I finished sharing our story of paying cash for a house two weeks ago and but I promised I’d follow it up with a few thoughts on mortgages and paying cash. Unfortunately, I completely forgot about writing this post last Wednesday, so I’m finally getting it done this week. Thanks for your patience!
While being debt-free is a wonderful thing, I want to stress very clearly that it’s not the be all, end all. Paying cash for a house doesn’t make you a better person than someone who is barely struggling to make ends meet and doing good to pay the utility bill and grocery bill.
We all have different families, different backgrounds and different situations, so our financial stories are all going to look quite different. And that’s perfectly okay! I want to give you ideas, inspiration and encouragement here, but then I hope you’ll take it and go find how to best steward the resources God has given to you.
With that said, if you are considering the benefits of paying cash for a house versus getting a mortgage, here’s what I’d encourage you to think about:
1) What are the costs of housing in your area?
Don’t just believe what everyone says about how much houses cost where you live. Go research it out yourself. All real estate is local. The prices in one area will be different from another, even if in the same city with comparable cost of living. For example, if you live in an area where most houses cost $400,000, you very well may be able to find a fixer-upper for $200,000 in a decent part of the other side of town.
Since we live in the Midwest, housing prices are really affordable, compared to many parts of the country. In fact, with some looking and patience, you can buy a very decent relatively new starter home for around $100,000 to $110,000. (Some of you who live in high cost of living areas just had to pick yourself up off the floor, I know!) The low housing prices is one reason we moved here and one of the big factors in our decision to save to pay cash for a house.
2) How much can you save each month?
This is not meant as an exercise in frustration, but as a reality check. Look at your written budget and see if there are any areas you’d be willing to cut or downsize for a time period in order to free up more money to go to savings.
Our family decided to keep our grocery budget low, have a moratorium on spending, not have any monthly subscriptions, delay college and retirement savings and downsize in rental home in order to free up more money to put toward savings. We also were blessed with a good income from both of our businesses, so the fact that we kept our expenses as minimal as possible and didn’t have any debt allowed us to be able to save a sizable amount of our income each month towards a house.
3) What do the numbers look like in ten years?
Once you have a good understanding of how much you can expect to pay for a house and how much you can save each month, you’re ready to run numbers and calculations to determine what is the best plan of action for your family. Figure out how much you could potentially save over the course of the next ten years if you were to live on as little as you can, rent and save as much as you can.
Then, calculate how much you’d have in equity in a home in ten years if you were to instead save aggressively for a great down payment (at least 20% down, maybe even 40%+) on a 15-year fixed rate mortgage on a very modest home, buy the home and then throw everything you could at the mortgage payment to pay it off early.
Running these numbers can give you a very helpful gauge to decide what is the best course of action for your family.
Don’t Get Too Focused and Miss Out On Life
My husband and I are very focused, driven and stubborn people (well, it’s probably just mostly me who is stubborn!). These can be wonderful qualities when exercised in balance.
Unfortunately, we didn’t exercise a lot of balance while saving for a house. Since we’re both self-employed and our income is based a great deal on our productivity, we became work-a-holics with a single-minded focus of earning enough to make our monthly house savings goals.
Instead of pacing ourselves and allowing ourselves margin, we sprinted and ran ourselves ragged. We accomplished our goal, but not without it taking a major toll on our family, friendships and health.
I’m grateful that God was gracious, our friends and family were forgiving and we survived the grueling months of hard work. But neither my husband nor I would recommend that you follow in our footsteps.
Just in the last year, we’re finally feeling like we’re beginning to learn to know our limits, have our priorities in better order and have more margin in our life — and we are happier and healthier for it.
So please, go right ahead and set big goals and work hard, but pace yourself and give yourself grace and breathing room.
Something I’ve been wondering (and my apologies if you’ve discussed this already and I missed it), but how does it work when you pay cash for a house? Do you hand over one big check? And did the sellers react with shock?
Lea Stormhammer says
Okay, these are just cracking me up!
My cousin is looking at buying a house in a different part of our state and she’s complaining about how high the cost is – 2,500 sq ft, 5 br/3ba, 5 acres for the same price as our 900 sq ft, 3 br/ 1 ba, city lot was 10 years ago! We did finish off the basement to make it 1200 sq ft and added a half bath which add 20k onto our value.
My aunt bought a 900 sq ft 3br/1ba that was in terrible shape, on a city lot, no basement, for DOUBLE what we paid for ours in another state – the town she happened to buy in had a severe housing shortage.
All this stuff cracks me up becuase it does SO depend on the area you are in! And it means that what we each need to do depends so much on our own situation. Funny how that works….
Thanks for your post Crystal!
Love your words of encouragement for all!! In todays world its so easy for us to look at others and not realize where they have been and the struggles they have had. Your blog is so honest and uplifting. God Bless.
It’s so amazing to see the differences in housing prices around the nation. I live in a really small community in Michigan. Our town consists of MAYBE 1000 people. We paid $100K two years ago for a 2500 sq. ft. log cabin on 5 acres. You can easily pick up a fixer upper foreclosure around here for less than $20K. The down side, however, is the job market. My husband and I both have jobs, so it works for us and I’m quite grateful. On the flip side, I would never recommend anyone moving to Michigan without a job waiting for them. A cheap house is only worth it, if you a job to pay for it.
Enjoyed reading your post and the comments here!
We will be closing on a home in another week. We are purchasing a foreclosure for $190k. It was appraised at $287k. Our mortgage is $200 less a month on this 4 bed 2.5 bath home than for a 2 bed 2 bath apartment we were looking into.
Emily Johnson says
Not all large cities are expensive. We bought our 2-bedroom home (1000 sq ft) in San Antonio, TX for $86K. Not a “nice” part of town but not bad either (just older). In the “bad” parts of town (westside, eastside, some southside) you can get a house twice as big for just under $100K. And San Antonio is one of half a dozen towns in the country where the economy is still going up! 🙂
I LOVED reading these posts!! They really gave me a different perspective on money and instead of frustrating me they just gave me new ways to think about various aspects of how we spend our money. Thanks Crystal!
As for houses here in the Greenville/Spartanburg area of South Carolina: we just bought a brand new house (over 2500 sq ft) in the upper 160’s. Just about 3.5 years ago we had a house that cost about the same and was 900 sq ft less…so prices have definitely gone down. Since the market is down they had great deals as well – paid closing costs and half off of upgrades up to $25K. The house is worth close to 200K with all of the upgrades. Also, looking at the same builder in VA and MD the same house (without any upgrades) would be over $450K!!! It really does depend on where you are living.
