Of course, you should just ignore the monthly price for anything you see advertised.  The only thing that matters is the price of what you’re buying anywhere else, so why is it different for cars?  You need to find out the price of the vehicle you want to purchase, then you can worry about getting the best deal on a loan (if you need one).

Really though, you should not take out a loan on a vehicle.  You should just save up until you have enough cash on hand to pay for it.  It should be treated just like any other expense: if you don’t have the money to buy it, you can’t afford it.

Now, I know we’re not all perfect.  I have a car loan.  We shouldn’t have done it, but we did.  And now we’re working really hard to get it paid off before our second child is born.  We should have it paid off in just over 2 years though.  We wouldn’t have even been in this position if we just kept our old car for a couple more years.  But the plan is that will be the last car loan we’ll ever have.  We are going to start saving for a new car as soon as that’s paid off, and we will only spend what we have saved.  That’s what we should have done before, and what most people should do.

Wondering how you can set the money aside?  Using YNAB, it’s really easy.  You just create a category, and treat a car savings fund just like a car payment fund.  Decide how much you can afford for a car “payment,” and put that much into the car savings fund every month.  It’ll automatically build up every month, and when you reach the amount you want to pay for a car, you can go get it without a loan.

If you aren’t using YNAB, you can still set up a savings account, and set up an automatic transfer to it at the beginning of every month.  Still too hard?  Set up the automatic transfer on the day you get paid, but make it for half of what you want to save for the month.  This will even get you a bonus savings of an extra month throughout the course of the year (assuming you get paid every two weeks).

So don’t listen to those stupid car commercials.  If you’re looking for a new car, follow my post on how to buy a new car.  If you’re looking used, try to find the best deal you can that fits your budget.

Last weekend, I took on my biggest project with my car.  I’m changing the timing belt along with all the other belts, and more importantly a leaky seal behind the belt.  That project isn’t progressing as I’d like either.  I’ve broken several tools trying to loosen the bolt that holds the timing belt to the crankshaft, and am borrowing tools from three different people to try to complete it.  If it wasn’t leaking, I’d be putting the car back together with the current timing belt, because it doesn’t look like it’s in bad shape.  But I really want to fix the leak, so I have to figure out some way to get it apart.

Just a few weeks ago, things weren’t so busy at home or work.  Now all of a sudden both are taking up all my time, and it seems like I can’t get anything else done.  I know it’ll settle back down once both of these projects are complete, but there’s still a ton left to do once they are done (both at work and at home).

It’s just strange how things go in waves, and right now it’s even busier than usual in both my professional and personal lives.  Hopefully it’ll calm down soon.

1. Reduce house debt by 44.11%.
   Target: 14.7%, Actual: 29.76%.  We have crossed the halfway point!  But this is still part of the revised plan.  Since we’re pregnant again, we won’t have as much to contribute to this once the baby’s born in October.  I’ve updated the graph to show our revised target.  We should be able to pay off more debt, but it’ll be much more irregular.  This revised target takes the new baby into account.  Here’s a graph of our progress so far:
   
2. Run a 5k.
   Not yet, but it’s still early.
3. Work out at least 2 times per week.
   I ran twice this month.  This has been more difficult than I thought, and I don’t see it getting easier next month.  I will be working more over the next few weeks, so my exercise time will be even more limited.
4. Add at least 2 products to archwayhometheateraccessories.com
   I added one group of products this month.  I don’t know where all my free time has gone, but it’s definitely not here.  I feel like I’m falling behind on this one.  The only group of products I added were the high quality component cables.
5. Make our home  more energy efficient.
   Nothing this month.  But I’ve made some real progress in this area so far this year.  Just about the only thing left on my list is stuff in the basement, which isn’t as high of a priority.  I knocked this one out early.
6. Participate in at least one bike race.
   The race I plan to do is the Tour de Donut.  I found someone else to race in it with me, so now I’ll know two people in it.

