Where are you living now and how are you handling the rent payment? Do you have a budget currently? Can you post that? I would have a careful look at my current situation before I decided to buy a house.
Well I had a budget, but because of recent changes it really isn't accurate anymore. I started a new job with a commute 51 miles one way (was 6 miles) and my wife graduated and started a job right out of school about 60 miles one way. So we have to move just to save on fuel, we would just prefer to make a home purchase in the process.
Looking at your proposed budget, there is no explanation of the additional debt. Why will that change and how is it related to the cash in lieu?
I am basically allocating 100% of my cash in lieu benefit to debt payments on
existing debt. No other mysterious debt lingering somewhere.
You obviously value your church and you donate heavily to it. The amount of income going there is significant and that donation does slow your progress. Could you cut back for a couple of years?
We could cut down, but, it is an item that I really do not wish to cut down. I do reduce how much I contribute in accordance with retirement contributions, because I would give on that deferred money in the future. But really, what is the point of wealth accumulation with no intention to share?
I see there are student loans. In your shoes, I would try to pay those off as quickly as possible. Those are alligators and should be treated as such. Also, it's unclear what your retirement savings are like. Is the $2,500 going to your pension matched by your employer? Does your wife have a pension she does not contribute to? I would consider beefing up the 457 and both IRA's as part of the larger financial plan. If there is no other retirement, I would work on that now, while I was young and the power of compounding has the maximum time to work in your favor.
Ah, yes, the wife's student loans... they actually do not bear any interest until December (federal subsidized student loans) and the rate will more than likely be less than what we can secure a mortgage for. That is why on my debt plan I go for the mortgage before the student loan. Right now 100% of that payment is going to the car loan until payments start in December.
As for the pension, your reading it too generic. It literally is a defined benefit pension where, after working for the employer for 10 years, at age 60 I am guaranteed a benefit for life. My wife is not eligible to invest into a 401k until after a year and they will do some form of profit sharing (no match). I have a 3% match for investing my 4% into the 457 plan. My budget is based on us saving 10% of our income (and I considered the pension as savings for retirement) until debt is paid off. But, you always come to that question if it is better to save more or pay off debt? That is where I am sitting with the end balance in my budget.
In summary, I would pay off the student loans, beef up my retirement contributions, look at my current spending to see if it could be cut, and consider buying a home once I had accomplished these items.
I agree with paying off debt and beefing up retirement contributions. But I feel that I can accomplish that AND purchase a home in my situation. I have a nearly $9,000 surplus before cutting expenses and splitting this maybe 50/50 with debt and retirement would give a massive boost to both.