We might not have the best cost in housing, but I love where I live…and I think that is the most important thing!! 🙂
I can’t imagine ‘cheap’ houses going for 100k! I live in Ohio and a fixer upper, not in a bad neighborhood, can be found for 17k! An apartment building around the corner just went for 33k! I’m glad that the house we’re looking into, a 3bd w a 1/4 acre, is only around 80k!!
So glad it looks like you’ve found a great deal on a house you love!
Steph, I don’t know what part of Ohio you live in but I can’t imagine it is near the capital (Columbus)….the majority of homes around here are 150,000 to 200,000. Even my parents home which is 1200 square feet (small by today’s standards) in the suburbs of Columbus which was 16,000 back in the 60’s….are now worth 80,000-110,000…and not the greatest neighborhood.
I am so sad to hear about your postpartum depression, but so grateful that you were brave enough to share about it. So many women suffer from depression whether it’s hormonal related or due to other circumstances.
We need to support one another and tell our stories, so that those who are depressed don’t feel so alone. Thank you!
Thank you for your kind comment. I’ve been learning a lot the last two years… and someday soon, I hope to be able to share more in-depth what God has taught me through my journey with PPD. My heart aches for the many women who suffer from PPD and depression without help and I am so blessed to have had such a strong support system around me during this time.
Great perspective on this. I’ve seen some pretty varied housing markets over the years. It seems as though some parts are just more than others. The commentor who said the 100k homes are in the really nice part, that is a cheap market. We saw houses in florida go from 300k to 150k list price, same house, during the period of two years, so clearly some markets have greater movements. Another aspect to consider is that in some markets the prices are kept artificially low due to extremely high property taxes, which makes the total cost actually higher.
Thank you for this encouraging post! If only I’d been a reader of yours (or Dave Ramseys!) before we bought out house 5 years ago. We bought at the top of the market (unknowingly, of course) and now our home is worth $100K LESS than what we owe on it! Where can we look for answers about the best way to deal with our devastating debt? We can afford the monthly payments, no problem. We would like to refinance and at least get a better interest rate, but no one will even consider refinancing us because we are not delinquent in our payments–too many foreclosures out there for the banks to deal with. We have thought about consulting a financial planner but most of the ones we’ve heard of just try to sell you stuff. Any advice on whom we can ask for some good solid financial guidance?
Thank you for sharing your story and WHY it worked for you. I love that you shared that it’s not for everyone. So many people share their stories and are unrealistic. You emphasized the fact that many factors were involved, and I think that’s great. Here in Hawai’i, I think it wouldn’t be quite possible to attain the same things with houses here costing about 500,000 on average. Again, I just wanted to thank you for your honesty.
I think 10 years of not saving much for retirement or college and living as cheaply as possible is a bit long. Missing out on the huge potential of growth from those investments. I think 5 years is a bit more reasonable, bit even then I think it would be hard.
Still I think it’s worth running the numbers to examine the possibilities!
Yes, I would definitely agree that you shouldn’t delay retirement or college savings for ten years; I’m sorry if it made it sound like I was saying that because that’s certainly not what I was trying to communicate!
I just gave those as examples of things we chose to delay for a short time in order to accomplish our savings goals. In the post I linked to on those, it explains more why we chose to delay those and we only did it because it was going to be very short-term. I wouldn’t recommend our course of action for a long term. Thanks for commenting so I could clarify that for you!
Very interesting topic! I have enjoyed this series, as well as reading all the replies! The thought of paying cash for a house has never even crossed my mind until recently. We are fortunate to have no debts, other than our mortgage. Now we are paying extra each month on our principle to hopefully be able to pay off our mortgage early. We bought this house about a year ago. We moved just 35 miles from our last location and the cost of houses here are greatly higher! Ideally we would have liked to move a little further, but we just couldn’t afford anything in a decent neighborhood. Overall, we are happy with this house and location and it feels like somewhere we could stay for a long time. Keep up the good work, Crystal. You are an inspiration!
This post was perfect timing for me. I’ve been “consumed” with saving, saving, saving for a down payment for a house and I realize now that life is passing me by because of it. I live in an area where the average “move-in ready” house will cost you $350-400K and trying to save 20% down is proving to be an impossible task. My husband and I live in a decent rental house with our 4 children in an area with great schools and I’m not even certain we would be able to afford a mortgage here. I’ve been putting off any “unnecessary” purchases and throwing everything towards a goal that really isn’t going to be attainable. I think it’s time to re-evaluate what matters most and maybe start living a little! So thank you…
Thank you for posting a different perspective. Here, in the suburbs of Boston, where housing prices vary widely from town to town (and have a very close relation to quality of public schools), a small starter home in a town with good public schools (for those who care) can be bought for ~300K. Paying 100% will never be an option for us, and we were proud to have saved up for even the down payment on our starter home.
Oh, but you live in Boston………so worth it, IMO. 🙂 I went to school in a Boston suburb, and it is one of my most favorite cities!
Me too 🙂 I was raised here and loved it so much, that my husband (also from here) settled here!
I meant, “my husband and I settled here” 🙂
Stephanie @ Keeper of the Home says
“We all have different families, different backgrounds and different situations, so our financial stories are all going to look quite different.”
It’s so true, Crystal, and I know that many people need to hear this. It’s easy for us to just assume that someone else is further ahead of us or that we’re doing something wrong because we ourselves can’t save up that kind of money, or buy a house at all, or are still in debt. The reality is that each circumstance is very unique and we are not called to do things perfectly, but to do the very best we can to honor the Lord and be good stewards with what he has given us (not what he’s given our neighbor!).
My husband and I have sometimes felt very discouraged about not being able to purchase a home because of the market where we live. Run down houses in bad parts of town start at $350,000 and anything decent/safer is more like $400,000-$550,000. Buying a house with cash is not even a remote possibility, at least at this point in our lives.
But, it’s not the end of the world. We’re still saving up aggressively, we’re still making wise investments (at least, we hope they’re wise :), and we hope that at some point, we can buy a house with a very large down payment and pay it off on a shorter amortization (10-15 years instead of 25-30). And that would still be a great way to go, working with the situation we have and trying to make the best of it.
