My Financial Journey: Part 2

Life After College:

After a lot of soul-searching, I decided on a career that requires a significant amount of graduate schooling….think over a decade!  (I’m going to try and keep my blog anonymous, so I won’t give out too many details about my career or location if I can help it).  While this is a huge amount of time to spend (still) in school, it was the path that felt right to me.  And there was some compensation…all of my graduate tuition, health insurance, and fees would be paid for by my program, and I would also receive a very modest stipend of $25,000 a year.

Becoming a Homeowner:

Current students in my graduate program had talked to me about how they purchased a home, and I decided that since I would be living in one city for over 5 years, it might make sense to purchase a home and put my money into equity instead of into rent.  Many of the people in my program took on roommates as a way to help pay for the cost of the home.

How did I make it happen on $25,000 a year?  With some considerable help!  I moved into my parents’ home and commuted by public transportation in order to save up the majority of my income for a down-payment.  With the economic slump and the housing bust, loan interest rates were getting low and *some* of the housing stock in my city had reduced prices (not in all of the neighborhoods, however).  My parents agreed to become investors in the purchase of a house – they would front the down-payment if I paid the closing costs, and we wrote up a contract to give them a 6% interest rate on their contribution, which I could either start paying off now or wait until we sold the home.  We bought a home that was much reduced in price from its original sale price (it was only 5 years old), but the original price was grossly inflated due to the real estate bubble.  We still have hope that 5-7 years from now, when we go to sell, I will be able to sell the house for more than we purchased it.  The home has multiple bedrooms, so I took on roommates, whose rent helps me pay the mortgage.

How has it worked out so far?

It’s been a big struggle, which I’m sure I will blog about in the future.  The responsibility of owning and maintaining a home has been a huge drain on me.  I only feel like the house is my HOME about 25% of the time…75% of the time it just seems like a structure that I enter for showers, food, and sleep.  Because the rent from my roommates covers most of the mortgage, I could start paying my parents back for their down-payment….but I haven’t been.  Because my stipend is so small, I’ve been putting my money into different goals…I wanted an emergency fund in case something were to break with the house (and boy, has that ever happened!!), I wanted to pay off my car, I wanted to start contributing to retirement.  And in the back of my mind, I’ve been a little too comfortable with the idea that we will sell the house for more than we paid for it, so that my parents can get their money at the end.  I feel somewhat guilty that I’m not putting every penny into paying them back and getting out of debt (loan from parents and mortgage loan), but I did the math and I will not make enough money during my time here to get out of debt…just not physically possible.   These are some of the issues I’m wrestling with and will certainly seek out advice from the PF web community!

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