Should I rent or Buy?

[Kstatus]

So I just graduated as an Electrical Engineer in May of 2015 and landed a job making $60,000.  I have about $25,000 of debt to my parents interest free that I am paying $1000 a month towards.  I have been committing 23% of my check to a 401K leaving about $1200 left over a month for random expenses like gas, car insurance, fun spending.

I currently live at home/mostly at my girlfriend's apartment as she just finished school this December and will be making roughly 65K at her job starting in February.  She has roughly 70K in debt with somewhere around 3% interest rate. 

My question is what should I do for housing when her lease is up (August).  We want to live together, but it seems that renting is roughly 800-1000 a month for a single bedroom 500-700 square foot apartment.  Unfortunately we work about 30 miles apart from each other so plopping down right next to work isn't really an option (Unless I got a job at her location, which is the long term goal). 

I was curious if it makes sense to save up 5% to put money down on a house some where.  The mortgage payment would be less (I would pay faster than that) than $1000 a month and I wouldn't be throwing away money at rent (I understand that renting means no cost on fixing stuff), but it seems like investing in a house is something that I will eventually receive back.  I would be really interested in buying a duplex and renting out half to bring my housing cost down to almost nothing. (Friend of mine is doing this, $1300/month mortgage with $1000 from rent income)

My biggest frustration is saving money to get the money down for a house when some of that extra money left over each month is also being saved to max out my roth for this year.  Typing this out seems like it should be more than possible, but my monthly expenses after gas, groceries, misc. expenses adds up to around $600 a month (WTF HOW?!)  I am using mint and trying to limit the spending, most of the spending the previous months have been from "going out" with friends.  This month would have only been around $400, but after gifts and all the Holiday travels it was around $750.


Well anyways this has been a long ill-thought out proposal, but maybe someone can help guide me.

Thanks,
K

[thd7t]

I wouldn't buy in your case.  You should spend more time seeing what it's like to live on your paycheck and saving money.  In addition, a house really ties you down and can limit your options in the future.  Don't do that if you've just graduated.  Finally, if you buy a house, you should save a 20% downpayment.  It has three quick advantages.  First, you'll get better loan terms.  Second, you won't have to pay mortgage insurance, which is a stupid expense if it can be avoided, and third, it gives you immediate equity in the house. 

Spend more time before making this decision.

[Kstatus]

Okay I am convinced to wait on a house, but would like to start saving now obviously.

How would I go about saving more money for a down payment on a house while still trying to maximize 401k and Roth funding?

60000
-$18000 (401k)
-$5500 (Roth)
-$3300 (HSA)
-$12000 (Parent Loan)
-$600 health insurance
=
$20600 a year left over for living not considering taxes.

Thanks,
K

[ShoulderThingThatGoesUp]

Don't buy a house to live with someone you're not married to.

[thd7t]

Okay I am convinced to wait on a house, but would like to start saving now obviously.

How would I go about saving more money for a down payment on a house while still trying to maximize 401k and Roth funding?

60000
-$18000 (401k)
-$5500 (Roth)
-$3300 (HSA)
-$12000 (Parent Loan)
-$600 health insurance
=
$20600 a year left over for living not considering taxes.

Thanks,
K

Is there any reason that you're funding a Roth instead of a Traditional IRA?  You're not in a particularly low tax bracket.

Regarding the saving for a house, you should get that parental loan out of the way.  Then you'll have 1k/month.  That will build up quickly.

[4alpacas]

Okay I am convinced to wait on a house, but would like to start saving now obviously.

How would I go about saving more money for a down payment on a house while still trying to maximize 401k and Roth funding?

60000
-$18000 (401k)
-$5500 (Roth)
-$3300 (HSA)
-$12000 (Parent Loan)
-$600 health insurance
=
$20600 a year left over for living not considering taxes.

Thanks,
K

Is there any reason that you're funding a Roth instead of a Traditional IRA?  You're not in a particularly low tax bracket.

Check out the Mad Fientist (http://www.madfientist.com/traditional-ira-vs-roth-ira/) for great posts about using a traditional IRA instead of a Roth IRA.

[TomTX]

Transaction costs on buying a house are stupidly high, and they REALLY tie you down to a certain location. Early in your career, you want to be able to seriously look for new/better jobs every 2-3 years. The vast majority of employers will not increase your salary commensurate with your increase in value/experience. But a competitor will pay you 25% more.. Don't burn any bridges, and 2-3 years later you may end up back at the first employer for another 25% bump in salary.