Buying a Home For Christmas; The Gift That Keeps On Giving!
According the the National Retail Federation, the average American will spend $920.00 on Christmas Gifts in 2019, with 33% predicting that they will spend more than $1,000. When you look at household expenditures on Christmas gifts (including money spent by other adult household members and money spent by and on behalf of kids), the amount spent on buying Christmas gifts can range into thousands of dollars per household.
POP QUIZ: What did your significant other buy you for Christmas last year? What did you buy your significant other last year?
Chances are that you don't remember and that your significant other probably doesn't remember what they bought you or what you bought them last year.
Now, let's talk about your kids. Did you know that according to an unscientific poll posted on the website Netmums.com, it's not unusual for parents to buy each of their kids as many as 20 different gifts for the holiday. And this doesn't count the gifts that they receive from other friends and family!
To make matters worse, according to a study performed by the University of Toledo, receiving too many gifts actually reduces the quality of a kids play time with the toys that they receive!
So, please allow me to ask you, is dropping a ton of money on Christmas gifts the best way to spend your money?
Would you and your family be better off if you reduced what you spent on gifts? How about if you were to limit what you spent on other expenditures for the holiday, such as what we spend on Christmas decorations, happy hours, etc?
Now, I'm not saying that you shouldn't decorate your home, travel to see Grandma or stop buying your friends and family ANY Christmas gifts (though I do sometimes wonder how many people out there truly deserve lumps of coal instead of a new Nintendo??), I do oftentimes wonder if American's don't buy into the commercialization of the holiday a bit too much.
This is especially true if one of your excuses for not owning your own home is that you don't have enough money saved up!
Think of it this way, in the long run, would your family be better off reducing what you spend on Christmas this year if you spent the money on buying them a home of their own?
As I've written about before in my post, "Buying a Home Without A Bunch of Money" , the number one impediment to buying a home is a lack of savings. And, as I also pointed out in that article, you don't have to have a "bunch of money" in order to buy your family a home.
Depending upon your circumstances and where you want to live, it is actually possible to buy a home with very little, if anything, out of your pocket!
Just last week I closed on a $225,000 purchase where the buyer closed on his home purchase by simply signing the closing docs. He did have his earnest deposit, his due diligence deposit, and the cost of the appraisal into the deal by the time that we got to closing (a total of about $2000), but at the closing itself, he did not have to bring in a penny!
Earlier this year, I closed a home purchase for a client where they had a total of only $550.00 into the transaction by the time that they closed and actually walked out of closing with the keys and a check! How cool is that?
Pop Quiz Two: What do you think is the number one source of wealth in the United States?
Did you answer Stocks and Bonds? Lottery winnings? Or something else? Well, the right answer is, "Equity in Real Estate". According to Statista.com, as of 2019, American's held approximately 15 TRILLION dollars in household equity.
While the total invested in the stock and bond markets is higher, most of those investments are held by entities other than households; banks, investment companies, insurance companies, etc.
And the vast majority of households investments are held by the wealthiest of us. Approximately 84% of the money held in investment accounts of all kinds is held by the wealthiest 10% of the population.
This being the case, buying a home is the most likely path to financial stability for the majority of us.
And the first step towards becoming a home owner is to start saving. As I pointed out above, you don't have to save a tremendous amount. Most folks with at least a half way decent credit rating and a steady job can buy a home for less than a couple of grand out of their pocket.
Bringing that back around to the topic of my article, it is very likely that you can save a good portion of this amount by simply reducing how much you spend this year on Christmas. Combine these savings with other belt tightening measures (please see my article "The Painless Way To Save For a Home"), such as reducing your cable bill, setting up a payroll deduction, etc. and you can see that, if you set your mind to it, you too can buy a home for your family!
If you have any questions on how to get started, please feel free to reach out to me.
* Christmas Gifts Under Tree courtesy of Wikipedia.com under creative commons license
** Keys to House courtesy of PXFuel.com under creative commons license.
As always, the opinions expressed in this article are those of Bob Mitchell alone and do not necessarily represent the opinions of Atlantic Home Loans or any other entity. All photos published under creative commons license with attribution when requested.
