So you might be asking, "Where did you get the money for the new house when you already own a house?" Well, there are a lot of factors in play here. I have always been a saver. I love the thrill of watching my savings account grow month after month. I have always had a knack for finding how to make it all work AND still manage to save like a fiend. BJ had 2 year stint in the Peace Corps before we were married, and I vowed to have enough money for a down payment for a house for us when he returned. When he returned I had amassed a good amount of money for a 27 year old in the job that I was in, and we bought our first house when we got married a year later. We still didn't have 20% to put down, but it was enough to get us into a house that we both liked.
Over the next few years BJ ended up in law school, I switched jobs, and we had a baby. Law school, as many of you know, is not a sound financial investment anymore. You are damn lucky to find a job afterwards that pays a salary equivalent to the amount that each year of law school costs. BJ found a job, though we are not talking six figures by any means. We have a nice life. A very nice life. We buy what we need with cash (or credit cards to get the points) and we only maintain our student loan debt and mortgage. No car payments, no credit card debt, no extra personal lines of credit. There are no extravagant purchases by any means. But we do not starve.
By switching jobs I was able to move myself into a position where we had the potential to receive bonuses each year in the amount of 10% of our salary. Its not guaranteed, but I have received the bonus 2 out of the 3 years I have been with my company. This helps. A lot.
Having a baby has not been a huge financial burden (yet) that so many people say it is. I guess we don't try to keep up with the Jones. Amelia is the first grandchild for my parents so there is a tiny bit of spoiling that goes on. But that is mostly in the way of my mom using her retail discount from the department store job that she retired from after 20 years to baby sit Amelia while I work. She volunteered to retire. I did not even ask. This is one of the amazing perks that we are spoiled with. The other is that on a monthly basis my mom cannot wait to take Amelia back to the department store to show her off and buy her little outfits. My mom has a knack for shopping on a budget, and that retiree discount doens't hurt either! I do not fight it because it makes them both happy. But my mom does not buy her unnecessary toys and expensive gifts. That would be setting her up for a life that is unrealistic for us to maintain. I just don't want that for our daughter either. I want her to be showered with experiences rather then plastic toys.
Back to the down payment. When our offer was accepted on the new house I almost crapped my pants because my initial thought was, "What do I do with two houses?" How was I supposed to pay two mortgages? We decided to rent our house after talking it over with an agent and realizing that no matter what, we just couldn't get what we needed to in order to ensure we didn't lose money on the sale of the house. We also needed to sell quickly to avoid having two mortgages, and we just didn't think that could happen. We put our house on the rental market just slightly above what our mortgage & escrow account payment was. After 2 months we lowered by $100 and listed our own ad on Craigslist. A note to anyone renting out their house: avoid selling your soul to an agent. Just get on Craigslist. We found a great family to rent our home within a week or two after listing our own ad. But because we were originally listed with the agent we still had to pay them their fee. What a crock. So with the renters locked in, I now knew how much I needed to pull from various sources in order to get our down payment together.
I literally had a dozen choices of how to pull this money together. Not to say I had a lot of money. I mean I had it in a dozen places. $2,000 in failed stocks, $1,500 in a life insurance policy, $250 in savings bonds from great grandma in 1982. The great thing was we were now locked in to the FHA loan which only required 3.5% down. Can you imagine that during one of the most difficult times in recent history for the housing market, we were basically handed the amount of money we requested at a 3.875% interest rate and only had to put 3.5% down? But 3.5% is still a lot of money. I decided to make sure we were "liquid" enough (look at me using fun financial terms!) by cashing in some failing stocks. I didn't mind taking the financial loss since I only put the money in the stocks when I was in my early 20's to try out the market. I only used money I didn't need in the stock market. I had a couple of successful stocks that I also cashed in. The gains and losses will probably just cancel themselves out at tax time. I do not plan on doing my own taxes this year. They got a little more complicated then I can handle on Turbo Tax this year. Much of the money really was just in savings over the years. One thing that I never touched was Amelia's college fund. We had been saving for her since we starting trying to have a baby. Let's just say she has a great head start considering she took her sweet ass time getting here. But she was worth the wait.
Once I pulled all the money into one bank account knowing that it would all be wiped out with one check for settlement, I started to shed a little tear for all of the hard work that it took for me to accumulate those pennies. Each and every one of them came from BJ's first paying job after law school, my bonus at work, my attempt at playing the stock market, and even cashing in life insurance policies. But moving Amelia out of the city was the best life insurance policy I ever could have invested in.
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