My plan has gone off track. My life is a mess. Please knock some sense into me

[Emergo]

Hey guys.

I started the year off great. Then it all went downhill in the last couple of months. My 401k was set to max out of $18000 by the end of the year then i lowered it to the company match of 6% because of life complications with family.

My goal for the year was to achieve $18000 in 401k, $5,500 in ROTH, $4800 in my taxable account.

So far I have $11800 in 401k, $4019 in ROTH, and $0 in my taxable account.

This is paycheck week 18 of 26 and for each account I SHOULD be at: $12400 in 401k, $3800 in ROTH (im ahead of this but not for long), $3300 in taxable account.

The reason I lowered my 401k and I haven't been contributing according to plan is this: there is a likely chance I need to purchase a home within 1-2 years. And that is because I may need to support some family by giving them a place to live in temporarily.

THe ideal home right now is a town home because I'm single and the plan for the future is to be able to rent it out and get it paid for while I live elsewhere. Price range is about $80k-100k with 2-3 rooms in Houston.

for a little background on me and what my plan was at the beginning of the year:
http://forum.mrmoneymustache.com/ask-a-mustachian/case-study-raising-my-savings-rate-to-50-from-35-but-wait-my-calc-is-wrong/msg950022/#msg950022

So me lowering my 401k is so I can have money saved and handy to get 5% downpayment so there's no PMI or maybe 20% if I have more time. And then set it at 15 year loan. That money that's then saved from contributing less to my 401k is gonna go to my taxable account so I can get it out when I want and not have to take it out of my 401k.

ANyway, I haven't been keeping up with this site at all and I don't know if anything's changed with the marketplace and whatnot.

Right now I have about $1500 from my checking account I can either put it into my ROTH or taxable account.

Thanks for your help.

[KickingRocks]

You're doing fine.  Don't beat yourself up over a few set backs.  Saving money is always two steps forward and one step back.  In a year you will look back and laugh at this rough patch.  The longer you save the easier it will get and you will learn to not sweat a few storms here and there.  My goal is to increase my net worth $5,000 every month.  It never seems to fail that one month I'll either have a bunch of unforeseen expenses or work will really slow down and I'll only be able to save $3,000.  Then out of the blue I'll hit a home run the next month and save $7,000.  It'll all average out in the end.  Trust me.

[LeRainDrop]

You may not have followed your original plan, but I don't see anything here to indicate that your life is a mess.  Seriously, you are still doing great!

[ender]

Yeah your life pretty much is falling apart.

You've only saved about 33% of your income (after FICA) so far this year. If you don't hit at least 40% I've heard that the moderators here delete your forum account. Go below 30 and you start getting hate mail.

Seriously dude, you're doing fine. You aren't buying junk you don't need, you are reallocating your priorities. Huge difference (well, unless you reallocate priorities into junk you don't need...).

[Emergo]

Yeah your life pretty much is falling apart.

You've only saved about 33% of your income (after FICA) so far this year. If you don't hit at least 40% I've heard that the moderators here delete your forum account. Go below 30 and you start getting hate mail.

Seriously dude, you're doing fine. You aren't buying junk you don't need, you are reallocating your priorities. Huge difference (well, unless you reallocate priorities into junk you don't need...).

Lol

Yeah, in addition to my original post, I forgot to mention I have been terrible with my living expenses. I really had $4000 extra money to work with for vacation or anything for the year, and I think right now I've almost at that limit because of putting my money into junk without having a vacation. But I know what I must do regarding that. Just cut the stupid spendings.

Anyway, I appreciate the encouragement so far. any thoughts on my plan to buy a home within the next 1-2 years?

Thank you again

[JLee]

Keep in mind that 5% may get you into a conventional loan instead of FHA (3.5%), but to avoid PMI you will likely need 20% down.

[arebelspy]

ANyway, I haven't been keeping up with this site at all and I don't know if anything's changed with the marketplace and whatnot.

Ignoring the market is a good thing, not a bad one.

