Hoang’s Vietnamese mother wants her to buy a house, but she’s unsure if that makes sense for her and her family at the moment. And financial planner Thao Truong speaks with Juleyka about this often symbolic purchase among immigrant families, and offers practical advice for discussing the decision with our loved ones.
Featured Expert:
Thao Truong joined Morton Wealth in December 2020. She has 10 years of experience in the wealth management business. Prior to joining Morton Wealth, she held various roles in financial planning, private investments, portfolio design, and advisory services at other independent advisory firms based in San Francisco and San Diego. Additionally, Thao is a CERTIFIED FINANCIAL PLANNER™️ professional. She graduated magna cum laude with a B.S. in finance and economics from the University of New Hampshire. Born and raised in Saigon, Vietnam, she moved to the United States by herself and became financially independent at age 16. Thao is dedicated to supporting youth and women through life transitions and closing the financial literacy gap. Recently, she helped launch “Herself by Morton,” an initiative that provides free networking opportunities and financial education resources for women. Thao is a member of the National Association for Divorce Professionals and is training to become a Certified Divorce Financial Analyst®️ (CDFA®️). She is one of the honorees of the 2022 class of40 Under 40 by InvestmentNews. Outside of work, she enjoys reading, crafting, and maintaining an active lifestyle: running, cycling, hiking, tennis, and yoga. She is fluent in Vietnamese, and also knows some French because of her Vietnamese heritage. Learn more about Thao's work here.
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Juleyka Lantigua:
Hi everybody. Today we welcome Hoang to the show. When Hoang and her husband started a family Hoang's Vietnamese mother began insisting they buy a house. For Hoang the decision felt daunting and she wasn't sure it was the right time, but her mother kept bringing it up, which of course created tension between them. Let's get into it.
Hoang: My name is Hoang Samuelson. I am a writer from Portland, Oregon. When I was growing up I would call my parents, Ma, that's my mom, and Ba, my dad. I'm the youngest of three. My second brother, me and my parents came to Portland in 1995. I was 10 at the time. I Vietnam I grew up in the same house and this is the house that my parents bought the land and built on, but over here they didn't own a house. My dad passed away when I was 18. They never got the chance to buy a house or anything like that. My mom has lived in apartments for years and she still does.
The dream of home ownership, she wanted it for me, the whole family and partner and kids, so she's very much on stability. For a long time she was pushing me to buy a house. It was irritating I have to admit. It was her saying, "Now you have children, wouldn't it better to have a home for them," which I agree. It's good to have a roof over your head, but the way she was going about it was more like you need to buy a house or else kind of conversation, and I was like, "I'll buy a house." I want to buy a house, but I don't think she realizes how hard it is to buy a house.
So my mom, she lived with me for a while after my daughter was born, and at the time we lived in this very tiny apartment, like three adults and one child in there, and we all were sharing one big bedroom. We would rearrange certain furniture around to make things appear larger than it actually is, and from that experience she just started dropping words here and there, hints and things like, "Don't you think it's better to have a house? Apartments are stupid. Apartments are not for families."
I sort of brushed it off. I think I was more dismissive because I just didn't want to hear that. I'm not making enough money right now, so it'll happen, sure, just not right now. That would be the end of the conversation.
I think it's frustrating to me, because it makes the presumption that everyone should buy a house if they have a family, and I don't think that's necessarily true. A house is a good investment. It's a way to build equity. It's a stable place, absolutely, but it is not for everyone. It's not something that we should assume that everyone should want. Not everyone wants to be a mom. Not everyone wants to go to college. Not everyone wants to do XYZ.
Hoang: Especially being a daughter and the youngest, there are soon expectations that we have to contend with, especially in Vietnamese culture. Oldest children, youngest children are sometimes relegated as the supposedly responsible... Like you're supposed to be taking care of your parents when they're old and frail and they're sick.
She knew that my brothers, they were just doing their own thing and they probably were not going to do what she wanted, so I sort of had this unspoken expectation that there are certain things that I'm supposed to do as the daughter.
So I bought a house a few years ago, so I did that. I had to work towards that. We talked about the numbers a lot, my husband and I, like what is the minium that we need in order to qualify? We weren't making enough to really get approved for a loan, but at a certain point when I started making more money and my husband started making a little more we got to the point where we did, and so we talked about it a lot. Luckily my mom also helped out with some of the down payment costs as well.
I don't regret it. I think it was a good decision, but we were afraid to jump ship because buying a house is no joke. It's a long process, and it's expensive, and it takes a lot out of you.
