Homes vs. baubles?

[MichelleCarmen]

Out of curiousity, do most of you own homes? My husband and I recently sold our rental house and are using the proceeds to pay down our mortgage. I could have used the money to buy diamonds, but am realistic about what I would be most happy with when I retire.

I see so many younger people with loads of designer stuff and I admit, I too love expensive jeans and fun shirts from the t.b.d. dept. in Nord. (which isn''t by any means the most pricey stuff out there), but I am sure to pay cash, not even credit or debit, and wonder HOW most are paying for everything. Are they paying cash too? What about diamond eng. rings? What would a person sacrifice for a larger stone?

For you gals, was there a choice between a larger eng. ring or putting a down pmt on a house? Would you postpone buying a home or putting a decent down payment down or would you go with a smaller stone?

 

[chrono]

I'd put the money down on the house first, then save up again for a ring. While upgrades are sweet/pretty and a large bauble is very tempting, it IS a luxury item and a house should always come first.

 

[strmrdr]

Right now is a bad time too buy a house in many markets.
I dont plan on buying one ever. (might change someday but as long as rent is less than a morgage I wont.)

 

[MichelleCarmen]

Date: 9/26/2007 3:03:50 PM
Author: strmrdr
Right now is a bad time too buy a house in many markets.
I dont plan on buying one ever. (might change someday but as long as rent is less than a morgage I wont.)

It is a bad time for some but not in all markets. Housing prices around my region are still going fairly strong. We bought in 2005 and paid a portion of that mortgage off. I guess we are lucky as we didn''t get stuck with one of the ARM mortgages that are messing everyone up!

 

[mrssalvo]

house first, no question and cash only for jewelry purchases...

 

[Lynn B]

I actually didn''t get my first diamond until our house was paid off. I agree with Mrs. S... home first, diamonds (bought with cash only) when possible! Believe me, I love the baubles as much as the next person, but I am a practical girl!

 

[decodelighted]

Isn''t "debit" the same as cash .. in that its directly deducted from your account? Or do you mean carrying around large quantities of physical CASH??

To the original question -- we own our home ... or, I guess the bank still owns about 1/2 of it.

. Having that checked off the "to do" list played a part in our decision to splurge a bit on my engagement ring.

Before I started saving for a down payment ... I went through a brief period of indulgence. Fancy appliances, clothes, shoes, dishware, crystal, furniture, makeup etc. It demystified those things for me enough to kinda get the desire out of my system a bit. Not that I don''t still crave luxuries -- but now I know they''re not the be-all & end all. Not life changing. Yanno?

 

[Lynn B]

Well, by "cash" I mean check, debit card, etc... heck, even a credit card if paid in full by the statement due date, qualifies (in my mind) as a "cash" purchase.

Definitely don't carry that kind of real, literal, green paper *cash* around!

 

[strmrdr]

Date: 9/26/2007 3:08:44 PM
Author: MC

Date: 9/26/2007 3:03:50 PM
Author: strmrdr
Right now is a bad time too buy a house in many markets.
I dont plan on buying one ever. (might change someday but as long as rent is less than a morgage I wont.)

It is a bad time for some but not in all markets. Housing prices around my region are still going fairly strong. We bought in 2005 and paid a portion of that mortgage off. I guess we are lucky as we didn''t get stuck with one of the ARM mortgages that are messing everyone up!

I hear ya...
I begged a friend of mine to lock in the low rate while he could but he bought the sales pitch and got an ARM and is now in trouble.
I remember the 15% morgage interest rates of the early 80s and knew he was going to get into trouble.

 

[Petunia]

MC-- we built our home 14 years ago and paid it off two years ago. That was such a relief to my husband because he hates debt. There is more money now for baubles and extras, especially with me working now (I went back to school a few years ago--have since graduated and also was a stay at home mom for a bit). My daughter just started college this fall so the money that would have gone towards the mortgage is now earmarked for college--no stress for college payments, which was his plan all along and still money left over for other extras, which are promptly paid off when the bill comes. My opinion: pay off/down the mortgage. Also, I can''t say I''m into the designer jeans, shoes, and bags. I do own some high end items but I can say that I''m not drawn to own a lot of these things. I much prefer to indulge in vacations and upgrading/remodeling some areas of our home.

