Credit: This article was brought to my attention by the lovely Megan of Counting Pennies.
Debt is choking twentysomethings higher up the career ladder, too. I heard from another Jennifer, who is 29. Four years ago, she bought a small two-bedroom condo.
Now she and her husband—they got married last year—want to move and plan to have kids.
“It’s not what I want at this point in my life,” she writes of her condo.
“Having spent the past 10 years living in suburban multifamily housing, I’m sick of hearing my neighbor’s alarm clocks, schlepping 350 feet between my car and my front door, and putting up with the guy downstairs who entertains on his patio until 2 a.m.”
But if Jennifer and her husband sold, they would take a loss and have nothing left for a down payment on a new place.
Nor do they feel like they can look ahead and see a higher income. Jennifer makes more than her husband, but she thinks she has “hit the ceiling” at her job. “I work in local government and there’s definitely a boys vs. girls mentality.”
Her husband spends half his paycheck on student loan debt—together, they pay off $1,800 a month. If one of them gets laid off, they would have no cushion to land on. “Sure, other people have it worse, and I am thankful that my husband and I are both employed,” Jennifer says.
“Still, this is the time in our lives when we’re supposed to be making a future for ourselves, yet our seemingly good salaries don’t get us anywhere. In 10 years, when I’m 39 and my husband is 40, we’ll be in exactly the same place we are today—living in a starter condo … with no children of our own.”
Jennifer is beating herself up for one decision she now regrets—spending $10,000 on her wedding and honeymoon last year.
Getting married has also meant a higher tax bill. (Are you listening, Congress?) And, as a couple, Jennifer and her husband aren’t eligible for a first-time homebuyer tax credit since she already owns.
Source: Slate.com – How twentysomethings are coping with the recession
Note: A higher tax bill for married DINKS (Dual Income No Kids), not for ones with kids.
I am not in her position, so I cannot claim to understand how she feels. However, this particular woman irked me a bit because it really does sound like she’s whining. To be fair, the author says that the whining is really not whining, but actual fear and frustration, so I read between the lines of her quotes, and still thought she was whining.
She writes in saying that this is not where she wanted to be in her life and that she’d be stuck there 10 years later, no kids in a starter condo, older, and unfulfilled.
But things happen. Shift happens, as marketing buzz agents say.
To me, you cope with what has changed, come up with a new strategy, and figure out what you have, need and are able to do in the given parameters, instead of complaining that things are not moving smoothly in tune to the master plan you hatched when you were 25.
If you can’t change or be flexible, you get eaten by dinosaurs.
So let me tell you the things that bothered me about her situation and statement:
YOU DO NOT NEED A LARGER HOME OR SPACE TO HAVE KIDS
Their main priority was to move and have kids, because they just got married last year.
Totally fine. Something that would be in the cards for me later on.
Their logic is that since the housing market has taken a beating, they can’t move or they’ll have to take a loss on the condo, and will not have enough for a down payment for a new home, which means they will not be able to have kids.
You do NOT need a larger home to have kids.
I don’t get where people get this idea that having kids means that you, by any means possible, must move to a larger home, with a backyard and give each kid their own room.
That’s a nice idea, and the ideal for most families, but it’s a strange (for me) to think that you, under any circumstances CANNOT have children in a small space.
You can have kids ANYWHERE! Even in a trailer! A shack! A room stuck out back!
(Sorry, Dr. Seuss was a big part of my childhood)
They’re in a 2-bedroom condo, and that to me, is at least 800 square feet, or more. If they feel it’s too small, it’s because they have too many things, a lot of furniture is my guess, and they just need to de-clutter.
I lived in a 2-bedroom in Toronto once. It was 1450 square feet. It was huge. I rarely used the living room, I had huge closets, a big kitchen and plenty of space.
Everyone wants a big home nowadays. Even I am in awe passing by mansions going “WOW!”, but isn’t that just the case of the Jones’ Envy creeping up on us?
(Read: I Met Mr. Jones — It costs around $500k to have an ideal North American life including retirement savings and kids’ education funds)
Well, the Jones’ Grandparents actually lived in a 1200 square foot (or smaller) home most of their lives, and everyone seemed to have managed to have lived through that awful, awful time in their lives of being in a small space. *insert sarcasm*
In those days, many parents would shoo kids out of the house to get some space and work done. Granted, it may not be as safe to do that in some neighbourhoods these days, but even I think parents are being a bit overprotective and paranoid without cause, but that’s another post for another day.
