I know I'm going to get some flack for this post from those have bought houses for themselves at a young age, but I'm willing to take it in order to reveal why in MOST (not all) cases, buying a house at a young age is NOT always a good decision.
I see all these kids who are getting engaged at the early age of 18 - 24, and mortgaging a new house, kind of like the American dream. All the while these kids are still stuck in their hourly jobs @ Best Buy or have just landed a salary job that pays a whopping 30k/yr and they think they are millionaires.
Buying a house in most cases is not a long term investment, but a long term liability. In the end, you will be paying mortgage payments and taxes on the house no matter how you cut it. And these payments will come out of your paycheck, and will be a liability.
If your intentions are to FLIP the house, that may be different, depending on the market. However I get the feeling that most of these newly engaged couples aren't even thinking of selling their house down the road until the payments get so bad that they HAVE to sell and most of the time they sell for a net loss.
Not smart.
I've always advocated being successful and falling in love later. Or at least if you're going to fall in love, secure some financial assets before you decided to move into a long-term house.
Assets can be stocks, real estate (that you can flip at a higher price), etc.
Your assets are not your cars, because these won't make you money. They are liabilities and they will DRAIN you money at a net loss.
I'm always humbled when my friends tell me that they are going to 'hold off on a house' until they secure themselves financially.
This is a wonderful idea. I myself wouldn't move into a house until I had some money making assets in my asset column that could help pay for some of it.
If you don't have any assets, you're totally relying on your week to week paycheck to pay for your house. And what if you lose your job?
In this market, if you bought your house over a year ago and you lost your job NOW, you'd have to sell your house at most likely a LOWER price, thus a net loss.
In the end, those who chose to secure their assets early on (stocks, real estate, etc) will be the winners in the end who won't have to worry about losing their jobs for a few months. The great thing about money making assets is that they just multiply in value.
This is why I've always told my friends they need to learn how financials work, just as much as they need to know how to operate at their jobs. Financial knowledge lasts forever, and frankly jobs don't.
Even wealthy doctors who make 300k+ a yr go in debt, because as they make more, they spend more. What's the difference in a family who makes 100k and has a 100k house and a family who makes 300k and has a 300k house? Most likely none.
In fact, if that 100k family had money making assets, they could very well be wealthier than all their neighbors, even if they are just blue collar workers.
Don't even get me started with ARMs.. or adjustable rate mortgages that young couples fall for all the time.
Anyways, I'm done my rant. Just getting sick to my stomach seeing all my young friends buy houses with their wives when their only asset IS their house. And frankly, the family home is usually not an asset, but a liability.
