Budgets, featured, home, Money, personal finance, Real Estate

Home Ownership & You

When our parents were growing up, life was simple. Back in those days, it seems there was a blueprint followed to life. Our parents graduated college, started their first jobs, got married, bought their first homes, and began growing their family with the addition of children and pets. It seems those days are a thing of the past and today, young adults in modern society are faced with the difficulties and challenges of societal changes that deem it almost impossible to attain the simple dreams of home ownership.

Why Are Things So Different Now?

Well, before we discuss the now, let’s travel a bit. So, if you’ve not yet ordered that passport, do, so, for we are about to go back….way back in time….to a simple life. The year was 1946 and life in America was a simple one. The cost of living was so low that the average income was about $2,600.00. Yes, youngsters, you read that correctly, $2,600.00 (when compared to the 2006 average annual salary of $37,900, that is still too low for most families to survive on). The average price of a home was $5,150 (compared to 2006 average home prices of $266,000). The average monthly rent was $35 (compared to 2006 $950).

The average price of a NEW car was $1,125.00 (compared to 2006 average prices of $26,000). The price of postage stamps was $.03 (compared to 2006 $.39). Tuition cost for one year attendance to Harvard was $420.00 (compared to 2006 $30,275). Most importantly, gasoline was $.55 per gallon (compared to 2006 $3.03).

Now Fast-forward to 2018 COL Averages

  1. Average Salary: $59,039*  (last year available 2016)
  2. Average Home Price: $368,500
  3. Average Monthly Rent: $1,231
  4. Average New Car Price: $36,270
  5. Postage Stamps:  $.49
  6. One Year Tuition to Harvard: $46,340
  7. Average Gasoline Price: $3.40 (premium)

Why Are Things so Expensive?

Over the years, the normalcy of life in America has changed dramatically. For example, first time home buyers once ranged in the ages of 25-34 in the 80’s, but now, the average first time home buyer is 44 years old. The cost of education has risen so much that most college graduate’s debt are purely student loans, with the average cost of education being $43,260 annually without room & board. As a result, American students owe a collective debt of $1.2 trillion in student debt.

As the country continues to recover from the Great Recession that led to the crumbling of the real estate industry, insurance industry, and financial markets; young adults in America are left footing the bill. This has taken from their ability to build financial structure, causing these young adults to always feel as if they are either “starting over” or “drowning” under all the college debt they’ve accumulated over the years to better their employment opportunities.

With the federal minimum wage currently at $7.25, there is truly no real explanation to why things are so expensive. One would think the cost of living would match the expected return on income for consumers, however, with explanations such as inflation, blah blah blah; current young adults are left confused and drained from a system that provides no real solutions and many problems for them to bear on their shoulders.

But You Still Want a Home Right?

So, what do you do if you still wish to have a piece of that America pie (dream). Well, here are some simple steps to follow:

  1. Understand your financial transcript. This includes knowing your assets, liabilities, and net worth. Trust me, finding out this number may be numbing, but you will make better decisions once you know how much cash you have, what you owe, and what your financial leverage is.
  2. Create a plan to pay off your debt. Even if it’s $100 monthly, create a plan, know the timeline, and stick to it. Buying a home is a large investment, and so you want to be financially secure prior to signing those papers and getting those keys.
  3. Keep your job. Yep, that boss annoys your life to the point of nonexistence, but keeping your job is key in reaching your dreams. The more longevity you have at a position, the better you look to banks and other financial institutions that you’ll have to ask for money to make that important purchase.
  4. Save. Save. Save. Yes, saving is important. You want to save 10% of your annual earnings each year, or even more if you can. The more you save, the more you’ll have once you own that home. After all, when you purchase that home, there will be other cost to starting your new life.
  5. Live with your parent. OMG!!??!!….did you read that right. YES YOU DID!!! Live at home with your parents and help them with their bills, while saving your money. This will bring your plans to fruition quicker than you think. Don’t follow the norm of running into the world unprepared and get eaten alive. Stay at home, save your dollars, and believe it or not, you will own that home in no time.

So, Good Luck!

I can promise you, if you keep to these simple five steps, you will be able to purchase your first home in less time than you think. Good luck young generation. Always remember, the future is in your hands, so make decisions that not only benefit you, but the world around you.

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