Author Topic: Case Study - Repatriating with some Cash. What to do?  (Read 1488 times)

9ft5wt

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Case Study - Repatriating with some Cash. What to do?
« on: November 30, 2014, 03:55:06 AM »
Greetings!

This is my first post to the forum. I found MMM about a month ago and have begun to reorganize my life around many of the principals of mustachianism. I was wondering if I could ask for some advice?

We currently live in Tanzania and have been overseas for 6 years. I just turned 31, and we have a combined net worth of about $116,000 which includes $20,000 in student loan debt at 5.875%. Monthly payments are $606. No other debt.

We have about $70,000 is VASGX Vanguard account and about $60,000 in cash. We don't have a 401(k) or IRA accounts because of tax laws regarding US citizens earning their money abroad. About $20,000 of that cash is earmarked for my wife's upcoming graduate degree.

My SO and I would like to purchase our first home when we return to the United States in June 2015. We're looking for a small two-bedroom in Baltimore city (lived there prior to moving overseas) and would like to spend less than $175,000, including any renovations that must be made.

Here is my question:

1. Should I pay-off my student loans in one fell swoop or save the cash for a significant down payment on our first home?

If we factor in our earnings between now and June 2015, this is essentially a question between a $40,000 down payment with $0 student loans VS a $60,000 down payment with $600 monthly student loan payment.

Thoughts or advice would be incredibly appreciated.

Cheers
« Last Edit: November 30, 2014, 04:03:58 AM by Merd »

Cococola

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Re: Case Study - Repatriating with some Cash. What to do?
« Reply #1 on: November 30, 2014, 08:15:56 AM »
Pay off the student loan since your cash does not give you return at 5.875.  40k is a nice size down payment, your mortgage rate most likely will be less than 5.875, you can use 600 to pay off fast on your mortgage - my opinion.  Good luck.

9ft5wt

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Re: Case Study - Repatriating with some Cash. What to do?
« Reply #2 on: November 30, 2014, 09:30:53 AM »
You're both 100% right. I'm not sure what prevented me from pulling the trigger on those loans when I had enough in the bank to cover them. My mustachian sense, otherwise known as common sense, was overshadowed my sentimentality and fear.  NEVER AGAIN!
Thanks.