Buying a house is one of the largest financial decisions that most of us will ever make. I have bought two houses in my life. The first, I made many, many mistakes that I’ll share here for your amusement and general edification. The second, after having more experience in adulting and all things personal finance, I did in a much more planful and intentional way.
 
Through these two very different experiences, here are my top three tips for buying a:

• Assess your housing wants and needs
• Work with a buyer’s realtor
• Learn about the financial implications

​Here is my disclaimer regarding the content in this article. (We all know there has to be one of these just to set the record straight.) The ideas included are for educational purposes only, and should not be construed as financial advice. Concepts covered here are overly simplified examples of basic finance related information. Please consult a qualified financial professional to learn additional details about each financial concept and to help you figure out what is right for you.

The first time I bought a house, I did things in a way that hurts my current, better financially educated self. At the time, my then husband and I, were recently married and realized that more adultier adults bought houses. Here are the highlights of the poor decisions we made during this process:

​Years later, after having worked in the financial services industry for a bit, my soon-to-be fancy new husband and I decided to consider buying a place together. This time around, being 10 years older and a ton smarter, we had a more methodical process.

​We talked about how we wanted to live our lives and bought a house that would support those wants and needs. We also worked with a realtor, who helped us through the details of being a smart homebuyer. Finally, we had a greater understanding of the financial aspects and what we were getting ourselves into.

Before looking at houses, we talked about what we each wanted, and what was important to us collectively. We took our lifestyle into consideration and turned those abstractions into our list of must haves and nice to haves. Our list of requirements included the following:

• 2 bathrooms
• Gas heat
• A basement
• Grocery store nearby
• A two-car garage
• Ceiling fans

​Once we assessed our needs, we knew what we were looking for. We could also then assess if we were in a financial position to purchase a house that met our needs, or if we needed to wait longer. 

When buying a house, there is no earthly good reason not to work with a realtor. Realtors get paid a percentage of the cost of the house being bought, which is paid by the seller. In short, it costs you no more money to work with a realtor than to work by yourself.

Realtors will also help you save time, money and frustration because this is what they do for a living. They will help you find possible houses that meet your needs. They arrange house showings so you can privately view a given house. They may also know about houses that are going on the market before they are listed to give you a head start on other potential buyers. They also typically have relationships with people who do financing and home repairs, so they can help with recommendations throughout the whole process. They can walk you through the paperwork from start to finish.

Typical realtors represent people who are buying and selling houses. We worked with one who only helps people buy houses—a buyer’s realtor. Part of the reason why we chose a buyer’s realtor is that their only job was to help us buy a house, not to also sell other people’s houses. This means that they do not have a possible conflict of interest (unlike realtors who both buy and sell houses) since there would be no temptation to try to sell us a house that they had listed. 

Some people, mostly homeowners, tout the financial benefits of owning a home—and believe me, there are many. However, buying a home is also a multi-pronged financial commitment that goes beyond the desire to stop "throwing money away" on rent. Here are a few financial factors to consider when considering buying a house.

There are several calculators available online to help you figure out how much house you might be able to afford. If you look at guidelines for how much of your income should be spend on any given thing, typically they recommend spending 25-35% of your income on housing.

Personally, I think a lot of calculators suggest an amount that is higher than it makes sense to spend. (A calculator I ran recently suggested that I could afford to spend more than twice what I currently spend on my house—which is not something I would ever do on purpose). One more conservative recommendation is that you plan to spend 25% of your net income. (As a reminder, your gross income is the amount that your employer says they pay you, and your net income is the amount of money that actually shows up in your paycheck on payday). In the end, you need to figure out what makes sense for you.  

Financing Your Home Purchase

It’s not just the purchase price of your house, but how that translates into monthly payments for you. Most people  obtain a loan to buy a home, which is called a mortgage. The amount you pay on a monthly basis depends on the interest rate, the term (how long you plan to pay it back) and the amount that you borrow.

There are several loan options, but here are two common ones:

• Fixed Rate Mortgages: This is probably the best option for most people. A fixed rate mortgage has a specified rate of interest that is effective for the length of the loan. 30 year and 15 year loans are the most common terms. The shorter the term, the less you’ll end up paying in interest, and therefore overall for your house. With a fixed rate mortgage, your monthly mortgage payment will stay consistent for the term of your loan. 
• Variable Rate Mortgage: Variable rate mortgages may also have the same 15 or 30 year term, but the rate of interest is subject to change. The loan may have a set amount by which it can vary (like 1%) and a frequency for how often the rate can change (like once per year, or once per month). This means that the amount of your mortgage can change significantly (going up or down) over the term of your mortgage.
  
