5 ms·

Why did you buy a house while having such small savings?

TeMPOraL 2y ago
They probably spent all their savings on the down payment, as approximately everyone on the planet who wants a place to live but can't pay for it all out-of-pocket does? Investment shenanigans excluded, if you have enough savings to pay off your mortgage in case you lose your job, there's no point in getting a mortgage in the first place.
- Ferret7446 2y ago
  No emergency fund, I suppose. Sometimes I wonder how people manage to browse the Web without encountering "common" pieces of wisdom. Maybe we should bundle up a bunch of useful YouTube/TikToks as a supplemental education package for students.
  - Turskarama 2y ago
    You're kind of damned if you do, damned if you don't. If you save up an emergency fund instead of paying a downpayment then you're spending money on rent that you could have in retirement, and it's not like rent is consistently cheaper than mortgage payments anyway so if you can save up when renting you can save up when owning. So the gamble is, do you spend 2 years saving up for 6 months of income as a buffer and send tens of thousands of dollars down the drain in the meantime, or do you roll the dice and hope nothing bad happens in the next 5 or so years? The people who end up in the best position will be those who take the second option, and most of the time it will work out.
    - ghaff 2y ago
      The short answer is probably everything in moderation if you're reasonably young. Maybe don't put every penny you can get your hands on into a down payment on a house, especially if you're also a bit uncertain about future income streams and life situation. But maybe you also don't really need a year or two comfortable emergency fund. At some point, it probably makes sense to buy a place if you can if only for the stability as you get older.
    - zeroCalories 2y ago
      The problem is that many people view home ownership as a cultural / political statement beyond all else. They desperately need to stop being a rentoid and become a landchad. The reality is that renting is often a better financial decision than buying, especially short term. Plus, in this economy there is no guarantee that you're going to be employed in one city your whole life.
      - away271828 2y ago
        Maybe. It's very situational. Beyond the spreadsheets for a given location, there are times in your life when you want to be able to pickup and move fairly easily and there are times when you want to be able to put down roots and be in a pretty stable situation that lets you tailor things.
        zeroCalories 2y ago
        "Putting down roots" is the wrong way to look at it. You have to ask yourself if you're certain that you will be in one area for a long time. Everyone wants roots in LA or NYC, many of them wash out.
      - s1artibartfast 2y ago
        Sure. but what isn't cultural? Being cultural does not mean it is irrational. It would probably be a better financial decision if people lived cells and ate nutrient paste.
        zeroCalories 2y ago
        The goal is to maximize your happiness. Putting yourself into a precarious and stressful financial situation because of memes is irrational. Buying a sleeping pod might be rational for some, not for others. Those aren't cultural though, they're personal.
        s1artibartfast 2y ago
        I dont really understand the distinction you are drawing between cultural and personal. Personal opinions are shaped by culture and memes.
  - TeMPOraL 2y ago
    Nah, people know those "common" pieces of wisdom. What people bringing them up often miss is, they're also unachievable for most people. Life isn't a MMORPG where you can check out of progression at any moment and spend some time grinding to build up savings. Life has a clock to it that doesn't stop, and most can't afford falling behind it much.
