Home > Personal Finance > Home As a Forced Savings

The truth is out there: With many people who do not have much savings to speak off, should they be purchasing a home today?

In the past, my answer would be a strong NO. Today, my answer would be a MAYBE. Why the change of heart?

Just admit it, sometimes we are just going to buy "stuff". Whether it is a house, or a car, or clothes, or a jet ski. So, for some people, purchasing a home just becomes FORCED SAVINGS instead of spending the money on stuff that only sit on depreciation.

While serving as this realtor, I have many chances to become my client's trusted advisor in one of their biggest purchases ever. I do not take this task lightly and I am very careful in the houses I show them. We normally set up an initial consultation to evaluate their needs.

I serve a large pool of clients with different financial backgrounds. For those who cannot put down payments, I do evaluate their situations and where I am needed (when they ask for advice), I share with them my best home advice - where your home should be a blessing - not something you work hard to make payments for.

Thus, I advocate putting as much down as possible and if there are consumer debts, pay them off first. I truly believe in this philosophy because I feel that this is when you can make your home a blessing to you and your family.

However, I do have a small change of heart about totally paying off ALL the consumer debts. The truth is that people spend and people buy. Be it a jet-ski, vacation, or simply crap, people spend money. So, if they thought that renting is simply an act of throwing money away, then I would say that making that house payment in lieu of having any extra to spend on would be a good idea.
(Note: I still want to advocate that I think this is not the best idea in the world but I cannot or should not judge what people should do with their money.)

There is truly a fine line between saving enough for an emergency, saving enough for a down payment and then just going out to buy a home as a forced savings. Decide carefully.