Hey everyone. Long time reader and finally have a question of my own to ask.
I recently bought a condo and my dad loaned me some money to reach the 20% down payment and avoid PMI. Other than having a mortgage, this is the first time I’ve been in debt and I’m curious about how to approach it while still saving as much as possible. Single and living in Seattle.
Gross salary: $65,000
Pre-tax savings: 12% to 401(k) ($650/month). It was 16% before purchasing the condo but I lowered it for a couple months while I complete some renovations (blinds, heaters, and paint). My goal is to increase it back to 16% in the next few months. Employer matches 50% up to the first 4%.
Actual monthly take-home pay after all deductions and taxes: $3,680
Monthly Expenses:
-Mortgage: $983.40
-HOA: $310.61 (includes water/sewer/garbage/insurance/building maintenance)
-Roth: $300
-Electric: $30
-Internet: $35
-Dog costs (food, vet, etc): $80
-Gas: $40 (I walk to work and just use the car for weekend trips)
-Car maintenance: $100
-Entertainment: $100
-Shopping: $100
-Groceries: $300
-Bars/Restaurants: $200
-Personal care (haircuts, etc): $50
-Cell phone: n/a – fully reimbursed by employer
-Misc: $200
-Car and homeowners insurance: $65
Total: $2,844
Assets:
-401(k): $76,392
-Roth with Vanguard: $26,276
-Condo: appraised at $223,000
-Car: $3,900 (14 years old and will sell it in the next couple of years to be car-free. I don’t really consider it an asset but it’s there.)
-Emergency cash: $3,000
-Savings account from my grandpa: $6,000. I pretend as though it doesn’t exist. He passed away last year and his estate still contributes $1,000/year to the account.
Liabilities:
-Mortgage: $176,800, 30 year, 3.99% interest
-Personal loan from dad for down payment: $21,000, 4% interest
-Credit card debt: none ever
Total assets less mortgage and loan: $140,768
Question: Although my dad is not putting pressure on me to repay him in a specific time frame, I would like to repay the loan as soon as possible. Would it be best to reallocate my Roth savings to the loan repayment or is a 4% loan not worth missing out on a few years of Roth contributions? I’m happy to clarify any information or answer any questions. Thanks in advance.