AboutGina Boykin Expertise Financial planning, debt management & credit cards, and money-saving tips for adults and teens. Saving vehicles such as CDs, treasuries, bonds, and money-market funds. I provide honest, objective and relevant information to help you made the best decision for your money.
Experience Over 10 years of combined experience in accounting, audit, investing, entrepreneurship, real estate.
I am the CEO of Atlanta Y.E.S., a nonprofit organization dedicated to financial literacy for youth.
Education/Credentials B.S. Accounting, 10 years of experience in accounting, audit, and investing
Question Hi, so I'm not quite sure where to post this, but i will start here. i just recently bought a townhouse with my brother (we live in Canada, we were approved for close to $400,000, but ended up getting a $300,000 place. We live in Vancouver where prices are extreme) anyway, we were able to put $20,000 for a down payment, and my brother was able to include his $20,000 debt into the mortgage so he can pay that off. i am 21, and have absolutely no debt. my question is, is it ok, or would it be a bad idea to include another $20,000 for myself into the mortgage? this way, i am able to furnish the place no problem on my side, and still have some money to play around with, which would most likely go into investments. Also, this makes it a lot easier on payments, as we can both still pay the mortgage 50/50. So is this a good idea? a bad idea? setting myself up for something not good? thanks for any advice. Mark.
Answer In general, it's not a great idea to take out secured debt (mortgage debt# so that you can purchase other things. If you do any other form of borrowing #loan or credit cards# for your furniture and are unable to pay the bill due to a change in circumstances, you have more options #moving the money to a lower rate credit card, and even negotiating with the credit card company or bank#. However, if your mortgage is unable to be paid in full, you will lose your house. Also, do you really want to finance furniture for 30 years #assuming you're doing a 30-yr mortgage)?
A better option would be to pay as you go. There really is no need to have the entire home furnished as soon as you move in. Put aside money from every paycheck into savings and as you have enough to do an item or a room, buy it at that point. You should have money to set aside since you were going to have a higher mortgage payment by adding to the loan anyway. You can also take advantage of those store credit card offers where you have no payments or no interest for 6 or 12 months...however, I caution you to be disciplined and set aside the money every month so that you can pay in full before that time period ends. The majority of people do not, and end up paying a lot in fees and built up interest.
I would also ask that you talk to your brother about the movement of his debt to the mortgage. People have a tendency to run up debt again once they move it to a mortgage because it feels like they paid it off, when in reality it was just moved. If he has not already developed good financial habits, he may need to cut up his cards for a while until he does.
As a last note, make sure that you have an emergency fund in place. Homes can very easily have unexpected expenses, and you should have money set aside when these things happen, so that you don't have to resort to adding debt.
