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Budgeting and savings accounts

shortnstumpyshortnstumpy member
in May 2014 Moms
Hi ladies,

Just a bit of bavkground.. My husband and I have been looking for our dream home for a little while now and originally had our budget set firm at $400,000. Being idiots we let the real estate agent show us a house in a higher bracket and we have fallen in love with a house being marketed at $469,000. We are thinking of making an offer but I am a little worried as it will be an additional $13,000 from our savings for the deposit. While we would be able to meet the mortgage repayments I'm just a little bit concerned about our soon to be diminished savings account. If we were to pay the deposit for the house we would be left with $5,000 in savings. What are everyone's thoughts on how much of a nest egg to have? We both work and I will have a year paid maternity leave but we have always had savings in case of unexpected vet bills, car bills etc.

Just interested in everyone's thoughts on savings buffers?
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Re: Budgeting and savings accounts

  • pandadairpandadair member
    edited November 2013

    We've always held very firm on the 6-12 months' expenses in savings. I'm way more of a saver than my husband is, and it makes me feel very comfortable to know that we could both be out of work for a year and still cover rent, bills, food, etc. I'd say it'd more depend on how long it would take you to build your savings back up? Those damn real estate agents will get you! We're about to start house hunting and I'm having to slap my hand everytime it tries to search for stuff above our arbitrary limit "just to see".

    ETA: By nest egg, do you mean retirement savings or just emergency savings?

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  • shortnstumpyshortnstumpy member
    edited November 2013
    Yes damn real estates! The house is amazing and we could build our savings back up but we have always had a large savings fall back so the planner in me is hyperventilating at the thought of being left with $5,000 to our names. My husband is justifying it in te way that we originally were looking at. 3 bedroom home on a large block and this is 4 bedroom so when we have 2 children we would have a spare room for guests/playroom etc. we usually put away $10,000 a year into savings so we could realistically look at having our savings bumped up within 2 years but being our first baby we really have no experience on how much all the extras will cost.

    @pandadair for nest egg I mean just unexpected bills etc. we have superannuation for our retirement and we currently pay extra from our fortnightly pays so we will have extra to retire with.
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  • shortnstumpyshortnstumpy member
    I should mention we have a seperate saving account for the baby which we have $10,000 set aside in but we haven't purchased anything yet so if that diminishes we would have to dip into our main savings account.
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  • pandadairpandadair member

    My own bias is just creeping in and saying "What if something completely unexpected happens right after you buy?" What if (seriously God forbid) something comes up with the pregnancy that precludes you from working. I don't know how the laws work up there, so many you would be covered for pregnancy and still get mat leave. What if your husband is laid off and it takes longer than expected to find something with similar pay? What if what if what if. Totally depends on your risk tolerance, which I obviously have none of.

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  • shortnstumpyshortnstumpy member
    I think we share a mind. That's why I am freaking out. I work for a government hospital so if anything were to happen from week 20 I would be fully entitled to maternity leave and all our health care is free in Australia it's more me thinking if some freak cyclone hit the house and it was wiped we would only have te small amount to rely on until insurance kicked in. My husband can't understand my anxiety but I'm semi freaking out. On the other hand we both love the house so don't want to let it get away. Why can't we just win the lottery :-??
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  • pandadairpandadair member
    I don't know why I thought you were one of the Canuck ladies. That's why I said "up there". What I want to know is why can't someone sell us our dream house for our actual budget? Surely there is someone out there feeling generous. Let me know if you figure out that lottery thing, though.
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  • shortnstumpyshortnstumpy member
    edited November 2013
    I only buy the lottery tickets associated with charities. I figure karma is due to roll around shortly.
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  • Katemr1146Katemr1146 member
    That sounds crazy risky to me...but I'm pretty conservative with our money. Your agent really shouldn't have shown you that. I'm an agent and I would never do that to someone...because of course you're bound to fall in love with something in the higher bracket...there's a reason it's higher priced than everything else you've seen!

    We keep about six months worth of living expenses in our account at all times. Even that makes me itchy and I wish it was more.
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  • shortnstumpyshortnstumpy member
    It doesn't help that my husbands parents are wealthy and he has said if anything happens they will help out. Umm hello we are 27 and 34 we shouldn't need to rely on other people for money. We are completely debt free at the moment so even the thought of a $400,000 mortgage took me a good 4 months to get used to. #-o
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  • shortnstumpyshortnstumpy member
    edited November 2013
    I chatted with hubby and we are going to ask the real estate and our lending bank if we could do 10% deposit instead of the usual 20% deposit so we would only need to outlie $50,000 from savings as opposed to $96,000. That would leave us with a good chunk.

