Forcing your financial belief system never works

Financial Belief SystemYOU HAVE TO BELIEVE IN SOMEONE

 

Someone always has a financial belief system that will change your life and believes that it will not only change their life but yours as well.

Eventually you have to believe in someone, even if that someone is yourself.

The pushy sellers will stop at nothing to try and change your mind by forcing their financial belief system on you but when it’s your money, it’s your decision.

What is the definition of belief anyways?

Simple, it’s what you as a person trust to be the true answer, having faith in something or someone or a proper way of doing something.

At least that is what it means to me. In order for me to believe in something I have to trust the source. There is always risk no matter what you believe.

When no one believes in your financial decisions what do you do?

If no one believes in my way of thinking the answer is easy for me because I’ve never been one to follow the opinions of others unless I found them to be beneficial to me.

Financial news lurks everywhere, online, on the radio, in print and at your front your door even on your telephone.

Everyone hopes they are doing right by their own finances but are we really? If you find yourself struggling to stay afloat then maybe it’s time to search out alternate ways to get back on track financially.

If you tell people you are struggling they may offer you advice and say their way is the only way or suggest ways for you to save money. Believe what you want.

They say to always have a back-up plan in life because you never know what can happen. An emergency savings will only get you so far. Unless of course your savings includes many zero’s. It’s great to have an income source coming in from more than one place.

 

Financial decision-making

 

Sure there are times we will question what we are doing financially and we should. Never has there been a time where I’ve jumped into making financial decisions without doing a bit of research and getting opinions from financial experts that I trust.

The fact of the matter is nothing is for certain when it comes to investing but trends and statistics are what keep us going.

My parents for example invested their money in real estate and said it was the best investments they’d ever made. That was their belief system back in the day and it still is today.

We plan to do the same one day if we can save up enough for a down-payment on a second home. Of course it won’t be our only plan of action towards senior life living like my parents.

Once our mortgage is paid we also want to focus more on our investments as catching up is a place we need to be at.

 

Hiding money

 

These days many people are scared to hand over their money to anyone so it stays at home hiding under a mattress, in a drawer or in a closet in a box. You’d be surprised if people came forward to tell you where they stash money around the house.

That’s probably why we hear these stories of people finding thousands of dollars in items they bought used at a thrift store or while at a garage sale.

People forget where they stash their money or someone might pass away and you know, forget to mention that they hid $100,000 in the back of a book.

I believe the reason for this is because it’s their financial beliefs that their money should be saved this way. You can’t change their minds.

 

Retirement

 

My parents are living an early retirement now always on vacation for weeks at a time and life is good. Best part is those houses they bought years ago and are paid off keep paying them every single month.

Some people may shun the investing in houses for your retirement theory but clearly it’s working for some people.

Many successful millionaires are where they are because they took chances listening to a financial belief system they trusted because they felt they had enough evidence to support their decisions.

On the other hand bad business deals have led to some people losing their life savings because they put all of their eggs in one basket. Remember that some people are good talkers and can sell anything to anyone. If it’s too good to be true it may be.

 

Financial belief system

 

When we said that we were going to pay our mortgage off in full rather than invest the money there were countless comments and emails about why we would make that decision.

I’m going to write a more detailed post on that soon but the short of it is, because it’s what makes us happy. It’s part of our financial belief system to get us where we want to be.

When you know a sure thing like your interest rate, you can’t go wrong in my opinion. Try and tell me what investments will make you money 100% without a doubt and I’d still be skeptical, but that’s just me.

There’s something about concrete that sounds better to some than variable does to others. Risk, you bet but I pick and choose where that risk gets laid because it’s our money and our financial beliefs.

When people don’t believe in how you spend your money you don’t have to tell them anything. In fact that’s just another reason why I never talk about our money let alone what we have because for some it turns into a financial debate that is never-ending.

Don’t get me wrong I love chatting about finances but talking about what’s in my own bank account with friends and strangers is not my cup of tea.

I never try to force my financial beliefs on anyone although I do enjoy listening to what others do or have to say. That’s part of the learning process in my opinion.

On many occasions we’ve had friends ask us why we chose to shop at thrift stores like I mentioned in yesterday’s post and the answer has nothing to do with what people think.

Just because people may have money doesn’t mean they should run out and blow it at the first available moment.

You see, we all have our own financial beliefs and no matter how hard you try you can never force those beliefs on anyone.

 

Investing beliefs

 

I follow many personal finance blogs and I read many blog posts during the week. I take every post I read seriously but if I was to follow a certain financial path that someone else had tried I’d certainly do my homework.

My friend Mark at My Own Advisor is doing an amazing job with his investments and reaching his dividend income goals.

Anyone would want to know his secrets and even if he told you, you’d have to do your own homework. Mark has a large following of fans and for good reason because he’s showing them how his investments are working for him.

