This is the second post in my #Write31Days series, “31 Days Inside the Vault.” Get the intro and read the rest of the posts here!
We break our budget down into several overarching categories, and then into more granular categories within those. The large categories are:
- Fixed Monthly
- Rebudgeted Monthly
- Charity
- Short-Term Goals
- Budget Busters
- Automotive
- Healthcare
- Longer-Term Savings
- Work (Reimbursable)
- Other (Reimbursable)
- Business
(I told you we were really specific!)
Let’s get the boring fixed monthly out of the way. Fixed monthly is pretty much what it sounds like: expenditures that are the same every month. Our HOA fees are in there, insurance, internet, and phone. We also include money for a housecleaner to come once a month (a recent splurge), as well as “His” and “Hers” buckets. (More on those later–they’re a lifesaver!)
The biggest, regular, lump-sum expense for us is housing, which is as it should be. Canonical wisdom has it that housing, including any interest, taxes, and insurance, should eat up roughly a third of your gross monthly income. Ours comes in far lower than that. We could have afforded much more house than we bought, but that was not worth it for us. If we had a large family, or specific needs, I could see buying a bigger home and tying up more of your income. But for us with no kids and only a reasonable amount of stuff, location was much more of an important consideration when we went to buy a home. We chose to take out a 30-year mortgage to get a lower monthly payment, and pay extra toward the principal every month. So, our actual housing expenses are greater than they necessarily have to be, but they’re setting us up to pay off our mortgage early! Plus, it’s nice to know that if anything ever happens to one of our incomes we can drop back down to paying the normal monthly payment with no penalty. You pay a bit of premium in choosing the longer-term loan, but not much, and the peace of mind was worth it to us. Keep an eye out for a guest post from my husband on exactly how we calculated that break-even point!
The choice to buy a home was not one we took lightly, although when it actually came down to it we moved pretty quickly. Before moving to Atlanta, we lived in Huntsville, Alabama, a much smaller city with a lower cost of living. We were both fortunate enough to come into our marriage with no debt, and since we both had jobs right away, we were able to begin saving very early in our lives. My husband even encouraged me to open a Roth IRA one summer during college when I had a job as a day camp counselor! He has an extremely good head on his shoulders for financial matters. We’d been in Huntsville about a year and were starting to think about perhaps buying a house when the Andy was offered the job in Atlanta that he ultimately accepted.
Moving to Atlanta was a bit of a shock to the system. We obviously weren’t going to buy right off the bat, not knowing anything about where we might want to live, and we found an nice apartment in an area we really liked. It was ~300 square feet smaller than our place in Huntsville had been, a bedroom and a bathroom short, and didn’t include an in-unit washer or dryer–and cost close to $300 more per month!!
We kept dilligently saving any extra income each month toward a house downpayment, but it didn’t feel like as much of a rite of passage as it had in Huntsville. So many more people in Atlanta live in apartments, and there was a lot to be said for having maintenance and such included. Owning a home is about much more than just the mortgage payment and we didn’t feel any rush to take that responsibility on. But as our rent went up every year with the growing popularity of the neighborhood where we lived, it started to seem more and more appealing to have a lower monthly payment.
My dad recently sent me this calculator that the New York Times put together to help you figure out if you should continue to rent or if you should buy.
For us the biggest question was whether we would stay put in Atlanta long enough for buying to be worth our while. I place a high value on putting down roots, whereas my husband has a bit more of an itch to mix things up, so that was a long conversation for us. But we ultimately decided that, at least for the forseeable future, Atlanta had a lot to offer for both of us. Once we made that decision, we took the leap and started looking! I wrote a little bit about the process here, so I won’t harp on it. Plus, to be honest, my husband handled the vast majority of all the nitty-gritty.
We didn’t have the rent or buy calculator when we made our decision, but from playing with it recently, it’s readily apparent that we made the right choice. For the things that we value–location, walkability, proximity to public transportation–it gets really expensive to rent! We went ever so slightly outside of our ideal location, to a more up-and-coming neighborhood, and were able to purchase more space than we could have rented. We also chose to make a slightly higher percentage than normal down payment, to reduce the amount of our mortgage loan. We’ve loved exploring our new area, and I love coming home. And money aside, that’s what it’s really all about.
