One of the worst financial decisions a new grad or new professional can make is buying a bigger home than you need.

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Feb 22, 2019
1:11:32pm

Baron There was no collusion

One of the worst financial decisions a new grad or new professional can make is buying a bigger home than you need.

I have seen it way too often where a guy or a young couple starts a new career and is making a lot of money and they go buy this 4 or 5 bedroom home of the future. It is horrible financial decision and short sighted.
Much better would be to buy a small place close to work or buy two small places and rent the other. I have seen too many people kill their gainz by buying a house much larger than they need because that is what they will need in the future or that is what they grew up with. Don’t worry that time will come.

*Worst for someone that should know better. There are clearly worse things than buying a home, but this is for the smart CBers and their families not the riff raff who are bad with their money.

This message has been modified

Originally posted on Feb 22, 2019 at 1:11:32pm

Message modified by Baron on Feb 22, 2019 at 1:15:13pm

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Baron

Previous username: jarocho
Bio page: Baron
Joined: Sep 1, 2006
Last login: Apr 25, 2024
Total posts: 93,968 (32,672 FO)

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Messages

Author

Time

One of the worst financial decisions a new grad or new professional can make is buying a bigger home than you need.

Baron There was no collusion

2/22/19 1:11pm

That's why if you're smart, you move to a place like the SF Bay Area, where you

mik3

2/22/19 1:12pm

RE: That's why if you're smart, you move to a place like the SF Bay Area, where you

Tokolosh

2/22/19 1:14pm

RE: One of the worst financial decisions a new grad or new professional can make

CougarHut

2/22/19 1:17pm

But now days you need to have a minimum of $24,000 to itemize.

JAGA97

2/22/19 1:20pm

Most people stay in their home far less time than they anticipate.

garyfan

2/22/19 1:23pm

I think we'll see this change. Assuming interest rates head higher over the next few years, it will be more

HarlemCoug

2/22/19 3:06pm

I take the opposite position...stretch more than you think on your first place

Iman23

2/22/19 1:23pm

Yea that is great if you want to kill your gainz. This is for people who want to be good at making money and not slaves

Baron

2/22/19 1:25pm

The utility of the extra features of a house that makes you house-poor doesn't

TaiJuan

2/22/19 1:28pm

<< Deleted >>

Rooney

2/23/19 5:27am

Bottom line is, stretch on investment instead of consumption

hansel

2/22/19 1:49pm

True fact.

cougfanz

2/22/19 2:03pm

Also renting is OK. It is not "throwing your money away" like some people think

JackStack

2/22/19 1:24pm

If you have a mortgage, you are simply renting money rather than a house.

crack

2/22/19 1:25pm

But you can live in a house and can't live in money.

garyfan

2/22/19 1:28pm

the difference is that while renting, you are generally much more flexible

JackStack

2/22/19 1:38pm

renting has additional benefits

grandpacoug

2/22/19 1:44pm

Unless the owner is subsidizing the tenants those costs still go into the rent being charged...

Tokolosh

2/22/19 1:48pm

Renting is the right choice at times. But often people confuse the rent vs buy decision...

Tokolosh

2/22/19 1:46pm

there is another benefit to owning a home which no one has mentioned yet.

grandpacoug

2/22/19 1:49pm

One of the worst financial decisions a person can make is marrying a spouse who is bad with money.

Sea Chicken

2/22/19 1:25pm

Probably the most important choice after your career.

Baron

2/22/19 1:27pm

In some cases, could be more important than your career.

crack

2/22/19 1:28pm

What's worse is I've seen non-married people do this. What a waste of money and

GAINZ

2/22/19 1:25pm

What would a single person do with all that space? And it's not like they are going to stay there after they get married

Slim

2/22/19 1:43pm

I mostly agree, except in some places it’s cheaper to get a mortgage for a 3

Lieutenant America

2/22/19 4:06pm

I think it's just as bad to move multiple times within the same city.

2/22/19 1:29pm

This seems to be what floats the economy of St George.

kccougar

2/22/19 1:44pm

at the current time you are probably correct about St. George.

grandpacoug

2/22/19 1:46pm

I would expect a new grad to move multiple times in the first decade anyway. why buy a house?

byujag

2/22/19 1:30pm

Are you talking about switching companies?

Great38

2/22/19 1:52pm

It depends. Early career job switching has become a lot more common...

Tokolosh

2/22/19 1:55pm

Yea. This probably depends some on career and market in the city you live.

Cougar8Duck

2/22/19 3:17pm

False. I overextended myself 6 years ago and it’s been a fantastic decision

SlantRoute

2/22/19 1:43pm

This is called survivorship bias.

mik3

2/22/19 1:44pm

Fine by me. Call it whatever you want. Took a risk and it’s been awesome

SlantRoute

2/22/19 1:50pm

How much did you put down?

Baron

2/22/19 1:52pm

Glad to hear. Pointing out that your experience doesn't make OP "False".

mik3

2/22/19 1:55pm

I know. I’m purposely being a little obtuse

SlantRoute

2/22/19 3:05pm

And you’d be singing a much different tune if things had gone the other way

BYUFootballisBack

2/22/19 1:46pm

If you bought two homes and rented it out, you would have doubled that

Baron

2/22/19 1:46pm

if buying one rental house is good, buying two must be better and why not 10....

grandpacoug

2/22/19 1:50pm

well, you aren't wrong. If you have the financing it's a smart move

Saxa

2/22/19 1:51pm

I hope to some day. But you are the pro at that

Baron

2/22/19 1:52pm

Did this, moved into a bigger house after 6 years and kept the first as a rental

JONBOY

2/22/19 1:47pm

great strategy.

grandpacoug

2/22/19 1:51pm

That was my plan. Timing didn't work. Bought the first house in 2008.

Cougarrr

2/22/19 2:40pm

Yep. U also lose leverage. Doctors make that mistake all the

cougfanz

2/22/19 2:02pm

These days the doctors are much more worried about their student loan payments than their mortgage payments. Those

Slim

2/22/19 2:33pm

I think it's a bad idea in general to stretch too far in buying a house

Belboz

2/22/19 2:03pm

We bought a smaller home that we plan to rent out

Crazy Duck

2/22/19 2:04pm

I generally agree. But there are many instances when buying big can pay huge

JAGA97

2/22/19 2:15pm

False, I did that and now I own two homes, rent one out and it pays nearly both

Romex

2/22/19 2:18pm

And you make the mistake of ignoring opprtunity costs.

Baron

2/22/19 2:23pm

Laugh if you like but you could have a third home by now. But not everyone can get the gainz.

Baron

2/22/19 2:59pm

I want to live in a nice house. I spend a lot of my life there and I only

2/22/19 2:27pm

Where did I say not to do that? And ok'd people can burn their money if it makes them feel good. Not so much a 23 year

Baron

2/22/19 2:28pm

I'm just saying that CB generally looks down on those that spend to have a nice

2/22/19 3:01pm

See, I think the problem many fall into is thinking house prices always go up

crack

2/22/19 3:08pm

I agree. It ties up a lot of money. Best bet is to get something very

WizeGuise

2/22/19 2:43pm

Not as bad as leasing expensive cars, phones, etc..

byu1

2/22/19 3:01pm

If you are a yewt, save your money and buy the gas station you work at.

Bovine University

2/22/19 3:25pm

RE: If you are a yewt, save your money and buy the gas station you work at.

Tokolosh

2/22/19 3:31pm

I'm still trying to figure out how to come up with the down payment.

Rooney

2/23/19 5:29am

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