Saturday, May 16, 2009

Ch-ch-ch-changes

Things have been kind of crazy around here in the past couple of weeks. After a 7 month job search, DH was finally able to land a great new position. He loved his old one but his employer had gone through 7 rounds of layoffs with more rumored to be on the way. Not to mention that since the company had accepted TARP funds, they Are now bound by the Congressional rules limiting the size of his year-end bonus.

I understand anger over the AIG situation but what the average American doesn't understand is that in the financial industry, a bonus isn't really a "bonus" (i.e.. a one-time reward for unusually good performance that only a handful of folks at the company receive). It's actually more like a sales commission- an expected bit of deferred compensation to make up for the relatively low base salary. You hit or exceed your target numbers, you get your bonus. To put it into perspective, the base salary at DH's new job is more than twice what his current base is., though the total estimated comp is only somewhat more than his 2007 total comp. The only reason that Wall St. firms can get away with paying their employees a relatively low base salary is because of the bonuses. When Congress arbitrarily restricts bonuses to 1/3 of the base, anyone who can find another position is almost certainly going to leave. Those are typically the best performers, like my DH. He made his employer a ton of money last year and the first part of this one even with the bear market. He had absolutely *NOTHING* to do with the mortgage mess- why punish him for mistakes other people made?

Getting off my soapbox and back to my main point. Now that DH has accepted this new position, we've decided to take the plunge and buy our first home. It's kind of sad that it's taken us until the age of 33 (for DH) and 32 (for me) and over a decade of marriage to get to this point. My parents were only 27 and 23 & newlyweds when they bought their first place. Granted that was a teeny 2BR ~1000 sq ft starter home and we're looking at 4 to 5 BR homes that tend to be in the ~1800-2400 sq ft range. And the towns we're considering are nicer than Campbell, the suburb of San Jose where my parents first lived. But we're probably going to be spending triple or even quadruple the inflation-adjusted cost of my parents' first house. That's even with the recent declines in the housing market.

I'm finding the househunting process exciting but a bit overwhelming. Fortunately it's not the frenzy of a couple years ago. More properties seem to be coming on MLS than are going off and there are a LOT of reductions in the listing price.

2 comments:

Barbara Frank said...

Congratulations on your husband's new job, and good luck on your home search! It's good that you didn't buy a house when you were younger because look how much they've dropped in price since then.

We're in the opposite situation. We bought our first house at age 21 ($66,000 at 13 1/2 %!) In 2007, we sold our second house and have been renting ever since. The prices will have to come down a lot more before we take the plunge again :)

Catherine said...

Thanks for your comment. We have been married almost 6 years, we are 30 and 35 with two kids, and we also have not purchased our first home. I don't regret it now that our first chance to buy would have been 2007 and we'd already be upside down in Seattle. True that our first home will also be 4 to 5 bedrooms. It's hard to imagine we'll be moving any time soon, but we are also moving in that direction. I'll believe it when I see it.

Right now, I'm planning to be a home schooling, working, law school mom by 2010. I must be crazy!

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