It’s his belief system that tells him that once he reaches a certain point he will reach his personal financial goals. I believe he will get there.

I’m sure Mark has spent countless hours learning about investments and made money and lost money because it’s all about risk but I can bet you he won’t do something with his investments just because someone said so. You have to realize that money and risk go hand in hand in anything you choose to do with it.

 

Behind closed doors

 

What works for one person might not work for you. Just because your grocery budget for 5 people is $600 and for another family it’s $900 we can’t judge each family because they may be shopping according to their own financial and health needs.

We don’t know what lurks in someone’s financial health. Just because you see what’s on the surface certainly doesn’t mean that’s the light in the background.

We’ve talked about The Millionaire Next Door and my other friend Mark from Money Saving Dude did a great review on the book. Just because your neighbour drives a beat up car and doesn’t dress the best doesn’t mean they don’t have money.

I’ve been subjected to people treating me differently because they see or hear where I shop yet I may just have more in the bank than they do. Does it really matter? Not really.

 

Work from home

 

What is a blog? You’re reading a blog right now. It’s a place where someone or many people share their beliefs about a certain topic or many topics.

What about if you want to give up your full-time job like Holly from Club Thrifty, Pauline from Reach Financial Independence, Michelle from Making Sense of Cents or my good friend John from Frugal Rules to pursue your work from home dreams?

They all run blogs and are good at what they do. Not all blogs are successful though and to make money be prepared for blood, sweat and tears.

You will always be met with opposition but if your financial belief system tells that you can make it, then go for it. Giving up a steady income for the unknown might be hard to do but many people have succeeded but it’s not for the faint of heart.

It’s hard work if you work from home because you are now fending for yourself. Nothing anyone says will stop you.

You only have to look at some of the incomes that these bloggers bring in from freelancing (those that share their numbers) to know they know what they are doing.

That’s why I say you should never worry about what others are doing and focus on your own financial health.

 

Budgeting

 

If you want to make positive changes to your finances finding someone you trust is a good start. Just because I say to use a budget doesn’t mean it will work for you like it does for us. Budgeting is part of our financial beliefs and has gotten us over the hump towards debt freedom.

Sure you can try it out but if you don’t give the budget your 100% effort like we do you will not succeed and say you hate budgeting. Boo on you, but I won’t judge you because I worry about my family first.

If budgeting is not your thing then I hope that you find something suitable to get your finances beliefs on track.

Saving money isn’t rocket science but investing your money takes a skill and a risk tolerance some people aren’t willing to take.

That’s the way you roll and I can’t change that. Only you can. So the next time someone tries to force their financial beliefs on you saying that you must or should do something, figure it out for yourself.

You might even catch me telling you should do something but like anything do your research and know what you want from of the outcome.

 

Your life

 

Never judge someone because of the way they choose to spend their money because you can’t change them. Their belief system is their own and in the end they are the final judge.

You might see someone who spends their money eating out every single day and blowing money on crap but you can’t make miracles happen for them.

What I’ve learned is you can listen and if they ask questions you can answer but you can never change someone.

Sometimes hitting rock bottom, get laid off or fired, losing everything and going bankrupt is the only wake-up call some people will need before their ears are open. Even then your financial beliefs may not be a right fit for everyone.

Have you ever had someone say that it takes too much time to cook so I just eat out?

If they believe it takes too much time you can’t change that they don’t want to cook nor that they are spending more money eating out than eating in.

You can argue all you want with someone why they should buy a name brand product rather than buying a no-name brand but if that’s all they can afford who are you to judge? Maybe they like the no-name product over the name brand.

The fact of the matter here is that if you could open the door to someone’s life you will find their financial health to be different from your own.

You may find some people who are similar but it’s rare to find someone who thinks and acts just like you do.

So, the next time you want to dish out your financial belief system to someone just remember that whatever they choose to do depends on how they view the outcome for their own life.

Have you ever had someone try to convince you that your financial beliefs were wrong? How did you handle that? Did you make changes to your finances? How did that work out for you?

 

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The Saturday Weekend Review #41: Would you buy a house that has a spooky or illegal past?

Fall-leaves-home

Behind Closed Doors Lurks A Story You Might Want To Know

You are looking for your dream home when you suddenly find it but then you also find out there is more to the home than meets the eye.

Getting my daily dish of Yahoo this morning I was reading about whether Satanists decrease the value of a home.

The article had me thinking about what other things might decrease the value of a home that was out of the ordinary and would I put an offer on a home of that calibre.

I don’t suspect the property assessment with the Multiple Property Assessment Corporation (MPAC) would be affected as they value the homes that are comparable in the neighbourhood so we might not see any value decrease reflection documented when the paperwork arrives.

Then again, what do I know?

Whether it was a grow op house for sale, illegal activities, someone may have died or even worse was murdered inside of a house would you put an offer in on a house you fall in love with knowing this information?

