I am currently on the market to buy a home and almost every time I tell someone that, they ask if I am planning on living in the area for a long time. It seems that it is the general assumption that if you purchase a home then you have to live there for years to come. I really don’t believe this is true. I am a big proponent of owning as opposed to renting because if I am going to make monthly payments for housing, I might as well be contributing to building equity in my own home.

I fully understand that not everyone has the means of owning a home. It is tough enough to save up enough money for a down payment, but I think many people count themselves out of owning a home before even considering it as an option. With a little research, one would find that with an FHA loan, only a 3.5% down payment is required in comparison with the typical 20% for a traditional mortgage. I believe that if the buyer does not purchase a home that is too expensive for them, then the monthly expenses of owning the home would only be marginally more than the average rental of the same size. Essentially, the monthly payments that previously would have gone to rent, could invested in the home. Also, many people do not consider the huge tax shelter that owning the property would provide. Individuals can deduct all the interest paid on the mortgage in their annual taxes and can significantly reduce their taxable income each year. Furthermore, for this year only, the government is offering a first time homebuyer’s tax credit of $8,000, which you do not have to pay back. This is essentially $8,000 in your pocket! With today’s depressed prices in real estate, low mortgage rates, FHA loans, and tax benefits it actually makes a lot of sense to consider home ownership.

Some people argue that buying a home in a certain area forces you to stay there for a number of years. To some degree this is true. It would not make sense to buy a home in an area and then try to sell it again in a short amount of time, especially if you are still trying to pay down the mortgage and build equity in the property. This is where the selection of the property is important. If you select a home in an area that has a strong rental history and there is high demand to rent the property, you should not have to continue living in the area if you should choose to move. All you would have to do is to rent it out so that the monthly rent covers the monthly expenses of owning the property. This way you can move and rent an apartment somewhere else and still end up paying what you were paying before, assuming the cost of living is similar. In order for this to work, you would also need to select a home that has monthly costs that are similar to the average rent charged in the area.

I think that homes can be a great investment. I do plan on staying in my city for a few years, but definitely not for too long as I’m too young to settle down and still would like to live in other places. However, I do think it would be an oversight for me not to buy a home. It could be a great investment, especially since the city I live in has a very strong rental history. The money that I spend on rent every month is basically going to waste, but if I could spend close to the same amount in mortgage payments and consider it an investment, I could take big steps in building my net worth.

Do you think buying a home is an option for you? Was there anything mentioned in this post that you would like to know more about? Please feel free to comment.

As I mentioned in my previous post, many people struggle with saving money. The past few years have been characterized by excessive consumption with little regard for saving. Since debt was so accessible, many Americans were spending more money than they had. With the recent economic recession, Americans have been forced to cut back on their spending to pay off debt and save for an extended recession. I think saving money starts with a certain mentality and requires specific goals.

Here are 6 key ways to curb your spending habits and to start saving money:

1. Budgeting – This is a very basic way to get your finances in order. The objective of this exercise is to determine where your money goes and to make sure that you spend less than what you earn. Make a budget for yourself and stick to it. Include all your living expenses, but also set aside a reasonable amount of money to spend on entertainment. However, make sure that you do not spend more than the amount you set for yourself.
2. Determine where to cut costs – After you set a budget for yourself, go through each of your living expenses and see where you can cut costs. Do you really need all those TV channels that increase your cable bill? Do you need to eat out so many times a week? Can you cut costs on your grocery bill by using coupons and looking for deals? Go through each of your expenses and ask yourself if they are really necessary. If they are, ask yourself if there is any way you can reduce that amount.
3. Don’t go shopping if you don’t need to – This is simple. If you don’t need something, don’t put yourself in a position where you’re going to end up buying something because you think you need it.
4. Always shop around – If you determine that you really need something, always shop around to find the best price. You can compare prices online or ask friends if they know where you can get something inexpensively.
5. Pay yourself first – When you set your budget, make saving one of your expenses. Pretend that one of your bills is to pay yourself. Set a certain amount per month and put it into a savings account that you will not touch unless in dire need. I would suggest starting with something like 5-10% of each paycheck. Over time, this will become a good emergency fund. Your goal should be to have about six month’s worth of pay saved up in an emergency fund.
6. Set goals for saving – It helps when you are saving for something in addition to your general savings. For example, I am currently saving to buy a house. I have a separate savings account specifically for my savings to buy a house. If you have a goal in mind, it makes saving a lot easier. However, do not replace your general savings/emergency fund with saving for a purchase.

I see personal finance in a rather simple manner. You have sources and uses of income. Your sources can come from a number of activities: wages, investments, dividends, passive income, businesses, and etc. Your uses of income are obviously your living expenses plus your discretionary income. Discretionary income is the excess income that remains after you pay for your necessities: housing, utilities, medical bills, food, and etc. You have a choice of what to do with this excess money.
I think the most fundamental concept in improving your financial position is to be consistently increasing your sources of income while consciously trying to minimize your uses. Although this is a relatively elementary idea, many people still struggle with it. You see millions of Americans struggle with debt, spending more money than they earn. You see people neglecting to save for retirement, opting to spend their excess cash irresponsibly.

With this blog, I hope to learn and write about new ways of creating additional sources of income while improving on the ways we currently make money. I also want to reveal new ways to save money, to find more efficient uses of our money, and to discover different strategies to increase our net worth.

Welcome to my personal finance blog! As a way of introduction, let me tell you a little about myself and why I am writing this blog.
I am a typical recent college graduate who is living in the Northeast in the U.S. Ever since I first began attending college and got my first credit card, I have been very interested in personal finance. I remember running around saying “I’m platinum baby!” to my friends (yes, I was young and excited to have a platinum credit card). Since then, I have spent a lot of time reading and learning about how to manage my money. My passion for finance led me to major in finance and accounting in college and to a career in the finance industry. At this point, I must note that although I work in the finance industry (my job has nothing to do with personal finance), I am not a financial advisor or expert and am merely a guy who has learned a lot about the subject and would like to share some of that knowledge. The information on this blog should not be taken as financial advice as you should always consider speaking with a financial advisor.
I have a number of reasons for blogging. I was inspired by a few of my friends who usually come to me for suggestions on their financial matters. They are extremely intelligent people who are very talented, but personal finance is just not something they have spent much time thinking about. I thought that with all that I have learned through my own finances, I should share some of it with people in similar positions as my friends.
I have to warn all of you that I am not that great of a writer as I am more of a numbers guy. Nevertheless, I will do my best and I hope you can benefit from reading my blog. Please feel free to leave comments and ask questions as I am always open to suggestions.