OK, ok, I confess. I have been one of the persons who bought a house at the peak of prices, and are now under water. Still, I think I am better than many Americans, who are not able to pay their mortgage. Fortunately, I have a job, and as long as I have it, I am going to slowly, but steadily bring my debt down.
I was making only $65,000 a year, had a single income, when I bought this new house that cost me $506,000. Actually, that is only the amount of its sales price. Considering closing costs, I paid well over $520K for it, exactly three years ago. Wasn't it crazy of me to buy the house at that time? Yes, it was. I have my excuses. Oh, it was the wife who wanted a bigger house, just because she had to be living in a house bigger and better than her friends did. But, after all, I take full responsibility for the decision.
After that it has been a continuous struggle to reduce my debt-to-income ratio. Trying to make a few more dollars every month, and trying to reduce the bills by a few dollars every month.
In 2006, with a 100% loan, my mortgage payment was 4,000 dollars a month. And I was only bringing home 3,200 over 2 pay periods (4 weeks) after deductions of taxes, 401k, insurance payments etc. So, my mortgage was 125% of my income. Today 3 years later, with some increase in my salary (now I make a little more than 90K a year - bringing home 4,500 per 4 weeks), and a couple of mortgage refinances (now I pay 3500 for mortgage), the ratio is 78%. Good progress, I would say -- but nowhere near an ideal value. My target is to make this ratio below 50% over the next year or so. How am I going to do it? At this time, I have some ideas, but not a lot. This blog is going to track my journey towards my goal. I am going to share how I am shaving off dollars from my expenses, and adding a few to my income. If you are reading this, I would welcome any suggestions, comments, etc.
Do come back. I shall be posting all details here. Exact numbers. How much I make, how I make it. If some of you guys out there are on your own similar journeys, do share your experiences.
