LIVONIA, Mich., Oct. 18, 2011 /PRNewswire/ -- RedPlum®, a leading provider of deals and savings on brands consumers want most, recently hosted Carmen Wong Ulrich on its Viva la Value online radio show to discuss tips for buying a home without risking future financial security. Wong Ulrich is a personal finance expert who makes regular appearances on The Today Show, MSNBC and CNN. She is also the author of "The Real Cost of Living: Making the Best Choices for You, Your Life, and Your Money" and "Generation Debt." An archive of the show can be found at www.redplum.com/vivalavalue.
"Where we live says a lot about who we are and what we value," Wong Ulrich shared on the show. "People thought that having a big house was their identity, but instead, we should be considering a place for value in our lives."
Each month, Lisa Reynolds, RedPlum's Mom Saver-in-chief, hosts guests on Viva la Value to help listeners achieve a value lifestyle in their daily lives from grocery shopping to dining, entertaining, teaching your children about money, and most recently, about home ownership.
"People sometimes oversimplify the cost of a home, and they forget about the other things that are really important to them, and where they like to spend time and money, whether it's vacationing, saving for college, or retirement," Reynolds said.. "Carmen shared important tips on how we should pay for our homes and when we should buy without sacrificing our savings."
Wong Ulrich has plenty of advice for anyone looking to buy a home. The realities of the housing market have changed, but according to Wong Ulrich, that's not a bad thing if you're looking to buy your first home. "Loans used to be too easy to get and it was too easy for consumers to live beyond their budgets," Wong Ulrich said. "Since 2008, we've all settled into the idea that things have changed, and that may be a really good thing."
Wong Ulrich compared the new realities in the housing market to the changing face of the car market. "We're seeing that the best-selling cars are getting much smaller, and people are realizing that it's greener to live closer to work and have a shorter commute," said Wong Ulrich. Rather than overspending on cars or houses that are too big for both their needs and budgets, people are adapting to smaller homes, and that leads to more money saved for college and retirement.
"When money was flowing like crazy, people started thinking of real estate as investments, instead of actual homes," Wong Ulrich said. "Instead of 'Should you buy?' the real questions are 'Do I want to buy? Do I want to be a homeowner? And am I ready to be a homeowner?'"
If you are ready to be a homeowner, Wong Ulrich has several pieces of advice:
- Don't wait for interest rates to go lower. Interest rates are already at historically low points. Some housing markets may see lower prices in years to come, but if you're planning on staying in one house for at least five years, and you're ready to buy, you should take the plunge.
- Be educated about the market. Committing to the housing market is like buying into the stock market. Imagine the house as a stock—and expect ups and downs as you would see with a stock. Make sure you're prepared for the risks.
- Don't buy a house with cash. A mortgage means that you're sharing the risk of buying with the bank. "I'm not a fan of debt-free," said Wong Ulrich. Debt is a tool that teaches you how to better manage your finances—so you have plenty to go around for education and retirement, she said.
- Keep retirement in mind. As long as you have a low-interest mortgage, you should have plenty of money left to save for the future. "If you own your home outright, but you don't have enough saved, what's going to happen then?" Wong-Ulrich asked. "You don't want to have to sell the home you worked so hard to pay for because you didn't save enough for retirement."
On Viva la Value, Wong Ulrich shared the right price to pay for a new home based on your financial situation. "Look at your take-home pay. Your housing costs—including maintenance and home insurance—shouldn't exceed a third of your budget," she said. "If you buy a house outside of your budget, there's no room for everything else in your life that you need—and to grow your money for your financial future." Here are some considerations when determining the right home for your budget:
- Figure out the costs of maintaining the home. Upkeep can be expensive. Consider the costs of any current or future repairs, as well as utilities and furnishings.
- Think carefully about where you want to live. Many homeowners assume they want to buy a large house in a brand-new development, but there are plenty of great homeowning opportunities outside of the suburbs. Consider the benefits of living in a city, or in a home that isn't brand new, but with a lot of history and character.
- Consider how much space you really need. Wong Ulrich said that at the height of the housing market boom, nearly 1,000 square feet had been added to the average American home. "In the early '80s, the average home was about 1,700 square feet," said Wong Ulrich. "At the height of the housing market, that went up to 2,800 feet." However, that number is going down, as people realize that "bigger isn't necessarily better."
- Don't buy a house outside of your means or your budget. "Stick to your budget!" Wong Ulrich said, "Any sacrifice that you make in terms of square footage or fanciness isn't depriving yourself—you're setting yourself up for a more secure future, and a more financially flexible future. You're building a great foundation without financial fear or pressure."
Carmen Wong Ulrich has been covering the financial field for 15 years, beginning her career at Money magazine. She is currently a contributor to The Dr. Oz Show and ivillage.com, and is a money columnist for Good Housekeeping magazine. She also hosted her own show on CNBC, On the Money. She says, "There is tremendous power in knowing personal finance, and in knowing how to manage your money—more power than having lots of money." Find out more at http://carmenwongulrich.com.
Lisa Reynolds is a busy working mom who lives and breathes the savings-oriented lifestyle she talks about on her radio show. When she's not at work, Reynolds is cheering for her sons at football games, hosting dinner gatherings with friends and family, and actively participating in her church community. She is also an avid cook with a philosophy of keeping it simple – less than five ingredients or meals in less than 30 minutes. She lives with her husband and two sons in Northville, Michigan. Reynolds is frequently quoted in newspaper, magazine and blog articles, and has been featured in Better Homes & Gardens, Forbes, Family Circle, 24/7 Moms Blog and more. For more tips on staying smart with your money, visit http://www.redplum.com/how-to-save-money.aspx.