2016 in Review

Happy New Year!  One of my favorite annual pastimes is to review the previous years and find out how we did financially and I’m happy to say that 2016 was a very frugal year!  EC Aunt and I have only been out of college since 2012, and there’s a huge difference in our costs from then and now, so I really am only able to compare our expenditures from the last 4 years, but this year we managed to spend the least!

expenditures

This does exclude buying a car in 2016 which I prefer to distribute over several years if possible (assuming that I will be able to continue to drive it during that time).  This does include the cost of my previous car which we did not keep very long, so it’s cost was pretty much entirely in 2014, although we did have it for a bit in 2015.  These expenditures also do not include some costs of buying our house incurred in 2013 such as the closing costs on the house.  The biggest concern for costs not shown on here regarding our path to financial independence is the lack of health insurance, which I currently receive as a benefit through my employer.

Trends:

A few trends that are noticeable for the past few years is the decline in transportation cost, an increase in bills, a fairly consistent expenditure on food, a huge decrease in shopping this year, and a large decrease in vacation.

The transportation costs have been reduced primarily from getting a more efficient car, a slight drop in average price of gas, and the fact that EC Aunt’s work now provides her with a monthly pass for the public transportation.  I would expect once we retire that this cost would actually be even lower since the primary expenditure in this category is the cost to get to and from work.

The increase in our bills over the last few years are primarily due to moving into our townhome in 2014 and starting to pay for our HOA in addition to the other bills we already had and again increasing in 2015 and 2016 as we started to rent out our spare room.  Although I feel like these numbers are high, we’re better off in this position overall since the cost to lease would be higher than the cost to own and we’re actually making a decent amount of money on the house through renting out the spare room and the appreciation of the value of our home.  I’m really not sure how this category will be affected by retiring.  It depends on what we plan to do, and we haven’t quite yet figured it out.  I believe we will sell our home due to the high costs of bills such as the HOA, but whether we buy a new home, or rent, or just travel around for long periods with short rentals to break up trips is still up in the air.

Food costs have been relatively stable, and although we spent quite a bit less on fast food and restaurants, we spent a bit more on groceries this year.  This cost would also be quite variable in retirement depending on how much we travel and when we settle down again.  Traveling generally would make this cost go up quite a bit I expect, but it depends on where we are traveling since the cost of food might also be lower or higher in certain countries.

The decrease in shopping is almost entirely due to a huge cut-back from EC Aunt.  After getting her new position, she has decided that working for money is too hard and it’s easier to just not spend it!  The expenditure was especially high in 2015 for this category as well since EC Aunt bought a new MacBook Pro, an expensive LV purse, and an IPhone 6s…  Of course, she’s still using these, so their cost should carry over a few years as well.  She also cut back on buying clothes this year, although I don’t think her sense of fashion has suffered for it!  We also cut back a bit on our entertainment spending, opting for less expensive activities like clamming on the coast and playing Pokémon Go, heh!

The last major category that we can control actively is vacations.  In 2016, we simply did not travel as much as the last few years.  A big part of this was that EC Aunt felt she was traveling a bit too much with her new job and didn’t want to do it as much.  We were also both very busy with work and finding time to plan out a longer vacation is difficult.  There’s also the fact that we really want to spend more time in each location when traveling but when work is waiting for us to return to, it’s difficult to really enjoy the time we travel.  Of course once we retire, I expect this to be the largest portion of our budget so, this trend is not something I expect to maintain, nor do I want to maintain this low amount.

The only other trends worth mentioning would be the difference in the cost to lease and mortgage interest and property tax.  In 2013, we didn’t have a full year of a lease, so the cost was quite a bit lower for these categories.  We did buy the house that year, but the first payment was not realized until 2014.  Of course, if we continued to lease, the price would have gone up as well, so I’m pretty happy about buying when we did.  Over the last few years, we have been paying off our mortgage at a very accelerated rate.  We owe about $32,000 currently.  This has brought piece of mind and a greatly reduced cost of interest which of course has many pros and cons.  A considerable portion of our expenditures though is our property tax which has been going up and up every year and will go up even further now that Seattle has passed a major expansion to the public transportation system…  Still, as mentioned before, we’re better off owning the house than we would be to lease, so it’s just the cost of living and working in a growing city and really can’t be avoided.