  I have had friends who have lost their houses because they borrowed more money than they probably should have AND they got a variable rate mortgage. When the rate went up, they were unable to make their payments and they ended up going into foreclosure. 

 
House Buying Expenses

• Down Payment: This is the money that you need to have in addition to the amount that you’ll pay for using a loan. Depending on the loan program, the amount you’ll need for a down payment can range from 3% to 20% of the cost of your home. Some programs, like FHA loans, expect at least a 3% down payment. To put this into numerical terms, if you’re purchasing a house that costs $100,000, you may be expected to have anywhere from $3,000 to as much as $20,000 to pay for your house up front. There may also be programs where there are different down payment related rules.
• Closing Costs: When buying a house, there are a multitude of additional expenses accrued that may total 2%-5% of the cost of the house. Items included might be home appraisals, assessments, pulling credit reports, home inspections, title insurance and fees. In some cases, closing costs can be rolled into the final amount being borrowed. 

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Ongoing Housing Costs

• Escrow: In many cases, lenders also set up an escrow account along with a mortgage. This is an additional amount of money you pay to your lender that the lender then sets aside to pay annual expenses. Typically, things like real estate taxes and home insurance policies are payed from escrow accounts. The amount your lender asks you to put in escrow may change from year to year depending on the change in tax and insurance costs. 
• Association Dues: Above and beyond what you pay back to your lender for your mortgage, you may also pay things like association dues or condo fees (if you live in an association that collects fees for common expenses). This is a monthly fee that continues as long as you live in the condo regardless of whether or not you still have a mortgage.
• ​Maintenance: Furthermore, it’ll be easier if you plan ahead for things like house repairs, replacing appliances, home improvements or paying deductibles for claims (like a fire or damages from a storm). In short, remember that you are now your own landlord. Instead of having someone to call when your heat is out at 2 am, you now get to either fix it yourself or figure out who to call and pay them to come fix it. 

​After you have a big long cry after realizing there is more to this than you thought there might be, realize that looking at houses is a part of adulting. Get thee a good buyers realtor, who has been through this a bunch of times, and then can help talk you through what you need to do. The more you know about the processes, the better off you’ll be. 

​What advice do you have for people considering buying a home? What missteps did you make that you’d like to help others avoid?

​Many people think of retirement as the magical day when they no longer have to work. The reality is that retirement is not just a one-time event. Instead, retirement is a phase of your life that could last decades. Part of the challenge of planning is making sure that you have enough saved in your retirement account so you can enjoy yourself without outliving your money.  

​In a previous life, I worked as a corporate trainer supporting a group of Financial Coaches in one organization’s Retirement Planning Group. The goal of this team was to help people prepare to retire. This included financial coaching conversations about topics including saving, investment options, health care, and the million factors to be considered when figuring out the logistics of retiring. In addition, we also focused on helping people envision the lives they want to lead, and figuring out what financial resources would be necessary to make those retirement dreams a reality.  

​Here is my disclaimer regarding the content in this article. (We all know there has to be one of these just to set the record straight.) The ideas included are for educational purposes only, and should not be construed as financial advice. Concepts covered here are overly simplified examples of basic retirement related information. Please consult a qualified financial professional to learn additional details about each financial concept and to help you figure out what is right for you.

​Now, let’s get back to an often asked question about retirement planning. Many time, when having initial conversations about retirement, people just wanted us to tell them what they perceived to be a very simple question: How much money do I need to save for retirement?

• The short answer is—a lot.
• The longer answer is—it depends. 

Sometimes, articles on retirement planning suggest a simple answer that even includes an actual dollar amount: $1,000,000.

That’s right. ONE MILLION DOLLARS!
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Doesn’t that sound like a CRAZY amount of money? Certainly, if I had a million dollars, I’d be rich—and for sure able to do whatever I wanted in retirement.

​The trick with retirement is that it may last a really long time—think 30, 35 or even 40 years. When we’re working, we get more money every couple of weeks as long as we stay employed. In retirement, though, we start with a big pile of money and our goal is to figure out how to not run out of money while we’re still alive. So how do we do that?

One common strategy for attempting to not outlive your retirement money is the 4% rule.

In super-oversimplified terms, the thought is that if you withdraw 4% of your total account value annually, there’s a pretty good chance that you’ll have enough money to last you for 30 years. (Notice that the word “guarantee” is nowhere in this statement. There are no guarantees. There is only planning as best we can and adjusting our plan as we deal with the challenges life throws at us.)
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Basically, if you start with $1,000,000 in retirement savings, and use the 4% rule as a guide, in your first year of retirement, you would withdraw $40,000 worth of income. If you’re for real using the 4% rule, you’d adjust what you take out each year based on inflation—meaning that you’ll typically end up taking out a little more each year. 

