The mortgage, the car loan and unemployment
Money Mistakes of a Young Couple - Part 2
by Kasey Steinbrinck
Money Mistakes of a Young Couple - Part One
Common Financial Mistakes of Newlyweds
"Real World" Money Rules for Recent College Grads
Buy or Rent a Home? Which Is Better?
The first few years of independent living resulted in some seriously stupid mistakes. As life moved forward, we'd slip up even more, but the decisions didn't always seem dumb. Well, they didn't seem dumb at first.
Home Sweet Home
I suppose we were excited to get started living the domesticated life, because we bought a house just before we got married.
It started with looking for an apartment. Then that turned into looking at houses for fun. That turned into making an offer to see if they'd take it.
The next thing we knew, we were the proud "owners" of a walk-out ranch and a monthly mortgage.
It was early 2006, a time when the housing bubble had yet to burst. There were warning signs the bottom could fall out of the housing market. We ignored them, and instead chose to listen to what you might call "conventional wisdom."
You'll often get advice from older and wiser people in your life that makes becoming a homeowner seem like the smartest idea in the world.
"Real estate is an investment that always increases in value," they'd say.
"When you make a mortgage payment, you're paying yourself. But when you pay rent, you're paying someone else." That's another good one.
A few years later, we realized we were underwater in our home in more ways than one.
I awoke one morning following a rainstorm to find a puddle on the kitchen floor and a big soft spot in the plaster of our ceiling. We needed a new roof. That's not cheap. In fact, owning a home has plenty of unexpected expenses.
Lesson Learned: Make sure you're at a point in your life where you are ready for home ownership and can afford it. There's nothing wrong with renting while you plan for the future.
Car Sweet Car
My father-in-law is the senior sales rep at a Chevy/Nissan dealership. He loves helping friends and family find cars. He hates it if you go to anyone else.
We ended up going to talk to him about a Nissan Sentra. It was the end of the model year, prices were low, and they were selling out of inventory.
While expressing my concerns alone on the test drive, my wife broke into tears. She'd been driving the same Geo Prism since she was 16 and she deserved this! I caved.
We could afford the payments, but it was going to stretch us pretty thin. I assumed things would only get better for us financially. We'd keep making more money, keep paying off debt, and the car payment wouldn't be a problem. That was not exactly the case.
Lesson Learned: You may be able to afford the payments, but that doesn't mean it's a smart financial decision.
Unemployed, Unprepared and Maxed Out
The so-called Great Recession left me unemployed at the beginning of 2009. A start-up I'd been working for abruptly closed its doors because of the uncertain economy.
To complicate matters, a couple of weeks later, my wife showed me a positive pregnancy test! In reality, we were very excited about it and quite ready to become parents...at least mentally.
It took me nine months to find a part-time job. If you do the math, that means the baby had arrived and I was still looking for work. Over a year and dozens upon dozens of cover letters later, I finally got a full-time gig.
But it wasn't the end of our unemployment woes. My wife got laid off from her marketing job because they were going to start outsourcing her duties.
Unemployment insurance is nice safety to have, but it wasn't enough to keep us from sliding deeper and deeper into debt. I had student loans, a mortgage, a car payment, credit card debt, and all the other costs of life to deal with. Our meager savings was drained in a few months, but our financial struggles would continue for the next couple of years.
For awhile, we played the balance transfer game, trying to keep credit card interest from making the debt balloon more. At one point, it all ended up on one card with the lowest interest. Then we accidentally maxed out that card. It was a rude awakening that we desperately needed.
Lesson Learned: Make sure you have some margin (wiggle room) in your personal finances. Had we made different choices earlier in our marriage, we could have avoided living paycheck to paycheck.
Heading Towards a Happy Ending
The good news is we were still young when we learned those tough lessons about money and life.
We had time to dig our way out of credit card debt. The student loans are paid off. The cars are still running, and the housing market looks to be rebounding.
Today we have two little boys. That means new challenges, new concerns, and new personal finance lessons that are yet to be learned. Some of them will probably be learned the hard way.
Kasey Steinbrinck is a copywriter and personal finance blogger for CheckAdvantage, a Midwest printer offering personal and business checks online.
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- A money challenge for nearly newlyweds
- How to live a life of luxury without going broke