There was a time last year where a beautiful home sitting on a large property in our city was busted as a marijuana grow op in a relatively quiet neighbourhood that stunned the residents.

Although many did say they could smell the scent of marijuana which is hard to miss they never quite thought that something so illegal was happening right under their noses.

For the longest time the house had yellow tape around it and it was boarded up which I imagine the police did as they conducted their investigation.

Through the grapevine we heard there was quite a bit of damage to the interior walls of the home as well as general damage from the amount of moisture in the air especially since the house was closed up all of the time.

When the house was put on the market the MLS pictures showed that they had cleaned up the house and also managed to call in a home staging company to make it look pretty for the open houses and potential buyers.

 

Real Estate agent requirements

 

If something happened in every home including natural death and it had to be disclosed would that really hurt the real estate agent salary if homes were then valued less? I don’t know.

If a death happened, well I don’t think that’s a big deal as it’s a natural part of life and people die at home all the time.

If it were me, I’d rather not know that old man Johnny had his final moments on the living room floor before peacefully leaving this earth. That to me is disturbing the peace, let it go.

I have talked to some agents and it’s clear as day that lining their pocket is more important than anything else.

I think there is a fine line when it comes to a code of ethics and many will teeter on that line and push the envelope as far as they can go unless they are of the type that believes what goes around, comes around but in a positive light.

I’d be interested in getting some feedback from agents to hear what they have to say on this topic and how they handle it or are supposed to handle it.

I’m not sure if home sellers or real estate agents have to disclose that the home was a grow op but I’m guessing that is the case to some degree from an article I read in the Toronto Star written by Real Estate lawyer Mark Weisleder who says,

In Ontario, real estate agents must disclose any material fact that they are aware of under the rules of their Code of Ethics. In my opinion this includes whether a murder or suicide had occurred on the property and could also include certain neighbourhood conditions.

I can see why it would be important that the homeowner know as well the home inspector so he/she has a sense of how the house has been taken care although any good home inspector will just find the defects without any prior history because that is what they should be trained to do, although that is not always the case.

To be honest I can’t see that a grow op would deter many people as long as they know what the damage was and whether it was repaired to the highest standards before moving in or at least securing a sale with a price that reflects the repairs needed to be done.

I don’t think a grow op would be as bad as a murder scene or suicide or even worse captivity which has been exposed and we hear about on the news from time to time that shocks the world.

I agree that the house should just be torn down and rebuilt. No one would want to move into a home like that, but are all these situations reported? Probably not.

The grow op house did sell eventually for a relatively decent price we thought, keeping in mind that the home still needed lots of work doing on it but the asking price reflected the renovations that the new owner would need to do.

If the home has a spooky past I don’t know if I could put an offer in although for some people it might not bother them as much. Saying that, be cautious just because you don’t mind if you plan to sell the next potential buyers might have a BIG problem with it especially if they can Google the information on the internet.

These days you can find just about anything, heck I can still find the listing to my UK house from when I was selling it and the next owner.

Sometimes things linger on the internet for years and years so do your homework because you might find the home for you but the home might come with a story you want to know about, or at least should know.

Would I buy a house that was a grow op? I don’t know to be honest, it really depends on the house structure and damage if any to the home, which is likely.

If the story about the home was headlining news and we know exactly what went down inside of that house through such media coverage and then the house was later on the market up for sale I might be hesitant.

If after having knowledge of what happened in a home I might not be that comfortable to live in it but it really depends on the situation.

It’s different if someone just passes away in their sleep or from complications I don’t think that would bother me as it happens all the time. What I think bothers me is when it becomes a crime scene where death or something way over the top occurred.

 

Home value

 

I believe the home’s value will decrease in price because people will know what happened and you may discourage potential buyers simply for their own personal reasons. Some people get spooked out thinking that ghosts will haunt their new home because of bad dealings in the home or consequently don’t want the dark vibes surrounding them.

There will always be a darkness in a home that was surrounded with evil in the sense of wrong-doing because life lingers on especially if it wasn’t meant to leave at that time.

That’s what I believe and maybe it’s far out there but that’s enough to spook me out of being a potential buyer.

There are so many stories on the internet and even a TV show if I can recall about ghost sightings and evil spirits lurking in homes with weird things happening during the wee hours of the night that prompt homeowners to seek professional help. Once you start reading and seeing TV shows like that it’s enough to say, nope I have no interest in homes like that.

At some point the home will go up for sale and when it does potential home buyers who don’t really care so much about the history will only care about that reduced price on the home simply because of that history.

Someone might score a bargain of a deal just like the buyers of the grow op marijuana house did in our area which was later put on the market less than a year later.

The house sold with-in 2 weeks this time as it was fully renovated and landscaped. There was no trace of the home being a grow op as we took a tour during an open house (yes we are nosey neighbours).