Overall, I’m doing ok, but I have slipped this month.  I’ve gotten a lot of products added overall, but that hasn’t reflected in this month’s report.  I do need to get the custom products up though.  I can basically check the home efficiency item off my list, but the exercise has been slacking all year.  I also keep adding to my list of things I need to get done around the house.  It seems like everything’s piling up with me right now, and I can’t seem to find the time to get any real work done with a 9 month old around.  She takes up my old work times – from the time I get home until dark.  I have to figure out how to work all that in.

1. Reduce house debt by 44.11%.
   Target: 11.03%, Actual: 23.3%.  We are still over 1 month ahead of schedule.  Our tax return came in, and we applied almost all of it to our debt.  We will do well in this category until the middle of the year, and then tail off toward the end (just like last year).  Here’s a graph of our progress so far:
   
2. Run a 5k.
   Not yet, but it’s still early.
3. Work out at least 2 times per week.
   I worked out 5 times this month, but two of them were leisurely bike rides with Brooke and Megan, so I can only count them as a half workout.  So I’m averaging once per week, which isn’t hitting my goal yet.  I’ve been spending more time outdoors, but not running/biking.  I need to start doing that more.
4. Add at least 2 products to archwayhometheateraccessories.com
   I added three products this month, but only one is live.  I’m still working on all the custom products, and I’ve been busy working on some advertising and design stuff instead.  The one I got live (subwoofer cable) has multiple lengths, so that sort of makes up for it, right?
5. Make our home  more energy efficient.
   Nothing this month.  But I’ve made some real progress in this area so far this year.  Just about the only thing left on my list is stuff in the basement, which isn’t as high of a priority.
6. Participate in at least one bike race.
   The race I plan to do is the Tour de Donut.  It’s not for a while, but I do need to get out on the bike more than I have.

Other than the workouts, I’m doing really well.  I have most of the stuff done to make the home more energy efficient already, and have added quite a few products to my store (even though it slowed down this month).  Now that the weather’s warmer, I gotta find some time to get some more exercise. I’ve been busy spending some time doing yard work, and there’s only a couple hours every day where I can hang out with Brooke.  It’s hard to balance everything in those precious few hours of daylight.

I find these situations come up from time to time.  When we moved into our new neighborhood, I noticed some of our neighbors would rather work extra to pay someone to do work around their house.  I’d rather do the work myself.  This makes me feel satisfied because with each task I do, I become more well-rounded of a person.  It saves me money, and increases my knowledge to fix/improve things later on down the road.  Not that there’s anything wrong with the way the non-doers think about things; it’s just not for me.  I get tremendous enjoyment out of doing the work myself.  I know the job will be done right, because I can do all sorts of research these days before even starting on any project.  I’m a perfectionist too, so I want to make sure I do the job right (otherwise it’s not worth doing, in my opinion).

I’m curious to hear back from some other people though.  Are you a doer?  Would you rather pay someone else to do the work for you?  Share your thoughts in the comments below.  I’d love to hear back from you!

If you decided to use a real estate agent, you can skip this post. 

Ok, if you’re still reading, let’s get to the real work of purchasing a house.  First off, let’s figure out how much you can save by not using an agent, so you can decide if the extra work is worth your time.  When you buy a house, 5 – 6% of the purchase price goes to the real estate agents involved, and it’s typically divided in half.  So you can plan on saving an extra 2.5 – 3% by doing this work yourself.

So, now that you’ve determined if it’s worth your time, let’s do some work!  Now that you’ve hopefully stepped foot in quite a few houses, you should have a good idea of the build quality and features of the house you’re planning to purchase compared to others in the same price range. Using that knowledge, take a look at the houses that have sold in the past 6 months that fit in that range on sites like zillow.com and trulia.com.  At first, try to pull in properties just within the same subdivision.  If you can’t find enough to compare it to (I try for 5-7), expand out to surrounding subdivisions that might have a similar resale value as the neighborhood in which you’re looking.