The Breakdown and Its Impact on Financial Independence:

On average in the past 4 years, we have spent just under $28,000 a year, with a high of just under $34,000 and a low of just under $22,000.  Using the 4% rule (ignoring whether or not it is completely valid), we would need at least $550,000  using the low, $700,000 using the average, and $850,000 using the high number.  Furthermore, the high number might not actually be high enough for our retirement since we plan to travel more, we plan to have a modest budget at around $40,000 per year to cover everything, which would allow us a great deal of freedom, but would leave us plenty of room to fall back into super-frugal mode if anything goes badly.  For this, we would need $1,000,000!  So, to be extra sure, EC Aunt and I are shooting for a net worth of a bit over $1,000,000 in our retirement accounts in addition to the house.

balances

Our Progress to our Goal of Financial Independence This Past Year:

This year, we managed to save much more than previous years, not only because we were able to reduce our spending, but also due to the fact that we just made more money.  EC Aunt and I both maxed out our 401ks for the year, saving $18.000 each.  My company matched me $3210 for the year, contributed $3100 into my HSA, and a 401k bonus of $6,100.  Ending the year with a balance of just under $73,000 in my 401k, an excellent gain from my starting balance of $37,200.  We also contributed the remaining amount allowed to max out the HSA with an additional $3550 for a total of $6,550 contributed for the year, putting the final balance at $23,500, up from the starting balance of $14,470.  EC Aunt put in $18,000 into her 401k and received a match of $2850, she also started a Roth IRA, maxing it out for the year, ending her retirement accounts at $84,000, up from their starting balance of around $52,100.  We paid off a great deal of the premium on our mortgage this year!  We started the year with a principal of right at $100,000 and now we’re down to $32,000!  We also started a brokerage account this year which has a balance of $41,500!

In total, we managed to save just under $170,000 for the year, an amazing feat!  We also gained around $16,500 from growth of our accounts.  I expect that we should be able to maintain this rate of savings for the next few years, putting our timeline for Financial Independence at 5 years without any gains!  As long as the markets don’t crash, we could achieve this even sooner!  Here’s to 2017!  Hope it’s a wonderful year!

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Uber Frugal Month Challenge – Homework Part 1

ECA here!  One of my fav FI bloggers Frugalwoods is leading the Uber Frugal Month Challenge. We have been very frugal people to start with. I am participating to learn some more frugal tips and share our knowledge with other people. If you would like to participate as well, you can join read all about it in the link above.

Mrs Frugalwoods left us homework, and I will be doing them here in ER Uncle. Continue reading “Uber Frugal Month Challenge – Homework Part 1”

Call Your Bank, ISP, Insurance Company, etc.

I recently opened a new credit card and much to my chagrin, I received a late fee after missing my due date.  I thought I had set up auto-payment which I have for all my other cards, but I was wrong.   But not to be dismayed, I called my bank and asked if the late fee could be waived since this was abnormal for me.  They did it, no questions asked! Continue reading “Call Your Bank, ISP, Insurance Company, etc.”

Eccentric Cute Aunt’s College Days

This is a guest article written by Eccentric Cute Aunt.

I grew up with a family of engineers around me, so it was time for college, I knew I was going for an engineering degree. In fact, my dad is a civil engineer with 3 Bachelor’s degrees (Mechanical engineering, civil engineering and computer science). He got the latter 2 degrees while working full time. I still remember days when I was a little kid riding with my dad on his bike touring his university. My dad helped me pick Purdue University (Boiler up!) for its reputable engineering school. His other rationale included that climate in Indiana is similar to my hometown which will help me adapt to new college life. He was right, the climate for my hometown and Indiana suck equally.