Would you buy a home if you know a homes dark past?

What if the home was reported to be haunted by ghosts, would you buy it or believe it?

Should a home price drop in value if illegal activity occurred in the home?

Should the real estate agent and/or homeowner disclose any information about the home or homes surrounding the home?

 

Canadian Budget Binder this week

 

If you missed any Canadian Budget Binder posts this week you can catch up by clicking any of the links below. Something is always brewing at CBB so subscribe to the blog today and get my daily post sent to your inbox!

Exciting news for Canadian Budget Binder as we make our way into the news again this week in The Toronto Star online and in print. Katrina my Canadian Budget Binder contributor gives a lovely interview with the Toronto Star about grocery shopping, budgets and the Thanksgiving holiday. Please do enjoy this one. “In Budget Plans Every Dollar Counts Rent it Instead: Do you really need to see the movie on the big screen? If the answer is yes pack your snacks.The combo amount amount to a small grocery load.”

 

Making a difference

 

bridget-money-after-graduation-blog

Hi, my name is Bridget and I founded Money After Graduation to chronicle my own journey from negative net worth to relative riches. After graduating with over $20,000 in debt from my Bachelor’s degree, I was financially maxed out with no financial assets.

Thanks to the help of the online personal finance community and some serious budgeting efforts, I was debt-free within two years, had five-figures saved for retirement, and had started taking on investing in the stock market. I fell in love with money management, and thankfully it loved me back!

My primary goal with Money After Graduation is both to share my own story, and help others on their journey.

Debt, particularly student loans, is an all too common burden on twenty-something shoulders, and unfortunately holds a lot of people back from living the life they want.

I frequently hear my peers question how they will ever afford to buy a home or raise a family when they’re living paycheque to paycheque.

For many, money is a total mystery: they know how to use it to buy stuff, but they don’t know how to make it work for them. Often it is very simple changes to habits and clear goal setting that can completely turn someone’s financial situation around.

Money After Graduation provides information to readers about budgeting, saving, and investing, and encourages shedding your debt and building the foundation of your financial future early in your adult life. My hope is that I can help readers set off on the right financial foot and life happy, wealthy lives!

 

 Blog post sharing

 

I really appreciate when other blog owners recognize my hard work at Canadian Budget Binder and share my posts with their fans or even mention my blog on their blog or website.

Here are the blogs that did just that this past week, so please head over and check them out. If I’m missing you it’s because I didn’t get a ping back so please send me an email and I’ll add you next Saturday.

A big thanks to these blogs for thinking of CBB even though I haven’t been around much this past month. Cheers!

 

What is a blog carnival?

 

Some fans have asked me just what a blog carnival is so a little explanation is due here for anyone reading for the first time or for my long-time fans. A blog carnival is where a blog or website hosts what we call a carnival of blog posts from around the web.

Most blog carnivals have a theme and certain rules for submitting which must be followed. If you are a blogger and would like to learn what blog carnival directories I submit to each week you can find the information in a previous Saturday Weekend Review post that I wrote.

A big thanks to these pages for accepting my blog posts and sharing them in the following carnivals

 

Carnival glory

 

Google-web-search-terms

Every week I get thousands of people visit Canadian Budget Binder because they did a search online and found my blog.

Here are a few of my favourite searches that may have even brought you here and you’re reading this, right now.

  • Do most guys not cook?- I don’t know it’s hard to say, I love to cook
  • Banks for sale in Canada- Why do you want to buy one?
  • Paid my debt to you- Funny, I haven’t received a thing :-)
  • Alcohol jackpot- Now there’s a jackpot I’d be proud to announce
  • Teen couple making baby- Nope not going to find any lovemaking on CBB
  • Money isn’t everything- That is so very true

That’s all for this week’s edition of The Saturday Weekend Review #41: Would you buy a house that has a spooky or illegal past?

Join me next week same time, same place to see what trouble I can get myself into. Have a great week everyone.

Mr.CBB

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Paying rent: Am I really wasting my money?

living-room-renting

Throwing Money Out The Window

I don’t think there is a right or wrong answer when it comes to renting and wasting money or purchasing a home but there certainly are pros and cons to both.

Why do I choose to pay rent?

While the freedom of owning my own home sounds great getting there on my own may not be a reality but I am certainly going to try.

I am saving my money right now and enjoying it, though what I am saving for exactly is not set in stone. For the next 10 years I am choosing to continue to pay rent.

As a single mother I want to make sure I am fully prepared for all the costs and fees that come with being a homeowner if I do decide to make that choice down the road.

I have my mindset that in 10 years, if I am still single, I could be close to or have enough money saved for a reasonable down payment on a  house if desired.

While budgeting and saving money regularly and wherever I can I figure I could have a decent down payment saved through investments and other means in those 10 years.