Once you find a few houses that fit the same criteria, look at the price the house sold.  Then look at all the features between that house and the one you are going to be making an offer on.  This is where the magic of a real estate agent comes in.  You need to be able to figure out how much money you can attach to different items within both the house you’re looking at and the one you’re comparing it to. 

For instance, if you see that a house you’re comparing has an updated kitchen, and it looks like they used middle-of-the-road products to redo it, you’ll need to know if that was a $5,000 difference or a $15,000 difference.  Once you can determine that, you’ll need to subtract from that amount off the sale price of that house to determine what that feature should bring in the house you’re looking at.  If the house you’re looking at had the upgrade, add it to the sale price of your comp.  Do this for all the important features, such as kitchen and bathroom remodels, basement additions, one or two or three car (or none) garages, decks (both covered and uncovered), square footage, number of bedrooms, bathrooms, etc. 

Once you feel that you’ve got all the major differences between the two houses down, you can add/subtract the numbers from that comp to determine what the house you’re looking at should be priced at.  Do this for 5-7 houses, and you’ll come up with 5-7 different prices for your offer.  Average that amount, take off the 2.5 – 3% for the real estate agent, and you have what you should pay for that house. 

When making the offer, work with the seller’s real estate agent.  Tell them that you want to work directly with them, and that you want the buyer’s agent’s commission taken right off the price of the house.  Knowing what you should be paying for the house based on  your research, make an offer that’s lower than that.  The price should be based on whatever strategy you want to do.  You should be able to feel out the buyer’s agent to give you an idea of how much flexibility you have.  You can offer something much lower than your magic price, but I wouldn’t recommend paying more than that price.  You can always find another house.  Don’t overbid!

Hopefully you can get to a price you can both agree on.  At that point, you can follow the advice of the seller’s agent for all the closing documents.  If that’s the case, congratulations!  You just got your offer accepted.  But you’re not done with the process of buying a house just yet.

Now that you will be signing a contract, you’ll want to get an inspector to look over the home and make sure there’s nothing major you’ll need to do to it.  Lots of things could be wrong with the house that you won’t find out until after you live there for a while.  Always get a home inspection done!  I’ll cover that and more in Part 4.  Stay tuned!

1. Reduce house debt by 44.11%.
   Target: 7.35%, Actual: 17.66%.  We actually hit this month’s goal last month.  I got a bonus that went toward our debt, so that made it higher.  I have a feeling we’ll do really well in this category for the first part of the year, and then tail off toward the end (just like last year).  Here’s a graph of our progress so far:
   
2. Run a 5k.
   Not yet, but it’s still early.
3. Work out at least 2 times per week.
   I only got to run once.  Two months in and I’m already slacking in this department.  I gotta get moving.
4. Add at least 2 products to archwayhometheateraccessories.com
   I did get 6 products added, but they aren’t live yet.  I can’t put them live until I get more of the series done, or it will look strange (they are custom-built products).  The last one I got done was an HDMI keystone jack.
5. Make our home  more energy efficient.
   Yesterday I added insulation to the low spots in our attic, and insulated the garage.  Technically, that’s March, but it happened before I wrote this, so I’m mentioning it now.  I also sealed around spots in the rim joists and in the garage, so that should help out a little too.
6. Participate in at least one bike race.
   The race I plan to do is the Tour de Donut.  It’s not for a while, but I do need to get out on the bike once it warms up to get in shape.

Other than the workouts, we’re doing really well.  I have most of the stuff done to make the home more energy efficient already, and am adding more products to my store than I originally thought.  Once the weather warms up, I can get outside and get some exercise, and I’ll be in really good shape.

So now you’ve figured out how much house you can afford, and have saved at least 20% of that amount.  You might think this is the time to find a real estate agent and have them show you some houses, right?  WRONG!  Don’t get an agent just yet.

