Home buying - what can we afford least
Hi folks, we are new to these parts and YNAB is opening our eyes to a lot of questions about our finances. Our timing could not be better/worse, though. We just put in an offer on a house, with NO contingencies, and are moving quickly towards closing.
However, we were so focused on the down payment and closing costs, that we glossed over just how much more the monthly cost would be vs our current rent. It will mean serious restraint and restriction as well as major scrabbling by my non-salaried husband to get extra hours etc. It would also mean lean times in clothing etc for our teenagers, and we still need to save for college!
The question we are facing this weekend: Do we move forward with this purchase? We can "technically" afford it but I think if you asked Dave Ramsey or a YNABer, we can't. Or, do we back out of the sale and lose what is to us a significant amount of money in the deposit?
Are we crazy to even be considering backing out? At this point, we just don't know.
Sadly, that sounds like a no with all those things compounded. In the long run, you're out your earnest money, which is probably a few thousand dollars, and in the end, that will feel like a drop in the bucket for long-term security. There's even a chance that given how on fire the market is in most parts of the US right now (not sure where you are) that the sellers might be willing to negotiate not keeping all or even any of the earnest money since they will probably go back under contract right away.
A home should feel like a blessing, for lack of a secular word. If you associate your house with being a major source of stress, it won't be a home and that would be awful. Every day you'll come home to feeling like you made a bad decision. If you won't be in a position where the monthly payment is going to feel comfortable within about 12 months, I would probably back out.
That being said, if you'd like to post more of your budget here, we are a good relatively non-judgmental community for finding ways to make it work. (I say relatively because we tend to be very quick to identify if your spending doesn't match your stated priorities--no judgment on what those priorities are but if they're priorities, your spending and budgeting should match them.)
I understand dreading losing that deposit money. And I certainly understand feeling like you can't afford something you basically already bought. If your home is going to be nothing but money stress then you might want to back out but if you want to see if you can make it work here are some categories I tend to look at when I'm trying to find money.
Groceries - I always feel like this could be lower. I won't give up fresh fruits and vegetables which can be very expensive in Alberta but we can give up pricey teas, epicure, and costly snacks like the mill chocolate chips we go through like crazy.
Personal care - prefer to use Lush body lotion and luxe face cream but my skin is just as hydrated on cheaper stuff. Another big way I cut back was dying my own hair.
Entertainment - I got a library and rarely purchase books now. We rent movies most of the time. I'd still shell out for MARVEL movies in theatres but that's about it.
In your budget I would intensely scrutinize that shopping category. I have found for us a big catch all category like that can hide lots of spending that can be cut.
Honestly a few months ago I shaved $5 off most negotiable categories and the only I have noticed so far is groceries. But that was a problem in the last year anyway.
Unfortunately you don't seem to have the time to try out some new spending habits and see if you can make them work.