Reworking My Savings Goal And Thinking About Buying A House

Currently, we live in a house provided by my employer.  We love our house, but at some point in the future, we’ll want to buy our own house.  To that end, I’ve created a new savings goal.

For the past six months, I’ve been tracking housing costs in our local area.  We have picked out three or four subdivisions that we really like, and we’ve calculated our ‘maximum amount we’ll pay for a new home’.  While I’d love to pay cash for the house, that may not be realistic.  But, I do hope to put at least 20% down so that we can get a conventional loan and avoid PMI.

I have run several calculations, including pricing the loan for 15 and 30 years, raising and lowering the interest rate, and manipulating the down payment.  For our price range, the ‘worst case scenario’ for our mortgage payments would be roughly $2,000 per month.  (The actual payment would be calculated when we took out the loan, and would be based on exactly how much we borrow and rates at the time we take out the loan.  According to my calculations, the monthly payment will be somewhere between $1200 and $2000.)

For the next twelve months, I’ll ‘pretend’ to have a mortgage.  By paying myself $2000 a month – stashing it away in my ING Direct Savings Account – I’ll accomplish two goals.  First, I’ll prove to myself that I can make these payments.  And, second, I’ll rapidly build a substantial down payment.  Win, win!

If I save $2,000 a month for 12 months, I’ll have $24,000.  If I add that to the $7,000 already in my non-retirement savings, I’ll have $31,000.  But, since I’m not a fan of the number 31, I’ll fix my goal at $33,000.  My actual monthly goal will be $2166.66.

I’ll track my progress over at the No Credit Needed Network.  Here’s my current chart – SavingsNCN.  This new goal replaces my old goal (of saving $16,000 this year).  I just never could get excited about that old goal, but I’m stoked about the new one.

Do you create goals?  If so, how agressive are you?  I like to set super-agressive goals and then push myself.