First you’ll need to decide if you even need a real estate agent.  An agent can be helpful in finding you a house, but all agents work on commission.  If you play your cards right (and you’re willing to do a little homework), you can get the house cheaper without a real estate agent.  Instead of paying them a commission, you get to take that price off the purchase price of the house.

That being said, choosing an agent does have its advantages.  They will look up houses that fit your criteria, and can sometimes find them quicker than you can on your own.  Most agents have a strong network of other agents built up to where they can find out about properties before they even hit the MLS, which is all you have access to on your own.  They also do a lot of work at closing for you, which makes the process go much smoother.

If you end up working with a real estate agent, and they show you multiple houses and do a lot of work for you, don’t take their advice and cut them out of the equation.  This is how they earn their living, so if you go down the road of using an agent, include them the whole way (including closing).  Don’t take their advice, have them find and show you several properties, then go behind their back and buy without them.  If you use them as a resource, pay them for that advice.  That’s the service they provide.

Ok, back to the subject at hand.  Now you’re at the step of starting the process of trying to find your new home.  This is the fun part!  Start at sites like Zillow (my favorite), Realtor.com, and Trulia to try to find homes that fit your location/criteria.  Find a few that you like, and contact the realtor for that property.  Simply ask them if they can show you the property.  You still need a real estate agent to walk you through the property, but they aren’t doing much work for you at this point in time.  When you go through the house, get a feel for the property and the real estate agent.  Once you’re done, get the agent’s card, and take some notes about the pluses/minuses about the house.  It’s always a good idea to take a camera and take some pictures too, so you can refer to them later.

Continue that process for a while, so you get a good feel of the houses in your price ranges and the real estate agents you can work with.  When choosing a real estate agent, look for both the personality and how you feel they will do in getting you the best deal on the house.  Ask them for some references, and try to find some reviews online (just type the agents name and the word reviews after it in any search engine). 

If you find an agent that you like more than the others, and decide to use a realtor, start contacting that person to show you the houses.  Tell them what you’re looking for, and they’ll help you find even more houses to walk through.  Keep looking online though, because you might find something your realtor could miss.

If you decide you aren’t going to use a realtor, just keep contacting the person for each house listed on the online site.  This way, you won’t waste much of their time.  You can even mention that you are not using a realtor, and you appreciate them simply showing you the house.

Once you find a house you want to actually make an offer on, remember to not get your heart set on it.  There are plenty of houses out there that will be a good fit for you, and you will most likely end up getting a bad deal if you get set on just one house.

If you choose to go with an agent, this is the time where they will really provide you with the biggest benefit.  They will do a lot of homework to find a fair price for the house, and work with you on what offer you can make.  Take all the information in, and make the best informed decision you can.  Remember, you can still offer whatever you want on the house, even if your agent doesn’t agree with you.  But they are the experts here, and have a good idea of what the house is probably worth in your particular area, so I’d recommend listening to their advice.  And remember, if you don’t get this house, there’s plenty of other options out there.  It’ll just take some more time to find them.

If you decided the agent’s not for you, I’ll cover the work you need to do to find out the fair market value for the property in Part 3.

No matter what you decide, always make sure to get a home inspection done.  I’ll cover that in Part 4.

See, now aren’t you learning a lot about buying a home?  There’s a lot more info to come, so stay tuned.

The first thing you need to do is figure out how much home you can afford.  Go to a site like www.mortgagecalculator.org (that’s my favorite) to see what you can afford.  Put in the price you plan on paying for a house for the Home Value field, and subtract your down payment to put in the Loan Amount field.  If you’re not sure what you can afford, you should ballpark something with a mortgage of less than 2.5 times your household income.  You can always adjust it later.  Another good rule of thumb is to make sure your monthly payment (including principle, interest, and taxes) is 25% or less of your take home pay on a 15 year mortgage.  If you fit into both of these categories, you’ll be in good shape.