    @smittysmiles we have been renting for 9 years and have always said we would move into our own house before we had kids. We want to be able to paint a nursery and plan a games room without having to worry about landlords. So excited its finally happening :)
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  • bcnoellebcnoelle member
    That does sound very risky. I would consider the following other expenses- possible medical ob/gyn bills for the next year, is the house bigger which would increase electric/heating bills, maintenance of the house such as any repairs/ cost of lawn maintenance or equipment needed for the lawn/ taxes on the house, childcare expenses (say if you are unable for some reason to care 24/7 for your baby). On the flip side I would also consider the housing market, of this is a seemingly good buy, the mortgage rate, and if you would have any extended family (parents ?) who might be able to comfortably help you in a financial emergency.
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  • shortnstumpyshortnstumpy member
    The mortgage rate actually works out to be cheaper then what we pay out a fortnight in rent at the moment so we would actually be spending less money a fortnight with a mortgage. My brother is a builder so could look at maintenance our main expenses will be the baby, our animals and electricity/ rates. All our medical care is free and anything requiring a specialist we have private health insurance for. I'm a commitment phone when I comes to parting with money so I think any house we find and decide 100% on I am going to have a mini heart attack when the time comes to sign a contract (I remember actually crying hysterically when I first moved out of home and had to sign my first lease). On the flip side it will be exciting moving into our first family home :)
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  • shortnstumpyshortnstumpy member
    Also interested in what you ladies are budgeting for baby on a weekly/monthly basis?
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  • Marcella05Marcella05 member
    edited November 2013
    I did what you're thinking of doing and replenishing savings has been moving a lot slower than I planned because of various utilities and home repairs that we didn't expect. I love my home though, and my husband and I just got promotions/raises so I expect to recover quicker now (a year later). It really was too risky and part of me sometimes wishes we bought something a little smaller/cheaper, but I wouldn't do it over at this point. The location, great schools and friendly neighborhood were worth the extra spend IMO.
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  • pandadairpandadair member
    shortnstumpy said:
    Also interested in what you ladies are budgeting for baby on a weekly/monthly basis?
    We honestly haven't figured this part out, yet. I figured the day-to-day costs for baby will come from what is right now our "spending cash", which we just use to eat out more often than we should and buy crap. Also waiting to see what kind of raises either of us get during yearly reviews before baby is here. For daycare costs, we're just going to have to lower our retirement saving percentage for a bit (currently at 25%).
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  • pandadairpandadair member
    edited November 2013
    I also wanted to add that I think it depends on how important your house is to you. I like having a nice house, but I'm also big on wasted space and would prefer something smaller over something larger (also more to clean). And I wouldn't want to be house poor for a dream house, if it precluded having the extra income for things like travel. And obviously I wouldn't buy a house that would make it a stretch to be able to save for retirement, college, etc. But if you can carry a $469k mortgage for less than you're paying in rent (factoring in home owners insurance, added bills, maintenance, etc.) and only put 10% down, I might go for it.
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  • IBackBevoIBackBevo member
    We bought a home a few years ago and wiped out pur savings and a month later I unexpectedly lost my job. Now we were able to still make it work, but it was tight for awhile.
    IF DX: DOR & Fragile X pre-mutation carrier
    2011: FSH 13.3 & E 99; AMH 0.54 2nd FSH 6.2 E 40's AFC: 8
    BFP from Clomid/IUI ~ Pre-e and IUGR during pregnancy ~ DS born 9/4/12
    Feb./March 2013: AMH less than 0.16 (undectable) and AFC = 4;
    BFP from supps ~ DS#2 due May 2014

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  • Katemr1146Katemr1146 member
    pandadair said:

    I also wanted to add that I think it depends on how important your house is to you. I like having a nice house, but I'm also big on wasted space and would prefer something smaller over something larger (also more to clean). And I wouldn't want to be house poor for a dream house, if it precluded having the extra income for things like travel. And obviously I wouldn't buy a house that would make it a stretch to be able to save for retirement, college, etc. But if you can carry a $469k mortgage for less than you're paying in rent (factoring in home owners insurance, added bills, maintenance, etc.) and only put 10% down, I might go for it.

