As a CPA, money matters are not far from my mind. I take as much pride in creating personal budgets for our family as I do in preparing budgets for my profession. But, even a numbers-cruncher makes mistakes sometimes. Here are the money lessons that I learned in 2010.
Rent before you buy upon arrival in a new location.
It is an age-old debate, renting versus buying a home, but there is one case where renting is the clear winner: when you move to a new city. Here’s the thing, when we moved from Florida to Georgia, we bought a house in the first month of becoming “peaches”. But, guess what happened. The housing market fell, and the value of our house went down. Then, after two years, we had to move to another state for hubby’s job. Although we were able to sell our house in Georgia relatively quickly, we lost a lot of money on it. That’s a sting that won’t go away for a while.
So, we decided to rent in our new city. We had no idea how long we would be in our new location, and it didn’t make sense to jump right into home ownership again. When it comes to moving around a lot, it doesn’t make sense to own a home, regardless of the housing market situation. Most of your mortgage payment in the beginning is interest and escrow (property taxes/insurance), so you’re never getting that money back anyway, unless you itemize on your tax return and get the tax break from it. On the other hand, if you rent, you have the freedom to pick up and move without worrying about selling a house, even though the rent payments are sunk costs that you’ll never get back.
At the end of the day, we will not rush into buying a home again. And, the current housing market is a tease, because there are a lot of great deals to be had right now. But, until we know with certainty that we’ll be staying in one place for a long time, renting will be our only option.
Don’t be afraid of generic goods.
Yes, it sounds like pure snobbery, but it took me a long time to figure out that generic items are just as good as (in some cases better than) the brand names. Many people already know this, I know. I’m a little behind. But, my pride wouldn’t allow me to shop in stores that signified “cheap”. But, I had an epiphany one day when I finally entered said store, and I think I fell in love.
Now, not everything I buy is generic, but truly, I have saved so much money on groceries – even brand names – from going to stores that are not known as grocers. Thinks like bread, chips, frozen veggies, and ice cream are becoming cheap eats with my newfound open-mindedness. And, my budget is doing quite well, thanks to the savings that I’m experiencing as a result.
I could go on and on about the money lessons that I’ve learned over the past year. But, I know that I’m not the only one. We’ve all had to make adjustments to the way we think about money and to our lifestyles. But, a lesson learned is knowledge gained, and we know better than to make the same mistakes again.