Life happens. Save as much as you can when you can. Don't stress in the meantime.  :)

[Dicey]

I didn't put a penny in retirement accounts during my twenties. I knew I wanted to buy a house and I live in a HCOLA. Yup, I amassed a year's salary of FU money. I finally bought a house at age 30, then I started saving for retirement. There was no MMM then; I didn't know any better. Somehow, I managed to FIRE, it just wasn't extremely Early. I never would have become wealthy had I not bought that first house, so it all worked out in the end. Stop beating yourself up and get back to it.

Houston has always had a more cyclical real estate market than many other places. Study the history so you can identify a slide when it's occurring, 'cause that's when you want to buy. Don't know if it's up or down? Don't buy until you can tell the difference.

[pbkmaine]

So where's the money going?

[Emergo]

So where's the money going?

Family, food, and newformed unnecessary hobbies.

[CU Tiger]

When you say family, does this mean you are supporting or paying bills for family? Is that an ongoing expense?

[thd7t]

I am questioning your desire to get a townhouse in a year or two. It sounds like you want homeownership, but don't really have a clear idea why. You want to live there (briefly). You want to put your family up(maybe? This is a little unclear). You want a long distance rental unit. Is buying a house in your timeline really moving you forward? I think you need to clarify your thoughts.

[boarder42]

i'd go with a 30 year loan not 15 todays rates are nuts.  i'm REfIing 1 week from today to a 3.25% on a 30 year ... thats basically an inflation level loaan.

[pbkmaine]

You need to be more specific.

Why the need for family support?
Why is a house important to you?
What are the hobbies that are costing you?
What is "stupid stuff"?
What do you mean by "food"? Is it eating out, or are you having steak every night?

[MrsDinero]

You need to be more specific.

Why the need for family support?
Why is a house important to you?
What are the hobbies that are costing you?
What is "stupid stuff"?
What do you mean by "food"? Is it eating out, or are you having steak every night?

+1  Good questions

I would also like to ask:
Why do you NEED to buy a house?  Can you rent?
How long will you be taking care of family?  To what extent?   Housing only or all their monthly bills?

[former player]

I agree with the others: you are doing fine.  Sometimes shit happens but as long as you get back on track when you can it's not a problem.

You say you may need to support some family by giving them a place to live in temporarily.  That's good of you to take on that obligation.  What I don't understand is what that has to do with buying a house.  If your family members need temporary accommodation, then find them that - there should be plenty of temporary housing options available, such as renting them a place from month to month.   Buying a house is not a temporary move, it is a permanent move.  There is a big mismatch between the temporary need of your family and the permanent obligation of a house purchase.

Also, if you buy a house and move your family in, I would worry that it would over time become a permanent home for them and you would be left with a permanent obligation, to no personal (financial) benefit and which could stop you from moving on with your own life (eg you meet someone and want to set up home with them by buying a home together but you can't get the funding because of this other house).

Obviously you know your situation best and should do what feels right for your family.  But I would look at all the other options available to you to help this family member(s) find a temporary home rather that buying a house.

[LeRainDrop]

You say you may need to support some family by giving them a place to live in temporarily.  That's good of you to take on that obligation.  What I don't understand is what that has to do with buying a house.  If your family members need temporary accommodation, then find them that - there should be plenty of temporary housing options available, such as renting them a place from month to month.   Buying a house is not a temporary move, it is a permanent move.  There is a big mismatch between the temporary need of your family and the permanent obligation of a house purchase.

Also, if you buy a house and move your family in, I would worry that it would over time become a permanent home for them and you would be left with a permanent obligation, to no personal (financial) benefit and which could stop you from moving on with your own life (eg you meet someone and want to set up home with them by buying a home together but you can't get the funding because of this other house).

Obviously you know your situation best and should do what feels right for your family.  But I would look at all the other options available to you to help this family member(s) find a temporary home rather that buying a house.

Yeah, I agree with all of this.  Especially since you're talking about stretching your finances just to get 5% down.  It seems you could come up with more sensible options for how you can help your family with housing rather than buying a home.

[justplucky]

I would avoid becoming your family's landlord. At what point are you going to stop being financially responsible for the house you move them into? If it's "when they're ready to move out," what if they're never ready?

[arebelspy]

I would avoid becoming your family's landlord. At what point are you going to stop being financially responsible for the house you move them into? If it's "when they're ready to move out," what if they're never ready?

