And yes... to be honest, I did go out and spend some money on myself in celebration. I bought myself a nice new winter cycling jacket.
I was starting to feel like the kid in the movie "A Christmas Story" who is bundled in so many layers that he literally cannot move!
Anyhow, my new jacket is designed specifically for cycling - all the blue parts are wind-proof and waterproof with an extra layer of insulation where you need it most. The black parts, while still insulated are stretchy and breathable, so I'm hoping it will keep me warm without all of the bulk and sweat buildup.
In keeping with that theme, I also bought myself a Smartwool (merino wool) base layer.
This one was a bit of a sentimental purchase since my mom bought me one last Christmas that I ended up having to return because it was the wrong size. At the time I really, REALLY needed a new pair of bike shorts, so I got them instead of getting the Smartwool in my size, but ever since I've sorta regretted it, and found myself searching in vain for one at the thrift stores.
Guess I figured this was a good time to honor my mom's gift and buy one that actually fits.
Anyhow, I'm pretty psyched about having the mortgage paid off. I'll still have to pay taxes and insurance, but that works out to less than $125/month. And just the peace of mind of being out of the banking system is HUGE for me.
I know that home ownership often gets a bad rap in the minimalist/simplicity community, but I really think that buying my house was one of the best financial decisions I ever made.
Of course, I did luck out with the timing of it all. I bought right before the housing boom, and I shopped around for over a year until I found a great deal on a house with plenty of room for me and the kitties.
Within a year of the purchasing my home, the value tripled. My initial loan was at 9%, but when the rates fell I refinanced and put the monthly savings into extra principal payments.
Those payments, plus a few mortgage Christmas checks from my dad, allowed me to get the 30 year loan paid off in about 17 years. And even with the extra principal amount added in, my monthly payments were still less than what it would have cost to rent a studio apartment!
And while it's true that there are upkeep costs inherent in owning a home, it's not like those costs don't exist when you're renting - they're just built into your monthly payments, and you have no control over how and when those expenditures are made.
Since I've been willing to do most of the work myself, and have a high tolerance for things like avocado green shag carpeting and plastic bathroom tiles, I've been able to keep those costs relatively low.
I'm certainly not saying that everyone should go out and buy a house, but for me at least, it was one of the big keys to achieving financial freedom.
So what do you think? Is home ownership a good or bad thing for you?
I think home ownership is a good thing (but then I am from the UK, where we are apparently obsessed with it, unlike Europeans, who are happy to rent). You can't rent a house similar to ours for the cost of the mortgage payments, and once the mortgage is paid off, it will be ours, and housing costs will just be making sure it does not fall down! Whereas with renting, you have nothing to show for a lifetime of paying rent, and will always need to pay the rent! Plus, landlords can be funny about things like three cats, house rabbits and chickens in the garden..
ReplyDeleteSo, YEY for owning your house outright :)
PS not that there are times when renting isn't the best option, but I think I'd always want a house I owned outright to live in when I am too decrepit to earn a living any more :)
DeleteI agree. Rent just always felt like throwing my money away!
DeleteCongratulations, that's awesome news :) My views on home ownership are similar to yours - I desperately want somewhere of my own and am willing to sacrifice to get it (which may have something to do with the fact I've moved every year since 2007).
ReplyDeletePlus I really don't like the idea of paying rent forever.
Knowing that I wasn't gonna have to move again and again, and that nobody could raise the rent was just HUGE for me.
DeleteThat's fantastic news! and OMG, plastic tiles!?! The bathroom we had growing up had pink, plastic tiles. I haven't thought of those in years!!
ReplyDeleteI think home ownership is completely worth it. yes, repairs can be expensive (especially if it's something you can't fix yourself) but you have more freedom to do what you want. Also, I thankfully purchased my home before the housing market went through the roof and, even though it's only 5 rooms (big enough for the 3 of us), i couldnt rent a place for what we pay for our mortgage. I always silently gag when i hear people talking about their mortgage or rent payments. (one lady i work with pays as much in 2 car payments as i pay on my mortgage!)
I cannot wait until we are mortgage free.....14 more years (and hopefully less).
Oh yes, the bathroom is "lovely" (ha ha). Maybe now that I don't have to make mortgage payments each month I can seriously think about upgrading some of that stuff!
DeleteCongrats! Wise purchases too. When you put a lot of miles on your bike, you need bike attire -- stuff for other sports aren't as effective for warmth and movement. Unfortunately, bike apparel costs more! But that's why you wash it by hand and let it air dry!
