1. $2k mortgage
2. $500 on property tax
3. $100 on home insurance
4. $100 on car insurance
5. $300 on utitlities - electric, water, internet, and cell phone bill
6. $1400 for daycare
7. My wife is still in college so I have to pay for her tuition
8. $200 for gas
At the end of each month, I am not able to save because I have all these expenses. Would you consider my mortgage as a saving right now?
Nope a mortgage is not considered a saving although it is more economically strategic to pay a mortgage rather than renting a home. When you have a mortgage on your home, your payments are normally fixed from 15-30 years, when you are renting, it is most likely your rent will fluctuate upwards due to inflation and market movements. Mortgage interest rates are also tax deductable. From what I learned from my Economics and Investment classes, a home for residential purposes should never be treated as an investment although most people see it that way it is a consumption.
I don't consider a mortgage payment as savings, although working towards owning a home is a good idea. Money can't be quickly extracted from a house, and if the real estate market drops, it's possible that money can't be extracted at all.
Hopefully, you are not accumulating debt on credit cards or anything. If not, I suggest that you actually can save, even if it's only $10 a month, or you might surprise yourself that you can do $100 a month. Have it deducted from your paycheck and sent to a separate account, or put it towards a 401k plan if your workplace has one. You probably won't miss the money if you never see it.
1) The principle portion of that payment is equity that you are building up for yourself. When you sell the home, you will get back most of the difference between the sales price and remaining balance of the mortgage after realtor commissions, etc, are paid. So, yes, that is a form of savings assuming you take good care of your house and assuming it retains its value or increases. Depending on how much equity you have, you also might be able to pull some out if needed during a refinance transaction.
2) Make sure your tax guy includes that write-off when you do your taxes this month or next. Same for mortgage interest indicated on your 1098.
for the first 10 years of a 30 year mortgage well it's like paying rent since hardly any, if any, money goes to paying on the house. Of course as you build up money after that 10 years you could borrow against it, or sell the home at 30 years and if the house is appraised at more than you bought it you might make a little profit, but mostly these says people have gone into foreclosure and the house was worth less than when they bought it so they lost their shirt.
Your wife needs to take night classes so that you (as a family) can avoid $1,400 a month in daycare expense.
And yes, a house is an investment, and (especially extra principle)** payments are a form of savings. As for "long term" It can be shorter than an IRA that cannot be accessed penalty free until age 59 1/2. There are also HELOC's if you get in a short term bind.
** Right now your basic mtg pmt is a living expense - but it will pay off (by being paid off) in the future
No. Paying your mortgage does increase your net worth so it's better than nothing but it does not count as savings.
Sign up for 1% into your 401K. Absorb the difference into your spending. In a year add another 1%. Slow but sure increase the percentage.
How on earth can paying off a loan (a mortgage is just a long=term loan) be considered as SAVING ?? It is a debt
Nope...not a savings but a better investment than renting...
The daycare seems really high...I would check around the community or close to work on better prices..for day care....because your wife is at school and you work I bet you could get HEAD start preschool services in your area...the have early head start free federal day care and head start preschools..all free and usually free day care if you are work and going to school...check with your local school(elementary)..where your closest head start program is..
cut daily expenses...eating out take home...coffees...fast food lunch
wife needs to get a part time job in her field of study for a reseme later...3-5 hours at work would help
plan meals and cook at home
all those other bills I would reduce plans and change cell companies for a better price...turn off lights and watch energy use...
overall you have to reduce the over spending to save a thing...
if you get free child care then all that money needs to be saved and you need to make a point of volteering in the class room..
you are house poor. In case you didn't notice----your house is costing you 2600/mo + upkeep. Sure you get some of that back as tax deductions but not all that much. $2000 mortgage payment means you owe something like 400,000 principal at 4% interest (some might be pmi). What were you thinking buying that much house with a spouse in college and a child needing day care.???
You are also overspending on Cell phones and internet/TV---a usual "need" that really isn't.
1400 daycare?? look around.
No.
