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To Grow Wealthy, Stay Where You Are

May 27, 2016 By MelissaB 1 Comment

When I was little, I devoured the Little House on the Prairie series.  I felt bad then for Ma and Pa.  I felt bad for the way they struggled financially, facing setback after setback.  I felt bad that they always had to move just as soon as they were settled.

But then I read the books again as an adult.  Then I read them one more time to my daughters.  Now I realize, as much as Pa was a loving father, he was responsible for a lot of his family’s financial hardships.

Life in Wisconsin was good for them.  But once Pa got the itch to go west, his family never had a stable environment.  They never got more than a few years into getting settled and making a life for themselves before they moved again.

Does Moving Now Cause the Same Financial Difficulties?

Grow Wealthy
Grow Wealthy by Staying Put?

Most people would argue that life was different then, and moving around now doesn’t cause as much financial hardship, but as someone who recently completed a 2,000 mile move, I would disagree.

My husband and I had lived in Chicago for 14 years before we made the move last July to Tucson, Arizona.  We went for my husband’s work and because the move would give us a lower cost of living and a pay raise for my husband.  On paper, everything looked good.

We foolishly thought we’d stay for two to four years.  Now, I’m not sure we should move so soon if we want to prosper financially.

Even though my husband’s employer paid for the move, we still had many expenses like setting up the utilities and paying deposits on them, buying a few new pieces of furniture, etc.

Breaking Even and Getting Ahead Takes Years

We bought a house when we moved here, knowing that we weren’t sure how long we’d stay.  We’ve had our mortgage for 15 months now, and in that time, we’ve paid down $4,300 on principal.  Our home has increased just $1,100 in value during that time.  That gives us a cushion of about $5,400, but I’m guessing if we were to sell our house next year (which would be two years that we’ve lived here), we’d be losing money thanks to realtor fees.

We’ve also just reached the point where we’ve started to discover ways to save money in our new city.  Now I know where the cheapest places are to buy groceries, secondhand clothes, etc.  Our first few months here we spent much more than we normally do on groceries because I didn’t know which stores offered the best deals.

We also have finally found decent doctors and dentists.  Our first few months here, we found out my daughter need 6(!) cavities filled.  We had to go to four different dentists before we found one that we liked and could trust.  All of those different visits cost us a little less than $200 out of pocket, and that was before her cavities were even filled.

Of course, I’m not saying never to move.  In our case, the decrease in cost of living and my husband’s raise made it possible for us to own a house, which we couldn’t afford to do during our 14 years living in Chicago.  However, the whole story isn’t just on paper.  When you move, there are many incidentals that add up.  Moving repeatedly can cause you to struggle financially.

It’s no surprise to me that the only time in life when Pa and Ma flourished financially was after Ma put her foot down and refused to move from DeSmet, North Dakota.  Without the constant moves, they could finally get established and become comfortable financially.

How often do you move?  Do you agree that frequent moves are detrimental to your finances?

Filed Under: Frugality, Home, Married Money, Saving, ShareMe Tagged With: Frugality, Home, married money, moving, Saving, wealth

5 Reasons Why You Should Declutter Your Home Once a Year

March 2, 2016 By MelissaB 3 Comments

When we moved from Chicago to Tucson 18 months ago, packing was a nightmare.  We hadn’t had a good decluttering session in nearly 3.5 years, since our last move, which was local.  We spent weeks, yes, literally weeks, giving away and selling junk that we just didn’t use anymore before we could even start packing our possessions.

When we moved to Tucson, I vowed to keep on top of the clutter and the household messes.  However, when we prepared to go on vacation recently and knew that our tidy neighbors would be coming in and out of our house for two weeks to cat sit, we realized we had a problem.  The clutter, and the messes, had returned since the move.

I spent several weeks decluttering again.  Several bags of items went to the local kids’ resale shop; several boxes went in the garage earmarked for a garage sale later this year, and a lot of crap just got tossed in the garbage.

Now that we’re decluttered once again, I can’t believe how much better I feel.  From here on out, we’re decluttering once a year.  Here’s why:

Make Additional Money

I made nearly $100 at the kids’ resale shop.  I opted for store credit to get 30% more money.  I’ll use that over the next few months to get my kids clothes and birthday presents.  (Yep, the store sells NEW toys at a fraction of retail.)

I also made another $150 selling items on eBay.

We haven’t had our garage sale yet, but based on what we have to sell, I think we’ll easily make at least another $100.

Sure, these amounts aren’t going to even buy us a month’s worth of groceries, but we now have several hundred more dollars than we had a few short weeks ago, AND our house is much tidier.

5 reasons to declutter your house
Original IMG credit: Dafne Cholet on Flickr.

