Reasons to Have a Small Mortgage
Low Mortgage has High Benefits
If you are like us, you've probably noticed people going "bigger". A lot of people we know are dreaming about, pursuing, or have just purchased their "forever house". Want to know what a "forever house" is? It is a house that people claim they will live in "forever". It's usually a house that has approximately 1500 sq. feet for each person in their family and usually costs about $1000 more in expenses each month than they can comfortably afford. Sometimes purchasing your "forever house" can lead to being "house poor", a term meaning that the costs associated with owning and maintaining the house keep you strapped (or poor) in other areas of your budget (like grocery bills and gas purchases).
I admit that my husband and I spend time on the MIBOR site and we sometime drool over large basements and houses with enough bedrooms that not only everyone in the family gets his/her own room, but there are left over, empty ones waiting for that once-a-year visit from Aunt and Uncle from Far Away. Properties with several acres of land also get us dreaming.
We've intentionally decided to live in a house we can afford without going "house poor". No, we don't get to say it's our "dream house" or our "forever house", but we do get to buy groceries without going broke (at least most of the time) and we don't have many fights over our budget and we have a little extra each month to do with what we please. Why? How? A low mortgage payment.
My husband and I have a weekly date at Starbucks and recently we decided to actually write down the reasons we need to keep our mortgage payments low. (no particular order)
Reasons We Have a Small Mortgage
Our low mortgage payments can allow for:
1. Travel, trips, and vacations
We have a goal to take at least one trip together (without kids), one trip with friends (me with a friend, him with a friend-- separate trips), and we take one family beach vacation a year. These trips are making memories for us that are invaluable in terms of relationships with each other and with close friends. We aren't about to cut these out of our budget. Higher mortgage might cut into this fund.
2.Driving nice cars
We don't buy new, but we do like to drive cars that routinely start when the key is turned and we also must admit to liking leather seats and having a moon roof.
3.Being generous gift givers
We enjoy giving to people or organizations and need room in the monthly budget to do this freely and regularly.
4. Retirement Contributions
Roth IRA's, Baby. Isn't always fun to make those monthly payments, but it'll be worth it years to come, right?
Retirement contributions can sometimes come with a tax break too. Another perk of thinking and planning ahead!
5. Less stress on our marriage
You've probably heard that couples tend to fight more over money and how it's spent than any other topic in marriage. A low mortgage gives us enough wiggle room in our budget that my husband and I feel a little freedom to splurge here and there without guilt.
6. Help pay for some of our children's college expenses
We have 4 kids and we spaced them close. We'll have 3 of them in college at one time. Like I said, we'd like to "help" pay for some of their college expenses. Paying for everything might not happen, but contributing to their Section 125 College Fund accounts each month now (even though 2 are still in diapers) will hopefully accrue to an account big enough to give them a jump start on their future college bills.
7. Money for house decorating and updates
We don't mind buying a house with brass doorknobs, nasty carpet, and missing mirrors. Actually, the house we're in now was missing a kitchen sink when we moved in. Our thought is that if we buy a house with some outdated, missing, or ugly elements, the price is probably going to be lower, and with a lower mortgage, we can theoretically at least, save some money to do updates and upgrades at our own pace... and we can have the freedom to pick out the exact color and style we want. We are more of the "Hey let's replace all of our doorknobs this week" or "Honey, I just had to buy this cute little antique dresser with lots of potential" or "Can I please paint our kitchen cabinets bright green this weekend?" sort of people than the sort that buys a house in perfect condition.
There you have it. This Springer family from the Midwest is making a point to keep a low mortgage. We've got our reasons. Our fist to the world of "gotta have its" and "we just have to haves" and "it won't be so financially strapping once we've each taken 3 more night jobs to pay the bills".
Call us crazy. Call us counter-culture. Call us the family that lives in the teeny house with brass doorknobs. We have our plan and we're sticking to it.
What if Your Mortgage is Too Much
Everyone wants a small mortgage, better yet no mortgage at all. However, many find out their mortgage payment is too much for them to afford after they have already settled into their home.
1. Sell and go smaller,
2. or go for something different-- a little older, less fancy, a different neighborhood, different school system,
3. change your location, sometimes moving a mere few miles away can put you in a different tax bracket
4. buck it up and make it work-- get another job or ask an able-bodied teenage son or daughter to work and contribute to some of his/her expenses to lighten the load on the family, consider selling a car and buying an older style version, pay the difference between the sale of your car and the purchase of the next toward your mortgage. have a garage sale, ask your children to participate by offering some of their belongings to sell. make this a united cause.
5. refinance, do your research before taking the plunge, but ask around, call around and have a banker or loan officer help you plug in numbers to see it it's worth it.
6. stick it out. slow down the pace on home repairs, keep to minimal upgrading until money frees up, commit to paying the mortgage first before spending money on family vacations, new cars, and other luxuries. we sometimes really can't have it all. perhaps you splurged with your house. this will have an effect on your spending in other areas. that just makes sense.
7. Get help. call the mortgage company and see if there are any other ways to pay off the loan. believe me, the mortgage company would rather have you paying on the house than going into foreclosure. foreclosures are a hassle for the banks or companies who own the loan on the house. honesty with a representative at the establishment where your loan is held is a good first step for you. they have dealt with many people in your same situation and will have resources or options for you.
8. get creative. ask your children to help you. perhaps they can take on a paper route or shovel driveways in the winter or mow lawns
9. let some things go: slash the extras on the cell phone plan, consider bumping down the internet speed or the cable plan, exercise outdoors instead of paying for the family gym membership, limit extras such as eating out, events like concerts, and shopping splurges. if you really want to be in your house more than anything else, you must make it a priority. Remember the old song, "You can't always get what you want." It applies here. If your house is your most important possession, you must act like it by prioritizing the payments over the payments of other things you want, but don't fit into the goal of keeping your house.
10. put money gifts toward the house. instead of using bonuses from work to splurge on something, perhaps you put that money directly into paying for your house. instead of cashing that check from grandma on your birthday, maybe you could use it to pay a bill. get a tax refund check? send it directly to the mortgage company. these may feel like no fun approaches, but the rewards of knowing you are responsibly paying for your house is a rewarding feeling.