Note: I’d strongly recommend putting 20% down, as that will avoid you paying any PMI on your home.  If you don’t have 20% to put down, rent someplace as cheap as possible, and stock money away until you hit that 20% level.  Don’t even start looking until you hit that level, or you’ll be too tempted to buy. 

To find an interest rate to use, go to www.bankrate.com.  I’d strongly recommend a 15 year loan.  You get a better interest rate on a 15 year compared to a 30 year, and you build equity much quicker.  On a 30 year loan, you pay basically nothing but interest for about 10 years, so you end up paying a lot more for the same house over time.  A 15 year loan is always much, much cheaper in the long run.  For the actual number to use in the calculator, take an average of what you find on Bank Rate’s website.  Don’t take the lowest number, because you realistically won’t get that number.  The average is probably closer to what you’ll find. 

Find out what your property taxes are for the area you’ll be looking.  You can go to zillow.com, look at some recently sold properties in the range you think you can afford, and find out what tax rates were paid over the past year are on a handful.  Then take the taxes paid divided by the sale price of the home, and you have your tax rate.  Average out the tax rate for all 5 properties, and you should have a good idea of what to use in this field.

This next box (PMI) is why I wouldn’t buy a house unless you have 20% down.  You can ignore it altogether, as it only applies to the first 20% of equity you build up in the house. In case you don’t know, PMI (or Private Mortgage Insurance) is a huge ripoff designed to be used by people who buy more house than they can afford.  It’s like paying rent on top of your house payment, as it goes to the bank to hold on to your money.  You never get any of it back, and it goes toward nothing.  Avoid it like the plague (I’m speaking from experience here, but that’s a whole other post). 

If you can’t afford the monthly payment for the price of the house you filled out above based on having at least 20% down, and on a 15 year loan, you can’t afford that much house.  You’ll either need to save more, or adjust your expectations on what type of a house you can afford (in other words, lower the price of the house you can afford).

Mortgage calculators can be used as a planning tool early in the house-buying process.  They can help you figure out what goals you need to hit before you start looking to buy a house.  You’ll regret it if you don’t do this step.

In Part 2, I’ll cover what to do once you save that 20% down payment.

1. Reduce house debt by 44.11%.  Due to the refinance of our house last year, and the added expenses of an additional household member, this number isn’t too much different from last year.  But we are making progress, and that’s the key.
2. Run a 5k.
3. Work out at least 2 times per week.
4. Put up at least 2 products per month on my online store: www.archwayhometheateraccessories.com.
5. Make our home  more energy efficient.  There’s lots of things I want to do that will save us some money once they are done, including adding more insulation (and insulating the garage), sealing and insulating the rim joists in the basement, replacing light bulbs with CFL or LED, and installing a water softener (to save money in the long run, on both faucets, shower heads, water heater, and soaps/shampoos, etc.).
6. Participate in at least one bike race.

My goals last year were a little too difficult to obtain, so hopefully these will be a little more realistic. 

And since it’s February, I’ll provide an update already.

1. Goal: 3.68%, Actual: 9.78%.  We’ve actually done quite well in this category so far, but I fully expected that to happen.  I had three paychecks in December (which go toward our January bills), so we got to put extra toward our debt.  Next month should be good as well, as I got a bonus in January.  Starting in March, it will be more difficult though.
   
2. Not yet.
3. I’ve only worked out once.  So it’s not a good start just yet, but it’s only January.  Plus, it’s cold out, and I like to run outside. 
4. I actually put up 6 products this month, so I’m doing good.  If you count the different sizes, I put up 16.
   
5. I’ve already replaced almost all of our light bulbs in our house.  I replaced most of them with CFLs, but added some LEDs to the kitchen (that only use 3W a piece, I might add).  I also added a water softener last weekend, which I will review in another post.
6. Not yet.

So far, I’ve been doing pretty good with my goals.  Once I start working out, I’ll be in really good shape.  Hopefully the rest of the year goes like that as well.  What new goals have you set for 2012?