Many of you reading this are considering buying a home. You’ve been saving up money, looking around, asking friends for advice, and now you’re ready to make the big move. Congratulations to you.
Then there are those in a different situation. Those that haven’t put much thought into real estate. They figured it’s the next logical step when debating what to do after college. Without putting in the proper research and time, things can get pretty sour with your first home purchase. Buying your first home can actually go horribly wrong in your 20s.
How can things go wrong once you get the keys to the place?
You’ll be spending more money than ever before.
The bills and expenses will add up like crazy when you get those keys. The closing costs alone will be more than enough to put some of us into debt. The costs associated with home ownership can become pretty astronomical for the young professional just getting started in their respective field.
Naturally, at this point you’re likely debating a few common points in your head:
Why’s there such a shock when it comes to your first home purchase?
Wouldn’t we just budget for this increase in spending?
That’s the problem. We all assume rational decision making when it comes to personal finance. That’s just not how we work. The way that you end up in this situation is by not challenging conventional wisdom and doing what you’re told is the next thing to do.
Despite attempting to save money for your new home and budget your income for your new expenses, there are many hidden costs that can creep up on you. Let me throw out a few examples:
It’s the long weekend and you want to have your buddies over. You realize that you need a new BBQ for the food. You need to grab some beers. You need to purchase the food. You need propane. You find yourself spending a few hundred dollars on an afternoon in the backyard. In my opinion an expense like this is worth every penny because I enjoy beers and food with friends. However, it’s still an expense.
Then there’s the major issues that can pop up.
The first brutal winter snow storm hits and your furnace breaks down. That could be thousands of dollars, but I don’t want to get too extreme with my examples. What if you need a new snow blower? A new shovel? Are you now going to wake up an hour early to shovel the snow? I just wanted to throw out a few common scenarios so that you’re prepared for the inevitable.
What’s wrong with spending more money than ever before? You’ll kill your savings, possibly go into debt, spend time on random activities, and regret ever moving out. I’m just trying to warn you.
Your whole mindset can change.
When you have a home mortgage you can’t have the same lifestyle as you once did. You no longer live with your parents or rent a place out. You can’t just get up and leave. You can’t randomly go to Cancun with your buddies next month. You can’t just quit your day job to start a personal finance blog (who would do that?). You can’t blow money on a random new toy.
Where am I going with this? Real estate can go horribly wrong in your 20s when your mindset changes and you realize that you no longer want to be stuck with a home mortgage. How will you deal with this?
That’s how buying a home can go wrong in your 20s. I’m not here to scare you. I just want to give you fair warning. The good news is that you read blogs like this one and you’re ahead of the game.