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Stretching a dollar
Sunday, April 8, 2012
By HOLLY KOZELSKY - Bulletin Accent Editor
I cannot tell you how many times, when I was a real estate agent, I answered the same ridiculous question over and over again.
“Yes, I see the price advertised on the paper,” the buyer would tell me, then ask, trying to get past my ignorance, “but how much does it go up with interest?”
The answer always would be that the price of the house does not go up with interest; interest is a separate charge you pay by being able to use someone else’s money to buy the house — in this case, the lender.
Only recent immigrants to our town from other countries would ask that questions. American buyers never asked it. The American buyers I had only looked for the lowest possible payment without regard to how many years those payments stretched on.
It took me a few years, but that foreign way of looking at money began sinking in.
As a real estate agent who helped people with the intense loan process, I was privy to their most personal financial details. If anything will teach you about money, that will.
The people who appeared to be the most modest often were, in fact, those with the greatest buying power. You might look at a family in an old car or small home and think they don’t have much; I’ve probably seen their bank statements and credit reports and known that they aren’t in debt to credit cards or charge accounts and have big balances in their savings accounts. They aren’t slaves to the weekly paycheck.
One shy, quiet couple from Guatemala drove the same blue mini-van for as long as I’d known them. They both made $7.60 at the chicken plant. With the $6,000 they had saved carefully for years, they bought an $80,000 house in the country.
I ran into them recently. They were happy to tell me that they paid the house off last year. They looked at the interest charts and figured out how much to pay extra on their loan payment to pay the house off much faster, saving tens upon tens of thousands of dollars in interest.
They owned their house debt-free before they were out of their 30s.
In these tough economic times, that’s one family who can take it a bit easier now financially.
Their story is not unique. Thanks to the fresh perspective of people who did not grow up in the American “I-want-it-now” economy, I’ve seen many cases of people with low incomes who made solid financial decisions and lived well. The point is to work things out for yourself, analyzing how you part with your money.
Anna Gehrken of Martinsville, who lived as frugally as possible during a three-month span, discovered just how far the dollar can stretch. She said she wanted to see just how well someone could live on a tight budget, and to be a good example for her children and others.
In today’s feature article, she shares her results, giving instructions how to achieve the same yourself.
Her findings are just what I learned from many of my money-minded customers: By doing your homework, you can live much better on much less.