Quote:
Collins: All right. And finally, give up college room and board. You want the kids to live at home forever?
Yeager: This is a big one, you know? Back in my day, if you have a child in school, consider having them live at home while they go to school. It's been a huge generational shift.
Back in my days, lots of people, including myself, lived at home when we went to college. Therefore, we didn't take out any college student loans. Now, of course, most kids go away to school, take out student loans. When they graduate, what do they do? They move back home with mom and dad! Let's skip the money step!
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This interview section assumes that the family already lives in a college town, or that the student is attending a school that is nearby to the family home. Not everyone can live at home.. but everyone does have a choice about how they live at college. This article got me thinking about how I started out in college a few years ago. I'll be the first to admit that my solution may not work for everyone, but it certainly worked for me.
I bought my own house when I was 19 and in college. I knew that I was going to be there for a minimum of 3 years, maybe as much as 7 with professional school, so the timing was right to figure on an increase in property value. But even without that, I knew that I was looking at paying $250-$350 for a bedroom in a rental unit. I figured that if I could get a 3 bedroom or larger house with a mortgage under $1000, then I'd be in good shape renting the other bedrooms out to other students and paying the difference myself. Building equity, plus property value, even if I didn't have the place fully rented all the time.
I ended up buying a 4/2 1900 s.f. house 3 miles from campus in a residential/student neighborhood. I bought it at $67k. I did borrow $3700 from my mom for the closing costs, and my stepdad co-signed the loan for me since banks, even back then, didn't want to write a mortgage for an unemployed college student (Yes, I recognize that not everyone has this option). My monthly PITI was $700 or so. I immediately found 2 renters, a third followed after 4 months. For most of the time that I lived in that house, I had more money coming in each month from rent than was going out for the mortgage.
I did set aside money for home repairs. I learned a lot about how to do things for myself. Basic electric and plumbing to start, tile laying, landscape, minor remodeling by the time I was done. The time there was not without difficulties. I had to act as a live-in landlord to kids that were my own age. I even had to evict one of them (though thankfully not through legal channels).
I ended up staying in that house after I graduated with my B.S., through 3 years of work for the University, and another 4 years of graduate school as well. All told, I was there for 11 years, which was considerably longer than I thought that I would be. We ended up selling that house for $169k and walked away with over $100k in profit. My renters had helped me pay down my principal on the house to under $60k at that point.
Looking back, the decision to buy that house was one of the most significant financial and personal growth events that shaped my life as it is today. I advocate that any student who knows that they are going to be in a college town for at least a 4 year college stint at least consider the advantages of owning a house or townhome.