Print This
Email This
In 8 short days I will make the biggest purchase I am ever likely to make, I will be purchasing a new house. And the closer we come to closing, the harder it is for me to practice what I preach.Everywhere I look small “upgrades” are popping up that I know I can find cheaper elsewhere, or that I can do myself without having to pay the builders up charge for, and it pains me every time I give the go ahead for them to do something else when I know I’m being ripped off. I can’t haggle with them, I’m not in a position to. I already signed the contract to build the house and put down earnest money, so I’m at my builders mercy.
Why would I voluntarily get ripped off you might ask? Because as I plan ahead for all of our upcoming expenses like drapes, blinds, rugs, random furniture (although we have most), deposits on utilities, moving costs… It’s easier to lump it all in and finance it so that I’m not out anymore cash after I seemingly drain my accounts at closing, because I will not allow us to dip into our emergency fund for these items. Really the only thing we aren’t having them do that they can is hang our drapes and install our doggy door ($350 for something I can do myself in a hour is too much for me to bare).
At the end of the day, and especially as our country is testing the waters of economic uncertainty, emergency funds are too important to tap into for non emergencies. And I’m proud to say that even though we may be paying an up charge on these items, our emergency fund will remain in tact and actually grow a bit due to the rolling in of some of our closing costs, so in the case of an actual financial emergency we will have money to keep us afloat.
For more timely, relevant, and engaging articles, subscribe to Brazen Careerist.
Recent Comments
Popular Posts
4 RESPONSES TO "BUYING A HOUSE WHILE MAINTAINING AN EMERGENCY FUND"
Thanks for responding--this is very informative.
@ Kate, come to Texas! We've got plenty of Job growth, $350k will buy you a mansion, and we've got one of the strongest economies in the nation right now :). Since you would be coming from the bay area, I'd suggest Austin ;).
@Presh, I'm financing in the upgrades and considering it part of my mortgage payment. It's not necessarily the smartest thing for me to be doing, but it saves my cash.
On the contrary, I find the conventional wisdom to be perfect for this. My wife and I have a fully funded emergency fund that will carry us through 3 months if we BOTH lose our jobs without making any change to our style of living. If only one of us loses a job we'll be fine for at least 6 months. 9-10 months if we modify our living.
We aren't eligible for 401(k) at work yet (we have to be here a year) but when we do we probably won't be maxing them out, but putting in as much as is needed to get a full match.
I love the concept of having different savings accounts for different items so that you can plan ahead. So have different accounts for a new car fund, home upgrade fund, new TV fund (though I must admit I financed this in with the house too), or anything else you can think of, and just throw what you can into there every month...
-Daniel
Congrats on the new purchase and dealing with all those decisions. It's nice to read you are practicing what you preach.
On another note, I agree with you that an emergency fund should be for real emergencies, like car crashes. So where should the money come from for unexpected expenses, like home upgrades?
I don't see an answer in conventional wisdom, which tells young people to (1)save for emergencies and (2) max out 401(k) and Roth IRA. This doesn't leave much buffer money for situations like yours.
I have suggested saving in taxable accounts, like high yield savings accounts and equity investments. What's your take?
I understand you're busy with the move and might not have time to respond, but if you do, I'd like to hear what you think. Thanks.
Impressive. It's my "A" "Number 1" goal to buy a house. San Francisco is the only city in the U.S where housing costs aren't falling. I looked at a one bedroom condo that was $750k and decided I won't be settling down here!
GOT SOMETHING TO SAY?