BIG HOUSE, Small House

I always enjoy talking with my neighbors, who are mostly retired, and listen to their stories growing up. Some of them grew up in our neighborhood and knew each other since they were little. One of them used to swim in our swimming pool (now covered with a redwood deck) in the summer when he was about seven or eight.

Back then people would buy a house and they would stay in it until it is paid off. Neighbors had time to know or befriend each other. Their children grew up or grew old together. Retirement was easier then because there were no mortgages to worry about.

It is very common these days that after building up a little equity, people would sell their house to acquire a bigger and fancier one. There is nothing wrong with doing that, IF you can afford it. If it will put your finances in jeopardy, DO NOT DO IT. 

There are so many things to consider before deciding whether buying a bigger house is the right thing to do. You have to ask yourself the following questions:  

1. Do you have enough time and money to pay your mortgage off before you retire? 
2. Can you afford to pay higher monthly mortgage?
3. Are you prepared to pay higher property tax and home insurance?
4. Can you afford the upkeep of a bigger house?

By staying in the same house they bought long time ago, my neighbors are still paying the property tax based on the original price of the house. The value of their house is also way up compare to the original price they paid. 

The same thing helped us kept upfloat after losing some of our investment income. Having no mortgage to worry about and having a very low property tax made it easier for us to adjust to our new budget. We would really be in trouble right now if we had a mortgage to pay.

If you ask my neighbors for tips on how to retire comfortably, they only have one thing to say; plan on paying off everything while you are still working. When you retire, the only bills you should have are the utility bills. 

Avoid Surprises

During tax season, we always wish that we could claim our dog as our dependent. We could not so we have to pay our dues.

To make it easy for us, we set aside “tax money” in the beginning of the year. We put it in the savings account and pretend that the money does not exist. I always cringe everytime I see how much money we have to give to the government, but it is what it is. 

We do the same thing with other bigger expenses such as car, house and earthquake insurance. Every month, we set aside certain amount. When the bill comes, we have saved enough to pay it off.

My husband and I work well together on this area. He is the bookeeper and I am the moneykeeper. He schedules the payment and I do the paying. In that way, we both have full knowledge of our financial status. There is no surprises. 

How about you? What kind of system do you use? 

Costco Membership + Good Credit = Huge Savings

When our twelve-year-old car started to give us so much problems, we knew it was time to buy a new one. We started checking prices online, then we visited different dealerships. We knew what car we wanted and we were just finding ways on how to get good deal. 

Now, we are Costco Executive members and every month we receive their magazine in the mail. We have been wondering about their car buying program. We do not know anybody who used it but we thought we would give it a try.

We were surprised how easy the process was. Costco connected us to the dealer. There are sales agents that are assigned to help Costco members. We were able to meet with him the same day, BUT, before we went to see him, we went online and printed the price of the car that we wanted to buy. In that way, we will see if we were really getting a Costco member discount or not.

To our surprise, we did. We got over a thousand dollars discount! Then, after checking our credit report, the agent said we are qualified for 0% APR financing! How cool is that! The agent was even surprised that we put a down payment on it. He made a comment we could have just used the money for other things. We could but we wanted our monthly payment as low as possible.

Our payment ended up just over a hundred dollars a month. Included in that payment is a seven-year extended warranty. We were more than satisfied when we drove our new car home. It pays to maintain good credit standing. It came handy when we needed it.

Oh, and did I say we love Costco?