Friday, May 2, 2008

Personal History, Part Six

Well, this is the sixth and final installment of my personal history. And the peasants rejoice!

When I left off last time, I had been well-employed for about a year, I had overcome my terrible roommate situation, and I was contemplating using some of my income to get a house. But let's back up a few months; there is something I want to mention.

When I finally got hired on full-time at my work and became a fully-fledged cubicle monkey, I finally had enough income to start saving toward my trip to space, among other marginally important things like, you know, retirement and a house and stuff. So the first thing I did was get myself a financial adviser.

Rule 5: Get a Financial Adviser.

The relevant statistic here is that, 5 years after college graduation, the 10% of people with a financial plan have 60% of the money. Or maybe it was 5% and 80%. Um... I can't remember. I tried to look it up, but I couldn't find it again. But it's something ridiculous like that. For me (and the same is true for most people I've spoken with) the financial world is way too complicated to create a good financial plan on my own, so I paid the necessary fee to have a plan written up for me by a professional adviser. It's a very enlightening process; I highly recommend it.

So I spent several months in a fairly static state of having a good job and a roommate helping to pay the rent, so I was putting about a third of my income into living, a third into my financial plan, and a third into my bank account. Now I had originally set up my financial plan with a big chunk allocated toward eventually making the down payment on a house. However, during these months, I started coming to the realization that it might be advantageous to invest in a house sooner rather than later. Besides, I really wanted somewhere that I could play obnoxiously loud sci-fi movies without anyone complaining. And a dog. I wanted a dog.

So I took the plunge. I did a whole lot of research before I did so, but I could find few drawbacks to the decision, so I did it. This brings me to my sixth rule for getting into space:

Rule 6: Invest in a House as Soon as You Can Afford To.

Disclaimer: I have no background in either financial planning or real-estate; I'm just relaying my experiences in the hopes that the story might be useful to someone. Follow my advice at your own risk.

Wait, I'm telling you to buy something extravagantly expensive so that you can save up for something extravagantly expensive? Well, yes, and here's why: housing prices double about every 10 years. So assuming your credit isn't in the dumpster, the gain in the value of the house you buy will far outweigh your interest payments. And here's how I look at it: I got a 30 year fixed-rate loan. In 30 years, if I stay where I am, my loan will be paid off. At that time, I could take out another loan for a fraction of the amount my house will be worth, and get my trip to space. So in 30 years, come hell or high water, I will get to space. However, my goal is to do it before I'm in my 50s.

Back to my story. Basically, my situation was this: I had a lot of disposable income. Not nearly enough for a down payment, but likely enough to cover closing costs. I had great credit, and housing prices were starting to go down due to the economic downturn that we are currently in. So I decided to go for it. I did a lot of research, I spoke to two different lenders and two different real-estate agents. I sifted through lists of hundreds of houses in the area and actually visited over thirty of them, and I finally settled on a good house. It's small, but I don't need big, and it's very well maintained and in a great neighborhood. And it came with the dog I wanted! Just look at her, being all cute and stuff because she wants your food.

So that's basically where I am today! I've been in my house for a few months, I've found a new roommate (who is paying me and not a faceless corporation), and I'm training my dog to carry a dog pack so she can go backpacking with me. Life is good, and I have plans to enhance my chances of getting to space even farther.

But more on that later.

Progress: 3.73%  Flight Time: 0:05:35

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