No, I didn’t go crazy! (A followup housing post)

Thanks y’all for the comments and opinions on my last post. It took me longer than usual to reply because I was, interestingly enough, en route to visit my parents — I’ll be working remotely much of this week so I can hang out at their place and also do some massive, massive attic decluttering (more on that later in the week.)

Some very reasonable thoughts and concerns came up a few times so I figured I’d do a bit more of a group response. So, here goes:

1) House?! What?! It really is only hypothetical right now. I’m not rushing right off to stop retirement contributions (I liked Hannah’s rule of thumb that I should be closer to 75% sure before I think about that more seriously.) Also, guys, I was kidding about the idea that I’d raid my emergency fund for a down payment. No way I’m wiping that thing out, after I’ve worked my butt off to build it this year. If I do buy instead of continuing to rent (see below), the only real options are borrowing a little, or a lot, from my parents.

1a) Wait, job?! What?! I haven’t said much about this lately but longtime readers will remember that I’m currently working on a yearlong contract at a major university (I just started my second yearlong contract, actually, so this one will be up at the end of June 2016.) I don’t want to go into much detail because all these discussions are ongoing, but over the last six months it’s developed into a certainty that I could shift into a different role at the same university and stay more or less indefinitely. It’s not tenure track, but it would be a very good deal, better both financially and in terms of workload than the t-t at a lot of places, and it’s work I’d enjoy. I’m excited about it. At the same time, I’m going to poke around at a few other possibilities, so I’m not signing up right now to stay in my current city. Sorry for all the mysteriousness — the upshot is I’ll either stay, or move somewhere else, but either way I won’t be unemployed, which is a good thing 🙂

2) Why not just rent for another year while you save for the down payment?/Why not just skip the whole house buying thing altogether? Yeah, I know, and actually I don’t have anything particular invested (heh) in the idea of home ownership. I wouldn’t be expecting to make money if I bought in my current town, just hoping to break even over time. However, there are a few problems with the idea of renting either another year, or permanently, in this situation.

The first is that when I moved to this city, I wasn’t expecting to stay two years, let alone indefinitely. So my current situation is that I rent a spare bedroom in someone’s house. My clothes and about half of my cooking equipment are there. Meanwhile, everything else I own is boxed up in a friend’s basement across town, or in my parents’ attic. By the time we get to spring 2016, I will more or less have been living out of suitcases for two years. Every time I want a book that I didn’t anticipate needing, I have to drive across town and dig through all these boxes to find it. Some of my lesser-used kitchen equipment is inaccessible and I do miss it. I miss sleeping in my own bed with my own mattress. None of this is going to kill me, and there are real positives (I like my housemate and her house, I like the cheap rent) but this situation was never really meant to be a long-term one, and I don’t particularly want to do it for more than two years.

I could, obviously, move out of the spare bedroom and into my own rental apartment/house. This would actually be my preferred option if it were a nice enough and cheap enough space that I could see being there for 5+ years. I’d definitely look around for situations like this. However, they can be very difficult to find in my current city. It’s a college town and the vast majority of the rental stock is wildly overpriced and kind of cruddy because it’s aimed at 4+ undergraduates and/or master’s students sharing the space. Grownups here, including even PhD students who will be in town for five years or so, buy houses, which are plentiful and cheap enough that I actually know several people who are renting out their spare rooms and making more than enough to cover the mortgage just from that. (I would also look for a renter to share my hypothetical house, probably.)

So, that’s why I think it’s more likely I’d find something to buy than to rent, and why I’d like to make a move next spring rather than a year later. (And I really don’t want to move to another temporary apartment for a year while I save up for a down payment — if I had to I’d probably rather stick out the spare room thing for another year!) On top of everything else, houses tend to come up for sale on the academic schedule because, again, college town. By far the best time to buy here is during the late spring and early summer; even if I waited six months to save more, it would be hard to do that.