When it all comes down to it, even if our plans fail, we lose our savings, we rent for the rest of our lives, and we simply love people and trust in Jesus and His care and provision for us, we’ll be all right. Isn’t that what life is about, anyways? 🙂
“Some of you who live in high cost of living areas just had to pick yourself up off the floor, I know!”
Oh, yes! This made me chuckle. After I’d climbed back into my chair, that is . . .
Lisa H says
Ha! Agreed. Though since I listen to Dave Ramsey regularly, I hear the debt-free screams of people who have paid off a mortgage that would qualify as a 20% down payment in my SoCal suburb! 🙂
Like everyone else, I’m so glad to read this post, and appreciate your transparency, Crystal. As I alluded to, our home was a foreclosure/fixer in a nice neighborhood, and it is worth about $350k. We hope to pay it off in 15-16 years through paying extra every month, and extra again when my husband gets extra paychecks twice a year.
Anyway, keep up the good work, Crystal!
Lisa H says
I thought I should add that our house is a three-bedroom, 1200 square feet, with an unpermitted addition bringing it to 1425 square feet. It sold for $520,000 in 2006!
Maybe I’m just overly-cheap, but 100K-110K sounds awfully expensive for a house. What about forclosures, you can find homes in the $20-40K range that are worth a lot more. Most of the forclosures in our area don’t need anything more than a new roof or some plaster work; right now we’re looking at a very spacious 4-bedroom for about $32K. This way, your house can be paid off without having to wait your entire lifetime to do so.
I’m glad that I found your blog so that I was able to learn to save, but the way I see it is that you could purchase several foreclosed homes for the price of one 100K home.
I think it depends on where you live. Where I live, most of the foreclosure homes in a safe neighborhood are still in the 100k or more range (the average price for a home here is 280k).
But I do agree that all homes should be looked at, including foreclosures and short sales.
In my area of CT, the average house is $350-400K!!!!!
WOW!! I couldn’t imagine houses that nice. There is really only one “bad” area of town here, besides apartment complexes here, so it’s pretty much safe to look all around for a home.
Liz Ann says
In NJ and CT, $350 doesn’t necessarily mean nice or fancy. We live in a super old 3 (small) bedroom house in okay condition in an okay neighborhood and it came in just under $300k. The next town over, which has better schools, there’s no way we’d find a house like ours for less that $400k. Housing cost is very relative.
Thank you, Lisa! I too am in CT and I’m thinking about how ridiculous these other home prices sound. I say ridiculous b/c I’m sooooo jealous! I don’t even think you can buy a piece of land (no house) in CT for under $100k!!!
We paid just under $350k for our 3 bed/1.5 bath house in 2007!
That’s sad. I was just looking at an acre down the road for $1500 and thought, “Maybe I should.”
In my area foreclosures are in the 180,000+ range (and they are not in very good shape at all) with the average home costing 275,000.
In my town, you technically can buy houses for 15k, but people regularly get shot there due to gang activity. So, not such a great plan. For a safe are of town, you’re looking at 85-120k as the basic starter price, which is seen as really inexpensive by most of the country. I think it’s safe to say that your experience is really in the minority for most areas.
Whereabouts do you live?
We’re in a Midwest metro area. There are foreclosed homes in the $30-40K range, but they’re in the very worst area of town in terms of crime and schools, and generally in terrible condition. I’d estimate most need at least that much money again to make them livable.
I suppose there’s no particular reason we couldn’t have gone there (and paid cash!), but we were concerned it would not be a good environment for our kids. Plus we’re just not that handy. 🙂
This depends highly on where you live. Foreclosures where I live can easily top $500k (there’s one around the corner from me that recently went at auction for $835k). The least expensive single family home listed in my zip code is $385,000 and it is being sold “as-is” due to a bad foundation. The next choice jumps to $450,000 for a little over 1,500 square feet.
Please understand, I’m not complaining. I love where I live and hope to make a lifetime home here. It’s important that we all understand – and Crystal makes this point nicely – that housing markets and costs are hugely variable. I could no more buy a “spacious 4-bedroom for $32K” anywhere near my job than I could fly to the moon.
“Anywhere near my job” is another important point to consider. In some areas, if you’re willing to commute an hour each way, you might be able to get a home for a lot less. But, I rarely think a plan to commute an hour each way long term is a good idea — especially with the costs of gas and the wear and tear on one’s vehicle (not to mention the hours upon hours spent driving).
I’m so thankful you love where you live, even if houses do cost two arms and two legs! 🙂
I’m amazed (once again!) at how housing prices differ around the country. It’s crazy!
Definitely enjoying reading how different the housing markets on! Houses here can start in the 200s for condos and town homes but a single family home wouldn’t be less than 300k. And that’s for an old fixer upper. A “typical” single family in my area goes for in the 700s and 800s right now!
Hi Zoe, where is “here” in your post?
Sorry Sarah- I should’ve clarified 🙂 ha. Same as Michele below actually- metro DC area.
And here in DC a one-hour commute would be pretty darn average, and we are still paying about $500K for a decent house (decent may mean a 1960’s split-level or if you are lucky a 1980’s colonial). A newer home is easily north of $800K. We are in a good town about 10 miles outside of the city (which in rush hour would be about an hour away, although we can take Metro). Our house is a 1950’s rambler with about 1850 square feet. It just got assessed last week for $505K, and would probably sell for $550K. One would generally have to go about 1 1/2 hours out to get a house in the $350K-$400K range.
Now some of the midwesterners on here can pick yourselves up off the floor. 😉
When we lived in Kansas City, Jesse’s commute was at least 45 minutes one way and an hour when traffic was bad. It was no fun and I can’t imagine doing that longterm. But that’s like a short commute for you DC’ers and you all have my respect! 🙂
Jesse and I both love Northern VA and always thought it’d be cool to live there, but when comparing the cost of living and housing, we decided it’s probably best to stick with the Midwest. 🙂
No, you’re not overly cheap, it just sounds like you live in a very inexpensive housing market — which is wonderful, especially if you’re thinking of paying cash for a house! 🙂
We looked into many different options, including many foreclosures and the price I gave in the post of $100 to $110K is actually typically the price you can expect to pay for a relatively new and still in good shape foreclosed home in our area.
