Tuesday, August 24, 2010

On Becoming Landlords - Part Two - Our Financial Background

As I mentioned yesterday, I could see the benefits to investing in real estate.  I just didn't see how it was possible, and I was still totally scared to try.

We don't have a lot of extra money available to work with.  But we did have some things working for us...

My husband and I worked very hard to be debt free (with the exception of our mortgage) before we had children.  I know that for so many that seems an impossible dream alone.   Here's how we did it...

 - Neither one of us had student loans to pay.  I worked during college, attended a state college (cheaper), lived at home & commuted (much cheaper) and paid my college bills as they came.  And, yes, I paid tuition by myself. My parents were not in a financial position to assist me - although they did pay for my books, and of course gave me room & board.  My husband attended an aviation technical school & also paid his own tuition.

 - Neither of us had car loans.  I bought my car new as a college graduate...by the time my husband & I met almost 10 years later my car was paid off.  My husband always bought used cars with the amount of money he had available.  Since we've been married, any time we need to replace a vehicle, we save money & then  buy used.  No loans.

 - I did have some credit card debt coming into our marriage (my husband did not), but the first 2 years of our marriage we used my paycheck  toward debt reduction.  By the time Baby #1 came, it was paid off.  Now if we use a credit card we pay off the balance in full every month.  If we can't do that, then we don't buy it.

 - We live in a very, very modest home with a very, very low mortgage payment.

So, that was what we had working in our favor.  Our challenges were these...

 - Despite our frugal living and no debt we still pretty much find ourselves living paycheck to paycheck.  We tithe, we save, we pay our bills & there's not a whole lot left after that.

 - Living on one paycheck means we make sacrifices.  It influences the kind of house we live in, the kind of car we drive.  I rarely if ever buy clothes or shoes or have my hair done. We've been very fortunate in clothing for our boys - we've received a lot of hand-me-downs from friends & family & they often receive clothing as gifts for birthdays/ Christmas. We still enjoy eating out, but only on occassion.  We raise some of our own food & shop at a discount grocery store.  It is hard, but to me it's worth it to be home with my children.

 - We had no money saved for a down payment on a rental property, and we had no extra money floating around.

So, how would this be financially possible?  Finding that answer was the next step in moving forward & will be what I discuss in Part 3.


  1. I love reading about people who are debt free. Did your parents talk about being debt free and not buying unless you could afford it while you were growing up?
    I want to encourage my kids to not make the same mistakes we have made financially.
    I am really loving this "series" of yours.

  2. Hey chatty mommy. To answer your question - yes & no. My husband and I both came from blue collar families where money was always a bit scarce. My parents did teach me to try to live within my means and to live frugally. But,I also think they viewed having some amount of debt as a fact of life.

    And, in my 20's when I was single I wasn't very wise with my money. I wasn't making a whole lot of money working at a day care center. But, I still wanted to go out with my friends, get new clothes, etc. & racked up some credit card debt. Not a huge amount by some standards, but still I was spending what I didn't have & barely getting by.

    I would have to say that the most important thing for my husband and I has been viewing the money we have as money God has put in our care & wants us to be good stewards of. We began tithing early in our marriage (not a concept that my parents taught me) and we have seen God's provision in so many circumstances. There have been some lean times, but we have always had enough to tithe & pay our bills.

    Teaching good financial concepts to our children is hard. There is so much materialism out there & our children have had some serious bouts with the 'gimmes'. It's an ongoing struggle.

    By the way, we viewed the Dave Ramsey Financial Peace videos & found some of his information helpful too.

  3. Good for you guys on being debt free!
    We are working on that...slowly but surely!:)
    Looking forward to reading more
    Enjoy the day


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