Lantigua: Whew. Buying a home is a huge decision with long, long lasting implications, and it's definitely not something to take lightly or to do under pressure. Hoang's story reminded me that home ownership is such a huge part of the, quote-unquote, American dream that our parents have for themselves and for us.
All of this of course made me wonder how should we, especially in today's economy, talk about home ownership and make the best decisions for our family, while educating our parents about how much things have changed and how much more difficult it is to obtain that piece of the American dream. Of course to help us figure it out I called in an expert.
Thao Truong: My name is Thao and I am a financial planner. I've been in the industry for a little over than 10 years. I work for a firm called Morton Wealth based in Los Angeles, California. I originally from Vietnam. I immigrated here when I was 16 and been financially independent since then. Yeah, and also supporting my parents, so I guess this is great for me to be here.
Lantigua: That's amazing. So, Thao, let's start at the beginning with the same question I always ask. As you listened what stood out in Hoang's story for you?
Truong: I think it's very relatable to my personal story. It is very typical for an immigrant parent wanting you to buy a house, and honestly speaking even with my current clients who are fourth generation American it is very common, but to me what stood out is the underlying question of not about the how you're going to buy it, but the why they want you to buy, so something that you may have to peel out and get an understanding the why, right?
Because so many immigrants, they subscribe to the American dream. They want to pursue a better life not just for themselves but for the next generation coming here expecting something better, because they already sacrificed their life for you, right? So they hope that eventually with you being here you will have the exposure to a better life, a better future. So the American dream, having a job, getting married, having kids, having a house and having a car, that is their definition of success.
Lantigua: So how do you begin the conversation with your clients about deciding whether they can, deciding whether it's the right time, deciding whether they're doing it for the right reasons, right?
Truong: Yeah. I think that is a very, very tough conversation, and of course it's never easy. Even with the clients whose parents are very wealthy, a lot of time when parents want it they don't think about affordability of their kids. They just look at this is the house and if you aren't really well in life this is what you should do.
To me it is an opportunity of conversation and getting and understanding between the two generation. Especially in this case, Hoang like maybe talk to her mom, like, "Hey mom, I hear you. I understand you. I understand that you care for me and you want me to success, but having a house may not be the right thing for me and here's the reason, XYZ." If she avoiding that conversation or just buy it herself, she will be the one that have to live with it later on, not her mom.
Lantigua: How do you help your clients who might be second or third generation have the information they need? What are the sort of like logical ways that we can have this conversation with our parents, because this conversation is essentially conversation about the symbolic access to success, right, and for them it's very much embodied in the house, but the reality might not be able to get you to the symbol, in Hoang's case, young couple with young children, lots of other things to consider, including their actual income?
So what are some of the real life facts that we can bring to bear to a conversation with our parents even if our parents are like, "We'll help you"?
Truong: Yeah. A lot of times people don't understand the true cost of a house ownership. It's not just the house price. They forgot to also consider the closing costs, the down payment, even if the parents help, and then today during the current interest environment I would highly recommend to my clients to put down at least 20% of the house value. Median home price in Portland, Oregon, I think it's like 522 right now, but let's just say 500. So 20% of that would be 100,000.
Lantigua: Most Americans, they don't have the ability to come up with 100,000. Most Americans don't have $400 in savings-
Truong: Exactly. Exactly.
Lantigua: ... like today.
Truong: There's a lot of loan programs out there that encourage the first time home buyer, but there's a cost to that. You will have to pay higher interest. Nothing will come for free.
People forget about that. They forget about home maintenance. They forget about property tax. That would be something that you may want to sit your parents down and maybe just pretend like here I'm going to buy a house, but this is the cost I will have to take on.
One more thing that I want to point out as well is in Vietnam there is no such thing as credit score. It's very common that people buy a house, miss a payment, and they are still okay, or lending money to friends and family and not paying back and for them to be okay. That's not the thing here, right? You will be in deep trouble if you don't pay your loans and you may have to foreclose your house here.
Those are the risks that Hoang will be facing if she buy a house that she cannot afford, and maybe her parents don't know that, and they need to understand that.
Lantigua: All right. So let's talk about some of the realities that Gen Zs are facing, which is that they have the most student loans of any generation, which is that they're coming into an economy that's probably headed to another recession so there aren't as many well paying jobs. They are also coming into an economy that is not really prioritizing home ownership as much because it's just not part of the lifestyle for that generation.
So how do you help the Gen Zs, the newest generation that's joining the labor force, in getting financially ready for these potential big purchases down the line?