The housing market hasn’t hit bottom here yet, so home prices aren’t as incredibly low here as they seem to be in some other parts of the country. However, the deals are definitely much more plentiful than they used to be since the market has really slowed in the last few years.
If you are okay with getting something old and rundown which could likely be a complete money pit, you could definitely find something for less here. But we were only looking for homes which we felt didn’t need a major overhaul costing thousands of dollars and which wouldn’t be a potential money pit.
A spacious 4-bedroom house for $32K sounds amazing and unreal. Maybe we need to move to where you live! 🙂
Let us know what city you live in. 🙂
Martha Artyomenko says
Wow! =) For sure depends where you live! If you buy a house here for that you get a mobile home or one without a foundation!
But also, we live in an area that is one out of three in the USA with year round tourist attractions as well as natural resources, which makes our property values higher.
Martha, what city/metro are you in?
Martha Artyomenko says
We are in NW MT…..in the mountains.
I hear MT is beautiful! Out of curiosty, what are the other two places with “year round tourist attractions as well as natural resources.”
Martha Artyomenko says
I am not sure, they did not mention the other places when we took our first time home buyers class!
I’m in Kokomo, IN…I really had no idea that the prices anywhere else (besides Hollywood and places like that) varied so greatly from my own area. Everything looks the same here in Indiana, there are what we call “rich” areas but for the large part, it all looks the same to me.
Megan-I am in Lafayette! Hi neighbor!
The real estate market varies largely. Around here foreclosures are $90,000-$100,000 unless you get a foreclosed mobile home which are still at least $50,000. And I don’t live in an expensive area either. For a nice 3-4 bedroom newer home they are $115,000-$140,000. You just live in a VERY inexpensive area. But something you have to remember is that there are always trade offs. Like you might either live in an unsafe area or in a middle of nowhere area (nothing wrong with that but its not for everyone) or the job market may be limited, etc.
Great points in the article. It is important to realize that we are all at different stages of life, different incomes, living in different areas, etc. It is good to see how Crystal reached her goals by her diligence and commitment and we can do the same. We don’t have to have the same goals, but we can use the same process and support and encourage each other along the way.
We are going thru “downsizing” where I work – 60 of 210 people were sent notices that they may lose their position 60+ days from now. I just started with the company 6 months ago but I’m in management, so I won’t be one of the people experiencing the change, but I know some of the people are wondering why I’m keeping my job when they’ve got 10+ years in.
I’m in a “business” that has NEVER experienced this type of downsizing. These employees have always operated under the assumption that they can’t be touched. Now they may be forced to find a new position, possibly out of state, and it’s hitting them hard. Some of them just bought houses to take advantage of the home credit. Some have kids in school here. Most are stretched past the point where their full-time salary allows them to make it from week-to-week, and they can’t possibly take one of the part time positions beging offered to them.
I’ve learned the hard way to expect the unexpected. In 2004 I was laid off from a very nice job that I loved very much. I took my 401k money ($45k) and started a business. It was really looking like it might make it – I lived on mac&cheese for a few years but put everything I could into making it work. By the end of 2009 when the bottom fell out of nearly everything… I knew it was time to close shop. I’ve lost my house, my job (several, in fact), even my dog. My life, at times, has been like a bad country song.
I knew the business would have to close so I started applying for jobs nearly a year before I finally shut it down. It took that long for me to find a decent paying full-time job with benefits and I ended up moving 400 miles to another state for it. I wasn’t paid any moving expenses and in fact, I lived in a tent at a campground for the first two months so that I could save enough to rent an apartment.
I now rent. Most of my income is going to pay off debt – either by garnishment or by me sending whatever is left to the first creditor on my list each paycheck. But, I have a fairly stable job, despite the downsizing. I could, though, at any moment, be told I’ll be working in another city or state – that’s ok, I’d adapt. The problem comes when you become so complacent with your lifestyle, spending as fast as you earn, and not putting away for that “rainy day” – and something like this downsizing hits you like a ton of bricks. I really feel for these people – during a meeting about it, they were asking the plant manager if the company would be buying their house if they had to move, if the company would be paying for them to move to another state, etc. Most likely not – that’s the way business works, unfortunately!
I guess the point I’m trying to make is that we should all first prepare for the unexpected. You can’t live your life afraid of what may or may not happen…you have to live and enjoy life and not hide away, afraid of what may come. But you should set aside enough to live off of if you were to lose your job or become incapacitated. If you don’t have an emergency fund then you don’t need a vacation to Florida or a new car – you NEED an emergency fund. You also need to decide what is important to you – are you planning to stay in an area for a long time, and owning a home would fulfill all your dreams? Or would you rather rent for awhile, pay off all your debt, put the money instead toward vacations, etc.? No one lifestyle fits every human being. We are all different and have different goals and dreams. I was brought up with the idea that owning a home was a solid financial move – but in hindsight, owning a business was my dream, not a house. I should have picked one or the other and not tried to have both. Now I know what I’m working towards and renting a small apartment or mobile home will suit me fine for the next few years while I readjust my Plan. Not everyone’s goals have to (or even SHOULD) include owning a home – if you love travel, maybe you are better off in an apartment that doesn’t require yardwork or maintenance… I know right now I’m focused on moving up in my company so staying mobile and putting my time into work instead of having to cut the lawn or paint the house is what works for me.
Oh, Susan, I am so glad I am not the only one who has started Christmas shopping already!! I like to save up my swagbucks for Amazon gift cards and then when a great deal comes up throughout the year I can snag it.
I’m saving up my swagbucks too!!!
Thank you thank you thank you for adding your perspective. I have read your blog for a couple years now and honestly was wondering if living extremely strict on your income would have an effect on your relationships, etc… You have accomplished an amazing goal that honestly most people only read about. I personally like taking some of your ideas and applying towards our lifestyle. We have buttoned up on many of our finances, I’m amazed on how our grocery bill has gone from $800/month to $250 which is over $6,000/year cash in our pocket. It is also nice to have sources to find deals on clothing and other items which has helped our income. For example in years past we would spend over $600 on Christmas. This past year we were under $200 for over $1000 worth of items with researching deals, etc.. So far this year I have 25% of Christmas shopping done with freebies. As my kids are older – eat more, have more activities, have more clothing opinions – it will be interesting how you work through more of that on a budget.