 

[Stardust]

No house right now - the market is insane and we don''t necessarily plan to stay in the area. The area we plan to live in depends on where I go to grad school and if we like that area long enough to stay there afterwards. Honestly though, after I finish grad school he''ll likely go to a different one so we won''t be properly settled for another 6 years to know what area to buy a house in.

I do still buy small jewellery (my e-ring is less than .50 carats and is the most expensive jewellery I own). It''s not near as expensive in the US (I live in London) with current exchange rates. I still have some money in the US that isn''t worth transferring b/c the exchange rate is so bad. I definately don''t plan to put off all small jewellery related puchases for another 6 or more years until we can afford a home and decide where to settle.

So my priorities:
smaller fun items now (including jewellery, new phone and computer)
house as and when we can afford it and are settled - to be honest, the fun items barely brush the household budget there''s no way doing without them would allow us to buy a house more than 6 months sooner

 

[Skippy123]

Date: 9/26/2007 3:09:54 PM
Author: mrssalvo
house first, no question and cash only for jewelry purchases...

I agree w/Mrs. Salvo.

To make big purchases I like to use my AMEX so I get the rebate and then pay it off right away. It is always fun to get that big rebate check at the end of the year.

 

[Keepingthefaith21]

We bought a house first. Figured the e-ring and other fun stuff would come around eventually. We were more interested in getting our house first just in case the mortgage rates went any higher. Thankfully we had the common sense to get a fixed rate mortgage!

 

[MichelleCarmen]

Date: 9/26/2007 3:16:56 PM
Author: decodelighted
Isn''t ''debit'' the same as cash .. in that its directly deducted from your account? Or do you mean carrying around large quantities of physical CASH??

To the original question -- we own our home ... or, I guess the bank still owns about 1/2 of it.

. Having that checked off the ''to do'' list played a part in our decision to splurge a bit on my engagement ring.

Before I started saving for a down payment ... I went through a brief period of indulgence. Fancy appliances, clothes, shoes, dishware, crystal, furniture, makeup etc. It demystified those things for me enough to kinda get the desire out of my system a bit. Not that I don''t still crave luxuries -- but now I know they''re not the be-all & end all. Not life changing. Yanno?

Debit is the same as cash, but when I go shopping for clothes & accessories - but not really expensive stuff like a new rug for my bedroom - I bring paper money (believe it or not!). lol That way I know how much I''m spending. I take the $ out of the bank, go shopping with that amount and when (if) I run out, I know it''s time to come home. lol It''s insane, but it works. Hopefully nobody robs me!

(before when I used a debit card, I didn''t track my spending and always went over my budget.) I''ve actually gotten funny and DIRTY looks from sales people before AND comments over my payment method! It''s kind of annoying.

Petunia - the whole college thing is making me nervous because I have two kids, two years apart, who will be going to college in 11-13 years from now. I am inclined to have them take out loans! lol

 

[onedrop]

Definitely the house first. We currently own our home and I would love to have more paid on my mortgage and my student loans in the coming years. We don''t have kids yet, but I''d like us to meet certain financial goals when/if we do have kids. I don''t want to be paying my own loans when it''s time for them to go to school. Plus we probably will want to move to a larger home as our family expands, and we''d like to be in the best postition to do so, hence we are trying to stick to a budget. I''d love to be able to splurge on baubles and other luxuries, but I just can''t bring myself to do it right now. Any money that would go for luxury items is now being saved.

And I have to say, that when I carry and use cash, I tend to spend less than I do with my debit card. yes the debit card draws the money directly from my checking account, I somehow and more judicious with my spending when I need to spend. Maybe it''s simply psychological. i.e., I am not going to spend ALL my cash on that new pair of shoes, I''ll just wait for the sale.

