Romance & Money
Buying Your First Home
Donât forget the hard choices like life insurance
Wendy in Bakersfield, California:
"Our September wedding is planned and mostly paid. We are now planning the
other details of our life together, and intend to have children right away.
We have a 20% down payment saved for a home purchase, and are also shopping for
a new family car, and will need property and car insurance as well. Itâs all so
We have been told we have excellent credit. I hope Iâve given you enough
information for you to be able to give me your very best advice on these issues.
Clearly you two are organized and truly getting your âducks in a rowâ so to
speak. Some people believe in destiny, I believe the choices we make deliver us
to our destiny in better shape than the blind faith that no matter what we do
our destiny will be achieved.
âDestiny is no matter of chance. It is a matter of choice. It is not a thing to
be waited for; it is a thing to be achieved.â
William Jennings Bryan (1860 â 1925)
This is where the link between romance and money becomes
critical. All the financial shopping and planning in the world will not hold
your relationship together if the two of you do not agree on your goals.
That being said, Iâll assume you are in harmony on these issues.
Regarding your questions, this is my best advice:
Since you are planning a family immediately, then the chances you will be
moving within three-five years are strong. Find the house you want for now,
and finance with a five-year mortgage. The rate is usually at least 1% lower
than thirty-year mortgages and can save you thousands of dollars in
interest. Be certain you understand what happens at the end of the five years;
the most popular feature is a 5/1 arm. That means that the rate is fixed for
the first five years and at the end of the five years it converts to a
one-year adjustable rate. You do not want a five-year mortgage that has a
balloon at the end. A balloon is a large sum of money due at the end of the
After the first house (usually first time homeowners move
within the first 2-4 years) look for a 20 or 30-year mortgage (or another five
year) and make at least one extra payment a year. Make certain you write a
separate check and clearly state âTO BE APPLIED TO PRINCIPLE ONLYâ with your
account number. This will take years off your mortgage and save you thousands in
Regarding the car, I am no expert however I always buy my
cars a year or two old (practically new) and save thousands off that new car
sticker shock. There is a good book you may want to pick up, âWhat Car Dealers
Donât Want You to Knowâ, by Mark Eskeldson that should give you more insight on
your car shopping questions.
Also, sell your old car yourself instead of trading it in.
The average additional amount people generally net over what a dealer will give
you for trade in value is $1000.00-$1500.00.
Insurance can be as confusing as mortgages to me. What I do
know is without it you are doomed to financial stress should disaster hit your
life. And sadly, disaster hits us all sooner or later.
For house and car insurance go for the higher deductibles and save hundreds
every year. Donât assume your homeowners insurance policy covers floods,
earthquakes or tornadoâs, especially if you live in and area that is prone to
those natural disasters. Most wonât cover those issues and require you to have a
Lastly and most importantly donât overlook your life
insurance. To be caught off guard by disaster is one thing, to be caught
unprepared is another. Many young families whom hadnât thought about life
insurance yet were left not only in grief, but in financial disaster as well
after 9/11. Be prepared. Buy life insurance to protect your loved ones should
something happen to you. On the financial aspect of life insurance; itâs much
cheaper the younger you are.
âLife insurance: cheaper the younger you
Time together; Priceless at any age.â
Finally, donât neglect to order your credit report once a
year in order to protect your excellent credit. The insurance companies are
also interested in your good credit as they have statistics showing that
people with good credit file fewer insurance claims. Right or wrong, your good
credit standing will keep your insurance premiums down.
Making good solid financial decisions that you both agree will deliver you to
the life of your dreams is a wonderful foundation for your new life together,
and will go far to eliminate the arguments that plague so many relationships.
Additional information on this topic:
Read Earlier Articles
Editorial Calendar &
Monthly Budget Worksheet
Important Financial Help
Websites and Phone Numbers