3) Borrowing from family is always a terrible idea/if you have to borrow you can’t afford it. It’s interesting to me, the way people think about this. I find it tends to be highly conditioned by the person’s previous experience, which makes perfect sense. In my family it’s fairly typical. My parents borrowed from their parents for their down payment (it was kind of a sudden emergency house-buy, as it turned out a fourth floor walk up was not a great idea with an infant), and they’ve always said they’d do the same for us if they could afford it. They paid my grandparents back religiously and, while they couldn’t have afforded to help me much when I was in my early 20s, their circumstances have changed a lot and they really could now. I’ve never wanted to have them support me — I toughed it out in New York on $12000 of freelance income one year! — but I think it’s actually my track record of financial independence that makes them want to help me (I didn’t spend my 20s siphoning off $$ from them, so they trust me) and makes me feel confident that I could and would pay them back in short order.

This is getting really long so I’ll stop there. The short version is: no need to worry, I am not off the deep end and signing a contract tomorrow, just looking ahead and trying to lay out various options, and there are some actual reasons why buying might end up being a better life choice (not necessarily a better financial choice) than continuing to rent, but on the other hand, it also might not! So I guess we’ll see. I’ll obviously get more serious about thinking through this stuff if I commit to stay here.

23 thoughts on “No, I didn’t go crazy! (A followup housing post)

  1. Kirsten says:

    I should go back and read those comments now! I totally understood this was a hypothetical and I assumed it would probably be another year or so before you ever even picked out a Realtor.

    I go back to saying, though, that I would borrow from your parents. The context you shed above just solidifies that for me. You have learned a lot of great financial lessons and it’s clear that you aren’t out to take advantage of them. I know some people just really want to do it all themselves (and remember, I am one of them) but there is no harm letting your parents help you out when they can afford to do it and when they want to!

    1. thesingledollar says:

      Yeah, I think I will (if I do end up buying). I think I’m in a place in my life where I can do it responsibly, so there’s really not a great reason not to.

  2. It sounds like you’re taking a very methodical approach to this decision. Based on what you said above, buying does seem like a good choice if the new position comes through. Good luck!!

    1. thesingledollar says:

      Thanks, and we’ll see! I’m trying to be methodical now because I feel like in the end it’s going to be a pretty emotional decision (based on my ‘feel’ of the space) and at least if I can work out my options now I’ll know more when I get to the emotional part.

  3. DebtFreeJD says:

    There’s nothing like having your own place (she says confidently with a mere two months of home ownership under her belt)! Plus, the wisdom of borrowing money from family very much depends on the family. In your case, it sounds totally reasonable. I think if it’s something you want to do, and can, you should definitely go for it! You don’t seem like the kind of person to leap without looking, so I’m sure it will be a well-thought out decision either way. Also, fingers crossed for the JOB!

    1. thesingledollar says:

      LOL, but have you had to replace the roof yet? Every time I watch someone undertake a major home improvement project I think, yeesh!

  4. I think it’s great you are starting to think long term and putting your ideas out there. And think whatever means you choose for a downpayment is personal and no one should judge you for that!

    1. thesingledollar says:

      I’m both excited and scared about thinking long term. There’s part of me that never wants to commit to anything, and another part that thinks it would be good for me to commit to something, even if the something is a house or a job 🙂

  5. Hannah says:

    I would like to clarify that my aversion to borrowing from parents comes from the “what’s the worst that could happen analysis.”

    In this case, the worst that can happen is that your parents lose all the money that they lent to you. Even if they are awesome, forgiving people who tell you over and over again that they have forgiven your debt, I think I would still feel awful about it. I would much rather unintentionally screw over a bank than my parents.

    On the other hand, if they give you money, I think you should take it.

    1. thesingledollar says:

      Interesting, I feel so much more uncomfortable taking a gift than a loan!