I still get laughed at when I talk about using coupons with my grocery budget, even more when people see I have a coupon binder, but hey every dollar saved helps towards reaching my goal!

Could you afford a mortgage on one income?

Buying a house as a single individual with one income it is not impossible as Mr. CBB showed us while sharing his experience with “Buying a house, was I too young?” Though not impossible it can certainly be a challenge when only one income is involved.

I like the idea of owning my home and having my own space where I get the make all of the decisions. If I want to paint a room then I will paint it, instead of having to get permission from a landlord to do so and how I would love to have my own property to landscape, oh the things I could do!! Is it worth it though?

Importance of a down-payment

Without a sizeable mortgage down-payment, 25% usually of the value of the house, you incur more insurance fees as your debt:income ratio is now bigger making you a higher risk borrower.

Where I currently live, in today’s housing market $350,000 or even $300,000 would buy more than enough space for the kids and myself and still be a relatively newer home.

Saving up 25% of the home purchase price would make my down-payment anywhere from $75,000 to $87,500. Can I save that much in 10 years?

I believe it is possible and I am trying everyday to find new ways to save, though it is a challenge I have accepted it with full determination to make it a success.

Again, I do not desire a large, luxurious home. I honestly do not want to clean it and would rather see my money go into savings and time spent with my kids then into more housework. I do not make a ton of money so being smart with what I do make is key.

I don’t want to be able to make my mortgage payments, stretch my dollars to pay taxes and maintenance costs while having nothing in my house or unable to put food on the table so a sizeable down payment is important.

Getting in over your head

Owning a house in our society comes with the status quo of being successful. If you can handle a mortgage then you must be doing something right!

The town I grew up in and still live in has boomed in the last 10-15 years with multi-million dollar homes that are absolutely beautiful but seem to be put on the market quite often as people are finding they really can’t afford them.

A large, lavish home or mansion is not something I ever desire, even if I were to ever win the lottery, I don’t want to clean it, especially as a single mom with enough already to do, but I would be happy with something that will meet our needs space wise, yet comfortable.

More space equals more cleaning time and more space for junk and clutter to build. If you have read some of my past blog posts you will know that these are two things I have been working to reduce the amount of time in my life that I devote to them.

Keeping up with the Jones’ is definitely not a smart choice when it comes to purchasing your home. A house is a major investment so why would you want to take on more than you can handle just to keep up with your friends and jeopardize losing it all?

 A close friend of mine has made many comments about how their house is costing them more than they can really afford and how it is putting a strain on all other aspects of their life, this is not where I want to be, ever!

I guess when Mr.CBB says “It’s not about how much money you make it’s how you save it” really is important not only to spending on everyday items but big ticket items as well. If we keep buying on credit or spreading ourselves too thin financially it will put a strain on our lives and for me, it’s not worth it.

If I am going to own a home it will be within my means, but only if and when I am fully prepared. Our quality of life right now is not lacking anything because I do not own where we live.

Benefits of Renting

Many will argue that renting vs. buying your home, apartment or condo is like throwing away your money.

This argument stems from the fact that unlike owning a home where you build equity, there is no return paid on your monthly rent payment. While this is true a mortgage can also be a good way to throw some money away.

Typically, until the 5th year of a mortgage the majority of your monthly payment goes towards interest while hardly making a dent in the amount of principal paid down.

  • If you sign an all-inclusive lease then your single monthly rent cheque pays for everything, utilities, property taxes etc..instead of several separate bills and fees when you own a house or a condo.
  • A single, all-inclusive monthly payment is much easier to work into your budget than fees and bills that can vary from month to month.
  • Renting does not require you to come up with thousands of dollars for a down payment,  closing costs and fees for things such as building inspections, legal support, property  taxes and insurance. Though you are not building equity from your home you are saving these costs which can become money you can put into savings, therefore still giving you return on your investments.
  • When your lease is up you can move! Moving  to Western Canada is something I dream of and hope to make a reality someday. Moving out when a lease is up requires a lot less time in paperwork and avoids penalties and fees you may incur while trying to sell a house.

Buying a home is a major investment and can be a great investment if you are prepared for it. Choosing to rent and save money while making informed choices of where to save that money whether it’s in stocks and bonds or even just a Tax Free Savings account can be a great investment as well.

My goal right now is saving to be able to afford a down payment though that might be not what I actually end up doing with it.

If I choose to continue renting after 10 years then I have an x amount of dollars in savings that I can continue to put to work building our savings and investment portfolio.

Heck who knows maybe one day I’ll meet the man of my dreams and not have to buy a house on my own but even then we will have an awesome start at paying down a mortgage, two incomes and less interest to pay sounds great to me.

In the meantime I am happy paying rent and planning for the years ahead. A stable future for the kids and I is what I look forward to, whether it means investing in a house, paying for the kids schooling or re-investing it into the market, it will be money well saved and put to good use no matter what.

