Why I Think Housing Stands A Chance

One of my new blog reads is a personal finance blog called 20s Money.  It’s centered around personal finance for people, as you might guess, in their 20s.  Even though I’m in my 30s, I still enjoy it and think it’s a very well written blog that’s fun and enjoyable to read.I’m pretty sure that it will get moved to my blog roll next time I make some changes (hopefully in the next few weeks).

Kevin wrote a post yesterday where he expressed his opinion that Housing Isn’t Going to Rebound.  It goes without saying that the housing market sucks and that pretty much everybody that owns a home (including me) has seen the value of their home plunge.

So, I agree with Kevin on that point.  I also agree that we will not again see ‘values shoot through the roof’ again in our lifetime.  In fact, I think that’s a good thing because now that we’ve seen what happens when they do, that type of explosion does more harm than good.

Since, as you can probably surmise from the title of Kevin’s post, he feels the picture on housing is bleak, I thought I’d take a look and see if there’s reason for a little more optimistic view.

I think that there is.

Let me start off by saying that in order to judge housing and whether it’s worth getting into at any time, you have to reset your expectations.  If your measuring stick is the gains we saw in the last decade, or even that housing will be a big moneymaker, then I’ll agree that there’s no hope in housing for you.  Why?  Because those expectations are out the window.

But, if you’ve reset your expectations a bit, here’s a few reasons why I think there’s hope:

  1. Not everybody wants to rent – There are people who don’t look at just the financial numbers associated with buying a house, but they look at the fact that they don’t want to be renters or be around renters for their entire lives.  I’ve lived in apartments in the past, and while I had some great times there, I realized that it wasn’t the lifestyle I wanted to live in, especially as I looked ahead to when I might have a family (which I now do).  For some, renting is great, and if that’s you, I commend you.  However, there’s a big portion of the population that wants to be in something that they call their own and who want to be around others with the same mindset.  For this portion of the population, home ownership will have an appeal.
  2. There’s a built in incentive to owning a home – Inflation, in the long term, actually provides an incentive for home ownership.  How so?  It’s simple.  Right now, if you’re looking at the opportunity to buy vs. rent, your monthly payment is probably a big factor in making that decision.  There is certainly the down payment element to, which I’ll get to in a minute, but focusing on the monthly payment for a second, here’s what you might find.  The buyer might be faced with a payment of $1,000 where the renter gets a similar place for $800.  So, renting is clearly favorable, right?  Well, for now it is.  But, assuming the buyer got a thirty year mortgage, what that means is that their loan payment will be $1,000 for the next thirty years.  But, renters typically only lock in for a year.  So, if inflation goes up, that rental might cost $825 next year, $850 the year after, $900 the year after.  At a certain point, the person paying rent will actually start paying more than the renter, where inflation is ‘protecting’, if you will, the payment of the buyer.
  3. We’re starting to save more – People are finally getting the hint that holding lots and lots of debt with nothing to show for it is not a good financial strategy.  As such, people are paying down debt and trying to put money away.  Since we’re still in the middle of a recession, this isn’t going as well as it could, but I’m optimistic that even baby steps will help.  When this happens, eventually people will have money to afford a down payment.  As (hopefully) more and more people shed credit card debt and instead build a pool of money, this could open the door for more and more people to purchase homes.  Actually, this isn’t a new idea, because until the 1980’s or 1990’s, saving up a down payment on a house was the way it was done.

I know that there will be people that remain pessimistic.  I also know that some people will probably say my possibilities are unrealistic.  That’s all fine and good if you do, but I’m just putting out there some possibilities that I see that I feel are realistic and, if they happened to play out, would lead to some cautious optimism in regards to the housing market prospects.

I will be the first to admit that things do look bleak, but I also hold in mind the old saying that it’s often darkest just before dawn.

What do you think?

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Should You Use Coupons On A Date Night?

My wife and I are in a couples small group through our church, where four married couples get together once every other week to discuss various topics, either corresponding with a series that our church is putting on or just a general reflection of things, always centered around our beliefs.

The current discussion we’re in is centered around marriage, and the DVD that accompanied this week’s discussion spurred some interesting discussion, one of which centered around ‘date nights’.

Keep in mind that we’re all married.  Two of the couples (including us) have kids.  Two do not.  But, in everybody agreed that a ‘date night’ now and then is an important thing.

We discussed what we each defined as a ‘date night’ and that varied across the board.  Most said that it involved ‘going out’, but one of the men said that he’d even define a date night as spending dedicated time with his wife, even if it was at home.

Centered around the ‘going out’ aspect came an interesting side conversation, and that was whether it can be considered a ‘date night’ if a coupon is used, normally at dinner, but I suppose this could involve other possible elements such as using a coupon at a movie.