I know not everyone is on board with my way of living ever since I turned into a bit of a minimalist (we only have a table, 2 chairs, one rack for kitchen supplies and a futon on the floor for sleeping), but I have to tell you, our apartment is around 800 square feet (one bedroom) and is more than enough space for just the two of us because we just don’t have a lot of stuff.
We don’t use the bedroom during the day, and it’s the main reason why we are moving to a smaller studio at around 500 square feet, as an experiment.
We want to see how much space we really need as a couple, and we’re going to save $401/month on rent to boot.
If we decided to have a baby now (hypothetically, the way Jennifer in the article wants to), we’d just turn that 1-bedroom into a baby room. Or have the baby sleep in the living room. Or work out something.
But while we feel comfortable in such a small space, many families don’t. But they still make it work and live in smaller apartments than a 2-bedroom condos, and have full-sized families.
She could turn one of the 2 bedrooms into the baby’s + future siblings shared bunk bed room, and sleep in the other with her husband.
And I feel as though she thinks in her mind that she is trapped from even planning or starting a family because they aren’t able to get the house with the white picket fence, the large backyard and a room for each kid they don’t even have yet.
In fact, if they start now, they could have one kid, wait 5-6 years or more, and when they finally have 3 kids (the maximum most people seem to want these days), the housing prices should have improved by then, and they could move to a larger home.
But even if they don’t move, you can still make it work if you want to.
It’s all in her head that having a kid means you must have a big house.
That big house she wants, to me is a comfortable luxury that she may not be able to afford even if the economy was doing better (based on what they have to spend on student loans and debt each month). It may be UNREALISTIC for them, the way it was for many other families who all thought they deserved a home, 2 cars, 2.5 kids and a white picket fence on a limited salary.
And we all know how that story ended.
The silver lining she should see in all of this is that she could have narrowly escaped being a subprime victim.
THEY WERE BANKING ON MAKING MONEY ON THEIR CONDO
Everyone dreams of owning a home, and many believe that if they bought something, they’d build equity and stop “throwing their money away on rent”, which would result in a higher net worth and so on.
That is not necessarily true, and that is the reason why I rent instead of owning a home right now.
Renting may be cheaper than buying your home in the long run depending on where you live.
And if I were to buy a home (which I plan on doing), I’d buy it for mostly emotional reasons because things happen, and like Jennifer above, the market could decide to take a downturn at the very moment I decided to sell it.
I’d never buy a home with the thoughts of $$$$ pouring in, to be able to clear my mortgage on my first home, upgrade to a bigger one and have a sufficient down payment to secure that home.
But I do understand that she’s frustrated because that was her plan, however as I’ve said before, shift happens and you’ve got to roll with the punches.
NO ONE should ever expect that when they buy their homes, it will ALWAYS rise in value. Yes, that could be true as a trend but only in the long to very long run, like in 10, even 40 years.
She just bought the condo 4 years ago, that’s mid-term to me, and in the end, she should just be happy that she even owns anything, and that her mortgage payments are essentially building equity for her (even though I’m not entirely sold on that idea, but I don’t know her situation enough to comment definitively).
It’s just bad luck that is happening to everybody, she should not have expected that her home would rise in value anyway, and it should not stop her from having kids just because she can’t get a bigger home.
I understand that condo living sucks. I think LAL mentioned this once, that she and her DH lived in a condo and HATED IT with a passion (was it you, LAL?), and they couldn’t wait to get out of there.
But hey. It’s a place to live.
And maybe if you had a baby, you could politely (not passive aggressively) ask your noisy party animal neighbour to keep down the noise.
If he didn’t, and the baby woke up screaming their lungs out, you’d walk downstairs, put a damper and a wet blanket on the party, place the baby in his arms and tell him that he caused this with his raucous partying and he is going to either turn down the volume and party quietly (*snort*) or calm the baby down each time he wakes her up.
Just kidding. Sort of.
Anyway, my point is that they could figure out a way to make it work. It’d be easier if they had rented instead of buying a condo, and they could just switch apartments in a quieter, old-age pensioner’s area, but alas, shift happens and hindsight is 20/20.
THEY MAKE GOOD MONEY AND HAVE FAIRLY SECURE JOBS FROM WHAT I READ
Now you may say “FB, you’re being a bit harsh. Give her a break. Stop being a sour bitch. The poor girl already said that she was lucky that her husband and her were gainfully employed at fairly high salaries.”
