Note to the reader: I am in India this month (June). I am available by email.
Earlier, I spoke about my first home, a townhouse. The day we bought the town home, I had already decided that 5 years later we will move into our dream home. Hence, we went with a 5-year balloon mortgage. I will talk about my journey to buying the dream home next month.
I used to pay $600 a month in rent. My mortgage was less than $600 and included taxes and insurance. I knew that I would get tax breaks as a homeowner. I spent a lot of time researching school districts and feeder patterns. I bought less of a home so that Artika would go to a good public school.
The money I would have paid for her private school, I began investing for her college. I met an investment adviser Robert Allen. He had just started his practice. I don’t remember how we met, but I am glad we did. He is advising us with our financial options to this day. I began my 403 b plan for retirement and some mutual funds for Artika’s education.
Then the market started its downward spiral. My husband always read the sports page first. He started reading the business section. Our morning ritual, tea and newspaper, became very stressful. I would tell Ravi that we lose IF AND ONLY IF we touch our investments. He was not comforted.
In 2001, we cashed all our investments—about $50,000. Such money finds a way out of your pocket easily. I had to invest it. I did. I bought a condominium for $50,000, which I rent mostly to family and friends.
Ravi did not want home ownership UNTIL we became citizens. I could not fathom shelling $600 each month in rent. More importantly, until I came to America, I had lived a nomadic life. My dad, hotheaded, ethical with a strong moral compass, could not last on a job more than 2 years. When I married Ravi, a sailor, my home was either a ship or parents/in-laws. This emotional stuff is difficult to explain or even understand. I had transplanted us from half the world away. We needed roots.
It is challenging to make financial plans with another person. Especially when the other person has a different philosophy about money. If you find yourself in this boat, I am but a phone call away at 302-824-5219.
When I looked at my money and my plans, I did not always start with income. This was because once upon a time, my income was less than my expenses. In my early years, I used to throw an IOU in a shoe box each payday. This was 10% of our gross income. The day we could afford it, we began building our safety net.
As soon as our safety net was strong enough to take care of 3 months of our expenses, I began saving for homeownership. Once we reached homeownership, I continued saving. This time for our daughter’s education. When our daughter went to University of Delaware, we began saving in earnest for our retirement. Now that my husband is retired, we are saving for our travels and granddaughters.
Once you make savings a habit, it gets easier.
For as long as I have budgeted, I have created two broad categories:
I will be the first to tell you that it is not easy. But, if you are ready to give this system a try, I am only a phone call away. 302-824-5219.
When I came to America 30 years ago, everything was new to me: language, money, culture, politics, education, etc. I was in awe of the money-spitting machine! I had never seen a MAC machine. I had no idea how it worked. Each time I walked into the bank lobby to ask, there was a crowd of customers. I was too embarrassed to ask. Until one day, my curiosity won over.
I learned that there was no stupid question.
When I started at DCRAC as a student intern, my job was to review reports from our banking partners and compile data for the board. At $10/hour, my income had more than doubled. I had to become a homeowner if I wanted to create wealth.
DCRAC taught me:
So, what was so unique about my success? Becoming a homeowner within 3 years.
I had support. My husband’s sisters, Asha and Usha, were my safety net. I did not use it often, but knowing they were there, allowed me the luxury of experience.
I still attract amazing people around me. When I landed at Philadelphia airport, my husband Ravi had already completed about 4 weeks of classes. Ralph, a classmate came to pick us up at the airport.
My prior experience was spending Ravi’s money at shopping malls around the world. I am a quick learner. I learned how to live poor. Still cheap. And proud.
I did not (and do not) know any Jones’. No one to keep up with or compete.
I knew that we had to bring more money in (much harder) and find ways to spend less. I still work at it.
As soon as Ravi got a full-time job, I began socking his paycheck into certificates of deposit at WSFS where we earned about 12% to 13% interest. 18 months later, when we cashed our CDs we had about $20,000.
Between the two us, we made under $40,000/year. Our realtor insisted that we could afford a $120,000 home. I put my foot down and bought an $80,000 townhouse. At closing, I had enough for down payment and closing costs, 2 months of mortgage payment in my bank account, and a $65,000 mortgage for 8% (I opted for a 5-year balloon).
I have wanted power, independence, and freedom for as long as I can remember. Money helped me get there.
As you think about New Year’s Resolution to make and keep, over the next ten months, I want to share my wealth-building journey with you.
I came to America with my husband and our four-year old daughter on September 21, 1988. My husband came here as a student. Six months later, I joined the University too. Our meager income doubled. We were still living a hand-to-mouth existence (income less than basic bills). I found ways to reduce my expenses. We moved a few miles away from the University and shared our apartment with a good friend splitting expenses three-ways. Two years later, my husband found a job with the state. I had learned to live poor. I continued for the next 12 months (as if we were still student interns). I socked money in certificates of deposits (earning 13% a year!).
By September 21, 1991, exactly 3 years later, I was ready to buy my starter home and we became proud homeowners before the year ended.
My husband will retire this month. August of 2019 we will have a mortgage burning party. Homeownership is how we build wealth in America. If you are ready, call me at 302-824-5219.