Rae's Next Idea Theft

So, you may or may not know that I like to "advertise" to myself by reading articles in the morning oriented toward my goals. I'll check my favorite finance blogs (Get Rich Slowly (less so lately since they started advertising credit cards on a blog that encourages 0 debt budgets), Mr. Money Mustache, the Non-Consumer Advocate) and reddit's /r/personalfinance to kind of get into a mind set of non-spending early in the morning. It doesn't always work, but it's better than watching a McDonald's commercial and then immediately wanting McDonald's breakfast.

Or even typing that sentence. Ergh. Now I want an egg white delight damnit. Focus, Rae. Remember, you've got good healthy paid-for 50-cent pineapple yogurt in the fridge at work and skipping a $2 sandwich today will save you $1.50, which will be $12 in 30-odd years if you put it into your IRA instead! Is that sandwich worth $12 and a spoiled yogurt? I don't think so.

Oh hey, Roth my mutual fund purchase went through. And I got it cheaper than last month's purchase even with the market up. Neat!

Ahem.

One of the ideas I read the other day, I think on reddit? I'm totally stealing it. The suggestion was that if you want a certain price house, you should calculate exactly how much it will cost you per month - in mortgage + interest + pmi (if any, which since we don't have a downpayment there would be) + taxes + insurance + estimated maintenance. I would even add HOA fees to that, since locally, almost every place you purchase is going to have an HOA. And once you have that number, you budget for it, even though you're not purchasing the house yet. Then, when you pay your rent every month, put the rest of that amount into a savings account.

I love that idea. Not only is it a realistic way of looking at whether I can actually afford a house, but it will definitely help me save for a mortgage downpayment. And if we need to pull from that money to pay bills or get groceries, well, we have to wait longer and make more money if we want a house, and that's that.

So, my goal is to get a $200,000, single-family house with 3 bedrooms and 2 bathrooms. I want to estimate high with my numbers so that I can be pleasantly surprised. So, with an interest rate of... let's go crazy in case it's a while from now, 5%, 0 downpayment, 2% for taxes, $2000/year for insurance, HOA fees of $100/month, PMI of $163/month. So using some online calculators, I get:

Mortgage Principal + Interest: $1074
PMI: $163
Taxes: $330
Insurance: $167
Estimated Maintenance: $167
HOA: $100
Total: $2004/month

So yeah. I am aiming very high of course, but that's about the total cost. It'll be a lot less if we save up for a 20% downpayment of 40k, because that'll bring the mortgage + interest way down, and nix the PMI entirely. But that would be an awful lot of saving, and I want to be putting my current rent cost into equity sooner than later.

So... time to start pretending my rent is $2004/month, and see where that goes. Hoo boy.