Save Money

There were several items like my son’s arm shield for archery, our headphones for the computer, to name a few, that we were planning to replace because we couldn’t find them.  Surprise, surprise, once we decluttered and cleaned up, we found these and many more things.  We saved ourselves from buying duplicates.  These small savings add up!

Kids Outgrow Things

Kids grow. . .A LOT!  Pants that fit last winter may be two inches too short this winter.  Games that they loved to play with last summer may be too babyish this summer.  Why keep all these relics of previous phases of childhood?  Clear them out so you have more room.

More Satisfaction With Being At Home

My youngest two children and I had a particularly painful decluttering session when we tackled all the papers, toys, and little pieces that were littering the floor in front of their toy area.  But how much better we all felt when we could see clean, empty floor in front of the toy shelves.  In fact, my children started playing immediately in that space and had a great time.

I notice now that the master bedroom is cleaner, I feel lighter and happier when I walk into the suddenly much more open space.

It’s Easier To Maintain Your Home

We hope to stay in our home for many years, but the reality is that my husband may not have a job here in another year or two.  Until he secures a permanent position, we feel like our home is ours temporarily, so it’s important to keep up a maintenance and cleaning routine in case we have to put it on the market some time.  Having a clutter free home makes this much easier.

What benefits do you get from a less cluttered home?

 

Filed Under: Consumerism, Home, ShareMe Tagged With: declutter, Home

What Effect Does Student Debt Have on Home Ownership?

November 14, 2015 By Satinder Haer Leave a Comment

Millennials are doing things differently than previous generations, especially when it comes to homeownership. Compared to just a couple decades ago, first-time home buyers today are delaying home purchases and renting for longer – and most are millennials. The low rates of homeownership in this demographic have been primarily blamed on overwhelming debt from student loans. After all, Americans owe a combined $1.2 trillion in student debt. While student loan debt can impact an individual’s ability to save for a down payment or qualify for a mortgage, new data suggests it is a myth that student debt is the reason homeownership rates are low among recent graduates.
Student Loan Debt
As long as you get a four-year degree or higher, the effect of student debt is actually negligible on your probability of becoming a homeowner. If you obtain a bachelor’s degree with no student debt, you have a 70 percent probability of owning your home. Someone who graduates with the same degree and $50,000 of student loans has a 66 percent probability. The likelihood of homeownership only drops a measly 4 percent even with $50,000 of undergraduate debt.

For married couples, the key is getting at least one degree between the pair. If at least one spouse has a bachelor’s degree and no student debt, the couple’s probability of homeownership is 69.8 percent. Add in $30,000 of student debt for that degree and the probability drops a mere 2.1 percentage points. Getting approved for a loan or saving for a down payment might take time but the research shows student debt isn’t a major hurdle in homeownership, whether you’re married or single.

Student Loans and HomeownershipGraduate school loans have an equally minor effect on homeownership. Obtaining a masters, medical, law or doctorate degree actually insulates you from the adverse effect of student debt when you buy. The probability of homeownership is highest for individuals with a doctorate and no student debt; they have an 87 percent chance of owning homes. That likelihood only drops to 84 percent if the individual incurred $50,000 of student loans obtaining the doctorate. At the master’s degree level the probability falls from 80 percent if you have no debt, versus 75 percent with $50,000 in student loan debt. Getting an advanced degree increases your overall likelihood of owning a home, despite the small negative impact student loans have on your probability of homeownership.

Individuals with an associate’s degree or no degree are impacted the most by student debt. The probability of homeownership drops from 73 to 57 percent if you obtain an associate’s degree with no student loans versus carrying $50,000 of debt. And for those with no degree, homeownership probability is even lower. The probability of homeownership is 48 percent for an individual with no degree and no student debt and declines steadily with the debt amount. Getting at least a four-year degree significantly increases your odds of owning a home.

The outlook is positive for millennials who want to become homeowners. Not only should student loans have a minor effect on ownership, the research reveals millennials who put down 5 percent and spend 30 percent of their income on a mortgage can afford 70 percent of for-sale homes on the market. While this inventory isn’t spread evenly across the country, buyers who focus on properties in the Midwest and South can afford as much as 86 percent of the for-sale homes. In major metro areas, the pickings are much slimmer; millennials can only afford 25 percent of the inventory in Los Angeles and 27 percent in San Diego. Location is key to affordability, especially for individuals also balancing student loan debt.

Recent graduates should not shy away from exploring their options. It’s surprising how many homes millennials can actually afford, despite their student loan debt.

Filed Under: Home, loans, Student Loans Tagged With: Home, home ownership, mortgage, student debt, student loan, Student Loans

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