Thursday, October 1, 2015

Parenting and Property

At some point every day I catch myself wishing that we owned a house. This issue has been a constant consideration ever since my husband and I finally decided to leave the academic life and pursue professional careers in the private sector 5 years ago. We saw this as our chance to settle down start a family AND perhaps one day own our own home.

Unfortunately the AND in that last statement turned into an OR. Since we both have an aversion to going into debt which is a given these days for owning property. We'd just gotten out of years of graduate school and for the first time in our lives were completely debt free and unwilling to get back into it so soon. And so we decided to start a family first as age (we were both approaching 30) was starting to become a factor.

A handsome little man and a curly haired little girl completed our family and providing for their happiness and wellbeing has seriously hampered our ability to set aside large sums of money towards owning property.

And yet, this extra time has provide us opportunity to refine our taste and expectations from home ownership as well as allowed us to put together a realistic plan to someday own our eventual family home knowing full well that we will be able to afford the repayments necessary. And all this with one simple little trick.

My husband and I have researched the area we would like to live in to get an understanding of the prices to expect in the area. We also know what kind of house we would like to build in the area so the total expense was easy to estimate.

We then worked out how much a mortgage would cost us each month and the amount of money we needed for a downpayment. From then onwards, every single month we "paid" that mortgage repayment into a savings account to make sure that we could easily manage the amount without running into too much financial stress. It wasn't wasn't easy at first. We regularly overstretched our budget and it took a while for us to reach that level of financial maturity and earnings to comfortably save and live the lifestyle we wanted. But at least we did it all with self imposed restrictions and didn't have the banks hounding us for cash. And whenever emergency struck (like when the car died) we didn't have to stress about not making our repayments.

Every month that savings account grows for our deposit (target at 20% of the cost of the house and land to avoid having to pay mortgage insurance) and we get disciplined about how much money we can actually spend.

Here's the bonus, all that time we're actually living in the neighborhood of our choice because renting is significantly lower than paying off a mortgage in the area. We are both no more than 10-20 mins from work and a short drive to the city and great restaurants.

In that way I'm glad that choosing parenthood before property has given us the chance to be more mature about our finances rather than rushing headlong into property ownership when we were obviously not ready for it. And for our family at least that has been the right way forward.

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