Translating $1,000,000 into about $40,000 a year puts that amount in perspective. Depending on your lifestyle, you may need to save more, or less, money for retirement. One commonly recommendation for figuring out much income you need is to anticipate that you’ll need to replace approximately 85% of your pre-retirement income. If for example, your pre-retirement income is $50,000 per year, 85% of that would be $42,500. (Again, in this super-simplified version doesn’t consider other sources of retirement income, like Social Security, or inflation.)
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One way to estimate the amount you may need to save is to take what you anticipate to be the annual income you want, multiply that number by 25, and use that as your overall savings goal. If, for example, you decide your annual desired income from your retirement account is $75,000 per year, $1,875,000 could be your desired retirement savings goal. (Again, in this super-simplified version doesn’t consider other sources of retirement income, like Social Security, or inflation.)

Check out these resources to give you another take on these topics. Don’t take my word for it—keep learning more so you can make the best decision for you.

• 3 Serious Problems with the 4% Retirement Rule
• NerdWallet’s Retirement Calculator
• Information from the IRS about Retirement Plan Contribution Limits
• "If I Had a Million Dollars" performed live by the Bare Naked Ladies

When it comes to basic financial advice, we all know what we're supposed to do. Spend less than you earn. Save for retirement. Pay down your debts.  This covers the what, and a little bit of the how, but skips the most important part: the why.

 When figuring out how to budget your money, you need to know what you care about and how that influences what you spend your money on. Without thinking thorough the why, you may catch yourself spending money on things you don't really value just to keep up appearances--or because you think you should spend on those things. 

Most of us inherently know what we care about, but we have a hard time putting it into words. Fortunately, Think 2 Perform offers a free, online tool that can help you name and prioritize your values. For me, this tool helped me translate my ambiguous thoughts about what matters to me into a few helpful terms. 

Here are my top 5 identified values:

• Happiness
• Health
• Autonomy
• Relationships
• Education

Here's what each value tangibly means to me: 

• Happiness: For me, happiness means low stress, low hassle and low drama. It includes quiet time for me to recharge, and the time and money to do things that I want to do with people I  enjoy. It also means I have choices and options and I can decide what I want to do and when I want to do it. 
• Health: After seeing friends and family members struggle with health issues that limited their mobility and quality of life, being healthy is a priority. Health means getting enough sleep, eating well, staying active, being functionally fit, having energy, not being in pain and making time for my mind and body to rest. It's important to me that I am able to take care of myself and my family and set a good example for my daughter so she doesn't have to struggle with some of these same issues.
• Autonomy: I like to have options. I like having control over my schedule and being able to decide what to do on a given day. I like to be able to work from home and work shorter hours on some days and longer hours on others depending on work demands.  I like living in an area that has so much to offer and being able to have multiple possibilities for what to do in a given day.
• Relationships: I work to maintain the strong relationships I have with my husband, my daughter, work colleagues, and friends I've made during different part of my life. My best friend and I get together weekly--even if it's just to run errands together or take a walk. My daughter and I have game night and go roller skating together. I make the time to participate in communities related to my current job, my profession, my daughter and my neighborhood. 
• Education: In day to day life, I look at each interaction as an opportunity to pick up information--whether it's a new meditation app, a great place to buy a Vera Bradley purse or characteristics of the best roller derby wrist guards. I also do the standard things like take classes, attend webinars and re ad daily.  At my professional job, I create experiences to help individuals continue grow their knowledge after initial training has been completed. Overall, education is a big part of who I am.

So how do those values translate to how I choose to spend my money? Here are a few examples on how this manifests itself :

• Happiness: I budget for a monthly light rail train pass. Since driving in traffic stresses me out, I commute to work via train.
• Health: I budget for monthly massages for myself. It  helps me make time for self-care and promotes my overall physical and mental health. 
• Autonomy:  I budget for 2 vehicles.  In addition to my train pass, my family owns a car and a truck. We have a car because it's more comfortable for road trips and a truck so we can haul things. There is also less coordination of plans, and we have a backup vehicle if one needs repairs. 
• Relationships:  I budget for roller skating. Since my daughter and I both started doing roller derby earlier this year, one of our mother/daughter activities is roller skating. We usually go once a week together, and sometimes she brings a friend or we skate with other people we know. 
• Education: I budget for exercise classes. Recently, my best friend and I went to an all day yoga festival where we got to try out multiple yoga styles.