Hi MMM community. I might be in need of a solid face punch here but would like some advice.
My wife and I currently rent a great (inexpensive) apartment but live far from my job (about 30-45 minutes by car each way)
I am interested in a townhome listed at $95,000 and could probably get it for$ 88,000. It is 2 miles from where I work (so I can walk/bike) and we can sell one of our two cars. It is in a good neighborhood and completely refinished, good schools, finished basement, blah blah. We would plan on staying there for at least 7-10 years, possibly more barring any unforeseen circumstances or change in job. HOA fee is 212 per month and taxes are 100 per month, I'm guessing utilities would be about 100-200 per month. My wife is flexible on her job and would probably work from home if/when we have children (hopefully soon).
My first question:
Should I take a loan from my 401k right now to cover the down payment and buy the townhouse? I hate the thought of PMI and I don't think it is a terrible time to reduce allocation to equities (don't yell at me for timing the market, I'm just saying). I could sit tight and keep renting while I save up a downpayment or look for cheaper rentals near work but rentals in this area are over $1000 per month plus utilities and I'm tired of wasting time and money being a car clown.
Second question:
Along the same lines, would it be wise to borrow from my 401k to pay down our student loans? I'd rather pay interest to myself than whatever lender we are paying back and again, I don't mind taking a step out of equities the next year or two.
Should I do one, the other, neither, or both?
Long term my plan is to live frugal, carry zero debt (including the townhouse) and max out all retirement accounts every year then put the rest into taxable index funds. The HOA kinda stinks but I guess there is no such thing as free housing (?)
Thanks in advance,
M
Expenses:
$800: housing (includes all utilities)
$1700: everything else
TOTAL EXPENSES:$2500
Income:
Day job: 3500 take home per month
side job(s): 200 take home per month
wife's job: 1,350 take home per month
Debt:
2,800 (0% credit card hack until July 2016, will pay this back before interest rate hike)
23,800 (4.85% student loan paying 233 per month currently)
Assets:
Roths: 44,500
401Ks: 48,500
Trad IRAs: 5,700
other retirement: 15,000 (can't sell)
Emergency Fund: 5,000
Taxable investments: 1,000