This brought about some lively discussion. There became two schools of thought here:

  1. Going on a date and using a coupon
  2. Using a coupon and calling that a date

I had never really thought about it, but I guess that there can be a fine line.

Personally, my wife and I use coupons whereever we can, even if we consider it a ‘date night’.  Neither of us have a problem with that.  And, while everybody agreed that using coupons is good and saving money is even better, I think that it was brought up just to make sure that the thought behind going out and using a coupon was “We’re going out because we have a coupon.”

If that was the case, I can see where some of the ‘romance’ of ‘date night’ might be rubbed away.

I thought that this was an interesting discussion, because it highlights just how different married life can be from dating life.  In dating life, the general perception seems to be that there should be no way that a coupon is used on an early date for fear of coming across as cheap.  I can attest to that, back in my single days, I never would have dared pull out a coupon on a first date (unless of course I didn’t like the girl *laugh*).

What do you think, does going out on a ‘date night’ have the same magic if a coupon is used, or does the coupon take some of the sparkle away?

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Keeping Our Dormant Frequent Flier Miles On Ice

I used to fly quite a bit.  In my single days, I would try to do at least one trip per year. I got to see destinations like New York, Las Vegas, San Diego and Florida.  Having purchased a more expensive house and now with a baby, we have limited our travel to where flying has been significantly reduced.

I’m not going to lie, the multiple rate hikes and fees imposed for such things as picking your seat or checking baggage makes me less inclined to fly as well.

But, with the slowdown in our flying, we haven’t been accumulating frequent flier miles.

With Delta, at one point I had a significant amount of miles banked after having done a six month stint where I was flying back and forth to Florida every week for work.  At the time it was Northwest.  But, all that traveling actually got me and my wife free tickets on two trips, one to New York in 2005 and another to Orlando in 2008.

That was our last flight, and in doing so I had used up all of the miles that would give us free flights, but there was still a significant amount left.

Enter in the latest and greatest ‘great idea’ by the airlines, and that is where they will take away your miles after two years of non-use.

Great way to encourage flying.  Take away the carrot that might encourage people to fly more.  But, anyways, I digress.

Well, I received the notice that my miles were about to expire so I logged in to take a look. I had about 13,000 miles, which was about halfway to a flight.  I didn’t want to lose them, so I looked at the options.  Turns out I didn’t have to fly, but I could basically do any activity on my account to keep them active, including redeeming miles.

I’ll note that one suggestion I’ve heard is to have a rewards credit card that logs miles.  I actually did have one of those back when I was flying to Florida, and with charging all of the flights and travel costs to that card, then getting reimbursed, I was able to accumulate miles quickly.  However, when I stopped traveling as much, I determined that I would get better use out of our Citi Dividends cash back card.  When Northwest simply canceled my card (after a year of non-use), that sealed the deal and I decided that unless I started flying again regularly, I was not going to cave in and get a rewards card.

So, I looked at other options, and I decided to look at their magazine subscription program.  You can get subscriptions to many magazines for the cost of some of your miles.

One of my favorite magazines for years and years was Entertainment Weekly. I always like knowing what movies, music, books, and other things are coming out, and they’ve always written some pretty good articles about movies, TV shows, and the like.  I had a subscription for over ten years.  When a renewal came up that I felt was way overpriced, I let it lapse.  Over time, I remarked a few times that I missed reading it, but that paying for a subscription didn’t seem like something I wanted to do.

Since using my miles represented no out-of-pocket costs (well, actually a small amount, but I’ll get into that in a second), and it actually perhaps will lead to saving me in the future should we get a free flight from the miles we avoided losing, I decided to use 1,500 miles for a one-year subscription.

I’m still left with a majority of my miles.  I get a year subscription for no out of pocket costs, and I get two more years before I have to do anything again to avoid losing the miles (assuming they don’t tighten the program again, which I wouldn’t put it past them to do).

When I went to enter my subscription, it presented me with a great offer.  Add a second year subscription for an additional fee.  The additional fee?

Two dollars.

I jumped on that one without even thinking about it.  The way I looked at it, that actually got me right to the point where my two year inactivity fee would come up, and assuming they still had magazine deals, I could just re-up.

We’ll see what happens between now and then, but in the mean time, I am loving having my subscription back and loving even more that my out of pocket costs are less than two pennies per magazine for the next two years!

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Guess What? I’m Not Nominated!

I just read my 103,309th article this week (but who’s counting) with the topic ‘Hooray, look at me, I’m nominated for a Plutus Award’ and the obligatory begging and groveling request for votes.  I just thought I’d join the fray by mentioning that I’m not nominated, so instead of requesting that you leave my site and vote, I’ll ask that you stick around and read a couple more of my articles instead!

Have a great weekend!

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