Okay, we are on the verge of buying a new home .I've posted several times about land and such and we are going to purchase some land and put a new home on it we've decided and do rent-to-own to a family member in our current home. We're trying to decide if we can truly afford the home we want or if we should cut back. After our basic bills, utilities, food, and gas we would have 600-700 left per month before savings. Is this cutting it too close? (Our second choice home would leave us probably 200 more or so a month more, but it's around 600 square feet smaller) What are your opinions?

Without a better detailed budget I could not make an answer one way or the other.

But does your buidget account for things like property taxes, car registration/ tags/ insurance, doctor's co-pays, newspaper/ magazine subscriptions, savings, retirement accounts, house maintance, car maintance, gifts, charitable contributions, school costs, etc, etc.

There are numerous more money drains on budgets that many people never consider.

Good luck thou!

Here's a breakdown of our budget with the new mortgage:
4000-5000 bring home pay (dh's commission varies)
Mortgage w/taxes and insurance ~1000
Car 282
Car insurance 108
Cable 80 (could be lowered to 50)
Phone/Internet 85
Student loans 97
Utilities 225
Medical bills 125 (for next 2 years)
Tithes 400-500
Groceries/eating out 600 (could be much lower)
Gas 200 (I get reimbursed for mileage at work)
Total: 3302

In our $5000 month we would be just dandy, but in the $4000 month we'd only have 698 left for "miscellaneous" and savings. Dh also gets a 1500ish bonus every 3 months.

I'm worried about the rent to own feature. What happens if the family member stops paying? I'm assuming you trust them to not stop paying and that's why you're going into this type of situation, but what happens if (God forbid) they get in a car accident and can't work and can't afford the payment? Can you afford to pay for both? Maybe there's some way to 'rent to own' where you're not liable if they don't pay, but it just seems a little risky to me. I'd want a back up plan. And maybe a back up plan to the back up plan.

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Stay at home mom to my 3 boys... ages 5, 3 & 1!

I can do all things through CHRIST who strengthens me. Philippians 4:13

I've always heard the 25% rule. That your house payment shouldn't be more than 25% of your take home pay.

Can you get your car or medical bills paid off first and THEN get the house? If this land isn't going anywhere I'd work as fast as you can to pay off the car and the medical bills and THEN get the house. We're in the process of trying to pay off my van before we move up. We're pretty tight here, but feel SO much better about the decision since deciding to pay off the van first. Oh, and I'd suggest a 3-6 months of expenses in savings first too. But that's just me - I'm a big Dave Ramsey fan so my advice will generally be along the lines of what he suggests!

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Stay at home mom to my 3 boys... ages 5, 3 & 1!

I can do all things through CHRIST who strengthens me. Philippians 4:13

I would think that with that take home $1000 mortgage payment would be fine. Most of your other bills can be lowered during your $4000 months, like the eating and tithing especially. You might consider tithing a must, but I'm sure God can forgive you $100 or 200 if you are having a lean month. But with $700 left over AFTER all your budgeted items I don't see you having any problems. However, it's your budget, if you aren't comfortable with it, wait awhile.

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A woman is like a teabag. You never know how strong she is until she gets into hot water.-Eleanor Roosevelt

One other thought, since you are building you really can't be sure EXACTLY how much your utilities will be. With having a house that is 600 sqft more it will probably be more to heat/cool etc. You might need to guesstimate higher on that one. We are ones that always guesstimate high - then if it is lower all the better for us.

For the rent to own question-we're getting 5 months payment as a deposit so if something happens we'd have 5 months to find another tenant or to sell the house (which shouldn't be too difficult in our area in the price range the home would fall in).

We're currently working to see if we can get the house done any cheaper-decrease some of the amenities or maybe make it a little smaller but the same floor plan.

Thanks for all your input! There were things I hadn't thought of yet.

[quote=GavinAllymomma]For the rent to own question-we're getting 5 months payment as a deposit so if something happens we'd have 5 months to find another tenant or to sell the house (which shouldn't be too difficult in our area in the price range the home would fall in).QUOTE]

Good - I'm glad you'll have that deposit!

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Stay at home mom to my 3 boys... ages 5, 3 & 1!

I can do all things through CHRIST who strengthens me. Philippians 4:13

I actually think you would be alright with your current plan. I'm used to 100 or less "extra" money in a month so I think you could do it on 600-700. I also agree that if push comes to shove God would probably forgive you for having a hard month. There are other expenses you could cut too if it came down to it. I guess if it was me I would want the home to be the way I want it. I mean, that seems to be the point of building a house from the ground up.