Do you rent and would you consider buying a house right now?

Katrina-CBB

Post Contribution: 

Katrina is regular contributor for Canadian Budget Binder and is as passionate about personal finance as she is gardening. Katrina is a horticulture graduate with over 10 years experience with landscaping and greenhouse production.

Her goal is to share her knowledge and experiences blogging about gardening and her continued passion for personal finance in hopes of motivating others. While being a single mom of two and an in-store marketing representative for major retail shops she also runs her own Landscaping Services in Southwestern Ontario.

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PF Weekly grab a brew #37: How small is too small of a house?

Grab A Brew

Tiny House Sale Is Not Surprising

Many of us all have our dream home purchased in our minds before we even set foot on the pavement to search for the home that has it all, or at least what we need. Depending on where you live your dream home might be a distant dream because the price tag on most homes in major cities in Canada are just too high for many to handle.

Even in smaller communities we can see house prices are still higher but jobs are far and few for most who opt to commute just to bring in the money to live comfortably in a decent sized home.

If you are out of school and have lots of OSAP and other debts to pay off it may be a long time before you even get into the real estate market. It’s tough enough trying to pay back any debt that most people carry let alone saving for a down payment on a home that will cost them an arm and a leg these days. Sometimes I wonder how we were able to get into the real estate market so fast living in the Greater Toronto Area but timing was on our side but that’s not always the case for everyone.

Prices of houses seem to be moving up still and although interest rates in Canada are still low I also believe we will see them creep up over time. When I read about the tiny house in Toronto that sold for $165,000 it’s not surprising at all.

I bought my first home at 21 and it was a flat which I later shifted and sold up to buy a small home about 3 times the size of the tiny home. Even though I didn’t have a big house I made the space work for me and when I sold it I made back my cash many times over. I believe there will always be a buyer.

Tiny house design

The tiny home is only 230 sq. feet but I wonder how long it will be before we start to see how many tiny houses contractors can fit on a lot to profit the most money from. If you drive around almost any community you will see that homes built between the 50′s -80′s and into the 90′s have relatively decent sized lots but after that they got smart about it.

I often find that it only takes a few people to start the movement of a new craze and I think the tiny home will become something of a craze for many. I’m sure designers are already working on plans to create beauty in these small spaces and figuring out ways to build a small home so that it is optimal for the home owner yet affordable.

New subdivisions that are being put up faster than we can say build are squished together so companies can squeeze every last penny out of the homeowner and get the most bang for the land they own. We see bigger homes these days on tiny lots and they don’t come with a cheap price tag either.

We don’t have a huge lot on our property and our house was built-in the 90′s right when they started to build the homes closer together in our area. Initially when we bought we didn’t think we’d care but over the past few years we found out we do care. We don’t want to have to shake hands with our neighbour in the morning when they leave for work because that is how close the homes are on our street.

Tiny houses for sale

If home builders can get away with the ability to build bigger homes on smaller lots and make a fortune why not build small homes on tiny lots and still make a fortune like the tiny house in Toronto which has only one bedroom and air conditioning. I’m sure for the person with excellent organizational skills and the creative touch they can make this one bedroom home a space that has everything they need. I’m betting this won’t be the last of the tiny houses for sale as the small house movement is becoming an upwards shift I think we will continue to see.

The home will be used as an investment and I don’t see it ever being vacant for long because of the attractiveness of having the outdoor space and it being a detached home rather than an apartment or bedroom rental in someone else’s home.

The house the size of a “tool shed” is how it’s described was used as a retreat for the previous owner which isn’t shocking given the prices of Toronto homes. I think we will start to see homes getting smaller and subdivisions of little homes being constructed for those people who just want to own a piece of property without the huge price tag. Personally I don’t mind having a small home but I’d like to have some property and garages are essential for any man in my opinion. I’m an easy guy to please though.

Could you live in a 230sq. foot home and would you buy one instead of renting if you lived in a major city like Toronto or Vancouver?

PF weekly reading line-Up

If you missed any of the posts from the week you can check them out right here.

Weekly Reads

Every week I share a few of the best personal finance blog posts that I read over the past week with all of you.

Top Read: Why Mortgage Insurance Doesn’t Work For Everyone: My Own Advisor

Top Recipe

Every day Food Bloggers from around the world pass by my other love the Free Recipe Depot Facebook page to share a daily recipe which I share with my fans. Each week I pick one of those recipes to share with the Personal Finance world and this weeks TOP RECIPE goes to……. Bunny’s Warm Oven for this gorgeous Apple Dumpling recipe. 

apple-dumpling

Have a great week everyone and I hope you enjoyed this edition of my Personal Finance Weekly Grab a Brew #37: How small is too small of a house?

Join me again next Friday when I do it all over again.