Luckily, my parents covered all my tuition and expenses in college, so I didn’t have any financial concerns. I had never worked before prior to college, so I was eager to find a job and be an adult. My first job was in my favorite dining court on campus. I absolutely loved my job. Now that I think about it, the job was nothing more than mundane minimal wage manual labor. But when I worked there, every day was so exciting with loads of fun. Part of it was because it was the first job ever and the other part was the people I worked with. 7 years later, today, I can still remember the smile from the faces I worked with and how kind everyone was to me. I worked there only for one semester as I needed to make time for things that better prepared me for graduate school.

My plan for the first summer was to be in Purdue’s Summer Undergraduate Research Fellowship Program. However, things did not work out. I missed the deadline for a recommendation letter, as I asked for recommendation from my academic advisor who did not qualify for a faculty. I was quite upset at the time, but it must be the best thing that has happened to me! I found a summer job in the resident hall and met Eccentric Rich Uncle, my future husband.  Our paths would never have crossed if I did not work there.

Then the new semester started, I became an undergrad teaching assistant (TA) for a physics class which I was super proud of. This was the highest paid undergrad job on campus ($9/hr vs. $7.5/hr everywhere else). I enjoyed being a TA and leading the physics labs. At the same time, I interviewed a few research assistant (RA) jobs. My goal then was to go to graduate school right after my undergrad to get a Master’s in Engineering, so research experience was crucial. My job as an RA was to genetically modify mint plants. (Yes, I love GMOs. It is GMO that makes it possible for the world not to starve) I had so much fun nurturing baby mints and cutting them under the fume hood. Most importantly, I loved my boss and we became good friends. She was a great inspiration as she is continuously curious of the world and eager to explore. We would make handmade soup together using the mint essential oiling distilled from the mint we grew too.

With the TA and RA experience in semester 2&3, a professor agreed to sponsor me for my graduate school. The plan was to be enrolled in an accelerated program that allows me to graduate with Undergrad and Master’s in 5 years total. The second summer, I finally got to be in Purdue’s Summer Undergraduate Research Fellowship Program sponsored by the professor realizing my dream from the first summer. This is also the summer I got married to Eccentric Rich Uncle.

Semester 4 was quite uneventful as I continued working as TA and RA. At the end of semester 4, I realized with the current speed, I would graduate one semester before Eccentric Rich Uncle. I saw a brochure about  Disney World internship in Florida. Since our relationship was at all time low due to some conflicts about the past wedding and I had the extra semester, I decided to take the semester off from school and go work for Disney. I enjoyed the time in Disney (truly happiest place on earth) but did not like the job. I worked in a fast food restaurant right next to Tower of Terror. I was not strong enough to lift the French fries from the hot oil and I had to stand all day long. I am always glad that I went to Disney, as during my internship in Disney, Starbucks Corp interviewed me for the upcoming summer internship opportunity and they were really pleased to hear I was interning with Disney.

The third summer I flew to Seattle and interned in the Starbucks Headquarters. This was my first corporate job using my engineering degree and it completely changed my path. The last day of the internship, I was given a full time offer for me to return after graduation. I was so excited that I had to give my HR manager a big hug before she showed me my offer letter.

I returned to Purdue starting Semester 5. By then, Eccentric Rich Uncle and I had been apart for 8 months, so it was great to be together again and we got over the relationship trough. The last 2 semesters (5&6) was stress-free and easy except I had to tell my professor that I will not continue with my Master’s degree. It was hard as I had great respect for the professor and I am grateful for his support in my change of mind. I became the lead undergrad TA for physics class. I also tutored 2 students math and physics and became good friends with them.

I had lots of cool jobs along the way when I was in college. Although I was never paid very high, all the jobs were very meaningful and help build who I am today. It makes me smile going down the memory lane and thinking about the various jobs I had.

Pay Off the Mortgage or Invest?