 

[MichelleCarmen]

Date: 9/26/2007 3:54:20 PM
Author: onedrop


And I have to say, that when I carry and use cash, I tend to spend less than I do with my debit card. yes the debit card draws the money directly from my checking account, I somehow and more judicious with my spending when I need to spend. Maybe it''s simply psychological. i.e., I am not going to spend ALL my cash on that new pair of shoes, I''ll just wait for the sale.

Yep, people have a harder time equating debit card with actual cash. It''s like disassociative spending when using a debit card. When it comes to pretty plastic vs. actual dollar bills, the latter reminds us of working for our paychecks.

 

[Tacori E-ring]

Date: 9/26/2007 3:03:50 PM
Author: strmrdr
Right now is a bad time too buy a house in many markets.

I dont plan on buying one ever. (might change someday but as long as rent is less than a morgage I wont.)

The opposite is also true. In some markets it is the PERFECT time to buy b/c it is a buyers market and homes are selling for less. Unless you live in an expensive city or you have crazy cheap rent owning will always be the smarter choice.

 

[Petunia]

MC--I think I would tend to agree with you on the loans

only because they are so close in age. My girls are 6 years apart (18 and 12 years of age). I planned it that way for various reasons, college being one of them (I''m always the planner and control freak

). I figured we would have 2 years to recover from daughter #1''s college years and save up for daughter #2.....wrong. Daughter #1 is studying pharmacology

which is a 6 year program. I may have to explore creative financing for daughter #2

Loans aren''t a bad thing though......can teach them some financial responsiblity!

 

[Tacori E-ring]

MC, I love being a home owner so much my vote would always be for the home over diamonds. My DH is very much like you. He paid for my e-ring in cash. Wants to pay cash when we get new cars. Even wants to pay off our home sooner than the 30 year mortgage. He is not against using CC but likes to pay them off in full each month. College tuition scares me too! I cannot even imagine how much it will be 18 years from now.

 

[portia]

Tacori,

I was thinking the *exact* same thing as you. DH and I were walking around our neighborhood last weekend and noticed quite a few flyers posted for open houses that have extremely motivated sellers. I would think it''s not a good time to sell, but could be a good time to buy.

Where''s DeeJay? I know she would have some interesting insights.

 

[scarleta]

pay loans first, house after and the mortgage. diamonds ,sapphires , rubies and the rest of it only if $$.Not a priority for me..Would prefer to go to a nice spa if I had extra money....Don''t know any nice spas so would have to post here and ask...

 

[portia]

I''m in agreement with those that say owning a home is more important than diamonds. Diamonds are definitely a luxury item, not a neccessity. There''s always opportunity for those things in the future. Of course, I suppose that''s easier said than done!

 

[rockzilla]

It''s really tough to compare the two when you live in expensive city like I do (LA).

Entry level condos in so-so areas start at $500k...a 20% downpayment is $100K...so for us, it''s kind of like asking "Would you rather have new shoes or a new car?" You''d have to go shoeless for a WHILE to make up the difference

Plus, I will likely be going to business school in a few years, in which case it doesn''t make sense to be either making payments on a home loan or having a lot of cash/assets (for fin aid purposes). We''d also be delaying marriage for this reason - it kills you financially in bschool.

I''ve actually heard of folks who used some of their bschool loans to finance big ticket purchases (ring, wedding, down payment, etc) since the student loan interest rate (I think at that point was <<5%) was SO low. I don''t know how comfortable I''d be with that, but it is certainly creative.

 

[Tacori E-ring]

Date: 9/26/2007 4:12:43 PM
Author: portia
Tacori,


I was thinking the *exact* same thing as you. DH and I were walking around our neighborhood last weekend and noticed quite a few flyers posted for open houses that have extremely motivated sellers. I would think it''s not a good time to sell, but could be a good time to buy.


Where''s DeeJay? I know she would have some interesting insights.

