Monthly Archives: May 2016

Honestly, home buying is not for everyone

The housing crisis occurred because we thought that we should make it that way. It costs more to own a home than to rent. given how much home prices have dropped in the last several years, I’d be better off if I had chosen to just rent. Even if I were to sell right now, I’d be in the hole by at least 100 thousand dollars.

But, remember that the average person out there is not spending money wisely or budgeting and that is why they cannot get ahead. I look at how my dad came from a poor family and managed to work his way through college and his doctoral degree without any help at all from the government or anyone else. The last few years, he was even supporting a wife and two kids. Then, when he was finally making a good salary, he put much of that money into savings and investing so that when he was laid off in his 60s, they were fine.

He did finance to buy the house, but he paid it off early. He never once financed to buy a car. Although he could have afforded it, he never once bought a car new. Usually, he never even bought a gently used car. Granted, he knew how to fix cars and so he’d just fix them when they broke down, but I vividly remember how excited my mom was when he purchase a car for 1000 dollars. He had never spent that much. In today’s dollars, it would probaby be more like 3 to 5 thousand, but my point is simply that people do well financially because of the choices that they make. The current American mindset does not fit with this old fashioned style of dealing with money.; If it did, all of us never would have been in the condition that we are in.

I’ll admit that I do not follow DR to the letter, but if I could do it again, I certainly would regarding buying a house. Except in cases of disability etc., there is always a way out. A person just needs to get creative and be super frugal. For example, there is absolutely nothing wrong with having multiple generations living together when possible. I am truly hoping that my kids choose to stay at home for college to save in the cost of living. If my parents needed it, we’d find a way to have them live here with us.

Also, there is always a choice for where to live. I am from the San Jose area so I know how expensive housing is there. I currently live in Maryland and it is pretty expensive here as well. We chose a neighborhood that is not high class, but more lower middle class. Our educational level is more upper middle class (two parents with doctoral degrees), but we will probably always stay here. If we chose to live elsewhere, we’d really be in trouble in terms of our house value. If we had chosen to wait a few years before buying, we could have had our 20 percent down payment and financed a 15 year mortgage. Paying cash for the house would have probably taken many more years, but DR does mention that it is okay to do the 15 year mortgage if needed.

DR certainly is a way of life and a different mindset. I know several people who say that they are “doing DR kind of” I am not sure what that means. I am not perfect with it either in the sense that I am paying off my credit cards in a slightly different order, but I am hoping to never have to take out another loan for anything.

But, if you want to finance a car, that is up to you. I just don’t think that you can expect this list to tell you that it is an okay thing to do. DR would say no.