Thanks for this Crystal! We are currently saving up to pay cash for a house as you did but I in no way think that it is the road for everyone to take. It is the path that makes sense for us according to our past and where God is leading us in our future. Thanks for the encouraging words and I really appreciating reading your thoughts on money management as it applies to “regular” people. 🙂
Last May, we felt God was calling us to sell our home of 8 years and move due decrease some stress in our life. We had originally paid $87K for a 5 bedroom, 2 full bath, full basement + attached garage on 1/4 acre in central Iowa back in ’02. We did some fixing up over the years we were there.
I loved our home, but did not love the stress that came with the upkeep, cleaning, etc while I was (and am) attending nursing school FT, trying to keep up with an active 4 year old and a husband that works FT for the Dept. of Defense, goes to school PT and is in the National Guard.
We decided to move to a 3 bedroom townhome 8 miles from where we were. We moved in June and I spent the summer cleaning the house and getting it ready for sale.
Just as we were ready to list it, our neighbors called and said their daughter may be interested and wanted to come look. Long story short, we closed on our sale at the end of August. What an amazing testament to God’s faithfulness as I had been praying all along for us to sell quickly.
I’m not always happy to be renting again but I know in about 3 years, we will move from Iowa to Texas and am looking forward to purchasing a home again.
Sarah K. @ The Pajama Chef says
thanks for this post, crystal! i love your honesty and appreciate your perspective. my husband and i probably won’t be looking to buy a house for over a year because i’m still in grad school and we don’t plan (but God could change this, i know) to stay in the area after i’m done. but we’re doing everything we can to save for a house and pay off student loans now, so when the time comes, we can be more flexible with a down payment, location, etc. you’ve definitely given me things to think about. thanks!!
Crystal, Love how you introduced the topic today. Once we became debt free, it was immediately apparent that our lifestyle would still be different than many others and also require even more self-discipline, communication and a humble attitude. Having enough and saving for the future is just a different kind of challenge than living on next to nothing to get out of debt. Me and my husband have been diligently working our total money makeover since 2007, which by the grace of God helped us weather, learn from and then recover from selling a home in the worst housing market in the U.S. We are now completely debt free, giving, saving, investing and living below our means. Saving up for a house is next after buying a second car—thanks for the great tips! I will keep them in mind and share with hubby. Blessings!
I have enjoyed this series. At first, I started to wonder if we could have saved more or if we could have done a better job. However, living in the past is something that can consume you and I have made the choice not to go down that path.
Yes, we could have made better decisions but we have learned our lessons and moved on. Paying for a house in cash is something that would have been very difficult since we purchased our house 19 years ago and the prices nineteen years ago were in the $250,000 range for a starter home that needed work. We were smart enough to save for a good down payment – 30% down – and we took our time adding furniture and fixing up the house as we were able to save the cash to do it. We paid some extra principal down when we had extra cash and now our house is paid for. Of course our property taxes are way more then our mortgage payment ever was but that is a different story. 😉
Thanks so much for your honesty in this series. There are many good principals that you have shared!
My grandparents have shared this same thing with me! Their current property tax payment is more than the original mortgage payment on their paid-for home! 🙂
Keep in mind that the price of homes in the last twenty to thirty years (aside from the past two years) has outpaced the average inflation rate. If you have a 10 year plan to purchase a house outright, the interest you’re earning on the money you’re saving may not be enough to keep up with the rising cost of real estate.
If anyone is looking for great financial calculators related to mortgages go to dinkytown.net we used this site when I worked at a bank. It really has everything and can help you see things easier when it puts things in charts and graphs.
We are looking at moving into a house in about 2 1/2 years. We already know where in town we want to live (a specific school district). Housing prices are pretty reasonable there. I’ve been looking online and the houses the would fit my families needs are prices around $180,000. We are hoping to have a $50,000 down payment and get a mortgage for the rest. Even though we know its so far away it’s nice to start looking now so we know a little more about how much buys what kind of house when we start really looking.
Thanks for this post. For the past year or so I have been saving, saving, saving and not doing anything with my family because “it cost’s money”. Recently my great aunt passed away at the age of 88 and all her life she saved and never spent. She lived in a nursing home (12 X 12 room) with little in her room. Her passing has really opened my eyes about spending quality time with my family and making memories instead of “hard core savings”.
I know what you mean, my inlaws never do anything and save save save and I feel they are missing out on life with us and the grandkids. Balance is the key! We have learned to plan for fun things with all the bargains we find on blogs, groupons, etc… it has helped keep us in budget.
Thank you so much for this post. I can relate to your story even as my husband and I save up for a down-payment on a house. Your journey to paying 100% cash for a house has given me motivation, the will to be patient, and has dared me to dream. I appreciate this “behind the scenes peek” at the sacrifices required to reach this goal. It has helped me, and I’m sure it will help others, to decide whether it is the right goal to pursue on an individual basis. Thank you for your example, honestly, and humbleness.
I also just wanted to say thank you for this honest post!
Thanks for your post. We are currently renting because my husband is in the military and we usually move every 3 years. We just found out we will be staying in this area for longer than anticipated so we are now considering renting a bigger/nicer house (we live in a small townhouse now). What you said about being too focused really made sense. I have been hesitant to move because I know it will cost more to be in a house but would love to have a nice backyard for my daughter to play in and a street where she can learn to ride her bike. We also own a home in another state that we are renting out and paying as much as we can on each month. Thanks for being real!
My jaw hit the floor when you mentioned that you could find a decent home in your area for $100,000-110,000! The homes in our area that would cost that much (and there probably aren’t many) are in the “fancy” section of town. We are currently renting a three-bedroom home for $550 a month, which is a great price for this area. I know that the home was purchased for $53,000 twelve years ago and we are renting it because of it’s lack of sale over a five year period. The home next door to us was purchased for $13,000 about ten years ago and fixed up by the owners. I expect that they will likely be able to sell it for around $30,000-35,000.
My husband and I recently looked into moving to a city about 100 miles from us. Although the rate of pay at a job in that area would be enough for us to live on with a little wiggle room, we chose to stay due to the high cost of rentals. We were routinely finding 3-bedroom apartments for $1,000-1,500! That would certainly be unaffordable for us, even with the savings in gas.
I don’t understand how you can even build a house with the cost of land/materials/labor for less than 100k! wow–where do you live?