    - araes 2y ago
      > MMORPG where you can check out Had this same type of idea cycle around recently quite a bit lately. Similar issue, if this experience actually had the "uninstall", "quit", "leave", "exit", or red X in the corner, it would have been hit a long time ago. Much rather drop and go bodily join some fantasy or sci-fi land than the perpetual grind of meaningless, mundane, superficial, banal America. There's a reason millions spend almost every waking moment staring at a screen, playing a game about a fantasy or sci-fi land where you can actually feel like you accomplish something than interacting with the human race. Frankly, a lot of MMORPG economies almost look preferable these days, and nearly as believable. At least in quite a few you can personally manufacture something and at least have a possibility of making money that's relevant. On Earth, rather challenging. Etsy for example: Only 26% of Etsy shops are successful and run as full-time businesses, or 74% of all Etsy businesses eventually fail. Average Etsy seller makes $2,900 per year Almost every part of the world economy seems designed to punish every member for not being born rich and a celebrity at birth. What's the best way to get followers online and be an "influencer"? Already be a rich celebrity who's influential. Most followed on Instagram - Christiano Ronaldo (635m), Leo Messi (504m), Selena Gomez (425m), Kylie Jenner (398m), Dwayne Johnson (396m), ect ... The top 50 is pretty much universally previously known athlete, actor/actress, musician names. "Normal" influencers are an order of magnitude or further away down in the 10m, 1m, 500k range. It's simply another way to make even more money, have even more fame, be even more self involved, and take even more of the same photos. One part that's been really bothersome lately is how many games actually seem better implemented than the "real" world. Farming Simulator being one of the perennial cases. The equipment is implemented down to the individual bolts and seals on the engines, and you can probably print out the CAD models and manufacture your own tractor they're so detailed. Yet the game actually implements numerous technologies that the "real" farming consistently refuses. Quicker iterations, quicker development, quicker releases and responsiveness to customers. Intermediate cost farming equipment for the starting farmer, bicycle and human powered equipment with low yearly input costs. The "real" farming sector appear unable to do little other than offer the same $500,000 super-rigs they've been offering for years. There was a post a while back where the Farming Simulator people actually complained to the John Deere's of the world "common guys, how about some entry level stuff, we don't have anything to offer our players." Anyways, TLDR, would have quit, uninstalled, and then burned the computer in the yard a long time ago.
  - MarcelOlsz 2y ago
    Emergency fund is useless when expenses are 5k/mo, and that's just sitting in my room working in 15C with my food costs and expenses as low as can be. Burned through 40k already.
    - deleted 2y ago
      [deleted]
- technothrasher 2y ago
  > Investment shenanigans excluded You're poisoning the well there, as that is the major reason to get a mortgage even when you have enough cash to buy a house outright. It's not "shenanigans", it almost always makes financial sense to keep your cash invested elsewhere when mortgage rates are low.
  - NewJazz 2y ago
    Also mortgage interest is tax deductible.
    - goodJobWalrus 2y ago
      Not in Canada
      - ghaff 2y ago
        And, for many people in the US without a lot of deductibles, not in the US either after tax law changes a few years ago.
        NewJazz 2y ago
        Yeah they're going to keep SALT capped farther than they said they would, huh?
        ghaff 2y ago
        No idea. I wouldn't count on anything with a new administration/congress.
        NewJazz 2y ago
        New? It is the same crowd as 2017. I mean they dropped the McCains, Cheneys, and Paul Ryan. But the rest are still there.
- lottin 2y ago
  If that's the case, the savings are not 'spent' but are simply invested in the house. They should be able to sell the house for the net value (market value minus mortgage outstanding) which should be roughly equal to the down payment.
  - NewJazz 2y ago
    High transaction fees on sales. Typically at least 5% in US, not sure about Canada. Also don't forget taxes, insurance, mortgage interest needs to get paid while house is in your hands. Most mortgages have lots of interest during the first few years.
    - MarcelOlsz 2y ago
      5% for me + various breakage fees and other minor costs.
      - NewJazz 2y ago
        Can you imagine if buyers and sellers only had to pay, say 1% each? The whole market would become a lot more liquid. But nah, brokers are essential and have your interests at heart.
        s1artibartfast 2y ago
        They absolutely aren't required and fees are negotiable.
        MarcelOlsz 2y ago
        Yeah sure but then nobody will ever see your property for sale unless they drive by it. Purplebricks also shut down in Canada.
        s1artibartfast 2y ago
        What do you mean? Im not sure about Canada, but Private individuals can list on redfin and Zillow in the US. MLS posting must be from a broker, but you can hire one flat rate upload your listing
- MarcelOlsz 2y ago
  Bingo. I should have waited another 10y on the house.
  - axus 2y ago
    I'm gonna predict that in a 10-year trend, the house price inflation will have continued. Unless you could save faster than the bubble, you still wouldn't be getting/keeping a house in 10 years.
    - MarcelOlsz 2y ago
      I'd have been WAY better off if I stayed at my parents and invested it all into the S&P or something similar, or even bitcoin (inb4 it's going to crash). Then kept building/working/saving, and in 10y I'll have been in a much better position.
      - immibis 2y ago
        Hindsight is 20/20 and you can't extract value from the economy without changing it. The values of certain things go up or down because certain people are or aren't investing in them. If everyone who wished they'd behaved differently had behaved differently, they often wouldn't even be any better off. Somehow the little guy always ends up taking most of the system's losses, though.