    I agree. If you can get the terms of your loan down and not wipe out your savings it sounds like a better plan to me. We had a set budget in mind for our current house and we looked forever in the areas we really wanted. We ended up finding our dream house, perfectly within our budget, but it's in an area with bad schools. We bought it anyways and now are planning on sending the kids to private schools. If we had found this house in the area we wanted, I think we probably would have paid quite a bit more to get it.
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  • dragossoul84dragossoul84 member
    Have you looked at less pricey fixer uppers? When I buy a house I like to get something that's trashed and then just redo it as long as the wiring, plumbing, and foundation are in good order you can remake anything normally a lot cheaper than you can buy it finished. We bought a total gut job put 60k under what the average selling in the area was put 40k in its worth more now than we could have ever afforded when we moved down here. Its a way to get your dream home at a lower price 
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  • shortnstumpyshortnstumpy member
    Trust me we usually would have funneled part of the savings into our superannuation and other accounts but we have been saving hard for a home deposit for a few years and have the savings in a high interest account. Once we buy a house we are going to have to build our account up again. Luckily my husband and I are both in high paying jobs so we have knuckled down and saved one wage for the past year and lived off the other. Hopefully we can get an answer from the bank and real estate tomorrow about a lower deposit if not I think we will let this house go and start looking again. Our main loves are that it's 4 bedroom and on a large block of land so the dogs will have plenty of space and in a good neighborhood. Cons are its going to diminish our savings if we pay the 20% deposit. My husband thinks we should put in an offer for $450,000 and see if it gets accepted (if we can arrange the terms with a 10% deposit)
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  • mishi09mishi09 member
    Hubby and I counted on me not getting paid for maternity leave since I just started a new job. So we figured out how much I make for 3 months, and then we added to that what we felt we needed to save for baby things. We then calculated how much time we have left to save, and we set aside a fixed amount each paycheck into our own personal savings. I'm trying hard to continue to help pay my end of the bills once I'm out of work. We aren't working on a house anytime soon, though. He's in the military and we haven't figured out quite where we want to settle yet.
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  • IBackBevoIBackBevo member
    One thing to think about is that if you put less than 20 percent down, you have to pay pmi. On a 330k mortgage, it was about $250 a month. When we refied we put more down and the home appraised for 520k so we were able to get out of pmi. PMI is a lot of money and it doesn't go towards anything.
    IF DX: DOR & Fragile X pre-mutation carrier
    2011: FSH 13.3 & E 99; AMH 0.54 2nd FSH 6.2 E 40's AFC: 8
    BFP from Clomid/IUI ~ Pre-e and IUGR during pregnancy ~ DS born 9/4/12
    Feb./March 2013: AMH less than 0.16 (undectable) and AFC = 4;
    BFP from supps ~ DS#2 due May 2014

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  • Katemr1146Katemr1146 member
    IBackBevo said:

    One thing to think about is that if you put less than 20 percent down, you have to pay pmi. On a 330k mortgage, it was about $250 a month. When we refied we put more down and the home appraised for 520k so we were able to get out of pmi. PMI is a lot of money and it doesn't go towards anything.

    That's not necessarily true. I don't know what the lending process is like in Australia, but in the US, some banks will work with you to do a non-PMI loan. You usually have to pay a higher interest rate though...so you'd have to play with the numbers and see which way works out better for you financially.

    OR you can get two mortgages. In the US you have to pay PMI if your loan is more than 80% of the value of the home. If you're combining two mortgages, you can avoid PMI. But you'd have to get both lenders to agree to the others terms in order to get approved for both.

    There are ways around it. Or you can do exactly what you (and my DH and I) did and refinance once you have enough equity.
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  • pandadairpandadair member
    @Katemr1146 (Sorry for threadjacking, shortnstumpy) Am I crazy for wanting to use our VA loan to get something a little cheaper right now, for the next 5 to 7 years, and not tie up any cash in it at all, and then move into something a little more substantial where we'd put a down payment? I can't see putting $50k down on a house (20%) when we don't have to and can leave it in investments, and will need it for another downpayment in 5 to 7 years. Thoughts?
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  • Katemr1146Katemr1146 member
    edited November 2013
    Edited: hit post too soon

    I have never had a client use a VA loan (not because they're bad- I just haven't had any veterans) so I'm not as familiar with them. From what I can remember from real estate school though, it's a really great option, and you might as well take advantage. If you're okay with a smaller home than you maybe could afford otherwise, I think that's a really awesome financial move. You might even be able to save and have more for an even larger down payment in 5-7 years? I would have taken advantage if that was an option for us.

    My husband and I have never put down 20% on a home. We've done an FHA loan on both of our houses, and then refinanced after we built up enough equity to refinance into a conventional loan to get rid of PMI. Both times we've been able to refinance within a year with only minor upgrades to our houses. But we bought a foreclosure the first time, and got an unbelievable deal on our current house. So just taking ownership upped our equity almost immediately.

    So if you don't want to do a VA loan, there's a bit more wiggle room with an FHA loan, or a conventional loan, without putting up 20% immediately.
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  • ZiegefickerZiegeficker member
    Rocknroll64 said:
    I am seriously impressed that you have over 100K in savings.  Wow! Eeek makes me feel really behind.

