Just wondering if it's my husband that thinks we need to have all this extra cash or if everyone else is like this as well. We have 6 month emergency fund and savings for a down payment for a new home. I am thinking we can if we want to buy our new home and I can quit my job and be a SAHM mom. My husband thinks we need a lot more money in savings before he feels secure. He is also afraid of being laid off but I think a lot of people feel insecure as well due to the economy. He and also I feel it's important to buy this home and not rent since the market to buy is really good right now and also interest rates are so low. So I'm trying to convince him it's okay to buy the home and for me to be a SAHM since we still have our emergency fund. So just wondering what everyone else has in savings and if you think this is enough in this economy?
Added: Yes, definately the home we buy would be able to afford on just my husband's income!
Added: Okay, so my husband is an engineer and I think can easily get another job but he says he doesn't know how long that would take and if it would pay as well also... He makes 90k/year. I make 70k/year. We plan to have @2000/month mortgage payment and that includes taxes/insurance. We don't have any other debt. We may need to buy a new minivan soon but that is it.
Hi, S.:
First things First.
I see a power struggle going on between
you two.
Sit down and discuss the issues and
make a decision that both of you
can agree on.
Just my thought.
Good luck.
D.
I'm not sure how you've worked your budget to determine if you can stay at home or not, but do keep in mind the true cost of owning a home:
1. yardwork (buying, maintaining, and gassing all lawn equipment or paying a company to do it for you)
2. furnishing/decorating
3. repairs - big and small - appliances, hvac, plumbing
4. general maintenance - air filters (typically handled by landlords), painting, roof replacement
5. homeowner's insurance
6. homeowner's dues (HOA, if you have one)
7. PMI if needed
8. ...
Think about your car - you've got maintenance/oil changes/repairs/etc. Now multiply that by whatever factor would get you to the price of your house (cost of car x 12 = cost of house; car maintenace x 12 = house maintenance). Just to get an idea.
I don't think I would ever recommend someone buy a home and then lose one income. Test it out. See how it works. I think you may be surprised at the cost of owning a home...
One simple question to ask....are you purchasing the home on both your incomes or his income alone? In other words if he makes 100,000 a year the mortgage should be no more then 2,700 a month including taxes and insurance. So if he makes 50,000 a year mortgage plus insurane and taxes should not exceed 1400 a month.
Foolish people buy a house on two persons income and the quit a job. Buying a home is a HUGE move in life. having someone quit their job and stay home is a HUGE move in life. Do you want to tackle two big moves at once?
Congrats on saving enough for a down on a new house!
What I would do if in your position is buy the house: live on husband's income but keep working for a while to see how the budget pencils out. I'd use my income for any immediate repairs, upgrades, and furniture for the new house, and put the rest in savings. This is actually what we did long ago, when I was married and we were buying our first house together. It put us in a good position to weather some tough financial times, and was worth the extra year or two that I worked after buying the house.
A "great deal" is only a great deal if it's the right deal for you.
I agree with your husband that you should have an emergency fund in place in case something bad, unforeseen happens. It can take people a year or more to get a job of the same caliber in the event of a layoff. Thank the Lord your husband is cautious.
See how much "house" you qualify for then halve that. When I was singe I was approved for a 100K mortgage and bought a house for 50K. I would have been eating dog food if my mortgage was double what it was.
Your mortgage payment should be about 25% of his NET income per month. No more. Regardless of the emergency fund that's in place. If you can put down a large down payment to avoid PMI, all the better!
ETA: With your husband making 90/year, there's NO way you can afford a $2000 mortgage payment!
Your husband is not totally crazy. I don't know your finances or if you should be a SAHM mom but the economy is sucky! Having an emergeny fund is a great idea! We have an emergency fund that should get us through about 3-4 months and then a savings account that could get us trhough another 3-4 months. People are losing their jobs all the time and I don't blame him for worring about that. BUT, it is a good time to buy a house as mortgage rates are low and I bet they are going to go up a bunch in 2013.
I completely agree that now is a great time to buy a home. It's a buyer's market and interest rates are at their lowest.
As far as savings, yes you should have at LEAST a 6 month emergency fund. Have you been able to save because you're taking your check and putting it into savings, or are you using a portion of your income for expenses? Remember to include in that 6-8 months your income that's not going into savings.