Eccentric Cute Aunt and I hate being in debt.  I’ve always hated asking for a loan, even just borrowing a buck or two from someone.  And anytime I’ve had a loan in my life, I’ve tried to pay it back IMMEDIATELY.  In college, I was forced to take a few Stafford student loans which I started to pay back well before graduating, and was fortunate enough to end college with around $8,000 in loans which we promptly paid back before the grace period ended (whew! No interest!).  And although I have never found it difficult to save up enough money to buy anything that I need, including cars (I’ve never had a car loan and I’ve always owned, never leased), saving up enough money to buy a house with cash was not something that seemed reasonable.  So, we got a mortgage…

We bought our home in October 2013, with a down-payment of around $80,000 which we had saved the prior year and a half after graduating.  We were debt-free at the time, and then suddenly, $225,000 in the hole.  Of course, we owned the house too, but if you’re like us, that somehow feels like a small consolation (I know it’s irrational).  So, with our obsession to be debt-free, we started to pay down the loan.  Today, the balance sits at just under $48,000 and we are extremely far ahead of our 15 year timeline.  If we don’t make any additional payments, the mortgage will be fully repaid in April, 2019, 9 ½ years before the original December, 2028 timeline for our 15 year mortgage.  And knowing us, we will almost definitely be putting in more, so it will likely be paid off within the next year!

All this is great, but was it the right choice?  Is continuing to pay down the mortgage the way to go, or would I be better off investing that money?  I looked at how much and when we put in extra towards the mortgage and compared it to the amount we would have made by investing this money into the S&P 500 with reinvested dividends.

Here is what we actually did (approximately) for the past year: 1

And here is the theoretical alternative would have been for the past year:2

5

I used this calculator to determine the gains on the S&P 500 for each month.

From the theoretical version, if we were to take the total value of the portfolio and use it to pay down the loan at the end, we would end with a loan amount of $55,893.  Compared to the actual value of $57, 611.  Therefore, we would be about $1,700 better off investing just over the past year.

The discrepancy gets a little bigger when I look at the entire life of the loan.  When I go further back and do my “what-if” scenario, I found that we would be around $6,000 better off if we would have been investing the extra money instead of paying down the mortgage.

So in the end, we could have been a little richer by investing, but we have earned a greater peace-of-mind going the safe route and getting that mortgage off our backs.  I’m not sure which is the best choice.  What would you do?

Food Expenditure Update

It’s been long enough since I last wrote that it was worth looking at an aspect of our finances, specifically, food.  It’s one of the largest categories of expenditure for us and therefore deserves a lot of attention.

Last year, from January 2015 through December 2015, we spent about $4,440 on food and dining, giving an average of around $370 per month.  From January up until today, we have only spent $2,380 in food and dining, giving an average of around $340 per month.  These expenditures generally include anything we buy at grocery stores including non-grocery items, fast-food and restaurants.  The vast majority of the spending was $2,000 at grocery stores so far this year ($285/month), $270 at restaurants ($38/month) , and $105 at fast food restaurants ($15/month).  Comparing these from last year, we spent around $253/month at grocery stores, $66/month at restaurants, $43/month on fast food, and $3.80 on coffee shops per month.

Food Expenditures Table Aug 2016

Without trying very hard, we’ve been even more frugal this year than we were last year.  We have spent more on groceries, which makes sense since we’re cooking more at home and eating out a bit less.  It seems that Eccentric Cute Aunt has not been going to Starbucks at all this year either, although it was never really a habit for her, so we have no coffee shop expenditures.  She also seems to eat out even less, opting to pack her lunch nearly every day.

I have also changed my lunchtime diet a bit.  I used to do cold meat & cheese sandwiches, but I have switched to home-made flatbread and hummus for most lunches.  It’s a good meal and since I make the flatbread at home, super cheap.  I also generally get the hummus at Grocery Outlet, a discount grocery chain in the area, saving a few bucks further.  My cost for lunch for a week is about $5 currently (4 cups of flour, 2 teaspoons of yeast, 2 teaspoons of salt, 6 tablespoons of olive oil, 1/4 teaspoon of baking powder, and a 9oz container of hummus), and it’s healthier, so a win-win.  I’ve also picked up baking, making my own bread which is both extremely cheap and extremely delicious!

Not everything has been an decrease though.  EC Aunt has been spending more on fresh fruits this year than last year by my estimation, eating more blueberries, watermelon (which she eats about 1 large one a week!), and lychee rather than fruits like apples.  After reading about the various health benefits of drinking in general, I have also tried to pick up red wine.  I pretty much only used to drink once a month or so with coworkers on the rare occasion, but now I’m drinking more frequently at home (probably 3 days a week on average).  I’ve also picked up home brewing hard cider, which was not very successful on my first batch, but I’m giving it a second chance currently!

