B.L.I.P. Heros
Wednesday, January 2, 2008
Buying a House You Can Afford
In this article, Jim Yih talks about buying only what you can afford in real estate. Some people buy sexy homes that are worth more (surely) but may pay a heavy price to do so. Also in this article he discusses 'other investing' versus putting your savings into your home.
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The debate is on and valid for renting instead of buying. Read Peter Taylor's blog article here ( http://moneymash.blogspot.com/2007/03/large-purchases.html ) for his interesting ideas. The basic argument is that by renting instead of buying you can take that extra $500-$1000/month and do some serious investing - serious investing. My thoughts are fairly simple on this. If you are someone who can diligently and seriously invest the said money every month and make and execute the plan, I'd say go for it. Then, when you have made some good money you can dump that into your house later. Fair enough. For myself, I would probably end up 'investing' in things like dinners out and computers that depreciate over time. Or, I might 'try my hand' at various stocks (aka lottery tickets if you don't do your research). So, for me, I have chosen to buy rather than rent because I liken the extra money to a good savings account. Instead of the bank holding it, my house holds it and in a good way since the primary residence is a good tool in Canada. It also makes for a great place to dump any extra money kicking around. If your mortgage permits it, you can drop double payments in or pay up to 20K/year extra on paying down the principle. That's a good thing in Canada. Hide your money from the tax man and hide it legitimately. The article above talks about this idea. I like his perspective on this "8% GIC" comparison.
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