Author Topic: Case Study: New City, New Jobs... New House?  (Read 1905 times)

stealmystapler

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Case Study: New City, New Jobs... New House?
« on: January 03, 2014, 04:52:14 PM »
Hello! Ive been lurking and soaking in the wisdom of this site since I was a graduate student in South Carolina. After working at a real job there for a year, I took a great opportunity (essentially a dream job position) to work in the cultural resources field for New York State last July. My husband found a job last month, and now were re-examining where we are, how we can improve and some options that are beginning to present themselves. We appreciate your help!

Income: 52,000 (hers) 31,000 (his). Monthly, this looks to shake out at about $4300 after insurance, HSA, retirement, taxes, etc. is taken out. (His paychecks are still new, and are settling in as things like retirement begin to be taken out)

Assets:
   Checking Accounts (Joint and Personal): $495
   Savings Accounts: $1723 (Includes joint, personal, part of our e-fund, and set-asides for irregular expenses like auto insurance)
   Mortgage Match Savings: $375 (We signed up for this matching program for first time buyers, but are now income-ineligible. We plan to continue with the savings plan and take advantage of the classes offered)
   Betterment (E-fund): $3425
   457(b): $1825 (Just hers he is starting his up this month. Still very small!)
   Ally Savings (for house): $6,153
   TOTAL: $13,996      

Liabilities:
   Credit Card at 11%: $495 (atypical; from Christmas travel, paying off this month)
   Car Loan at 0%: $3,500 (only vehicle, nearly paid off and no regrets!)
   Student Loan 1 @ 2.8%: $2,034
   Student Loan 2 @ 5%: $2,464
   Student Loan 3 @ 5%: $2,760
   Student Loans (several) @ 6.8%: $34,615
   Student Loans (several) @ 6.8%: $22,114
   TOTAL: $67,982
   
Ouch, student loans. Were using the snowball method to overpay on all of them. We had a much lower income for most of last year, and were able to pay off $14,000. At our current rate (under expenses), they should be paid off in three years.

Current (Monthly) Expenses/Set-asides:
   Rent: $820
   Gas: $60
   Car Repairs: $15
   Car License/Taxes: $30
   Auto Ins: $65
   Renters Ins: $9
   Food: $200
   Restaurants: $50
   Good beer: $50
   Netflix: $9
   Laundry: $15
   Dog: $35
   Vacation savings: $50
   Gen. toiletries: $20   
   Clothes: $40
   Entertainment: $10
   His pocket money: $30
   Her pocket money: $30 (pocket money is new for us were trying it out now that we have a second income)

   Car payment: $200
   His Student Loans: $1000 (min. $350)
   Her Student Loans: $1100 (min. $540)

   House savings: $75
   Mortgage Match: $125
   
   TOTAL: $4,038

Were still working out the new incomes, and we have chosen to continue to live off of one income and use the second to help achieve our goals more quickly (paying off student loans, and saving for a house). We keep our expenses low were both walking or biking to work, we eat frugally but well but we do have a few small extravagances like our beer and our once-a-month dinner out. We realize our hair is on fire, but we consider a good beer with dinner a few times a week a small luxury.

Everything seemed very straightforward in terms of simply paying off loans as quickly as possible, but we recently came across a house that is very attractive and were tempted to move out of our apartment sooner. Its two miles from our jobs (walkable!), has lots of historic details that I love (Im a historic preservationist, and I definitely want a house that someone hasnt screwed up), its a good size (2200 sq ft), has a fenced backyard for the dog, and is only $63,000. Were very wary of the price and I know that there are some things that are over our heads to fix. Well visit in a few weeks, and see if it is too much of a fixer-upper to manage.

So, the question is would it be reasonable to even be thinking about considering buying a house given our income and debts? Were definitely planning to be in this area for good. We had put off buying a house for another year and a half, but were sorely tempted.

We appreciate your suggestions for reducing expenses, and unbiased opinions as to what makes sense for our next step!

gooki

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Re: Case Study: New City, New Jobs... New House?
« Reply #1 on: January 05, 2014, 12:14:04 AM »
At such a low purchase price I think it's very reasonable to consider buying.

stealmystapler

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Re: Case Study: New City, New Jobs... New House?
« Reply #2 on: January 13, 2014, 10:46:36 AM »
We checked out the house, and unfortunately the elderly sellers won't work with someone who wants to do a mortgage (too much time). When the real estate agent suggested that we take out a personal loan to buy a house (which needs work immediately) it was all I could do to not laugh in her face. The house is a great investment, but not for us right now.

We revisited our budget this weekend, now that we're getting more solid numbers for our second income. We're looking to each bump up our student loan payments another $100 (a total of $2300 a month). We also have decided to save $375 a month for a house (in addition to the mortgage match program). We also bumped up our entertainment fund a little (to $30) after some discussion.

I feel like we're on track, and I'm not sure where else we can cut. We're both very excited to be paying so much toward our student loans. Here's hoping the next several years fly by! It'll be great when they're gone.