All-in-all, I don’t think we’re at the absolute rock bottom of frugality on our food expenditures, but we’re doing quite well!  We are well below the USDA’s “thrifty” plan of $389.90/month (which we were last year as well).    We’ve also managed to avoid the dreaded “lifestyle inflation” which up until now, we’ve experienced very little of even with increased wages.  I think the biggest factor for us is that neither of us really enjoy eating out.  The food is rarely better than what I could have made myself, it takes a long time, and it’s expensive!  Fast food is convenient and cheap and tasty, but it’s horrible for you.  So, we just make our own meals.  Luckily, it’s also the most frugal way to go!

Plugging a Tire DIY

 

Recently, I picked up a self-tapping screw in my tire.  Not sure where it happened, but I’m betting it was in the parking lot of my work.  Fortunately, the screw itself made a pretty good seal, so I wasn’t leaking air very fast, (about 7 psi overnight), so I went and bought a tire repair kit.  The kit I ended up getting has everything you might need to plug or patch a tire and cost me just around $10, but it’s pretty common to find just a plug kit for around $5.  Once I had my repair kit, I grabbed a few other tools and went to work!  It probably took me about 10 minutes to do it, but I got lucky that I didn’t need to remove the tire.  I decided to just plug the tire for now since the hole was pretty small and I don’t have a tire changer, but next time I go get an oil change, I may very likely patch it then.IMG_2348.JPG

Tools used:

Flat-head screw driver

Vise grips (pliers would be fine too)

Tire reamer (comes with repair kit)

Plug Hook (comes with repair kit)

Utility Knife

Gloves (not needed, but keeps your hands clean)

First, I used my screw driver to get the bolt out far enough to grab it with my vise grips.  I didn’t need to take the wheel off the car to do this, I just parked it in such a way that I had access.  I just put the car in park, but I should have probably used the e-brake too since the car moved a few inches when I put in the plug.  Once I got a good grip on the bolt, I slowly pulled it out.  I didn’t let out any air or anything so, air started escaping pretty quickly after doing this.  I then inserted the reamer into the hole and pushed it in and out a few ti

mes.  This is just to clean the hole and make it big enough to put the plug in.  I left the reamer in the hole to keep the air in while I prepare the plug.  I took out a plug and threaded it through the eye of the plug hook.  The one I bought actually splits apart when you pull it out, others are actually more hook-like.  I tried to push in the plug, but the hole was a little too small, so I reamed it a little more.  I then pushed the plug in, with some effort, until only about 1/3 of each end of the plug was showing.  I then very quickly pulled out the hook, leaving the plug behind.  The last step is to cut off the tails of the plug, I left a little bit on assuming that it will be smashed while driving.

IMG_2351
The offending screw.

And that’s it.  It was really easy.  You can get this done at a shop for pretty cheap, so it’s not an amazing way to save money, but you will save a buck or two by doing it yourself and maybe some time.  I know that Costco does this for around $11.  I’m sure other places are about the same, but for how simple it is, and how little time it takes, it’s a nice little DIY repair that I think pretty much anyone can do and I would personally much rather do it myself than wait for an hour or so for a shop to get around to it.  It might even be a good idea to keep a kit in the car in case you need to plug while on a trip.  Of course, if you are unsure, always err on the side of caution.  If the hole is too large or in the side-wall of the tire, the damage may not be repairable.  If the steel rings in the tire get damaged, or exposed, they can rust and the tire can fail catastrophically later too due to rusting.

How to Get Cell Phone Service for Free!

A large bill that can pretty easily be avoided every month is a cell phone bill.  According to J.D. Power and Associates, the average monthly cell bill was $78 a person in 2010.  I pay $0 per month.  Here’s how I do it:

Get a Google Voice Number

Google Talk

Google has a service called Google Voice.  You can get a phone number through this for free which can receive calls through Google Hangouts, sends voicemail to your email and transcribes the audio, and can send and receive SMS messages.  You can make and receive calls using your computer’s microphone and speakers as well.  The quality is generally as good as your connection though, as long as you have DSL or cable though, it works great.  You can use Google Hangouts to make calls from your favorite web browser, so you don’t need to download any apps or anything.  You can also get hangouts on iOS and Android, so you can use it with a smartphone or tablet and use it on the go.  This way, as long as you have wifi, voila~ you have a free working phone!