They probably spent all their savings on the down payment, as approximately everyone on the planet who wants a place to live but can't pay for it all out-of-pocket does? Investment shenanigans excluded, if you have enough savings to pay off your mortgage in case you lose your job, there's no point in getting a mortgage in the first place.

Ferret7446 2y ago
No emergency fund, I suppose. Sometimes I wonder how people manage to browse the Web without encountering "common" pieces of wisdom. Maybe we should bundle up a bunch of useful YouTube/TikToks as a supplemental education package for students.
- Turskarama 2y ago
  You're kind of damned if you do, damned if you don't. If you save up an emergency fund instead of paying a downpayment then you're spending money on rent that you could have in retirement, and it's not like rent is consistently cheaper than mortgage payments anyway so if you can save up when renting you can save up when owning. So the gamble is, do you spend 2 years saving up for 6 months of income as a buffer and send tens of thousands of dollars down the drain in the meantime, or do you roll the dice and hope nothing bad happens in the next 5 or so years? The people who end up in the best position will be those who take the second option, and most of the time it will work out.
  - ghaff 2y ago
    The short answer is probably everything in moderation if you're reasonably young. Maybe don't put every penny you can get your hands on into a down payment on a house, especially if you're also a bit uncertain about future income streams and life situation. But maybe you also don't really need a year or two comfortable emergency fund. At some point, it probably makes sense to buy a place if you can if only for the stability as you get older.
  - zeroCalories 2y ago
    The problem is that many people view home ownership as a cultural / political statement beyond all else. They desperately need to stop being a rentoid and become a landchad. The reality is that renting is often a better financial decision than buying, especially short term. Plus, in this economy there is no guarantee that you're going to be employed in one city your whole life.
    - away271828 2y ago
      Maybe. It's very situational. Beyond the spreadsheets for a given location, there are times in your life when you want to be able to pickup and move fairly easily and there are times when you want to be able to put down roots and be in a pretty stable situation that lets you tailor things.
      - zeroCalories 2y ago
        "Putting down roots" is the wrong way to look at it. You have to ask yourself if you're certain that you will be in one area for a long time. Everyone wants roots in LA or NYC, many of them wash out.
    - s1artibartfast 2y ago
      Sure. but what isn't cultural? Being cultural does not mean it is irrational. It would probably be a better financial decision if people lived cells and ate nutrient paste.
      - zeroCalories 2y ago
        The goal is to maximize your happiness. Putting yourself into a precarious and stressful financial situation because of memes is irrational. Buying a sleeping pod might be rational for some, not for others. Those aren't cultural though, they're personal.
        s1artibartfast 2y ago
        I dont really understand the distinction you are drawing between cultural and personal. Personal opinions are shaped by culture and memes.
- TeMPOraL 2y ago
  Nah, people know those "common" pieces of wisdom. What people bringing them up often miss is, they're also unachievable for most people. Life isn't a MMORPG where you can check out of progression at any moment and spend some time grinding to build up savings. Life has a clock to it that doesn't stop, and most can't afford falling behind it much.
