a glut of Baby Boomer homes on the market, the property values of homes are going to plummet. Yes, SF, LA, NY, all of those big cities will still get higher than average asking prices, but there is no doubt that the bubble is going to burst.

    This is good news for all of you who are holding on to your coins right now. You are certainly doing the right thing. Use this time to build up your savings/ down payment, and educate yourself on all the ins-and-outs of home buying and ownership. In a few years time, you will have your choice and a lot of room to negotiate.

    You can read one of the more recent studies on this by the Bipartisan Policy Center here:

    http://bipartisanpolicy.org/sites/default/files/BPC%20Housing%20Demography.pdf

  • Kelsey

    This times a million. Thanks, Meg.

  • Beelitenotfab

    This is really beautiful, thanks for having a frank discussion about this issue. My fiance and I are always joking about the little things we get excited about from growing up in abject poverty. Having a grocery store. Buying fruits and vegetables. The fact that I am treat well by my doctors. That trauma lives with you, it is a very different way of experiencing the world than most of my other college educated friends.

  • ktan

    A little late, but THANK YOU for this:
    “It’s knowing we can pick up and go if a better job opportunity presents itself. It’s knowing that I’m not going to be hit with a bill for the roof I don’t know how we’re going to afford, which then keeps me up at night franticly moving numbers around on paper. It’s knowing we can pay rent, even if there is an unexpected job loss. It’s not feeling pinned down by a mortgage that feels bigger than the house we were able to buy.”

    Thank you, thank you, thank you for writing this down. My significant other and I don’t wish to join the home ownership club now, anytime soon, and maybe not ever. We love to travel, move, change jobs, and adapt to new things in a way that makes owning a house seem daunting and trapping. I know that not everyone feels this way, but for me, owning a home sounds like a death sentence.
    We are very secure knowing that we may rent for the rest of our lives, and are frankly sick of everyone pressuring us to own. I am relieved to find that we are not the only ones!

  • Ambaa

    I feel so torn about the house thing. For a long time I’ve assumed it’s just not something I can afford. But then my husband mentioned that maybe once he has a job again (in just a few months!) maybe we should start looking. And instantly I felt the force of my desire for it. I want a house. Luckily, my taste in houses runs very small and cozy, but even so I’m not sure we can afford it.