If you need to make international calls, you can do that too, but Google charges $.10 a minute.  I haven’t tried this aspect, but I’m betting it works fine.

FreedomPop:

Of course, you won’t have wifi everywhere.  The way I get around this is I have a mobile hotspot (MiFi) with FreedomPop.  This is not completely free as you need to buy the hotspot, but once you have it, you can use it to connect to the Sprint LTE wifi network for free for each month.  You are limited to 500 MB for the free plan, but I only use around 250 or so a month, so it works well for me.  Still, service is a bit spotty and the wifi likes to drop for no reason.  My phone is also getting old too, so I’m sure that has something to do with it.  I only paid around $80 total for having FreedomPop for the last 3 years or so, so I can’t really complain about price!  The hotspot is also supposed to work internationally now.  I haven’t tried it yet, but that alone might be a good reason to get a hotspot.

FreedomPop also has a free phone plan, so you can just skip all this and just get one of their phones.  Or you can bring your unlocked phone over.  I haven’t personally done this, so I can’t recommend it, but I will probably do that when I’m thinking of upgrading.

I think these are the rock-bottom ways to save money on the cell-phone bill.  Have you heard of any better?  If so, leave a comment!

Time Does Not Equal Money, Time = Time!

Everyone knows the saying that “time is money”.  The idea has been around for ages, but it was Ben Franklin who wrote it in this form in his “Advice to a Young Tradesman”.  Why then shouldn’t we take the advice of the man on the One-hundred dollar bill?
1024px-usdollar100front
Because he omits a very basic, very simple question…  Why do we care about money or time?

The main problem with the saying is that it is not advice for the vast majority of us.  It’s advice for a business owner, a tradesman.  The sole purpose of a business is to make money.  If a company is not profitable, it ultimately fails.  And for a company, wasted time means that either goods or services are not being provided to as many customers as possible, or that unnecessary wages are being paid to workers.  Wasted time is a throttle for a business’s cash in-flow and a leak for its cash out-flow.

However, unless you are Mitt Romney, you wouldn’t call a corporation a person.  The average Joe/plain Jane is not out to make as much money as they can.  We work for a living.  Five or six days a week, we wake up, go to work, and convert our time to money.  Most of this don’t do this because we want to.  In fact, most of us hate our jobs…  We would rather be at home with our loved ones, playing a game, watching a movie, reading a book, but we must work to earn enough money to get by.

We need to buy things that will sustain us, food, shelter, etc.  Once we achieve the basest level of human existence, we are able to buy things that we want a-la-Maslow’s Hierarchy of Needs.  For us, time we spend at work is converted into money so that we can do the things that we really want to do.  Money is just the intermediary, it’s just a tool that we used to convert our time into the things that we really need or want.  But what happens if you don’t want to work?  What if you want to retire?  If money is the intermediary tool, it becomes obvious.  We spend time in our jobs today so that tomorrow we can live a carefree life.  Conversely, every time we spend money, we must delay our retirement.

Some of us may love our jobs and our jobs may even define a few of us.  But ultimately, what’s important for us is the time we spend doing what we love.  And for most of us, money is just the tool that allows us to do it.

Rent or Buy and Why

Huge disclaimer:  I’m not classifying as financial tips or advice, buying a home is a huge financial decision and all options should be considered.  In many cases, renting is actually the best way to go, but I own a house and here’s why:

Eccentric Cute Aunt and I moved into our current home on Halloween of 2013.  We live in a brand new townhouse in Seattle, WA, about 3 miles from downtown Seattle.  It has 2 bedrooms and 2.5 bathrooms and about 1400 square feet with a detached garage.  We are the first owners of the home and purchased it while it was still under construction.  We didn’t get to customize much, all we had a choice in was the color scheme used for the cabinets and floor, but it came out quite nice and the floor layout is good, so I can’t really complain.