    No shit...this all day long.
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  • IBackBevoIBackBevo member
    @katemr1146 - I guess I should have said you "usually" have to pay pmi. We didn't have pmi on our very first home loan and put zero down, but it was a doctor's loan. I think not having to pay pmi is the exception rather than the rule if your loan is greater than 80 percent of your home value. I was just trying to make op aware of the additional expense if they put down 10 percent instead of 20 percent.
    IF DX: DOR & Fragile X pre-mutation carrier
    2011: FSH 13.3 & E 99; AMH 0.54 2nd FSH 6.2 E 40's AFC: 8
    BFP from Clomid/IUI ~ Pre-e and IUGR during pregnancy ~ DS born 9/4/12
    Feb./March 2013: AMH less than 0.16 (undectable) and AFC = 4;
    BFP from supps ~ DS#2 due May 2014

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  • Katemr1146Katemr1146 member
    IBackBevo said:

    @katemr1146 - I guess I should have said you "usually" have to pay pmi. We didn't have pmi on our very first home loan and put zero down, but it was a doctor's loan. I think not having to pay pmi is the exception rather than the rule if your loan is greater than 80 percent of your home value. I was just trying to make op aware of the additional expense if they put down 10 percent instead of 20 percent.

    No I totally get it, I wasn't trying to be snarky! I was just saying that if that's a concern, there are other ways around PMI. She's in Australia though...so I have no idea if PMI is even a thing over there.
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  • shortnstumpyshortnstumpy member
    Thank ladies. I have no idea what PMi is... We called the bank and real estate this morning and they are looking into 10% deposit. The bank is checking the terms of the loan and the real estate is feeling out the owners about an offer... So now we wait and see. If it doesn't work out then it wasn't meant to be and we keep looking.
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  • Jillzy86Jillzy86 member
    I'm sure you and your DH will work it out. It sound like you are two well educated people who will work on building your savings back up. The truth is, this is what you have been saving for, right? I wish you the best in your new home!
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  • banks81banks81 member
    My dad always says "Peace of mind is worth a million bucks". I think of this whenever I make financial decisions. What decision will you ultimately be comfortable with and able to sleep at night? My husband and I are savers so I know understand the struggle you're having!
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  • ABColeslawABColeslaw member
    edited November 2013
    Posts like this make me feel fucking poor.  Maybe you live in a HCOL area, I live outside of Boston, very high cost of living.  We own a home and we did not pay even close to that for it.  If you are having reservations don't do it.  13,000 bucks out of your savings is a water heater that goes...you never know.  And what I know from owning a home is that there is always something, even when you buy a home that had a squeaky clean inspection. 

    I equate them to the posts that will crop up after we have the babies where people are bitching about being fat and mention their actual weight.  Bitches will all be, "I'm so fucking fat I'm depressed I can't believe I'm 140lbs"  and I'm all like "Fuck you"
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  • shortnstumpyshortnstumpy member
    edited November 2013
    Wow. Sorry my post made you feel shit, not my intention at all. FWIW this is actually the lower end of average for where I live. And I won't be posting any I'm fat posts once the baby is here. I will most likely be too busy washing and drying all my muumuu's
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  • ABColeslawABColeslaw member
    shortnstumpy said:
    Wow. Sorry my post made you feel shit, not my intention at all. FWIW this is actually the lower end of average for where I live. And I won't be posting any I'm fat posts once the baby is here. I will most likely be too busy washing and drying all my muumuu's
    It didn't make me feel like shit, I just think that posts like this should respectfully talk about money in generalized terms, otherwise it comes across as a little, what is the term.....braggy.  There are ladies on this board who can barely afford their apartments.  You shouldn't feel bad about your hard earned and clearly hard saved money, but you don't need to talk about it in such specific terms either. 

    FWIW we make a good living, and I was still like "wow, 100,000 dollar down payment, half a million dollar house"  I don't need to get that up and close with you. 
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     Infertility
    PCOS, Progesterone Deficiency Disorder, Multiple Miscarriage
    Clomid, Metformin, Ovadril, PIO, P17 Iron/Platlet Tranfusion

    My Spring Babies! 
    <3 Angel Baby   Elisabeth Adelle  April 2008 <3
    Asher Benjamin  April 2010
    Lola Aisling  May 2014
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  • alioopsiedaisyalioopsiedaisy member
    edited November 2013
    shortnstumpy said:

    Wow. Sorry my post made you feel shit, not my intention at all. FWIW this is actually the lower end of average for where I live. And I won't be posting any I'm fat posts once the baby is here. I will most likely be too busy washing and drying all my muumuu's

    Your post didn't come off braggy at all. With decisions like these it's easier to use raw numbers. I have no advice but best of luck :)

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