  - araes 2y ago
    > MMORPG where you can check out Had this same type of idea cycle around recently quite a bit lately. Similar issue, if this experience actually had the "uninstall", "quit", "leave", "exit", or red X in the corner, it would have been hit a long time ago. Much rather drop and go bodily join some fantasy or sci-fi land than the perpetual grind of meaningless, mundane, superficial, banal America. There's a reason millions spend almost every waking moment staring at a screen, playing a game about a fantasy or sci-fi land where you can actually feel like you accomplish something than interacting with the human race. Frankly, a lot of MMORPG economies almost look preferable these days, and nearly as believable. At least in quite a few you can personally manufacture something and at least have a possibility of making money that's relevant. On Earth, rather challenging. Etsy for example: Only 26% of Etsy shops are successful and run as full-time businesses, or 74% of all Etsy businesses eventually fail. Average Etsy seller makes $2,900 per year Almost every part of the world economy seems designed to punish every member for not being born rich and a celebrity at birth. What's the best way to get followers online and be an "influencer"? Already be a rich celebrity who's influential. Most followed on Instagram - Christiano Ronaldo (635m), Leo Messi (504m), Selena Gomez (425m), Kylie Jenner (398m), Dwayne Johnson (396m), ect ... The top 50 is pretty much universally previously known athlete, actor/actress, musician names. "Normal" influencers are an order of magnitude or further away down in the 10m, 1m, 500k range. It's simply another way to make even more money, have even more fame, be even more self involved, and take even more of the same photos. One part that's been really bothersome lately is how many games actually seem better implemented than the "real" world. Farming Simulator being one of the perennial cases. The equipment is implemented down to the individual bolts and seals on the engines, and you can probably print out the CAD models and manufacture your own tractor they're so detailed. Yet the game actually implements numerous technologies that the "real" farming consistently refuses. Quicker iterations, quicker development, quicker releases and responsiveness to customers. Intermediate cost farming equipment for the starting farmer, bicycle and human powered equipment with low yearly input costs. The "real" farming sector appear unable to do little other than offer the same $500,000 super-rigs they've been offering for years. There was a post a while back where the Farming Simulator people actually complained to the John Deere's of the world "common guys, how about some entry level stuff, we don't have anything to offer our players." Anyways, TLDR, would have quit, uninstalled, and then burned the computer in the yard a long time ago.
- MarcelOlsz 2y ago
  Emergency fund is useless when expenses are 5k/mo, and that's just sitting in my room working in 15C with my food costs and expenses as low as can be. Burned through 40k already.
  - deleted 2y ago
    [deleted]
technothrasher 2y ago
> Investment shenanigans excluded You're poisoning the well there, as that is the major reason to get a mortgage even when you have enough cash to buy a house outright. It's not "shenanigans", it almost always makes financial sense to keep your cash invested elsewhere when mortgage rates are low.
- NewJazz 2y ago
  Also mortgage interest is tax deductible.
  - goodJobWalrus 2y ago
    Not in Canada
    - ghaff 2y ago
      And, for many people in the US without a lot of deductibles, not in the US either after tax law changes a few years ago.
      - NewJazz 2y ago
        Yeah they're going to keep SALT capped farther than they said they would, huh?
        ghaff 2y ago
        No idea. I wouldn't count on anything with a new administration/congress.
        NewJazz 2y ago
        New? It is the same crowd as 2017. I mean they dropped the McCains, Cheneys, and Paul Ryan. But the rest are still there.
lottin 2y ago
If that's the case, the savings are not 'spent' but are simply invested in the house. They should be able to sell the house for the net value (market value minus mortgage outstanding) which should be roughly equal to the down payment.
- NewJazz 2y ago
  High transaction fees on sales. Typically at least 5% in US, not sure about Canada. Also don't forget taxes, insurance, mortgage interest needs to get paid while house is in your hands. Most mortgages have lots of interest during the first few years.
  - MarcelOlsz 2y ago
    5% for me + various breakage fees and other minor costs.
    - NewJazz 2y ago
      Can you imagine if buyers and sellers only had to pay, say 1% each? The whole market would become a lot more liquid. But nah, brokers are essential and have your interests at heart.
      - s1artibartfast 2y ago
        They absolutely aren't required and fees are negotiable.
        MarcelOlsz 2y ago
        Yeah sure but then nobody will ever see your property for sale unless they drive by it. Purplebricks also shut down in Canada.
        s1artibartfast 2y ago
        What do you mean? Im not sure about Canada, but Private individuals can list on redfin and Zillow in the US. MLS posting must be from a broker, but you can hire one flat rate upload your listing
MarcelOlsz 2y ago
Bingo. I should have waited another 10y on the house.
- axus 2y ago
  I'm gonna predict that in a 10-year trend, the house price inflation will have continued. Unless you could save faster than the bubble, you still wouldn't be getting/keeping a house in 10 years.
  - MarcelOlsz 2y ago
    I'd have been WAY better off if I stayed at my parents and invested it all into the S&P or something similar, or even bitcoin (inb4 it's going to crash). Then kept building/working/saving, and in 10y I'll have been in a much better position.
    - immibis 2y ago
      Hindsight is 20/20 and you can't extract value from the economy without changing it. The values of certain things go up or down because certain people are or aren't investing in them. If everyone who wished they'd behaved differently had behaved differently, they often wouldn't even be any better off. Somehow the little guy always ends up taking most of the system's losses, though.