THE BREAKDOWN:
We purchased our home for $301,000 with an original loan amount on the mortgage of $226,000.  We locked in a 15 year loan at 3.375% with a down payment of $75,000 and closing costs of just around $5,000.  Our monthly payments are just a tiny bit under $2,000 a month with $380 escrow for property taxes.  Our home insurance costs $375 per year.  Last year, we paid $4700 in interest and $3,400 in taxes, in 2014, we paid $6150 in interest and $2130 in taxes.  We also have a $150 quarterly payment for sewage capacity charge which is charged to new buildings in Seattle.  We are also required to be in an HOA which has a monthly charge of around $170.  So, for 2014 and 2015, the cost of the house has been $21,660 or about $10,830 per year, or $450 per month.  In addition, we have paid around $300 a year for trash pick up ($26/month), $150 a year for natural gas ($12.50/month), $360 a year for electricity ($30/month), $460 a year for water ($38.50/month), and $450 per year on internet ($37.50/month).

HouseCosts

TO-DATE MONTHLY COST OF OWNING AND LIVING IN A HOUSE:  $1,065
MONTHLY COST OF OWNING A HOUSE (EXCLUDING UTILITIES):  $890
AVERAGE MONTHLY COST OF RENT IN SEATTLE:  $1284 

CAVEATS:
Other than the fact that this is completely my personal situation and it may not reflect your experiences with home ownership, there are a couple of other caveats to bring up.

In my cost calculation, I’m ignoring the premium of my mortgage.  I assume that over time, my home will gain value (and it has).  My actually monthly payment is more like $2,750.  This payment may unfortunately be a little too high for many people…

I’ve ignored income tax savings on interest and real estate taxes paid.  This reduces the monthly cost by around $190.  Rent can also be deducted, which for my tax bracket would reduce the monthly cost of rent by around $360.  Therefore, the monthly cost of the house becomes $260 and the cost of renting becomes $924 before utilities.

As I write this (January 2016), we owe just a tiny bit over $100,000, our next bi-weekly payment will put us into 5-digit territory.  We’ve basically paid half the loan in two years and could easily pay it off fully in two more, but we have decided to slow down our repayment a little bit and invest our money in higher-return investments since the cost of the interest on the loan is fairly low, but we may change our minds looking at the current market.  Our accelerated repayment has considerably lowered the amount of interest we’ve paid, so that should be taken into account when trying to determine the cost of owning a home.

I have also not taken into consideration home improvement or maintenance costs.  Some of these are covered by my HOA such as gardening and the exterior of our home.  The average annual cost is around $3,435 according to Zillow.  I expect that my home maintenance costs will increase over time as the house ages, but it won’t be quite as high due to some of the coverage from the HOA.

THE VERDICT:
We started renting a 500 square foot studio apartment pretty close to where we live currently and were paying $860 per month before utilities.  We could have kept that apartment indefinitely for $1060 per month after our lease expired on a month-to-month basis.  If we would have stayed, we would have basically paid the same amount we have thus far for owning our home (which is much bigger and nicer).  Furthermore, after we pay off the loan, the monthly cost will be more like $615.  It might be worth it to consider the lifetime costs of housing between renting and owning, which for us makes owning worth it.

Also, I have neglected to mention the fact that our home value has increased tremendously since we bought it.  We were lucky to be able to buy a home when we did, its value has nearly increased by 150% from the time we bought it.  In addition to that, we put the spare bedroom to good use by renting it out on Airbnb which also generates a decent income and is generally something you cannot do if you rent.  But of course, these again are both very situational.  Perhaps renting is truly the best option for you, do the math and make sure it is truly the best investment.

Sources:
Rent costs – http://www.seattletimes.com/business/seattle-area-apartment-rents-climb-to-average-1284-a-
Home Maintenance Costs – http://zillow.mediaroom.com/2015-06-17-U-S-Homeowners-Can-Spend-More-Than-9-000-Per-Year-in-Hidden-Homeownership-Costs-and-Maintenance-Expenses
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