DH flips houses for a living so I only know the market where I live but there are some GREAT deals out there. Of course there ALWAYS will be forclosures. There are many reasons why people cannot pay their mortgage (adjustable rates are hurting people right now for sure!) Buying a house is such a great investment. Even though now might not be an ideal time to sell (in most places) the market will recover and the equity will always be there (and after 2 years tax free!!!) People will always need a place to live. Renting is like flushing money down the drain IMHO.

 

[onedrop]

MC: I totally agree with you with the debit card vs. cash thing. Unfortunately my words got a little jumbled in my last post, sorry about that.

Scarleta: I totally feel you on the spa situation. I love to go to the spa! And at times the more swanky the better. However I have put that on hold as well, since other priorities have come up.

 

[fleur-de-lis]

Why sure, I love baubles, but they''re not necessities. General rule, home over jewelry. However...

MC, I think there may be an element to the equation that results in "young people" buying nice jeans or attractive jewelry while still being renters. Where I live, 2 bedroom condos-- a somewhat normal thing for a fairly prudent young couple starting out to contemplate buying-- start at around $800K. Tiny and old single family homes start at around 1.2M. When you realize that the 20% down to avoid PMI on that mere condo is $160,000, the amount people spend on designer jeans (or putting an extra $5000 towards an ering) really doesn''t seem like much.

Assuming the average person in their late 20s derives most of their income from a salary, it takes a while to build up that sort of sum. (Well, that, or home prices have to come down significantly.) I think most people, young and old, can be disciplined if there''s an achievable goal that can be achieved in a relatively short time frame, but if the time frame is longer, it''s more emotionally healthy to not deprive yourself of EVERYTHING for years on end. I also think from the anecdotes I''ve heard that most people, when they get a windfall from an inheritance/selling an investment property/get a large bonus, *do* exactly what you did, which is put it into an asset like real estate rather than "stuff". But for those renters without a windfall who are saving for a theoretical home one day in an absurdist housing market, the upgrade may represent the difference between having a downpayment 5 years and 6 months from now versus 5 years and 9 months. That, I think, is psychologically very different from seeing the mortgage balance on an actual house with firm terms go down, and why you see young folks who do not yet own homes in the tbd section at Nordstrom.

Has anyone else observed this where they live?

 

[ursulawrite]

Yes, we own our NYC apartment. We got lucky and found a lenient co-op that only wanted 10% down and a relatively small amount in savings (most Manhattan co-ops like to see upwards of $200k in savings before they''ll even consider you). Since moving in two years ago, our apartment has appreciated by $400k, so I feel happy about our decision, even though it meant sacrificing many luxuries initially.

Next year we hope to sell our apartment and buy a Brooklyn townhouse. I can''t see us ever renting again.

 

[Mara]

house was the best decision we have made thus far, the tax rate we were paying into was CRAZY as renters. we get back an insane amount of money per year from federal thanks to the deduction on the house.

we bought our ring before house but got house before getting married. after house was taken care of, i upgraded my ring. now we''re still finishing up furnishing the house in the way i want...but we''ll probably move within a year or so. it takes so long to get settled in!!

so i chose ring over furniture/decor for a while but not before house really. we just got engaged before house because we didn''t PLAN to buy house til married but the property was too right to pass up.

i don''t think i''d put fun things like upgrades or new projects etc over another house or 2nd property. i am a huge believer in real estate seeing what it has done for people i know in terms of net worth and hopefully that''ll be us too eventually!!

 

[Eva17]

Most areas, it is a great time for first buyers that have been saving for the down payment. Houses that my sister was looking at a year ago asking close to 500, she is able to look at more options now in the 400 range.

So between it being a buyers market and interest rates were just dropped again last week, (and they are expecting another drop) it could be a great time for the first time buyer. Just make sure is a fixed rate.

Agreed, first the real estate, then the incidentals.

There is no greater return on an investment, than real estate. Especially in the long run.

 

[snlee]

Date: 9/26/2007 3:09:54 PM
Author: mrssalvo
house first, no question and cash only for jewelry purchases...

Ditto! For cash, I use a credit card that I pay in full, so I can take advantage of the rewards program.