ReplyDeleteIn NY state with have a School Tax Relief program (STAR) where you get a rebate that gets taken off your assessment of up to $50,000 if you earn less than $500,00 per year. If your house is worth 100K, you end up being assessed on $50,000. If it's 80K, you are paying property tax on 30K. When you rent, your landlord doesn't get the exemption and since rent is based on the owners cost, the tenant is picking up the tab for the assessment -- that isn't reduced at all from STAR. So where we are, it makes sense to own rather than rent. Unfortunately, our taxes are high so our monthly tax bill (without insurance) is over $300. And that's without insurance!
Our tax rate was lower in the City so we'd be saving money if we still lived there (also because that house was assessed lower), but we are glad we moved here.
Now be sure to sock some of that mortgage savings into your retirement fund!
Wow! STAR sounds like a great program! But still... $300/month for property taxes sounds ridiculous!
DeleteMy hubby and I keep arguing about owning a home. Right now, I have ZERO desire to own any time soon. We're hoping to sell our current home (a rental at the moment) this summer, and use the money towards buying a new vehicle without the loan. However, that won't leave us much for anything else. I'm actually finding that we can rent a place in better areas that we would not be able to buy in. For example, we could rent a house in an area we like, zoned for decent schools, and a decent size for $1300/month...or we could buy a house in the same area for $250+K, putting a mortgage, taxes, and insurance at well over $1600+/month. I also don't like the idea of home ownership for the cost of upkeep. I vividly remember my parents' struggles when we were younger having to decide between anything fun/needed and house repairs, like AC fixes. I feel this is a big reason why I never got braces--everything else cost so much! I don't want to worry about having to choose between braces and a new AC for our boys. I'd personally like to save up the money while our boys are growing to put in a house when they're older. Hubby wants it paid off near that point, but the way I see it, we'll in our early 40's when both boys are off to college, and then I can put that money into my dream home and not have to worry about school zones. Heck, I can even save that money and build my eco home haha! I think home ownership is great in some areas, but for us at the moment, I can't see buying any time soon (and don't even get me started on Texas' obscenely high property taxes!!)
ReplyDeleteForgot to say-- CONGRATULATIONS!!!!!!!!!!!!!
DeleteThanks Megyn... I think you've got some decent arguments for renting - it seems really odd to me that rent in the same neighborhood is cheaper than a mortgage. But either way, I can't believe how much you have to pay! Even with my extra principal payment included, my mortgage payments including taxes and insurance were only around $550/month!
DeleteIt really is odd. I think it's because of how quickly home prices have gone up. If a landlord purchased a home even 5 years ago, the price they can rent for will be so significantly lower than buying. In the year we have been here, home prices have jumped $50k!!! Our mortgage with taxes and insurance is over $100 less than what we're paying for rent at our duplex zoned for a not-so-great school. It's still crazy to me what we'll have to pay just to get into good schools!
DeleteI guess that makes sense that if the landlord bought the house before prices rose they could afford to rent it for less than the mortgage... I didn't realize that prices were rising anywhere any more though... let's hope it's not another crazy bubble!
DeleteWoo hoo! Congratulations!
ReplyDeleteAnd it's nice to remember your mom by re-buying her gift that you've really been wanting.
I also paid off my house in about 17 years (last year), and I have also kept a few decorating horrors: orange kitchen countertops (I did replace the dark orange kitchen curtains), and just plain different colors in every room. I did re-paint the pink room and the maroon living room floor, and I pulled up the pink hall carpet when the electricians accidentally burnt a hole through it (now it's a concrete floor--so cool in the summer!).
Economically, home ownership cost me about the same as apartment living while I was paying off the mortgage except for the first year and the year I refinanced (closing costs), which cost more. And now that it's paid off, it's cheaper.
It's kind of a wash otherwise though. I like not worrying if the landlord is going to double my rent or kick me out to remodel or just tear down the place. I really like not having to worry about being too loud for my neighbors. I miss free repairs where I don't have to be home to meet the repair guys. And I miss the cheaper utility bills (I think apartment folks get bulk discounts on things like trash pick up, plus my neighbors helped with the A/C).
The scary thing is just how much a neighborhood can change. In my case, I've been quite fortunate that the changes are averaging out to better.
My taxes + insurance come out to $456 ($338 taxes, $92 insurance, $26 flood insurance) (Why yes, Megyn, I do live in Texas). This explains why I'm less thrilled when property values go up than most financial blogger homeowners. We don't have income tax, which was nice when I had an income, and I think our sales tax is no higher than average.
I now think it might have been better to have bought a duplex, but frankly it's a miracle I could afford anything. When I bought, I was making less than 20K per year and the median house cost 100K--I found one for 60K.
Now I'm glad to be locked in to a small, well-built place in a good location. My boyfriend loves the location, but would like something bigger. Since he lives paycheck-to-paycheck, though, it's just as well to be someplace halfway affordable.