Truong: One quick way for me to assess affordability also is to look at their monthly payment that you have to pay for your home loan. Let's say that you make 100,000 a year. It depends on where you live, sometimes you have to pay state tax as well, but just consider the tax. You have to pay some 20% to 30% from your pay pre-tax, right? So then you only have 70 to 80% left to spend.
Ideally you want to save for your future, especially in this case Hoang also have a kid, so... Well, she also have her parents, so she probably will support her parents a little bit too, so you have to count that in as her fixed costs. So spending for her living and student loans should be half of her left over bucket, which is let's say 40%, so 100 minus 20 is 80. Then we take off another half, is 40, so the maximum that she should be spending for a home loan would be 40% of her pre-tax paycheck. That will be a very quick and easy assessment of whether she can afford it.
Lantigua: That is really, really helpful. Thank you for that.
Truong: And let's just be clear that $100,000 is not anywhere close to the average household income in the United States and it's certainly not the average household income for Gen Zs, so in most instances people are living and do well on $50,000 or $60,000 a year. It really all depends on where you live.
So make sure that you're looking at cost of living where you are, make sure that you are looking at interest rates where you are, and make sure that you have a sense of how much stability you're going to have in your job over the next two to three years.
Owning a house is no longer the definition of success, especially for our generation. Having a happy family with kind kids, that to me is a huge success already.
Lantigua: Actually I love what you just said. Let's talk about how you help your clients redefine financial success for themselves.
Truong: Yeah. That is a behavioral finance kind of question that I really love to go through with all of my clients. I love to sit the client down and ask them the question, "Hey, what is it that will make you feel that your life is worth living? What do you truly value in your life, whether it is travel, whether it is time, quality time spent with your kids?" It is a simple question, but it's not an easy answer for a lot of people.
So I highly recommend Hoang to have that question for herself and with her partner also. Just sit down and really ask her what really brings life out of her, what really motivates her to wake up and get out of bed every day, or what is it that keeps her stay up at night. Have that conversation with each other and fight it out with yourself, because also a lot of times your first memory of money also makes a huge impact on how you view money later on as well.
Lantigua: Okay. I really want you to say a lot more about that.
Truong: For me, I grew up like money wasn't easy access thing for me, so for me for a period of time it feel like an empowerment. I know that money can buy me things. But as I go through life my family go through bankruptcy and I have to become financially independent, so for a moment to me money means fear.
So when I grow up it changed my behavior of spending and saving. I still have that fear that I'm still working on, like not spending enough on my life and not allowing me to enjoy the value that it can bring to me. You need to balance that, getting an understanding of what triggers you, like why do you look at it this way?
Lantigua: All right. My next question has to do very simply with how much should we tell our parents about our money and our finances?
Truong: In Vietnamese there is an expectation that if you are doing well you should be taking care of them as well. In Vietnamese they call it hiếu, which means taking care of your parents, loving them. But we have to understand that if you don't do certain things for them, like buying a house, that doesn't mean you're dishonoring them. It doesn't mean that you disrespect them. You are taking care of them in a long way, which is not putting them into a financial hardship because you're doing something just to make them happy, and not being honest with yourself in your ability to pay.
Lantigua: Right. Right. All right, my last question is are there any absolute do not do this under any circumstances that you would caution us as we have these sensitive conversations around money with our family?
Truong: Don't shut down. If you shut down it will further the resentment and the misunderstandings between the two generations. You have to be patient and take your time and explain to them. This is like an opportunity to bridge the gap between the two of you.
Lantigua: Thank you so much for all this wisdom and for the practical advice. Please, please come back.
Truong: Thank you. Thank you so much for having me.
Lantigua: All right, here's what we learned from Thao. Discuss the fine print. When speaking with parents about the possibility of buy a house address things like closing costs, property taxes, maintenance fees and credit scores. This will help them have a more accurate idea of the long term commitment implied by home ownership.
Do the math. Take a clear-eyed view of your income, taxes and fixed living expense to help you and your loved ones really evaluate what you can actually afford. And remember, redefine financial success. Think about what you value, what makes you feel alive, and what makes your life worth living. Use this clarity to make your financial plans and to guide your spending and investing decisions.
Thank you for listening and for sharing with us. How to Talk to Mami and Papi About Anything is an original production of LWC Studios. [inaudible 00:19:21] is the show's producer. Trent Lightburn mixed this episode. I'm the creator and host, Juleyka Lantigua, on Twitter and Instagram with Talk to Mami and Papi. By everybody. Same place next week.
CITATION:
Lantigua, Juleyka, host. “Mom Is Pressuring Her to Buy a House”
How to Talk to [Mamí & Papí] about Anything,
LWC Studios., January 30, 2023. TalkToMamiPapi.com.