Author Topic: Finishing school and getting ready to start saving/spending  (Read 1921 times)

coldestcat

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Finishing school and getting ready to start saving/spending
« on: September 08, 2017, 04:37:25 PM »
I recently got married, got a full time job (32k/year), and started my final year of my MA program, which is not paying off right now but should allow me to promote more quickly once I get a few years of experience (Higher Ed). Just finished paying off wedding/tuition and my accounts are in the hundreds. My wife is finishing her final year of a BS in Civil Engineering which starts out in our area around 50-60k/year (right now she takes home about 800 a month with a student assistant job and is looking to start an internship which will bring in a little more hopefully). She has about 12k in her savings, most of which is student loan money. We also are sharing a residence with my Father-in-Law since he has been acting off since his wife died a few years ago. Living with him is making us want to stop renting, although right now it is very manageable rent at 1200/mo plus we are getting $500 in rent from FIL. We are excited to get a house of our own and start building equity, and a home that has a big enough yard to build a tiny home on a trailer in the back yard for FIL.

My wife said maybe we should take out a bunch of student loans our last semester and use that as a down payment for a house, since student loans are typically much lower in interest than house loans. I am not sure if this makes sense financially and wanted to check with the community.

RidetheRain

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Re: Finishing school and getting ready to start saving/spending
« Reply #1 on: September 08, 2017, 05:02:15 PM »
So a couple of things here.

1. I'm not 100% sure it would be legal to do this. Student loan money is supposed to be spent on education and purchasing a home is shaky ground there particularly with only one semester left to go. You could get into trouble depending on terms.

2. Using debt to pay for a down payment is not allowed. Sorry! Think paying a credit card with another credit card. Most likely lenders would turn you down if you tried to use that money.

3. I have no idea of your financial picture since you only list assets and clearly at least have student loans. However, I think now may not be the best time for buying a home. Civil engineering is a great field, but you don't know where a job might lead. Maybe she gets a job two or three towns over? Maybe you both want a change in a few years? Renting isn't necessarily a bad financial decision. What is it about living with FIL is the problem with renting? I don't really see the correlation if you want to continue having him on the property.

Beach_Stache

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Re: Finishing school and getting ready to start saving/spending
« Reply #2 on: September 09, 2017, 06:36:11 AM »
I agree with Ride.  You don't need to buy a house, especially when you're starting off and have no idea where you'll live in a few years.  Unless you plan on renting out the place after you leave, I wouldn't buy a place unless you think the property is going to drastically increase or you'll be there for at least 7-10 years.  I'm a bit jaded though b/c I felt the same pressure soon after college and we bought a condo in 2006 that we just sold (after renting out for 3 years) at like a $60k loss (not including the sale fees), but you are young and it's just you two, so there is no reason you can't find a small place to rent and save up a ton of money.  Also sounds like your FIL might need a bit of adjustment, are you sure you want to latch on to him?  If he needs support (emotional/financial) then okay, you've got some conversations to have, but you said he's acting out since his wife died.  Obviously a traumatic experience that is understandable, but no idea what acting out means, if it means spending money, being a D-bag or what?  But I wouldn't get caught up in buying too early, focus on saving.

GizmoTX

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Re: Finishing school and getting ready to start saving/spending
« Reply #3 on: September 09, 2017, 07:12:52 AM »
Buying a house while you are still in school is a bad idea. Most mortgage lenders will likely agree. Going around them by getting more student loans is a terrible idea; student loans can't be discharged by bankruptcy, even if you were to lose the house.

I agree that you will be better served by renting because you can be flexible with where you will both find post graduate jobs; tying yourselves down with a house at this point severely limits your options. We saved a prodigious amount by renting & living well under our means for our first 7 years of marriage & careers. We didn't know that we'd get a fantastic job opportunity in another city 1.5 years into our first jobs, & the move was so easy.

coldestcat

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Re: Finishing school and getting ready to start saving/spending
« Reply #4 on: November 03, 2017, 09:56:04 AM »
A little update, I've had a few talks with FIL and its been better with him recently. I am not feeling the house pressure anymore for the time being, but thanks also, beach_stache and GizmoTX for reinforcing that idea. We have pretty good rental cost especially with FIL paying part of it. I think we will try to copy that strategy Gizmo and save a bunch during this time.

 

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