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Buy or Sell First: One Home, One House, Two Mortgages And A Pool

modern house with a pool

Deciding whether to buy or sell first can be a difficult decision that face home owners. It is a decision that if not executed properly could leave a homeowner with 2 mortgages and lots of stress. Owning two houses sounds like a great real estate investment but not when one is a home and another is a house you are trying to sell.

This is the case with a neighbour of ours who is living the stress yet fails to see the problem, is the price of the house. Typically in the UK we would sell our home first with a reasonable closing date and then look for a new home to purchase.

Research

What to do when buying your first home? That’s easy, research! Talk to professionals and get tips and advice so you aren’t heading down a path where you want to tear your hair out. The same goes when you’re looking for things to do when selling your home, research.

When I sold my home I did my research first, granted I wasn’t buying a second home I was moving to Canada. I had estate agents come around and value my home and I averaged the values out to come up with a middle ground. My home sold in less than a week.

The Best Buying and Selling Option

I find in Canada it will go many ways, sell first with a long closing leaving the window to find a new home which would be optimal to me. There are some advantages to selling first and the most important is that the home has sold. Secondly, you know how much money you can work with when it comes to selecting a new home  or building in your price range.

We had friends who sold their home and moved into a rental unit while their new home was built.  They said all they cared about was making sure the house was sold first so then they could worry about building the new home with peace of mind. Renting was the better option for them and worth every penny.

Condition Of Sale

The other option I’ve heard of is to buy first with a condition on the sale of the new home that you sell your own home in a specified time frame.

As a home seller I likely wouldn’t care for that condition of offer because I don’t want to have to wait for someone else to sell so I can get out of my home and move on. It begins a chain reaction of homeowners all waiting to sell and move which is not only stressful but time-consuming for all involved.

When we bought our home we had no conditions at all which made the process easier however we went from renting to buying which is an even better perk when buying because you don’t have to sell anything just give 30-60 days notice to your landlord.

We didn’t jump in and buy our first home we went to many open houses but we knew there was a certain process to buying that would benefit us. The same goes when we opt to sell, we will follow the best option in order to remove being stuck in the middle of one house and a new home.

Take What You Can Get

There are also those that sell first but with a short closing because it may be the only potential buyer that’s come along so they took the deal. If looking to sell your home fast is on the table don’t make mistakes that are easily avoided. If the market is slow or if you’ve got an overpriced home it may sit on the scene for a long time. Some people will throw in the towel and take what they can get if an offer comes in that is reasonable.

I think homeowners need to be ready and realistic when it comes to numbers. If you believe your home is worth x amount of dollars that doesn’t mean it truly is. It is only worth what someone is willing to pay. If you are asking yourself why your house has not sold after 3-6 months up to a year you know it’s overpriced.

This may leave them with not enough time to look for houses so renting or moving in with friends and family may be a secondary option until a new place is found. If it were me I’d rather be a seller who has sold their home and has to find a new home. When you sell a home you remove a huge burden from the entire process.

Sometimes the circumstances aren’t always optimal but having the money in the bank from a sale seems the smarter way to go. You can buy a home faster than sell a home especially if the market is right.

Not All Homes Are Created Equal

I know some people who throw a wobbler because other houses on their street sold for more but they are not comparable. They believe because if one house sold for $700,000 theirs must be comparable and that’s how much their house should sell for if not higher.

They automatically assume they will sell and get that same kind of money but are devastated when reality kicks in. Not all homes are created equal even if they are on the same street.

Take for instance, size of home, land size, upgrades, landscaping etc. You can’t just slap prices around when it comes to home selling and I’m not even a real estate agent, that’s common sense. Another reason why for sale by owner can be tricky.

You really need to know your homes value in order to sell and understand your MPAC assessment on your home. If you buy a house that doesn’t have a real estate agent who gives the house a proper assessed value you may end up overpaying.

Even if you sell your own home you can get agents around who are willing to give you an estimated value based on professional experience and training. Not all homeowners agree with agents and in some cases want the house listed higher. Another scenario is when homeowners undervalue their home when the do for sale by owner leaving themselves out cash and the buyer celebrating.

Jumping In With Your Eyes Closed

Then you have the buyer who purchases a new home without selling their home with a reasonable closing date. I don’t see the rush with this scenario but for some they don’t want to miss out on their dream home so they jump in head first and hope for the best.

This is the least desirable scenario in my opinion as now you are left to sell your house and you own a second home.

What happens if the market is saturated in houses and your home does not sell?Typically come spring and summer home selling is ramped up with many houses for sale and in some cases less buyers, a buyers market. Your home may not sell for the price you want or in the time frame you desire.

What if you didn’t do your research and you over price your home and no one wants to buy it? I had estate agents around to value my home it was critical to the success of me pricing my home and selling it as fast as I could with a decent profit.

