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Hi there! I've posted before looking for student loan advice and you all really helped me out, so I'm back at it and looking for some advice. I've spent the weekend calculating my finances for you all in hopes you can help me or at least point me in the right direction. I think we've done a good job saving, but I'm really am unsure exactly how well we are doing, especially for some big next steps:
Need a 2nd car (new job so can no longer carpool)
Buy a house (need more room to start a family)
Questions
Overall: How well am I doing with savings/retirement(compared to others with similar income/situation)?
Car: I need to buy a 2nd car. I'm looking at something in the range of 18-27k. (need something reliable for 1hr each way in the snow, so looking at a pre-owned RAV4) Based on the details below, should I pay cash (knowing I'm going to buy a house [see below] - or finance for 1.9-2.7%? Can I even afford a second car in this price range?
House We are looking to buy a house. We are thinking we can afford around $300,000 with 20% $60k down, taken from our savings. $300k is on the low side in eastern Massachusetts, but I don't really want to spend more. What could we really afford, low and high end?
Savings? Car ($25k) + Down Payment (60k) + Closing/Moving/Furniture/Unexpected House Expenses (20k) Could nearly deplete our savings and I'm terrified by this.
Other: Any other advice?
Thanks so much in advance. Here's all the details:
Details
Married
Person 1: 31, Full-Time Employment, FICO: 810
Person 2: 31, Full-Time Employment, FICO, 801
Location: Massachusetts
No debt.
1 Car, Fully Paid
*Expenses*
Total Rent $14,100
Electric/Water/Sewer $2,374
Rent Insurance $123
Car Gas $948
Car Insurance $808
Car/Transit Expenses $716
Cable/Internet $1,650
Cell Phone $1,616
Grocery $6,576
Restaurants $1,68
Streaming Services $393
Medical $60.00
Clothing $1,079
Gifts $300.00
Misc/Home (Amazon/WalMart) $3,437
Memberships/Entertainment $1,096
Petty Cash (ATM) $1,200
Charity $300
Travel / Vacation $6,898
Gifts (Incoming) -$1,130
*Income 2015*
Person 1 Gross 40,343 (this is going up to 50,000 this year)
Person 1 Medical/Dental/Life 1,954
Person 1 403b Contribution 2,017
Person 1 403b Employer Cont. 4,437 (included for informational purposes, not included in totals)
Person 1 Net 27,328
Person 2 Gross 73,080
Person 2 Medical/Dental/Life 2,920
Person 2 403b Contribution 1,461
Person 2 403b Employer Cont. 7,308 (included for informational purposes, not included in totals)
Hi there! I've posted before looking for student loan advice and you all really helped me out, so I'm back at it and looking for some advice. I've spent the weekend calculating my finances for you all in hopes you can help me or at least point me in the right direction. I think we've done a good job saving, but I'm really am unsure exactly how well we are doing, especially for some big next steps:
Need a 2nd car (new job so can no longer carpool)
Buy a house (need more room to start a family)
Questions
Overall: How well am I doing with savings/retirement(compared to others with similar income/situation)?
Car: I need to buy a 2nd car. I'm looking at something in the range of 18-27k. (need something reliable for 1hr each way in the snow, so looking at a pre-owned RAV4) Based on the details below, should I pay cash (knowing I'm going to buy a house [see below] - or finance for 1.9-2.7%? Can I even afford a second car in this price range?
House We are looking to buy a house. We are thinking we can afford around $300,000 with 20% $60k down, taken from our savings. $300k is on the low side in eastern Massachusetts, but I don't really want to spend more. What could we really afford, low and high end?
Savings? Car ($25k) + Down Payment (60k) + Closing/Moving/Furniture/Unexpected House Expenses (20k) Could nearly deplete our savings and I'm terrified by this.
Other: Any other advice?
Thanks so much in advance. Here's all the details:
Details
Married
Person 1: 31, Full-Time Employment, FICO: 810
Person 2: 31, Full-Time Employment, FICO, 801
Location: Massachusetts
No debt.
