Why We Have Not Purchased A Home--Yet

My husband and I moved to our current apartment 10 years ago. At the time, we naively thought we would be here for one year. Then my husband began his combined M.A./Ph.D. program, and a few years after that, we had our son. The years began to stretch out. My goal was to move closer to family by the time my son was 5, but with the addition of our daughter a year and a half ago, my husband’s schooling took a back burner. We had hoped to be out of this area by this summer, but once again, that is not going to happen. My husband is painfully close to completing his Ph.D., so we are truly hoping we can move past this stage in our lives in the next year.

Meanwhile, I had to call our landlords to renew our lease, again.

We have been in this apartment building for 10 years now. The first three years were in the smaller one bedroom apartment while the rest of the time was in the much larger (more expensive) two bedroom apartment. A quick tally of 10 years’ of rent equals approximately $100,560 paid in rent.

Many people would consider that wasted money and argue that we should have bought a house in this area long ago. Yes, the equity would have been nice, but believe it or not, I am glad we haven’t undertaken home ownership yet.

When we first moved here, my husband was not working, and I only earned a salary in the low $30s. Couple that with my student loan and credit card debt that I accrued while in and out of grad school, and we were lucky to pay the rent. My income improved dramatically within four years, and we didn’t have much trouble living off of my income while my husband went to grad school. Perhaps we could have bought a house then, but we would have had very little money to put down and very little in the way of an emergency fund.

That $100,560 that we have paid out in rent over 10 years averages out to $838 a month. Sure, it is quite a sum, but it is no where near what a home loan payment would cost on a monthly basis. But then there is the property tax to add in, the heating (which we do not have to pay now), the repairs, the insurance (which would be much more than our smaller renter’s policy now), the upkeep, etc.

Some people may argue that we have been throwing money away on rent these last 10 years. I would argue that we have not. Not owning a home and having the related expenses has afforded me the chance to take a leave of absence when my second child was born and to be off work again now that our third child has been born. It has given us the chance to build up a five month emergency fund.

We will own a home someday, hopefully in the next 5 years. But when we buy that home, I want to make sure that we can afford it and all of the related expenses. I want to have both a healthy down payment and a healthy emergency fund so owning a home will be a blessing and not a curse.

An Unexpected Financial and Personal Bonus

Back in February, before my daughter was born, my husband and I made the difficult decision that I would give up my income and be a stay at home mom as I have always wanted. My husband is finishing up his dissertation for his Ph.D., so the income he could bring in would be from temporary sources and would not include insurance.

We looked at a variety of insurance plans and were overwhelmed by the price. So, I decided to ask for another leave of absence at my job instead of just quitting; that way I could keep my insurance benefits while paying out of pocket a smaller expense than getting private insurance for our family.

I wasn’t sure what the response to my request would be because, at the time I asked, I had just come off a leave of absence with my second child nine months ago and because I was asking for a 16 month leave. (My first leave of absence for my second child was 10 months long.)

While investigating my leave, I was informed that I could use some of the sick time I had accrued during my 10 years on the job to get at least a partially paid leave of absence. (I had not even known this was an option; my first leave of absence was entirely unpaid.)

To my surprise and delight, my full 16 month leave of absence was approved. Five months of that leave will be at my full rate of pay. During that time I will not have to pay extra for insurance benefits and my retirement will continue to be funded. After that, my leave will be unpaid and I will have to pay out of pocket for my insurance benefits.

What a wonderful gift we have been given! Between my full time salary for the first five months and the fact that my husband can now work instead of watching our kids while I work, we should be able to set up quite a nice emergency fund to last us through the unpaid leave of absence. I am so grateful for this. Now the only loose string is my husband’s degree. He has to graduate before the 16 month leave is over.

The Dining Out Challenge Blog

My husband and I love to eat out. It is our one true vice that keeps us from living as frugally as we would like. It is not unusual for us to spend $50 on dinner out.

I conducted a poll on my blog a few weeks ago and asked how much my readers averaged on dinner out for a family of four including tax and tip. The results showed that my husband and I are not alone. Forty-one people responded, and only 16% of them spent less than $30 when eating out. Forty percent spent between $31 and $50, and 41% spent $50 or more going out to eat. If eating out is a special treat, this is not that big of an expenditure, but for many Americans, eating out is something done at least weekly, if not more than that. This can take a huge chunk out of a family’s budget.

Clearly, with our decision for me to quit my job and become a stay-at-home mom, we cannot afford to continue eating out the way that we do. We considered not going out to eat at all, but neither of us really wanted to do that. Instead, we decided to set some ground rules—we can only go out to eat once a week, and we cannot spend more than $1300 on eating out for an entire year. (That averages out to $25/week for us and our two—soon to be three—children.) We want to still enjoy the experience of going out to eat but to be smarter about the way we use our money when eating out.

To document our eating out experiences and to share the ways we try to spend less than $25/week, I have created another blog, The Dining Out Challenge. Come join us there to learn tricks to save money eating out, to share your own experiences and to read our reviews of the restaurants we dine at.

We will try hard to avoid the typical fast food choices; we want to eat out like we used to at restaurants we enjoy without paying the high sticker price, so to speak. Hope to see you there!

Deciding to Stay Home, Part II

In part I of this post, I outlined the long path through my husband's educational career and my full-time career. You can read that post here.

We have two choices—I can keep working and he can keep taking care of the kids. He probably won’t be able to graduate for another two years. Neither of us is satisfied with this option. Or, we can take a huge leap of faith, and I can quit my job to take care of the kids while he finishes his degree and graduates no later than December, 2010.

We have thought long and hard about this. We have prayed about it.

I am not good with leaps of faith. When I was 17, I worked at a dry cleaners. I went to school with the boss’ granddaughter. The hours were perfect for school—3 to 7 p.m., and the pay was decent. However, the granddaughter and another girl who worked there regularly stole anything—money, sometimes drugs—anything customers left in the pockets. They made fun of me endlessly for not doing the same. I was miserable, but I was also loathe to give up my job security. The final straw came when a woman left her diamond ring in her skirt pocket and the granddaughter and her boyfriend took it to be appraised. I couldn’t stand to be in that environment anymore, so I finally quit. After I had done it, I regretted not quitting earlier.

I have held my job for nearly 10 years. I have enjoyed it, but as our family grows and I watch our children growing, I wish I was able to stay at home as I would like. Kids grow so fast! I am thankful for the security my job has brought us and for the fact that we have not had to incur any student loan debt during my husband’s education. However, both my husband and I feel if I continue to work full-time while we have three children, his education will continue to take a back seat to the rest of our lives. It is time for the leap of faith.

We are trying to save 5 months’ living expenses before the baby is born in April. We may need to take out student loans. At this point, we both feel okay about doing so because we have avoided it so far and it may be a necessary evil to final propel my husband to graduation. My husband can get an assistantship in the fall, and I could always work part-time. I also want to grow my eBay business more before the baby comes. I would also like to pursue freelance writing from home.

If we get VERY desperate, I have a nice retirement we could tap into, but I would NEVER do that unless we were literally about to become homeless. Still, it is a nice comfort.

You may notice my money saving kicking into high gear. We only have a few months left with a steady income. Next week I will outline my business goals for the year with the idea of quitting my job in mind.