Worldly advice - spend less on housing

By TONY BELARMINO
RevTonyAG@aol.com

last updated: July 16, 2008 03:46:12 AM

The signs are everywhere, planted in front yards brown with-out-of- control weeds. The confirma- tions say "auction" or "foreclosure."

There is a plethora of theories, but let me advance one that is seldom discussed: As long as consumers demand larger houses than they can afford for a bigger mortgage payment than they can handle, there will always be people who supply those houses and loans.

In my premarital counseling, I require two sessions dealing with finances. Two things I stress can prevent people from enslaving themselves to the evil taskmaster of debt. First, no more than 40 percent of take-home pay should be spent for housing costs. If other debt is excessive, then it should be 30 percent. Second, couples in their first year of marriage do not need all the things it took their parents 30 years to accumulate.

Those two principles require sacrifice and self-discipline. Therein lies the problem.

This article is not written from the sheltered confines of a pastor's office, but from personal experience. After having lived in parsonages for 25 years, in 1998 we started buying a house with nothing down using a Veterans Affairs 30-year loan. This house is a place for us to live.

For the first 18 months, we lived in this house. I did not have a full-time job; yet, in that time, we replaced the garage door and roof and had the kitchen completely tiled. We paid with checks.

We never have been tempted to refinance our house for new vehicles and fancy vacations. Our standard of living has not changed from our poorer days, except for a few more round-trip plane fares between Sacramento and Nashville.

We were tempted to refinance once. When the price of money started dropping, we explored taking out a 15-year loan for 1 percent lower than we now pay. My wife talked to our loan officer who asked some pointed questions. She asked if either one of us was forced to quit work, could we afford the new minimum mortgage payment? With a VA loan, we would have had to pay all the closing costs. The good advice she gave us was to keep doing what we were doing. She talked herself out of a commission, but I recommend her every chance I get.

If things work according to plan, we will be homeowners in less than three years. If not, we still will not be homeless.

It is a shame people are losing money in real estate, but I wonder if lower demand fueled by hard choices made by disciplined consumers could have precluded some of the problems.

Belarmino, a Turlock resident, works at the Health Services Agency and is a chaplain with the Assemblies of God Disaster Response Task Force. E-mail him at RevTonyAG@aol.com.

• Comments
• Add Comment
• Disclaimer