Of course, I have no idea of your complete financial status, but based on this little bit, I would agree with hubby and say it's NOT ok to buy a house and for you to quit your job. You have no idea what your expenses will be when you move into a new house. Your utility rates will change, your insurance rates will increase, you'll be responsible for up keep of the yard and for snow removal, repairs, etc. Once you have lived in a new home for 6 months and have a home emergency fund estabilished, then I would consider being a SAHM.
Being a SAHM is not more important than being prepared for an emergency. He may have these feeling about his job and they may be valid. Just because you want to stay at home doesn't make it the right decision. If you are able to save that amount of money then obviously you must both have good paying jobs. I say stay working for another year then discuss it again. You may be the only bread winner at some time in the future, either one of you could be laid off any day, this economy is bad and not going to get better for some time. Buying a house now is a good idea. If I had extra money I would buy a house and work 2 jobs to pay it off early.
You could make a chart of everything you spend on going to work. The gasoline, dry cleaning bills, child care, food, etc...and then show him the benefits of you not working. The lower taxable income, the less insurance if you give up your vehicle and you guys can go down to one car. There are all kinds of cuts you can make if he is willing but if he's not then you are stuck working.
If you really think you can live off of his income, then do it! Start saving 100% of your income and make a written budget showing how you are living off of his income. The answer, either way, will be clear - no argument. I would also say that you should go ahead and buy your house, move in and live in it at least for a few months before quitting your job. That way, you will understand the impact of home ownership, will be paying your bills at house level (some bills will probably go up) and you will have absorbed all of your moving expenses. Of course, do this all while living on his income and saving yours (which will probably help him feel better since you will be increasing your savings). If you can get that behind you and still show that you can live on his income, then I think you should move forward with becoming a SAHM.
We live on less than 42,000 a year...
I can understand his concern. The emergency fund in my mind is in case of a layoff you can pay bills for 6 months or more. It's taking some people a lot longer than that to find work. I don't know what field he's in but if it is one that is struggling??? Buying a home can come with a lot of unforeseen expenses. I know that first hand because due to a pipe leak under our foundation, my husband and I had to unexpectedly drop over $25,000 into our home this year. That's over and above the insurance check. Thank goodness we had the money.
He's probably feeling the pressure to provide security for his family on his own. It also sounds like you guys are making several big changes at the same time. I'd try to make sure he felt comfortable. Sounds like a wonderful husband and father.
All that being said, I hope you get to stay home with your children very soon.
Honestly S.....Owning a home is very expensive.
On top of the mortgage you will also have insurance, taxes, possibly an HOA fee if you live in a gated/planned community, and you will also need to have plenty of money saved for repairs.
Also don't forget yard work. You will probably have to buy a mower, edger, etc....and you will spend more money on water, watering the lawn....fertilizer...weed killer etc.
Also, depending on the type of guy your husband is, you might find he gets really into doing the yard work and home repair projects....lots of men LOVE this stuff....so you might find you need a new line item on your budget for frequent trips to Home Depot he will want to make.
I know this is not what you want to hear but, if you REALLY want to stay home, you should probably either
a) Wait until you can pay for like HALF the house in cash. Or ideally, own it outright. Not kidding.
b) Save up a HUGE downpayment and buy a very modest condo/townhouse......you will have a sizeable HOA payment each month for those but at least you won't have a yard to deal with and, quite frankly, less opportunities for your husband to take on "projects."
c) Rent, save, and be a SAHM for now. Wait to do the house thing until you feel OK about going back to work.
I say all this with experience.....we are living in our dream house but if I had it all to do over again I may have chosen B or C.
Good luck!
UPDATE: Looking at your So What Happened....
2000/month is a lot even including taxes and insurance. For someone making 90K/year. Just my honest opinion.
Hi S. - It sounds like you are in much better shape than most people. Dave Ramsey's book, The Total Money Makeover is awesome. You might also want to sit down with a professional financial planner before making the leap. You could also consider doing something from home; the best of both worlds - be a SAHM & contribute to the family income. Good luck with your decision and with purchasing your home.
Trust me, I'd love nothing better but to stay at home. My husband would love for me to stay at home as well. However, I'm wondering how long you'd be out of work. Given that this is not my first husband, I've learned that I would lose my retirement benefits. When the children were younger, I didn't work. I didn't even go for a job until I had finished having children and almost everyone was in school. It's good for him to want for your cushion to be extra padded because anything could happen. If one of you were to fall ill for an extended period, that may put you both out of work for that period. It also needs to be padded in the event that major (roof, electrical, plumbing) work needs to be done to the house if you're not working.