+1.  I'd MUCH rather pay to rent a place for them.

Hell, if you're set on buying a place, do so but rent it to real tenants, then use the money from that to pay for a rental elsewhere for the relatives, if need be.  Much easier to terminate that arrangement then.

[Emergo]

Sorry guys ive been really busy to reply to your posts. This is going to be a quick one too, but if you guys dont think i should buy a town home or a home at all. When do you guys think i should down the line? Im still single and living with my mom.

[LeRainDrop]

Not until you have saved 20% for a down payment, plus enough to cover the closing costs, an emergency fund (probably 3-6 months of your monthly expenses), and home repair fund (probably at least $10k).

[Richardp10]

I wouldn't look at buying until you've got 20% and until you know that location will suit you for at least 5 years.

We don't know the details of course but from an outsiders perspective I don't think you're in a position to buy a home for family to live in when you are living at home yourself and not meeting your own saving goals. Is there anyway to support them a bit without jumping fully in like this?

[PFHC]

Everything LeRain said. For the repair fund, I'd do even more. You can count on spending at least 10% of the value of the home in the first couple years, so have at least that much set aside. That is averaged out, so you could be looking at a one time expense in your first month of ownership for that much... or more. (I know because it happened to me)

[former player]

OK, leaving aside the house purchase idea for the minute, I'm still concerned about your situation.  You are 27, living at home, with a decent but not exceptional income from work.  You seem stressed to the max  (see: title to this thread) about problems in your family, and you appear to have already given about $4,000 to your family to help with their problems (see: start of this thread and the amounts by which your savings are down).  You are apparently being told it is your responsibility to provide housing for an undefined period for one or more family members.

Unless one or more of these family members is your own child, you have no legal obligation to do anything more for them.  You may feel a familial wish to do something for them.   But please remember:

1.  Put on your own lifejacket first.  This means not allowing anything to get in the way of your retirement savings.  Please go back to maxing out your 401k for the year, and if possible maxing out your Roth as well.  Those tax-free opportunities to save are limited and will not come back if you waste them.

2.  Don't do anything more for your family members than they are doing for themselves.  If they are making foolish choices when better options are open to them, do not subsidize those choices.  Help them help themselves into a better place rather than becoming your dependents.

3.  Do not become your family's sacrificial lamb.  Make sure that everyone in the family is contributing equally (or according to their means) to the family members who are in need.  If you provide the help when others who could help do not, you are setting yourself up to be expected to be the one who helps other family members financially for the rest of your life.

4.  I see that you give 10% of your income in tithes.  Consider either redirecting your tithes to the family members who need help, rather than taking it out of your retirement savings, or see whether your church can provide help directly to your family members - it is what it is there for.

5.  Don't put your own life on hold because of your family member's problems.  Don't let them get in the way of your work, your exercising, your friends and hobbies and social life.

Sorry if that all sounds like nagging.  It's a compilation of things I've learnt here and in life.  Good luck.

[thd7t]

I agree with former player's notes from above, but would add a caveat. If you're helping your mom, keep it up. She is housing you, so it's appropriate for you to be involved.

[FLBiker]

Sorry guys ive been really busy to reply to your posts. This is going to be a quick one too, but if you guys dont think i should buy a town home or a home at all. When do you guys think i should down the line? Im still single and living with my mom.

Personally, I wouldn't (and didn't) buy a house until I was married and thinking about kids.  Otherwise, I'd just rent an apt or (possibly) buy a condo.  For me, it's less to do with finances and more to do with responsibility.  When I was single, I enjoyed the freedom of being able to move at the drop of a hat.

[Emergo]

Sorry guys ive been really busy to reply to your posts. This is going to be a quick one too, but if you guys dont think i should buy a town home or a home at all. When do you guys think i should down the line? Im still single and living with my mom.

Personally, I wouldn't (and didn't) buy a house until I was married and thinking about kids.  Otherwise, I'd just rent an apt or (possibly) buy a condo.  For me, it's less to do with finances and more to do with responsibility.  When I was single, I enjoyed the freedom of being able to move at the drop of a hat.

