Author Topic: Clean slate and large life choices + small case study  (Read 1717 times)

newstache

  • 5 O'Clock Shadow
  • *
  • Posts: 9
  • Location: Minnesota
Clean slate and large life choices + small case study
« on: October 19, 2016, 12:38:43 PM »
So I am new to MMM (read most of blog) over the past month and have been brought up with sound money principals but a head of me there are major life choices to be made.
Background My wife and I are 30 and have been together for 11years (married for 5) We Just arrived back to the USA after living in New Zealand for 3.5years! (NZ is the best)
(no kids) Might look at having one soon...

Currently live rent free with parents (ya for being 30, married and living with you parents...) This location is 17miles for both my wife and I to travel in opposite directions for work.
We own one 2006 Honda CRV bought with cash and I am using a borrowed car to transport.

So here is my question and a few problems that we face. Rent/Buy and location. Location Is Minneapolis MN
Rent and buying are cheap next to Job 1 income(50,000) and a little pricy by Job 2(30,000)

In order to determine this you probably need to know some case study info

I would like to keep this simple
Income (take home pay) $4500/Mo
Bills
Phone $60
Hair $65
shoes/clothes $150
Gas $250
Food $700
Vacation/Travel +races $375      We like to enter various races, Running ,multi sport, rollerblade, ski etc.
Student Loans $900 yes its $900/mo  Total student loan debt is $80,000
Savings $2000

Currently we have a complete blank slate. We Just finished paying all debt from the move back and finding jobs.
We should be able to save $2000/mo from November 2016 - move out day?
Note worthy We will be getting a return form New Zealand in March 2017 around 13,000 Which was money we put in to a retirement account while in NZ

My goal would be to move out around April 2017
Giving my projected savings rate I should be around 12,000 plus the 13,000 from NZ.
So with the $25000 in April 2017 What should we do?

Option 1.
Pay student loan down some and find cheap rent in studio locally by job 1 rent would be $650
would not require a new car.
Job 2 would have to drive lots more.

Option 2
Buy a Cheap (<100,000) fixer upper and do some sweat investment.
I Have tools available from Father and some building experience.
how much for down payment and save how much for fixing?

Option 3
Buy a more pricy town house close to job 2 but does not need significant improvement.
Cheapest option seen was 130,000
Job 1 would have to drive a lot more.
still don't need second car.


Extra question once in a place rent or buy estimating all costs of housing and utilities is around $800 what should we do with the extra 1200/mo?
student loan, housing payment, invest?


Ok probably a little hard to follow but any advise on any of the topics would be greatly appreciated. please don't punch my face, I prefer kicks...
« Last Edit: October 19, 2016, 01:44:37 PM by newstache »

Cwadda

  • Handlebar Stache
  • *****
  • Posts: 2182
  • Age: 25
Re: Clean slate and large life choices + small case study
« Reply #1 on: October 19, 2016, 01:37:43 PM »
Congratulations on making the biggest step towards financial independence - starting!

Something you may want to consider is that when buying a house for the first time you can take advantage of government loaning programs like FHA and whatever ones your particular state offers. You benefit from the small loan interest rate and also the small down payment. You only get to use this once so it may affect the type of property you'd like to buy if you're going to buy.

Which state are you located?

Food expenses are high unless you're buying for your parents too? For 2 people you should be shooting for $400/month and that includes eating out.

newstache

  • 5 O'Clock Shadow
  • *
  • Posts: 9
  • Location: Minnesota
Re: Clean slate and large life choices + small case study
« Reply #2 on: October 19, 2016, 01:54:31 PM »
Updated question to include location
Minneapolis Minnesota.
While living with my parents we are buying a bit more food and cooking some meals for them... with that said we still probably spend to much on food but that is a sticking point for my wife.
we like to eat fresh and healthy (I try to avoid whole foods) We both stay very fit and active. (work out every morning at 5am) in free provided gym!
Another question I have would be about housing loan options. I am set on doing a fixed interest loan but not set on duration. 10,15 30years... what are the recommendations?

Cwadda

  • Handlebar Stache
  • *****
  • Posts: 2182
  • Age: 25
Re: Clean slate and large life choices + small case study
« Reply #3 on: October 19, 2016, 02:37:25 PM »
Updated question to include location
Minneapolis Minnesota.
While living with my parents we are buying a bit more food and cooking some meals for them... with that said we still probably spend to much on food but that is a sticking point for my wife.
we like to eat fresh and healthy (I try to avoid whole foods) We both stay very fit and active. (work out every morning at 5am) in free provided gym!
Another question I have would be about housing loan options. I am set on doing a fixed interest loan but not set on duration. 10,15 30years... what are the recommendations?

I'm going out on a limb here, but I've heard Minneapolis is a good area? Seriously going out on a limb, I don't know much at all about the area, I'm from New England.

To me it makes sense buying a property in which you can live AND collect rent. Multi families are well suited for this but you should do what you're most comfortable with.

For the mortgage period go with a 30 year fixed then make 2 extra payments per year. This brings it to a 15 year right away.

Let me make up a spreadsheet for cashflow for you. Give me a few mins.

Cwadda

  • Handlebar Stache
  • *****
  • Posts: 2182
  • Age: 25
Re: Clean slate and large life choices + small case study
« Reply #4 on: October 19, 2016, 02:45:18 PM »
Okay, this is a hypothetical example I have set up. Say you bought a property for 130k and rented out part of it for $900/month. It would cost you a total of $417/month to live there.

After living there 5 years you decide to move and rent out the rest for another $900/month. You'd be then making $407/month.

Again, I'm making up a lot of the numbers but you get the point. You can do the analysis for any property.