I concede that I am being a bit of a bitch, but I guess I am more frustrated about the fact that people live with such expectations about how their life was supposed to turn out, according to a great plan they had mapped out when they were 25.
And when things happen, instead of rolling with the punches, they freeze up, get angry and blame the market, all the while saying “WHY ME!? WHY NOW!? WHY!!!”
Well, it’s not just them. It’s the entire economy, all of the citizens of the world are being affected in some way by this, and even though she has admitted that they are better off than most, I don’t think she really gets HOW much better off she is.
I feel like she is using the whole situation to get a little whine fest in (may I offer some cheese?), but in fact, it’s not entirely justifiable the way she complained, when they seem to be fine to me.
Let’s go over the facts:
Employed. At high salaries. Not standing in lines at the soup kitchen. Not stripping on poles to make money. Not living like hobos. Making their payments each month, albeit on a tight budget.
See, they pay $1800 in student loans each month. That’s $21,600 in NET INCOME each year, going to student loans. I don’t know if that’s the minimum debt payment or if they owe a LOT of money (like in the hundreds of thousands), but she was talking about how if any one of them lost their jobs they’d have $0 to fall back on and would not be able to make their mortgage payments AND student loans.
I guess that’s a realistic number for debt, as Dog mentioned that she had high student loans and paid $1100/month (hypothetically) towards them. With 2 sets of student loans, $1800 could be right number.
But if it’s not, and they could pay just the minimums on the student loans and/or cut back somewhere and save at least $100/month (they earn a lot of money, she says), then at least they’d have started SOME sort of savings and she wouldn’t feel as insecure about the money and the loan payments if she had some cash to sit on.
It’s just a matter of downscaling their lifestyle (anything but food, shelter and utilities is not a true necessity in times of hardship) and putting aside something, ANYTHING each month.
Assuming $1800 is a quarter of their pay, it means they pull in $7200/month (am not sure this is entirely the case based on the words above), and they have 75% left to pay for everything else.
Where is the money going?
EVEN IF EVERYTHING WORKED OUT, THEY’D BE IN THE SAME POSITION OR WORSE!
This was the last straw on the camel’s back for me.
She was talking about this master plan, and moving to a larger home, and IF she had sold the 2-bedroom condo, she would have had that down payment for that larger, family home and THEN they would plan on having kids (which by the way, if she’s 29 now, they’d have to start having kids within a year or two of moving and buying the larger home, assuming she wanted to have kids before the age of 35, which is ideal).
COULDA. WOULDA. SHOULDA.
But what IF everything was fine, but they were still not able to sell the 2-bedroom condo at a profit because prices stagnated?
What would they do?
Would they have been able to blame the recession or housing market as easily?
Maybe the housing market. But not the recession. And they may have been a subprime victim.
Would they have sold the condo?
No. They wanted to make a profit to secure a down payment for the larger home. So they need to sell at more than what they purchased it at.
Would they have stayed in the condo and had kids anyway?
So why can’t they implement that strategy now?
Stay in the condo, have a kid and hope for the prices to rise.
Or, wait until you cannot wait any longer to have kids, bite the bullet, pay the mortgage, pay the loans and work out a plan to make it work until you can afford to move to a larger home to give your kids more space.
See my point is that EVEN IF they had sold the condo at a profit, moved to the larger white picket fenced home and had everything they had ever dreamed of to their heart’s desire… they are still in the same damn position they were in the condo but are probably more stressed out than before with added expenses and a newborn baby/babies.
Maybe what she was really hoping for, was a HUGE profit on the condo sale, so that she’d have an INSANE down payment on her new home, and the mortgage would be the same as it was before, or lower.
Wow. Talk about banking your dreams on something you cannot control.
As for the added expenses, my logic is: they would have taken the condo’s profit after the real estate agent’s fees, bought a larger home, secured a larger mortgage to pay for the larger home, ended up having to buy a lawn mower, curtains, carpets, and all of these other little tiny, eensy weensy expenses that come with owning a home, and since it is a LARGER home with more space to fill, they need more furniture and are probably going to see a large hike in utilities because it takes more dinero to heat and run a larger home.
Then they’d have a baby on top of that? Babies aren’t cheap!
They start off at $500 a month (BF and I did the math for a friend), and then they just get more expensive thereafter.
Remember, she’s 29.
