Should You Buy A House While You Still Have Consumer Debt?

Over the last two months, I have been pouring over my budget, trying to find ways to speed up my debt payoff. Initially, I was going to focus on paying off all my consumer debt first. My thinking was that doing this would increase my credit score and get me the best possible rate for a mortgage in 2 or 3 years.

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I am already in my forties, so instead of focusing on increasing my income and decreasing my debt separately, I decided to work on both sides at the same time. I live in one of the more expensive areas in America; consequently, my rent is quite high, and will continue to increase 3% every year, as long as I am a renter. Experts warn against taking on new debt, and a mortgage specifically, while you still have consumer debt. So it may come as a surprise to find that I am seriously considering doing that very thing.

I have some pretty good reasons for considering a home purchase at this time.

At first, I was going to put this reason last on the list but it really should be number one:

Because I feel like I have earned it.

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I worked hard my whole life, despite the not so financially smart decisions I have made in the past. I’ve learned from my mistakes, and am working to correct my finances, so owning a house goes back on my priority list. I fall victim to the American Dream just like anyone else – having a home for my children and grandchildren to visit and make memories, being able to leave something to them, not having restrictions on what I change in the home, painting it the way I want. All these things have been on my mind for decades now and I believe this is still within reach for me.

To allow my house payment to work for me instead of someone else

Instead of paying off someone else’s mortgage, I want to be able to pay into my own home ownership. My plan would be to find a house where my mortgage and taxes would be within $100 of my current rent expense. That way, my monthly expenses will remain within my comfort zone. My savings would grow at the same rate my budget currently allows, and the boost to my tax return would pay off my remaining debt and fund my house repair category.

To add an investment product to my portfolio.

Sure, the house you live in is not viewed as an investment by most. But my plan will be to work on building the equity in my property to add to my net worth. From the start I will be adding additional payments with the goal of paying the mortgage off early. I may eventually be able to rent this property out, and move into a second one, starting the process over again.

To grow a business from my home

My teens and I have several business ideas that we plan to start flushing out as early as next year. Some are possible collaborations and having a central meeting place will make developing these ideas into sound business plans a more realistic endeavor.  Even simple ideas like starting a baking business, or opening a tutoring center, planning events or building a creative design business all become possible with our own space to be able to do it.

 To motivate my teens to buy a house of their own

When I was younger and lived in New York City, my parents and extended family didn’t own houses or cars. Neither did most of my friends’ families. Renting was the norm, and I had no aspirations for either. I had no understanding of having assests or building wealth. It wasn’t until I was closer to 30 years old that I began to desire both of those things, but by then I had developed bad spending habits, run up credit cards and collection accounts, and postponed my student loan payments a number of times. My credit was terrible and thoughts of owning a home became vanishing smoke.

It has taken me awhile to get control of my finances and really turn things around. Although my teens have seen our family go through some rough times financially, I am hoping that this last year and our progress moving forward will plant a better seed for them. They have been witness to my financial transformation, and although I am trying to give them space to make their own decisions with their money, I am also opening their eyes to other possibilities and ways to set themselves up for a more solid financial future.

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I’m sure many people could probably echo the significance that home ownership would play in their family’s legacy. It’s more than a piece of property – it’s the first wealth building asset most of us think of once we become adults.

I could wait 2 to 3 more years until I pay off everything else, but the question is . . . do I really need to?