The American Dollar
One industrious American family's focus on a financial goal of freedom. Through worldly personal finance education, here is our story.
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Our Story: Both my wife and I are 27 years old and have gone through financial hell and back. Now we are on track to financial freedom, however we are not financial advisors or professionals, just everyday people. Share our journey from a negative networth and email us if you have questions or comments! :)


Monday, April 30, 2007

Should we pay off the house?

The dreaded mortgage question lingers, should we pay off the house? Of course, people like us that absolutely hate debt with a passion say, "Why shouldn't we?". Given our situation, if things were to go the same financially and paying off this house meant a monthly commitment, we will have the house paid off in 4 years... by January 2011 to be exact. Lets go over some numbers first... we have remaining a $73,000 30-yr fixed rate mortgage at a 5.62% interest rate, which calculates to a monthly payment of roughly $430. Heres my issue... I would love to pay this house off by the time we were 30 years old. This will give us plenty of wiggle room in our budget to play with and thus be able to do save, invest, and maybe have a little fun too.

Yes that would be fine and dandy to own a $200K+ house outright. 3 beds, 2 bath, garage and a spacious fenced backyard... but what then? I was going over in my mind what some of my options were at that point. Heres the list:

1. Save aggressively another $100-$200K which could take another 5-10 years (making us 35-40 respectively) and then build/purchase our $300-$400K dreamhome, by selling our current home and moving up with no debt.

2. Purchase another home around $150-$200K and rent out our first home, which would cover our new mortgage amount and be able to pay down that one quicker; again when this done we would still be 5-10 years out. But do I really want to be a landlord and have the hassles of going through tenants and future repairs?

3. Sell our home now and move into dreamhome with a $135K downpayment.

4. Rent our home now and move into dreamhome with a small downpayment and use montly rent to cover mortgages on both.

5. Stay in our current home. Great neighborhood, awesome schools. Nice-semi nice neighbors. Ride it out and Invest.

I'd like to go over option 4 because although it may sound really good. My wife isnt attached to this house and although you can probably fit about a 7-person-family in this house, if we decide to have another child, 3 bedrooms (1 of which is our office) isnt going to cut it for the 4 of us. Sounds crazy but I guess we grew accustomed to having all this space and when the baby came, it was like... ok the guest bedroom just turned to the baby's room. With all of her toys and the baby knicknacks, it seems like our spacious simple space is being taken over! (in a good way of course). Maybe these thoughts of losing our space will blow over. I mean if you ask me 4 years, at 22, if I ever would be a homeowner and asking these questions, I would have laughed. Most of my time was consumed by getting drunk, hanging out with the guys, and trying to get the right girl. Well whatever decision we make, I guess we can consider ourselves very blessed in our position, but there is nothing wrong with thinking ahead. I wasnt born to be mediocre.

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Sunday, April 29, 2007

Enjoying our time at home... and a FINANCIAL update!

WOW a whole month and no blog! After stressing the pregnancy months (and even pre-pregnancy months), it feels good to be doing something different. The last post left little to be desired for a couple weeks however my wife and I have been busy. Spending the day with my daughter and wife has been a great vacation from the hassles and busy work of my job. We go to the park, take walks (weather has been really nice), take pictures, go shopping (not too much but she has already outgrown her 0-3 month clothes!), and get visits by the family on almost a daily basis. My date is set to go back June 15, 2007, a Friday and also our baby girl's 4-month birthday. Ahhh counting the months, just like when my wife and I started dating; we are so excited to have already passed the 1 and 2 month phases of our baby. A little sad though because with every passing day, I say to my wife that shes getting so big and doesnt look anything like she did when she was a week or a month old. She is a little older and doesnt fuss that much anymore but looks around alot and kinda does the "Im taking things in" look. Just yesterday she sat through a baby einstein dvd! She even did a tiny little laugh today (maybe gas) but it was very cute... also her morning smiles make it all worthwhile.

YEAH Finances: We did really good for the month of April and came in under budget. May promises to be another great month in living under our means... I think right now we come in right about $1200 in gross MONTHLY expenses including gas, groceries, household items, mortgage, cell phones, cable, electricity, and of course the all important baby forumla (~$35/week). I'll update the networth sheet to the right as well, as we have hit $200,000+! Apparently I havent kept track of the market these past couple weeks and it seems we did great on all our funds. Also with what little time I've had, I was able to get some needed housework done, mostly to the garage and outside. And speaking of outside appeal, 3 houses down from ours has sold for over $230K and another a few houses down from that was listed at 245K... I know our house can easily fetch 210 now... imagine what we can do if we put in a little bit more work!

Finally I apologize I havent been on here much but I promise to update a little better. But like one of my good deprived friends says it can be summed up in one word, "baby" and its pretty much understood.

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Emergency Fund
2007 Roth Contributions
$8,000 Total

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