Don’t Count On It

You may count on the amount of money you want to list and sell your house in order to purchase your new home but that’s not a smart thing to do. If you do have agents around don’t just take the agent who will list your home for the highest amount. Not all agents are created equal as well, money is a driving factor.

Learning The Hard Way

You will see below our neighbours are in a sticky position because they were more worried about a pool than the overall picture, their finances.

We live in a fairly mid- high-priced area of our city with homes nearing the million dollar mark. Homes in our area range in age from 10-25 years of age and some of them are new because you know how builders like to squeeze every inch of land possible in subdivisions.

We are not right in town, rather a 15 minute drive to get to the town centre where all the shopping and spending money happens. It’s an established area on one part and up and coming in another because many people want to get away from the business of the city but don’t want to move too far away from it.

For this reason, homes don’t go on the market often and when they do they don’t last too long. There are however instances when that statement gets thrown out of the window.

A particular home in our area sat on the market for one year because they thought their house was more than it actually was. I know they say there is a buyer for every home, but not every buyer is an idiot and will overpay in an area where we are unless their was some sort of bidding war.

It wasn’t until finally this year they lowered the price of the house from $619,000 to $579,000. This house price did not drop all at once. It happened once about 6 months in and then again at the 10 month mark where the price was at $579,000.

The home boasted a huge in-ground pool although nothing was updated and it was on a main road. The biggest set back and another reason why it took so long to sell was that the pool was jammed up at the fence in the back without much property left. You can imagine the pleasure of the neighbours who finally noticed the “SOLD” sign on this property, that and the homeowner.

Neighbours and The Pool

Another home around the corner on a mid-range priced street came for sale right at the same time with a full length in-ground pool. The property was pristine and well cared for.

That house had an asking price of $579,000 with 2000 sq feet, a larger lot than the previous home above and a fully finished basement. It sold in one day with a “For Sale By Owner”  sign.

Here’s where the story gets interesting and “wants” may cost a family more than they bargained for. All this because they were in such a rush to become pool owners before the summer. Amazing what you can learn just by talking to your neighbours. You can also learn not to make the same mistakes as they are. Read on.

The house was purchased by a couple on the same street. The mother is a stay at home mom to 3 kids so the pool was enticing. When speaking to her she said they wanted the pool for the kids as their current home didn’t have room for a pool.

They bought the house on a whim and called their realtor the next day to list their home for sale. They were under the impression that since most homes on their street sell for around $550,000 – $650,000 that their home would be worth just as much as the new home they bought with the pool.

They listed their home for $619,900 which has no bells and whistles a smaller property and is not near as pristine as the larger home with the pool. She told me the idea was to sell their home for around $35,000 more than they purchased the new home with the pool they just bought. There was no real estate agents fees involved with the house with the pool sale so those costs were eliminated.

They were aiming for around a $30,000-$35,000 profit above what they paid for the new home. That money would ideally pay for most of the realtor and other legal fees.

In their heads they thought they could make a smooth transition over to the new home, keeping the same mortgage and all realtor and legal fees paid. I thought at that point that they were trying to be very frugal and silly at the same time. It was simply not realistic. The new home is worth more than their house for sale.

Well, they moved part of their belongings into their new home at the end of April. They get showings on their house since they’ve dropped the asking priced to $599,000 but I reckon it’s worth $569,000.

I’m guessing it will sit on the market until they lower the price. At least they are enjoying the pool. Every time we walk around on the weekend there are plenty of cars parked outside as it’s the summer party depot now. I’d love a pool for the same reason, hot days and cooling off in the pool with friends and family.

That was not the brightest idea doing what they are doing because now they have one house, one home and a pool with two mortgages that she said they can’t afford. They need to sell their house as one income will not cover two mortgages, take care of the family and pay the bills. Maybe she can tell her cleaning lady she can stay home for a while.

She knows they have to lower the price but they keep thinking that there will be a buyer. I hope they come to their senses sooner than later because it’s summer now and there are many homes for sale. They are making a huge money mistake in my opinion. All of this, just for the pool. I’m sure they could have waited until they sorted money matters out first before jumping the gun.

Owning two homes sounds like you’re on your way to becoming a property mogul but carrying two mortgages will suck the money out of your bank account quicker than you know.

You will get little in return when you eventually sell the original home as most of the payments  of two large mortgages will be interest. How much is that pool going cost if the house sits on the market for a year? I’m sure that money could buy quite a few flotation aides for the kids but you might need something more buoyant than a multi-coloured noodle to hold up your finances.

When deciding whether to buy or sell first research all of your options so you don’t get less the optimal results when you make your move. Be smart, be realistic and don’t get caught up in the stress of owning a house, a home and two mortgages if you can work around that.

Have you made any mistakes in real estate  or did you over price you home and had it sit on the market? What would you have done in this couples case?

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