We live in a *small* area, which may account for the lower cost of housing. The population of a close neighboring town (where grocery stores and restaurants are located) is only around 10,000, while the population of the town we live in is just over 2,000. While housing may be quite affordable here, it is extremely difficult to procure employment. There is a local factory that employs many, paying $10/hr., which is one of the few places to find a job for more than minimum wage. If you want a job that can actual support a family, it is often necessary to travel. My husband will soon be accepting a new job that will require a 1 1/2 hour commute each way!
Wow, I can’t believe your housing prices. A family would be lucky to get an older home in our area for $200,000.
Yes, I too am one of the ones to pick myself up off the floor after reading these housing prices. A starter home around here would be $250,000, at the very least. And you wouldn’t get much for that price, either.
with the economy crashing down you can find pretty cheap houses. But you have to act quick.
Your article and the responses show how diverse the real answer is. Each persons situation and housing market are different. It is important for each family to consider that in their decision instead of buying because thats what everyone else or family says is the things to do. Your age, your physical needs, family size, the real estate market in your hometown, schools/homeschooling, your ability to save and so much more should influence the decision.
We rent now and will do it for a long time to come.Works best for us because my husband’s VA disability pays for the rent,landlords fixes everything in our house-in the past 5 years we have a new refrigerator,dishwasher,roof repaired and new heating unit put in.My husband has lost 6 jobs within 5 years and works out of state.So I never have to worry about fixing things in the house and paying rent when there was no income.
Samantha @ Mama Notes says
I can’t believe that there are houses out there that only cost 100,000. That is amazing to me. I am used to a nice/decent/normal/small “regular” house being in the 200,00-220,000 range here in Alaska and Oregon where I’m from.
We had to buy a condo because it was the nicest but cheapest we could afford. I would love to live somewhere that has my ideal house for an affordable price!!
Did you see the comment from someone who bought a 1500 sq. ft *decent* home for $68,000? I don’t know where she is from, but here in rural Missouri, that sounds fairly reasonable, though still a good find.
We used to live in southern California where, in the bad neighborhoods, home prices were in the 200,000-plus range. We moved to the Midwest several years ago and bought an older home for around 70,000 (5 bedrooms, 2 baths). In this area it is normal to find (new) homes in the 100000-150000 range. I think you are in a high-cost housing market!!
I built a 2100 sq ft brick house on 10 acres with a $85K total investment – land and all! I’m in Alabama. I can’t imagine how I would pay for a $200K house!!!
We bought our house in Florida for $72,000 in 2009 (it was a foreclosure). It’s a 20 year old 3 bed/2 bath on a nice corner lot, and the only thing we had to fix was one cracked window and the hvac fan.
Martha Artyomenko says
There are houses here….2 bedroom ones that are about $90k. We live in an area that the housing market is very stable, and will not drop much. We are in NW MT.
Crystal, I am so blessed by your honesty in this post. You did not have to write this and but chose to be authentic – what a great example for all of us reading it. It is also such a testimony to God’s good grace that even in our humanness he still cares and blesses us.
Cricket@ Thrifty Texas Penny says
I wrote a post (linked to my name) on the difference making small extra principal payments could make on a mortgage. I personally consider it fun to run the figures and see the savings grow, but found many people don’t even know where to start. I’ve referenced a good mortgage calculator that people can use to make it easy to figure out for their own mortgage situations.
I too have been awed at your ability to pay outright for your home. Regardless of income it still takes dedication. It has been our goal to become mortgage free since we bought our first home 8 years ago. We are currently almost 50% paid off. Unfortunately my husband accepted another job out of state and we ended up buying a 2nd home. For us, rent was much much higher than the combined costs of owning. I know that eventually we’ll be able to sell our first home and almost pay off the 2nd with the proceeds, but until then we’ll keep on snowflaking at the principals on both homes. Thanks for the encouragement to all of us with your example.
“Thank you for this post” doesn’t seem to do justice for the way I’m feeling right now, but it will have to do.
What a great post! Housing has “consumed” me for quite some time. We live on a 75 foot boat, with a “ship’s mortgage” and slip rent. I get concerned about not having a “paid for” house when we are older. Living on a boat requires physical abilities that will be diminished as we get older…
My husband does not want to sell the boat…. so I feel a bit trapped!
Thanks again for your transparency! I love the idea of getting to my goals as quickly as possible, but I don’t want to miss out on life in the process. I have to continually readjust my thinking to remember the big picture. Thanks for that reminder!
Crystal, a BIG THANK YOU…after reading your posts about buying a house outright and then seeing the gorgeous pics of the kitchen…I felt deflated and so inferior and I sat down and did the numbers…there was just NO WAY our family of 8 could have done the same thing…our income is much lower than yours and with homeschooling, volunteering and participating in our church, I didn’t have time to take on other jobs. I’m glad to see this post, it makes me feel so much better and I have learned so much from reading your blog. Thanks for being so honest, you deserve every blessing that comes to you.
God Bless you!!
I’ve loved this series. It’s so inspirational, and I love reading the comments on how everybody has a different situation.
We bought our house 4 yrs ago, for a killer price. It’s a fixer-upper, but we couldn’t rent for what our monthly mortgage payment is, even counting the monthly amount we budget for home improvement/fix-ups. It’s definitely not something I’d recommend to everyone, but my husband is really good at it, and loves it. I have jealous moments, of wishing we lived in a fixed up house, but can usually bring myself quickly back to reality by not being jealous of anyone else’s mortgage payments.
Our plan has been to sell it when we get it fixed up enough, then buy a bigger house, while keeping our mortgage the same size, or shrinking it. By being willing to fix up a couple of houses, and move a time or two (hopefully staying in the same area), we’re hoping to be mortgage free early in life. This series has inspired me to think outside the box on having a mortgage, so we may redo our plan to pay cash sooner, or not, depending on what we feel is best for our situation.
