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You make 40k per year or about 3.3k per month or about 2.8k after taxes....
You have 37k in debts at less than 5% interest... probably paying back at $250 per month or less...
Then you ONLY have 6k in savings (20% down... means you can afford a home valued at 30k).... I doubt homes are worth only 30k in your area... but then you could qualify for a FHA mortgage... and with that you can afford a home that is 170k home... but more than likely with all your debts you can only afford 130k-140k (don't forget property tax)... and I doubt those are the prices of homes in CA... even the national median home price isn't that low... don't fool yourself into thinking the "price is right" when its nowhere close....
As for retirement... do NOT sell... leave your accounts alone but do NOT contribute anymore... too many companies are going to go bankrupt this year and you will lose a lot if you just invest generally... put it into a CD or whatever savings account and leave it there... However if the CD rates/savings rates are lower than your interest rates on your debts than PAY YOUR DEBTS first... retirement will have to wait... until savings interest are higher than debt interest..
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Quote:
Originally Posted by sonarrat
Thanks for the perspective. One idea I have is to buy a duplex and rent half to my sister, who just had a baby.
I advise AGAINST involving family or friends in a business proposition that COULD place an undo burden on them, or yourself (If either run into financial trouble). Keep business business, and live under a bridge (rent out both sides of duplex)
Quote:
As for the debt, $17K is a car,
Ah-ha... I was wondering why $40k/yr = $2000 / yr into savings. I think we are on a different wave length... I always saved 50% of my income when single, even tho I was caring for a sick parent for 35 yrs. I just worked a few extra jobs per week.
I have used 5% card transfers, but not for personal depreciating assets. I only use them as a 'bridge loan' for tangible appreciating investments and would not consider them a 'longterm' option; they have stiff rules (Stuff happens... get sick, laid off, go to jail, must care for parents or sick child or support sister & child...)
I drive a $35.00 car that gets 50 mpg on free fryer grease (low insurance and little 'capital asset' extended) , tho I had a nice shiny 4x4 pickup when I was 18 (about a zillion yrs ago). I went back to driving my $65.00 1952 pickup I bought in HS after the 4x4 got stuck and I used the '52 to pull her free.
My econo cars are just fine, I would take them across the US if need arose (and sometimes it has). They have never left me stranded, never had to have them towed; More than I can say for my one (and only) 'New' vehicle.
My next car will likely be a grocery cart (after the economy digests the stimulus package).
.. leave your accounts alone but do NOT contribute anymore... too many companies are going to go bankrupt this year and you will lose a lot if you just invest generally...
Come on, dude, not contributing to one's retirement because of fear is recipe for failure. Have your new money go into a stable value fund if you are worried about a flame-out, but by all means, CONTRIBUTE!
You make 40k per year or about 3.3k per month or about 2.8k after taxes....
You have 37k in debts at less than 5% interest... probably paying back at $250 per month or less...
Then you ONLY have 6k in savings (20% down... means you can afford a home valued at 30k).... I doubt homes are worth only 30k in your area... but then you could qualify for a FHA mortgage... and with that you can afford a home that is 170k home... but more than likely with all your debts you can only afford 130k-140k (don't forget property tax)... and I doubt those are the prices of homes in CA... even the national median home price isn't that low... don't fool yourself into thinking the "price is right" when its nowhere close....
The city I live in has programs that can help me with a down payment, at least on owner occupied. If I want to buy a duplex then I'll have to get creative.
The city I live in has programs that can help me with a down payment, at least on owner occupied. If I want to buy a duplex then I'll have to get creative.
You are probably dealing with the same type of city program that we have. It is HUD-funded. Here it's a loan of 70% of the home's value at normal APR, and a loan of 30% of the home's value at 0% interest. If you sell, you retroactively owe accrued interest on that 30%.
You might want to check to see if that 8k is available w/ that program. I know that the existing $7500 program wouldn't allow any other type of federal funding - so it was either the 100% financing route, or a normal loan and the $7500k. Neither my real estate agent nor the city program director knew about this; they were giving me wrong info. Just a heads' up.
Typically the recommended purchase price of a car is 10%-30% of your salary. I don't support driving a POS $35 car like the above poster but you're spending a lot of money on your car.
When I graduated college at 22 these were my W2's:
$15k
$27k
$38k
I never made anywhere near as much as you. But by the time I was 25 I had around $20k in retirement. 2 years later at 27 I would've had $45k had the market not tanked, now it's only $38k. I did it by not buying things I didn't need like a new car. Personally, if you want to get ahead you're going to need to shed your debt ASAP, that means selling your car and buying another (used) for cash.
Put your cash in your Roth IRA, any contributions you put in can be taken out at any time (check with accountant obviously). Just buy into the money market, don't buy any funds right now, that way you don't lose money on $$ you might need. There is a limit of $5k now so I would put it in by April 15th and keep a small amount ($1k) as a backup in your checking. Use that as your savings account right now until you can max it out every year. Then put the rest in a money market account.
Buying a house now? With $40k in debt? You're nuts (IMO). Get the debt under control then buy a house. What happens if you lose your job and make half as much as you do now? What goes first? The house or the car? If you lose your car you lose the ability to get to a job in most cases. But if you lose your house your credit is wrecked.
You make 40k per year or about 3.3k per month or about 2.8k after taxes....
Man that's generous I lose about 30% off the top for taxes and deductions like insurance (not including 401k). I wish I only paid $500 in taxes/deductions!!! Unless he doesn't have insurance or anything else his take home is probably more like $2400 or so.
do the opposite of what those around you are doing. listen to dave ramsey like your life depended on it. become independent in your thinking and actions from your wife and kids.
At first I thought the debt you were refering to was student loan related. In which case the interest would have been deductable. And at that point I would have said that it was actually ok to just pay it down as you like. I wouldn't argue with the idea of paying it off but as long as the interest is tax deductable it's actually not the worst debt to have.
....but it's not student loan debt.
Even at 5% APR you are paying out $154/mo in interest to the bank/cc companies....or $1800/year. My question is...at this point is there anything you could invest in with the kind of money that you're planning to invest that would result in a growth that would exceed $1800/yr? If you are just starting out and are planning on sinking $400/mo into bonds and/or mutual funds I'm going to lean forward and go ahead and say 'no'. It's going to be a long time before you could gain $1800/yr on your investments....especially as bad as the market is right now. Don't get me wrong....buying now could be a good thing (and maybe not) because you could buy when the market is down (buy low, sell high). But anyone care to raise your hand and tell me when the market is going to stop it's decline and come back and how much over what length of time it's going to take to get where we were just a couple of years ago? It could be a while.
I agree with those who provided the advice to pay off the debt. There is nothing....I mean....NOTHING...like being free and clear of debt.
After you've paid it all off THEN come back and ask what to do with your money.
I want to say real estate is a good choice....but I'm as uncertain about real estate as I am the stock market.
I agree with those who provided the advice to pay off the debt. There is nothing....I mean....NOTHING...like being free and clear of debt.
After you've paid it all off THEN come back and ask what to do with your money.
I've been there, with no debt. Then I needed a piano for my business, then my $3500 car started costing me thousands of dollars at a time to keep it on the road. If I was paying 10%, 12% on the debt, it would be my first priority. At the interest rates I'm paying, I'm willing to let it ride and pay it off gradually over 4 years or so. There's not going to be much benefit to killing myself in order to pay it faster, I'll just get into a corner where I have to add to the debt I already have, which is bad news.
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Heard of 'stable value funds'???
