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Wednesday, October 16, 2013

Know Your Goals and Stick to Them

In 2006, we got the bug to stop renting and buy our own home.  Who didn’t, then, right?  Like most couples, we wanted a place of our own.  We first educated ourselves on the process and the real estate market in the Denver Metro Area.  We didn’t want to live far outside because this is a great location between our work, family and friends.

We looked at homes in our area when there was an “open house”.  We distinctly remember one home located in Denver’s Capitol Hill.  It was going for just over $950,000.  We knew before walking inside that we couldn’t afford it, but we wanted to see it anyway.  It was a beautiful home with a nice yard.  The kitchen and dining room were recently remodeled.  We liked it, but it was more than we could afford and we decided to leave.

On our way out the door, we passed the selling agent.  She was a blond woman, about our age, lying in the recliner in the front living room.  While chewing gum, we swear, she asked us if we were interested in submitting an offer.  She had no clue who we were! One of us, we don’t remember who, said, “It’s a nice house, but we can’t afford it.”  In her best Valley Girl accent, she said matter-of-factly, “Just get a no-interest ARM.” 

It was all we could do to not laugh.  We were raised right.  What was she thinking?!  We were novices to the real estate market, for sure, but our backgrounds are in financial services and we had an understanding of how interest rates work.  Neither of us wanted to stress about where mortgage rates would be in five+ years.  Bill Gross can’t even predict that. 

After more self-educating, we did some soul searching.  We asked ourselves, “What’s most important to us?”  We had three objectives and still do; we want to travel, save for retirement and not be house-poor.  We have a tough time sitting at home and when we’re finally forced to, we want to do so comfortably.    

Based on our income in 2006, we calculated the maximum we could afford and meet our goals was $130,000.  You may think that’s a lot or a little.  We decided this would let us make monthly payments on a mortgage, while still having money to travel, save and enjoy our life. 

We searched far and wide and quickly learned it was hard to find a decent place for $130,000 or less in the Denver area.  We should, also, add that neither of us is particularly handy.  We can paint like bad-asses, but can’t do much beyond that.  Our real estate agent knew our income and frequently suggested increasing our maximum.  We held fast.  We knew what we could afford and were determined to make it work. 

After looking at several places, we found a condo we liked and would work.  Our negotiations eventually broke down.  We were frustrated.  We took ourselves out of the market for several months.  After time passed, we became re-engaged.  We started looking at homes and nothing suited us.  The more and more we thought about it, the more we wished our negotiations on the condo worked out.  We decided to wait for another condo in the same building to go on the market.  We practiced patience and eventually a condo became available.  This one was four floors higher and faced west, the opposite direction, with a city and mountain view.  It was much better than the previous place.  We submitted an offer and after some negotiating, our offer was accepted.  We closed on April 20, 2007.

We have a two-bedroom/two-bathroom, 1,008 square foot condo and a huge, west-facing balcony.  It’s small relative to most of our friends and family.  It was a fixer upper.  It still is a little.

Since our purchase, we’ve been to London, England; Ibiza and Sitges,Spain; Sydney, Melbourne and Cairns, Australia; Auckland, Waiheke and Kaikoura, New Zealand; two times to Puerta Vallarta and once to Playa del Carmin, Mexico; several times each to San Francisco, CA, Philadelphia and Hershey, PA.  While doing all this travel, we’ve saved a bunch for retirement and feel comfortably on track.  We’re meeting our goals.

To this day, we still talk about the real estate agent in that $500,000 house in Capitol Hill and think how bad our situation would be if we had taken her advice.  We’ve all seen the stories since 2008, so it’s not hard to imagine.

The point of this story isn’t to show off our great life.  We want to share what we learned.  The lesson we learned is that it’s up to each person or couple to decide what they want and make their life fit what they want.  Most of us aren’t rich and we need to weigh trade-offs.  For us, we need to decide what’s important.  We may need to practice patience, save extra money and ignore what others say.  If you want a house full of kids, do it, get earplugs and consider you may give up some things to fulfill this dream.  If you want a large, fancy house with no kids, that’s also great and you’ll likely have trade-offs, too.  If you want something else, don’t let other people’s objectives or dreams influence yours.

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