A slightly different take on the whole paying cash for a home issue. We never know how God might provide for us, especially if we are patient. We were relatively content in our second home, which we owned free and clear thanks to wise buying and selling, plus the generosity of my husband’s parents. We thought we would stay in that home, but then my grandfather died, leaving my brothers and I (as well as my mother) a lot of money. We thought about adding on to that second home, but after looking at what we wanted and the cost, we realized it would have been a bad investment, so we started looking for a new home. We ended up building a more expensive home, and paid cash at closing. The builder was floored when we said we would not be getting a mortgage, and insisted in a larger downpayment than for those getting one (not fair, I know). It turns out this was the best decision we could possibly have made because 11-1/2 months after we moved, my husband was diagnosed with incurable cancer, and hasn’t been able to work since. That was just over five years ago, and we thank God for providing us with a new home that needs only occasional minor repairs, has a much better floor plan for our needs, allowed us to build a basement suite for our daughter and son-in-law and which will hopefully give me enough money when my husband dies to move into a decent townhome or condo. The moral of my story is to pray, be patient, and trust that even if you don’t see a way to meet your housing goals as you would like, God may open up those doors when you least expect. Above all, we must be content to trust His plans, no matter what they are.
Thank you for sharing your story Ginny! We owned a home 3 years ago and felt that God was leading us to sell and go back to renting. At the time it made NO sense at all, but we did it. All that time though, we kept trying to save for a house but things kept happening to prevent it. We were really wondering what God’s plan was. We found out last year my husband has ALS (Lou Gehrig’s disease) which is terminal. We know see God’s plan in our housing decisions crystal clear. We moved from our rental to an area that we had always dreamed of living “someday” and could not have done that in this market and these times. We would have surely lost our home if we had stayed in it with this illness entering our lives. Renting for us has been freeing. We live in a home where we do not have to worry about those unexpected house things eating up our budget, my ill husband doesnt have to worry about home repairs, we live exactly where we want and at an affordable price. I am convinced that everyone should really, truly seek the Lord on when, if and how to buy a house. He is the only one who sees the future and knows the circumstances you will be in someday. For us, He lead us down a path we had no understanding of, yet it was setting us up for where we are now. My heart just bursts when I look back and see how perfectly He planned everything.
I am sorry to hear about your husband. How is he doing now?
Stephanie, thank you for sharing your story, too! And for asking about my husband. Phil will be starting on another chemo drug, probably either late next week, or the following week. This will make his fourth drug, in addition to a stem cell transplant (which was standard treatment when Phil was diagnosed, and performed with his own stem cells.) Unfortunately, this is the course of Myeloma; eventually, each treatment stops working until there are none left to try. Come April, he will have been on chemo continuously for three years. The only silver lining in this time was when his kidneys miraculously improved enough to get him off dialysis (the kidney failure was a consequence of the cancer, and how he was diagnosed). We are both discouraged at this point, knowing this latest setback brings us one step closer to the inevitable. But God is in control, of that we have no doubt. Our lives are in His hands.
🙁 My heart goes out to you so very much. I’ll pray for a miracle and for comfort and encouragement for both of you during this incredibly difficult time!
I think you left out some important things to check out. One is the cost of renting versus the monthly payment of the mortgage and what you can get space wise for those costs. In our cheap housing market, with %20 down and a good interest rate, our mortgage (with taxes and insurance) is the same as what we would pay to rent a 2 bedroom apartment in the same part of town, or a house half the size in a not so good part of town.
Also, there is the interest rate to factor in. Right now, housing prices are down, and so are interest rates. It is a good time to be a buyer! Waiting 3 years to save a little more may end up costing a lot more in the long run!
I do believe in having a good down payment for better interest rates and less fees, but even that should be assesed individually.
Paying cash for a house is not feasible for very many. It is an indicator not just of how much you can save, but how much you make and how much you are willing to sacrifice to do it. I would say that if it takes you years to save, you may be losing financially.
One other thing to consider is buying a fixer-upper. A house with a lot of potential, but requiring extra work will be more affordable.
Another idea is to buy small, pay it off, then move up in size as you can afford it.
Also, because there is cost involved with selling and buying a house, it is not always worth it to buy when you know you will be moving soon
The interview you linked to (about your own burn-out) was very honest and sweet.
As a fellow “type A,” I salute you.
I once read that “going at the wrong thing with complete gusto will not make it right.” 🙂 As a girl who has the “gusto factor” going for her, I have to often take hard stops and assess who I’m aiming to please.
Like you, I think, I love my Father above, family dear, and close-to-home most of all. When I aim to serve right here, I never seem to miss anything on the *big* list.
Kudos to you for transparency and grace, demonstrated here.
Tammy L says
Very good “food for thought”, Crystal. 🙂
Sometimes I second-guess our decision to rent a 3-bedroom house rather than staying in our 2-bedroom apartment, because it’s a few hundred dollars more a month that is (in my mind) being “thrown away” in rent.
But, I really do think (and was reminded by someone who knows our family and has spent time with us over the past 2.5 years) that our children are thriving in a location where they can actually go outside and ride a bike… or just be KIDS indoors (not having to worry about walking too loudly or thumping on the floor!).
We decided that for us to save really aggressively, we’d be sacrificing more than we should. In 10 years, our oldest child will be 17! Do we really want our children to spend their childhood in a small apartment so we can buy a house when they’re grown up? 🙂
Another thing we considered is — and I think there is a good article on Simple Dollar about this, as he is from the Seattle area — that where we live, a person can rent a 400K house for ~$1300 – $1400 a month.
At those prices, it’s better to invest the savings and rent, rather than having a mortgage (unless you have a sizable down payment). We don’t rent one quite *that* nice! But the principal still applies, and instead of being just able to make minimum payments on a house + pay for repairs and upkeep, we are able to save the extras. 🙂
Martha Artyomenko says
Tammy, when we lived in Seattle many years ago, growing up….my parents rented for 2 years. We had such bad experiences with the landlord that they decided to buy over in Bothell. We lived there for 6 months. They sold the house about 2 years later and made like 20K. They were able to buy a small house, free and clear, which is part of the house they still own! = )
I know that area changes so much, but they bought it right before a big housing boom.
Something to consider as you think about “what do the numbers look like in 10 years?” is that prices will likely go up. Your salary will go up, your rent will go up, and housing prices will likely go up, too. Probably not the same way they did in the past decade, but the cost of a house will be higher in 10 years (unless the economy totally tanks, so let’s not go there). Even with two downward adjustments for a slow economy, our house is assessed at ~$60K more than when we bought it 7.5 years ago. That’s an increase of almost 50% of its original price. Even if prices would only go up $10-20K, how might that affect the amount you’ve saved for a downpayment?
Totally agreed! And hopefully, your income will increase with the price increases!