She is on a timeline assuming she wants to have a baby before 35. And if she wants 2-3, she better move a bit faster and have one within a year or two, as having a baby is no picnic and she’s going to need a year of downtime in between each child.
Plus, they’d have to go on maternity leave.
She’d have to learn how to live with mat leave, while paying $1800/month in student loans, eating discount pickles on ice cream and worrying about how they are going to make it work with a new dependent mouth (or mouths!!) to feed.
Maybe she may even end up yearning for the days where living in a smaller condo was cheaper but suckier, because the lower expenses would mean she’d have less stress about how to make it work.
So even if the economy was hunky dory, and they moved into the larger home and so on, if they can’t even make it work NOW in a small 2-bedroom condo because of their crippling $1800 student loans, how did they expect that the situation would get better with a larger mortgage, more monthly expenses and a baby (or babies) to pay for?
Again, I don’t know their situation and how long it would take to clear those student loans.
Maybe they were about to clear those loans this year and move pretty quickly.
I don’t know. I’m just writing based on the few facts I have.
But I am not entirely sure that a larger family home would be any better (financially) than a small condo, in fact, I am willing to say that it’d be worse because of the added extra expenses that people don’t think about (furniture, BBQ, carpets, curtains, more utilties used)
It just feels like what she said (although it may have been read wrongly by me, or taken out of context of whatever else she said), made me think that she gave up and was resigned to her fate.
“OH NO! Things are not working as we had planned. We can’t move. Therefore, we cannot get the bigger home. Therefore, we will not move for another 10 years at least because of the economy, and thus, we cannot have a baby.”
I hate saying things like “when life gives yo ass lemons, make lemonade”, but.. I feel as though:
She’s part of the “I Deserve” generation
…..imagining 800-1500 square feet is too small for a home which, may be the case today, but it’s all perception and if you learn to live on less (aka what you can afford), and stop envying the Jones’ or continuing to believe that that is a normal American ideal, it is more than enough space.
Shift definitely happened with these two (Carrie & Big) ———>
She’s making decisions based on emotion and feeling rather than rationality
Which is hard to change. I agree. It’s hard to cut out emotions. *sigh*
She’s imagining the condo would make them enough cash for a down payment on a large home
When in fact, real estate is not a “sure thing” to increase every single year – there are ups and downs like any investment, if not, if there wasn’t any risk, there would not be any gains or losses.
She’s unrealistic about what it really costs for a larger home, kids, debt, etc
Based on their current budget, mortgage, $1800 student loans (and possibly other debts), either in a good OR bad economy I am not sure they could have afforded that larger home comfortably without a huge (unrealistic) rise in housing prices.
They can barely make it work now, it seems! They can’t even save $100 a month for emergencies.
They need to really weigh the pros and cons of staying in a condo, starting out with one kid, maybe two, and then if the economy picks up they can then decide on what they can afford to upgrade to without banking on a huge rise in housing prices.
Because that’s what they based their entire life plan on — on a huge profit on their condo, and not much else.
Heck, they may even realize they should just stay where they are, bank some cash in the emergency fund, save for retirement and their kids education plans instead of putting it all into a home, that by the way, may or may not kill them in expenses/mortgage AND may drop in value again. She’s making the situation worse than it really is considering how fortunate they are in comparison to others
She’s using the economy as a reason to whine why she can’t have kids because she can’t get a big house, which to me, is a person who is caught up in her own web of woes, unable to be flexible in their new strategy and set priorities up for a Plan B.
So you have a small condo.
So what if you wanted a bigger home for the kids? Your kids are going to understand that you made it work without getting into a larger financial crunch, just so you could bring them into your lives.
Kids don’t care. They play with whatever hand they were dealt coming into the world, and make it either way. Rich kids, Poor kids, Middle-Class kids… it’s all a question of determination, hard work and motivation.
I have never heard a single story of a child saying “My mom and dad couldn’t afford a big home for me to play in, or the backyard and that is the real reason why I am now working at McDonald’s at minimum wage.”
I hear a lot more stories about how kids grew up with very little, and made good lives for themselves because of their situation as a kid — they took what they grew up with and used it as motivation.
Or how kids grew up with parents (with or without money) who fed them solid values about money, and they turned out wonderfully, with or without all the things we think they need.
So there you have it.
What do you think about their situation & my logic? Am I way off base?
Or give me your own ideas about WTF is going on, I clearly don’t have all the answers and would love insight into things I have overlooked or forgotten.