A cheap 100k townhome was the plan and then if ever i needed to move, i would just rent it out. I guess its not that great of a plan according to people here or it might be because ive provided limited information. Sorry guys, will post it soon.

[thd7t]

Sorry guys ive been really busy to reply to your posts. This is going to be a quick one too, but if you guys dont think i should buy a town home or a home at all. When do you guys think i should down the line? Im still single and living with my mom.

Personally, I wouldn't (and didn't) buy a house until I was married and thinking about kids.  Otherwise, I'd just rent an apt or (possibly) buy a condo.  For me, it's less to do with finances and more to do with responsibility.  When I was single, I enjoyed the freedom of being able to move at the drop of a hat.

A cheap 100k townhome was the plan and then if ever i needed to move, i would just rent it out. I guess its not that great of a plan according to people here or it might be because ive provided limited information. Sorry guys, will post it soon.

Have you done any market research on rents in your area? Townhomes often come with an HOA, which can make it harder to make the rental math work.

[mtn]

Sorry guys ive been really busy to reply to your posts. This is going to be a quick one too, but if you guys dont think i should buy a town home or a home at all. When do you guys think i should down the line? Im still single and living with my mom.

Personally, I wouldn't (and didn't) buy a house until I was married and thinking about kids.  Otherwise, I'd just rent an apt or (possibly) buy a condo.  For me, it's less to do with finances and more to do with responsibility.  When I was single, I enjoyed the freedom of being able to move at the drop of a hat.

A cheap 100k townhome was the plan and then if ever i needed to move, i would just rent it out. I guess its not that great of a plan according to people here or it might be because ive provided limited information. Sorry guys, will post it soon.

Its not that great of a plan because it isn't a plan. It is a sentence.

The thing I'm concerned with is what are the family issues? Are you providing economic outpatient support for folks? Your single, presumably with no kids--what are these family issues?

[Dicey]

OK, leaving aside the house purchase idea for the minute, I'm still concerned about your situation.  You are 27, living at home, with a decent but not exceptional income from work.  You seem stressed to the max  (see: title to this thread) about problems in your family, and you appear to have already given about $4,000 to your family to help with their problems (see: start of this thread and the amounts by which your savings are down).  You are apparently being told it is your responsibility to provide housing for an undefined period for one or more family members.

Unless one or more of these family members is your own child, you have no legal obligation to do anything more for them.  You may feel a familial wish to do something for them.   But please remember:

1.  Put on your own lifejacket first.  This means not allowing anything to get in the way of your retirement savings.  Please go back to maxing out your 401k for the year, and if possible maxing out your Roth as well.  Those tax-free opportunities to save are limited and will not come back if you waste them.

2.  Don't do anything more for your family members than they are doing for themselves.  If they are making foolish choices when better options are open to them, do not subsidize those choices.  Help them help themselves into a better place rather than becoming your dependents.

3.  Do not become your family's sacrificial lamb.  Make sure that everyone in the family is contributing equally (or according to their means) to the family members who are in need.  If you provide the help when others who could help do not, you are setting yourself up to be expected to be the one who helps other family members financially for the rest of your life.

4.  I see that you give 10% of your income in tithes.  Consider either redirecting your tithes to the family members who need help, rather than taking it out of your retirement savings, or see whether your church can provide help directly to your family members - it is what it is there for.

5.  Don't put your own life on hold because of your family member's problems.  Don't let them get in the way of your work, your exercising, your friends and hobbies and social life.

Sorry if that all sounds like nagging.  It's a compilation of things I've learnt here and in life.  Good luck.

This is so good, I'm quoting the whole thing for emphasis. It's not nagging, it's fucking brilliant! Go fp!

[LeRainDrop]

. . . Unless one or more of these family members is your own child, you have no legal obligation to do anything more for them.  You may feel a familial wish to do something for them.   But please remember: . . . It's a compilation of things I've learnt here and in life.  Good luck.

This is so good, I'm quoting the whole thing for emphasis. It's not nagging, it's fucking brilliant! Go fp!

I agree.  All of former player's points are spot on.  It took real-life experience (and therapy) for me to learn them, as well.

[arebelspy]

Its not that great of a plan because it isn't a plan. It is a sentence.

Spot on.