Eee gads! Your taxes are ridiculously high! Monthly payments on my entire mortgage (PITI) were less than just your taxes and insurance!
DeleteAnd your place sounds like it's of a similar vintage to mine... pink carpet in the bathroom, orange floral carpet in the bedroom, avocado green shag everywhere else... OY!
1955. The house is quite well-built and well-designed, though. I feel I lucked out.
DeleteYep, I'm learning that other states have way better exemptions (ours are 15K for public school taxes, 33K for the county taxes, 33K for the county health taxes, 5K for the community college taxes and 0 for the city taxes). If I ever move, I will definitely check these things out.
My whole PITI was only $610/month when I started.
Did I mention--no state income tax?
I guess that's the difference - state income tax. Colorado has a flat state income tax of 4.63%, which for me is no big deal since I make so little money to begin with. I'm not exactly sure what the exemptions are that you're referring to though - do those have to do with property taxes? Whatever they are, I don't think we have them!
DeleteExemptions mean that part of the property value is exempt from taxation. You normally get them for your main dwelling. Apparently you get them in Florida if you live there year round. You can also get breaks for being old.
DeleteHmm, 4.63% of what I used to make is about $150/month. You win (although you have more paperwork). If only it weren't so cold there!
Well, you made me curious so I went and did some research to see if Colorado has any property tax exemptions. Turns out that senior citizens who have lived in their homes for over 10 years are exempt from property taxes as are disabled veterans. Guess that's something to look forward to 20 years from now (the senior part - I don't plan on becoming a disabled veteran any time soon!)
DeleteSenior citizens are completely exempt from property taxes? Wow! Where I live, the school tax is frozen (which is about half the taxes). That's it.
DeleteWOOOOHOOOO! congrats on having it all paid off!!!
ReplyDeleteThe cycling jacket looks beautiful and wonderfully toasty while being super fashionable and still very practical. When it gets really cold here I end up layering my cycling gear under my winter clothes because the stuff is so good at keeping me warm without adding a ton of bulk. A great reward for you hitting this milestone!
Thanks Zoe! I'm really looking forward to giving my new cycling gear a test ride! I never thought of wearing it for general purpose stuff but you might be on to something there!
DeleteFirst of all, congratulations! We hope to have ours paid off in the next 5 years. Having children, I can't imagine NOT owning my own home. It comes with a basement (play area!) and a yard (more play!).
ReplyDeleteI think you SHOULD celebrate and buy something which obviously you will get a lot of use out of!!!!!!!!!!!
What did you ever decide about Halloween candy-offerings?????? ;)
I've come up with a compromise... I'm putting a sign on the door and leaving out a box with candy and party favor toys leftover from last year. That way I'm not being a total grinch but I don't have to worry about traumatizing the cats or the politics of how many pieces to give each kid etc.
DeleteBig congratulations, Cat!
ReplyDeleteI think if you buy the size of home appropriate to your needs, then homeownership is a good deal. For the folks who buy homes that are 3 to 4 times the size they need, well it's a lot of money at risk. Not all real estate investments pay off.
You hit the nail on the head in terms of buying the right size house - I think half of the reason so many people get in trouble with real estate is that they're not content with a house, they want a mansion!
DeleteThat's so cool. I'm smiling ear to ear right now. We paid off our home recently and similarly did a little spending in celebration (a nice dinner out). I like your bike jacket a lot better (and the Christmas Story reference was great).
ReplyDeleteEnjoy the newfound freedom!
I'm glad someone shares my affection for that movie! I'm soooo excited about my new financial freedom, and can't wait to try out my new bike jacket!
DeleteCongratulations! Some financial experts say not to tie your money up in a house that you may not be able to liquidate when you need it. Instead borrow money and invest the money you may have used to pay off your house--especially when interest rates are low. We could never do that. We like the peace of mind that comes from paying off our house and being debt free. It's a great feeling.
ReplyDeleteWell... I like the "all of the above" approach - ie both saving/investing in places where your money is liquid and paying off the mortgage so you don't have so many monthly expenses! I don't think you'd want to have all of your money tied up in a house, but the security of knowing it's paid off is just wonderful!
DeleteCongrats Cat! That's such an exciting time, I hope you're relishing in it! I won't be owning my own home for a very long time so I'm going to live vicariously through you!
ReplyDeleteAlso quick note, for some reason your blog doesn't let me post comments from my iphone, even with my Google account. Maybe it's something you have unticked in the settings or such.
I sorta can't believe I'm finally here... I also can't believe I'm 46 - how do these things happen?
DeleteThanks for the heads up about commenting from an iphone. I sorta doubt that blogger has any settings that will make it better, but I'll certainly go look!
