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Personal Budget vs. the Economy

September 29th, 2008 at 06:24 pm

I was talking to a friend today and I asked if they were still thinking of selling their home and buying another (upgrading) in light of what's going on in the economy since the "experts" are saying we could see a "deep recession". They are a young couple with two small children and in a 4 bedroom home, just not the best of the best schools and the first will start school in about 1.5 years. Anyway, they said that they were still considering it since their decision "has to do with [their] personal budget, not the economy..."

This doesn't make sense to me. I think the economy, especially of late, has a lot of effect over my personal budget, just look at gas and food prices. We've had to adjust these in the last year to keep up with the prices. It seems like the economy, especially with what's going on right now, would have a lot to say about selling/buying a home right now.

Am I way off or did that comment not make the most sense?

5 Responses to “Personal Budget vs. the Economy”

  1. whitestripe Says:

    i agree, it does not make sense - the only way it would make sense is if their incomes where 100% guarunteed, and if they knew also that their income would increase with the cost of living. and i guess, another factor is how much it will cost them to 'upgrade' and move - do they already have this money, or are they taking out a loan? so basically, if they have more money than they know what to do with, then maybe it might make sense.

  2. Personal Finance Student Says:

    I don't know how much they have as a down payment or how much "help" they'll get from their parents, but I know they'll need a loan of some sort and that they couldn't hope to do much more than break even on their current home. They bought in 2005 and I just don't see them having much equity yet from previous conversations we've had.

  3. monkeymama Says:

    I understand their side. I don't live my life by the economy. I live a financial life I can feel I Can handle through thick and thin. Thus, upgrading during bad times would be the same decision I would make during good times (& I can see taking advantage while prices are low and everyone panics). So I understand their side.

    Now, if they just haven't thought it through, well that is possible to.

  4. Broken Arrow Says:

    I guess I can see both sides here. In the end, they will sell if they can get a price they are satisfied with. Otherwise, they will have no choice but to hang on. Life will work itself out on this one I think....

  5. Personal Finance Student Says:

    I can see your point monkeymama; I guess what I'm worried about is that they haven't thought it all through since they talk about money worries at times when we talk. Of course, that doesn't mean they don't have enough to make something work I guess.

    Broken Arrow - I guess that's what it comes down to, seeing what they can get and if it'd be enough for them to move. I just hope they don't stretch too far to get into a new home and have it put them in a sticky situation.

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