1 Car, Fully Paid
*Expenses*
Total Rent $14,100
Electric/Water/Sewer $2,374
Rent Insurance $123
Car Gas $948
Car Insurance $808
Car/Transit Expenses $716
Cable/Internet $1,650
Cell Phone $1,616
Grocery $6,576
Restaurants $1,68
Streaming Services $393
Medical $60.00
Clothing $1,079
Gifts $300.00
Misc/Home (Amazon/WalMart) $3,437
Memberships/Entertainment $1,096
Petty Cash (ATM) $1,200
Charity $300
Travel / Vacation $6,898
Gifts (Incoming) -$1,130
*Income 2015*
Person 1 Gross 40,343 (this is going up to 50,000 this year)
Person 1 Medical/Dental/Life 1,954
Person 1 403b Contribution 2,017
Person 1 403b Employer Cont. 4,437 (included for informational purposes, not included in totals)
Person 1 Net 27,328
Person 2 Gross 73,080
Person 2 Medical/Dental/Life 2,920
Person 2 403b Contribution 1,461
Person 2 403b Employer Cont. 7,308 (included for informational purposes, not included in totals)
Person 2 Net 48,553 2015
Combined Taxes 28,189 2015
Combined Gross 113,423 2015
Combined Net 76,881
Totals
2015 Net. $76,881 2015
2015 After-Tax Expenses $44,230
2015 Savings (Net-Expenses) $32,650
Total Person 1 403b $40,000
Total Person 2 403b $88,000
Total Debt/Loans $0
Total Savings/Checking $140,000
Is this $32,650 savings all liquid, or a combo of liquid and 401k? If liquid, you can just wait 8 months to buy the house and that gives you a ~$22k emergency fund. You're doing great!
Is this $32,650 savings all liquid, or a combo of liquid and 401k? If liquid, you can just wait 8 months to buy the house and that gives you a ~$22k emergency fund. You're doing great!
Hi. Thanks!
The $140,000 is liquid. The $32k was just how much of my net in 2015 I put into liquid vs. spending on expenses.
What towns do the two of you work in? I'm wondering about the 1 hour each way automobile commute.
I think you're making a big mistake to think you need a used RAV-4 because you "commute to work" in Massachusetts. Any FWD car with best of breed snow tires will out-perform a RAV-4 with stock tires for any snow driving commute you'd do. I commuted for years in a VW GTI with Nokian snow tires. I also owned an SUV but the GTI was the better snow car for commuting. If you're watching your cash flow to buy a house, buy a reliable small Asian FWD sedan to eat up all those miles.
You have pretty solid savings but your income is relatively low for this region. If your willing to do it spending 5k on a car, cash, would probably go further to keep your position secure and reduce the depreciation expense of a car. Can get a car with well under 100k miles for under 5k.
Once you have made up that cash hit on the car look at buying a house. You are going to be pushed way out of Boston with a budget of 300k. I would delay further on the house (I am in very similar shoes to you, somewhat higher income but same region/similar savings)
You have pretty solid savings but your income is relatively low for this region. If your willing to do it spending 5k on a car, cash, would probably go further to keep your position secure and reduce the depreciation expense of a car. Can get a car with well under 100k miles for under 5k.
Once you have made up that cash hit on the car look at buying a house. You are going to be pushed way out of Boston with a budget of 300k. I would delay further on the house (I am in very similar shoes to you, somewhat higher income but same region/similar savings)
I agree with the advice not to finance the car. Your salaries are not that high, but you have been able to do well because of your absence of debt. It has give. You the benefit of cash flow. If you finance the car. You're going to eat into that - not to mention the many "hidden" expenses of homeownership. Don't take on too much. I'd pay cash for a $10-12k car (you can find a very reliable car in this price range), as just worry about the house for now.
I agree with the advice not to finance the car. Your salaries are not that high, but you have been able to do well because of your absence of debt. It has give. You the benefit of cash flow. If you finance the car. You're going to eat into that - not to mention the many "hidden" expenses of homeownership. Don't take on too much. I'd pay cash for a $10-12k car (you can find a very reliable car in this price range), as just worry about the house for now.
My advice on financing changes as price goes up. a 10-12k car could likely be financed at a rate well under 3% which incentivizes financing vs cash. A cheaper car is likely a bit older and the financing rates are likely higher. 10-12k is not an outrageous sum to spend on a car by any means.
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