The Happy Wife/Danielle says
I was very inspired by your story of saving to pay cash for a home. We actually ended up buying our homes around the same time. If we had been financially smarter in the beginning of our marriage, we probably could have done the same thing. However, we did not really start cutting our expenses until the birth of our 4th child. At that point, we were in a 2 bedroom apartment, but knew we had to leave when our lease was up. At that point we had to decide whether to look for a bigger apartment or to look for a house. After pricing several 3 bedroom apartments and looking at some houses, we discovered we could purchase a house for a lower monthly cost than an apartment. We ended up financing much of our mortgage and we pay PMI because of it. However, our monthly cost is less than the rent on our 2 bedroom apartment and includes our mortgage, insurance, taxes, and the PMI. Our taxes also include garbage pick up, so the only “new” expense we have that was not included in renting is water. Now, instead of saving all the extra money, we are using it toward paying down our mortgage so that we can hopefully have the PMI removed soon. I am really glad that you followed up with this information, because as you said, every family is different and every housing market is different. We ended up buying a 4 bedroom, 1500 square foot home, with just under a 1/4 acre of land for $68,000. The neighborhood is nice and it is quiet, but the schools leave a lot to be desired. Since we homeschool anyway, that was a trade off we were willing to make, but others may not want to. It is all about doing what is best for you and your family and what works for some does not work for all. Thank you for reminding us of that.
Don’t look back with regret, just press forward empowered with the financial knowledge and skills you now have.
And it sounds like you got a great deal on your home. Enjoy it — and I’m guessing it won’t be too long until you’ve completely paid it off!
I LOVE reading your personal posts and the guest posts!! They are so inspirational and make me take a step back (especially when I’ve been at the computer for hours) and realize I’m missing out on my son growing up, exploring and acting crazy.
We need to re-evaluate our goals here shortly and find out what we want to do.
I’m so happy that I found your blog. I love it and enjoy reading your posts. Thank you for all your hard work.
Thank you for your kind encouragement, Kara! As I always remind myself, I’ll never say, “I wish I had spent more time on the computer”, but I’ll never regret the time spend with my children.
Enjoy that little boy of yours. 🙂
I appreciate your note about balancing goals. When I read your first post about buying a house with 100% down and what you had to sacrifice, it was a real eye opener for me. Largely, because it showed me how little I care about owning a home. This was a good realization. Thankfully, it also suits our family right now, as we’re about to move for a 2 year stint in another city that we may or may not settle in after that point. And we’re taking a 50% pay cut to do so.
The truth, for me and my husband is, that the idea of being tied to a house is considerably less appealing than we thought (we’ve done it before and got out just before the market crashed, lucky us!). We’ve watched too many of our friends make solid financial decisions about buying homes, only to have these decisions come back to get them now that the housing market has turned south. It has made us entirely reevaluate the idea that owning one’s own home is a must, especially by a certain age or life stage.
Your original post helped me to realize that, for me, doing quite a few of the things you listed as not doing were so essential to our family that we couldn’t give them up and that owning our own home was considerably less important to us than maintaining those other items. Thanks for acknowledging the tradeoffs. It’s made us realize we’re happy to make the trade in the other direction, for the time being.
Kudos to your family for figuring out what works best for you and then going with it!
And for the record, I think that it is often a *wise* choice not to own a home if you aren’t planning to be settled in one location for an extended time. There are a lot of perks to renting — like the flexibility it gives you to up and be adventurous! 🙂
You make a good point. I read somewhere, that it is good to ask, do you own your things or do your things own you? Your post reminded me of that word of wisdom.
Thank you so much for your humility in this post. It is always good to see both sides of the story. That is why I love reading your blog (I’ve been a regular reader for many years).
Thanks for your kind encouragement. I’m glad to have you here as a reader!
Great post! Don’t miss out on life.. that’s what I needed to hear. We have just come out of that ‘scraping by’ phase, but I don’t want my kids,my husband, or myself to remember ‘financial trouble’ from those times. Then now when we have some to save we are having trouble allowing ourselves breathing room. Instead I feel like I have to continue to deny myself to catch up. I loved a homeschool mom’s offhand joking ( I think) comment about how she lets her oldest watch TV for school. No I’m not going to do that, but when I’m killing myself I think about her completely relaxed non-schooling. It’s the same with finances. Don’t let it be an excuse to do bad but you can say grace over today, go to bed early, play with your kids, and like Scarlett say, “I”ll think about that tomorrow!”.
“Life is what passes you by while you’re waiting for life to begin.”
We Type A people have to help each other remember about margin and grace. And then keep reminding ourselves over and over.
I’m trying to learn to soak up the moments, instead of stressing about the to-do list.
Love this, Crystal.
“Life is what passes you by while you’re waiting for life to begin.”
I am using your quote on my fb page, I love it too!
Thanks for everything Crystal
Love this comment and your insight! I’m a total Type A !!! I need to write down your quote and post it as a reminder. 🙂
We are in the midst of Baby Step #2 for Dave Ramsey – paying down debt. We’re paying off our van today (yippee!!) but still have a medical bill and a student loan to pay off. Sometimes, I feel very overwhelmed by how much further we have to go and that it is taking us longer than the average DR follower to pay off our debt.
But, you can’t get that time back and I really want to be there for my kids (ages 6 and 3 1/2) and not work 80 hours/week to get there quickly. Thanks for the reminder that it is all about doing what is best for OUR family!!
Once we are debt free (except the mortage) and have our 6 month emergency fund in place, we’re going to Disney!! We haven’t had a vacation in 5 years now, and probably wont’ for 2-3 more, so I look forward to having a reward at the end of it!
I like this bit of follow-up perspective. It’s important that one’s goals are in balance with each other – making simultaneous priorities of goals that are more appropriately pursued separately can lead to much heartache and discouragement. We live in an area where the average price of the listed homes in the neighborhood is well over $1 million. We love living here, although we’ve had to accept that living here will mean that we have to make choices, some of them hard. So we do, mindfully, willingly and cheerfully. Most of the time, anyway. To paraphrase a popular expression, you can accomplish everything, just not all at once. 🙂
Following-up on my own comment…my son woke up today full of pouts about why our family does X but not Y, comparing us to his friends’ families with us coming up a wee bit short in the lifestyle department. I had him read this post, filled in some of Crystal’s backstory, and then we had a nice chat over breakfast about choices and opportunity cost. A++ for the perfect jumping point for this morning’s teachable moment!
Liz Ann says