      1. Hannah says:

        Okay, then we are opposites, and I think you should ignore my advice 🙂

        1. thesingledollar says:

          LOL. I think it’s because of my brother — if I take a gift that large, I would feel unbalanced! I guess we could always split the theoretical inheritance unevenly, but it’s, you know, theoretical that there will *be* an inheritance (long term care? who knows) so I’d rather not get to that point without having paid back any major cash.

  6. Nice to know so many people care, right? 😉 All of the factors you mention make sense, and obviously there’s no hard and fast rule for decision-making. You gotta find what you’re comfortable with, given all of your own circumstances.

    GOOD LUCK with the attic clean-out. I did a massive downsizing for a parent last year, and it definitely took some months off of my life. But completely worth it in the end.

    1. thesingledollar says:

      It is nice actually 🙂 That’s the great thing about these blogs. Also, I guess “save money like crazy” is never the wrong answer, is it? So I can do that for a while and then see what happens.

      Every single thing I can clear out of my parents’ house is a victory. They are such pack rats, I swear.

  7. ARBM says:

    It sounds like you are taking your time and weighing all your options, so I’m sure you will make the right decision in the end, whatever it happens to be. And if your parents are willing and able to help out, I don’t see why you can’t make an arrangement with them to borrow the money, if that is the direction you want to go.
    I have a bit of a similar situation to share… Last year my fiance and I bought a house together, and sold my townhouse, but because of the market, I didn’t have much equity in the townhouse, so we pretty much broke even on that sale. So, the down payment on the new house had to come from savings and investments. We had enough in investments, but it took longer than anticipated to get out of the investment accounts (read months… back and forth… lost mail… yeah, just not a good situation). Lucky for us, my parents were able to lend us the down payment until we were able to get the investments cashed out. We had no issues with that, and I know that my parents were happy to help out.

    1. thesingledollar says:

      Wow, that sounds like a mess! It’s actually stories like that that make me think I never ever want to buy anything, LOL. However, yes, I do hope to eventually come to a decision that’s right for me. Fingers crossed!

      1. ARBM says:

        I learned my lesson. Get money out of investments before you need it…

  8. I missed your last post, and I’m excited about this house-buying idea! You have been stellar with your finances, and you have lived a more frugal lifestyle (especially with regards to your ultra-inexpensive rooming situation) than many would take on. You are debt-free, cushioned by savings, and all this without a permanent job! If a permanent job is on the horizon, I say embrace your good fortune and go for it! Your parents have every reason to trust you, and they want to help out. There is no shame in accepting that help, and of course you will pay them back as quickly as possible – especially if you take on a boarder (or two?). I vote for buying if the permanent employment thing pans out. I also vote for borrowing a small amount from your parents rather than a large amount. But I know that you will make the best decision possible, so just know that I’m really happy for you with all of these great possibilities shining on you : )

    1. thesingledollar says:

      Thanks 🙂 Who knows what will happen really, but it is awfully nice to feel like I might actually have a career rather than stringing together a bunch of temp jobs!

  9. Jessica says:

    I think you are taking a very reasonable approach here by articulating and assessing all of your options (even the bad ones like raiding your emergency fund!). I think when it comes time to make the decision you will have taken the time to really analyze the angles and arrive at the best decision for you. Whatever you end up deciding, I’m glad to hear that you’re excited about your prospects and wish you the best!

    1. thesingledollar says:

      Thank you! I should probably read Mortgages for Dummies or something though, I don’t know a damn thing about buying a house really.

  10. Chonce says:

    I like that you’re weighing all your options out. There are times when buying would be better than renting financially and in the long run. I agree that you should try to steer away from spending any of your emergency fund on a down payment. You need that as your security blanket for anything that could come up. If you do choose to buy eventually, it’s always great to go into it with some savings in the bank.

    1. thesingledollar says:

      Yeah, I can’t imagine buying without having a huge emergency fund. Seems like house emergencies happen constantly 🙂

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