My grandmother always maintained that once you reach 21 time just speeds up. I've just turned 21 and I can confirm this hypothesis! We're all getting old!!
DeleteThanks for the help!
Oh just wait until all your friends start having kids, and then one day you show up at a party and there's this nice young woman with a 6 year old child in tow - and you discover to your horror that the young woman is actually the daughter of your friend (who was herself 6 years old the last time you remember seeing her). I just can't figure out how those darned kids keep growing up when I'm not getting any older! :-)
DeleteBTW - I looked in the settings and couldn't find anything about mobile devices, but I did find a thread on a forum saying that it was an issue with the Safari operating system. So I don't think there's much I can do about it. Bummer!
Hooray for mortgage-free!
ReplyDeleteLike Nicola, I have a UK perspective on this, so of course you want to buy your own place, and paying off the mortgage is a major achievement.
Substitute 'mortgage' for 'overdraft' in this cartoon
I paid off my mortgage some years ago (by a combination of inheritance and moving to a cheaper house) and it's such a relief to be free of that debt, especially as UK mortgages tend to be unpredictable: Interest rates can rise and suddenly your monthly payments are a lot more than they were (I believe things are more stable in the US - am I right?).
It depends on what kind of mortgage you get. I had the tried and true 30 year fixed rate mortgage. It was originally at 9%, then I refinanced to 6.25. When the rates fell further I wanted to refinance again to an even lower rate and a 15 year mortgage, but by that point the balance was so small that no bank would touch it. That was when I decided to go full speed ahead with paying it off.
DeleteBut more to the point, in recent years lots of people got crazy variable rate mortgages that skyrocketed after a few years, or the even crazier interest only mortgage, where you NEVER actually pay any principle, just interest... seriously... and people gobbled them up! I don't get it!
Fantastic :D I'm happy for you!
ReplyDeleteBuying a house is definitely a big commitment, so I understand why some people prefer to rent. But I think buying was the right move for us, and we're also working to put a little extra toward the mortgage each month so we can pay it off early :)
Good luck paying it off, it sure is a fantastic feeling. I sent my payoff payment via priority mail so I could track it across the country, and it was pretty fun to watch it arrive, and then last night I logged into my account and the balance showed zero... for real! Pretty darned cool!
DeleteCongratulations, Cat! I expect I will be a homeowner until I'm too old to maintain a property because I have a very low tolerance for other people's lives infringing on mine - noise (even talking or footsteps), smoke, cleanliness of the shared hallways, landlord's timetable for snow clearing, etc. Maybe when I am 80 and in an assisted living apartment i won't mind so much! I love the cycling clothes you picked out. What a sensible celebration !
ReplyDeleteI am soooo with on the tolerance for other people in my space thing. Back when I was renting there were a few times when I'd come home to discover some random repair man in my apartment - no notice, no nothing. I mean what would have happened if he'd accidentally let the cat out or something? It drove me crazy!
DeleteFirst CONGRATULATIONS!!! I can't believe your taxes are so low in Denver! For me home ownership just wasn't an option. I didn't need a large home and what I wanted didn't exist as it's too small to be approved by the zoning here. Then there was the issue of maintenance, while I used to do almost all my repairs on both my home and my cars (until I became lost with the computers controlling them) and my limited abilities in recent years I would have relied on others to help me. My decision worked out this time, but I do wish I could say I had free reign to do what I wanted inside my apartment, it would look a lot different.
ReplyDeleteCan't believe you have plastic tiles :-) My youngest son had them in his first home, the night he signed the papers and received the key the first thing he did was head to the bathroom to start removing them.
I've been sorta blown away by the comments here and learning how astronomical the property taxes are in some places! But I guess some of those places don't have state income taxes so maybe it all works out? I dunno...
DeleteI also live in one of Denver's poorest neighborhoods, so I suppose my property taxes are much less than they would be in other neighborhoods.
But I do think that you make some great points about repairs and upkeep. If I had to hire somebody to do all of the work on my house it would be a completely different story! Plus, it's really hard to buy a place that's super small.
I hope you get to keep your apartment for a good long time because it sounds like a really good deal. It's about the same size as the apartment I had 18 years ago before I bought this house... at that time I paid around $300/month, but it now rents for closer to $800, so I feel very fortunate indeed!
Hi I just found your blog and thought I would chime in. I live in the lovely Northeastern part of th US near NYC metro where the average home cost is around $450,000, a phone ownership is just not an option for us. Property taxes are around 6,000$ / year - fancier pants towns near us have property taxes upwards of 30,000$ /year. We do have really good schools though...
ReplyDeleteYikes! I'm sure the property taxes are much higher in the fancier parts of Denver as well... guess low taxes is just another benefit of living in the barrio!
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