Hello fellow Mustachians,
I have recently started reading MMM and it is the first personal finance blog that I found that has actually made it seem as though early retirement (not as early as MMM, though) is within reach. The lady and I want to make the right moves to plan for our future. But we are not sure as to what to do. 'Ask a Mustachian' seems like the right place to seek help. First, find our situation below:
Me:
Age: 29
Income $51,250 yearly plus a 10K annual bonus
Occupation: Support Manager
Commute: Work from home
Debt: Only source of debt is a student loans - 62K. The interest rate on the highest loan is 5.75% ($4,500). This loan will be paid off by the end of February after which the interest rate of all remaining loans will be below 5%.
My loans are currently $600 a month, but I pay $1,100.
Savings: 7K - outside of paying extra to my student loans, I save $500 a month.
Before student loan payments I can live on less than 50% of my pay.
401K: 16K. I now contribute 7% and my company matches 4%.
FICO Score: 650 - before I committed myself to lowering my debt I had just over 100K between student loans and credit card debt. I was able to get my total debt down to 65K (car loan included) in just over 2 years by settling 25K of credit card debt (from college days for living expenses, terrible) for 8K. I also accelerated my student loan payments in order to eliminate my highest interest rate loan which was 9.25% ($8,000). In the process, however, my credit score to a big hit.
The Lady:
Age: 27
Income: $60,000 (it is a start up and so she must buy her own health insurance and there is no company 401K).
Occupation: Marketing Manager
Commute: Work from home
Debt: No Debt!
Savings: 10K - before retirement savings, she can save $1,600 per month
She is able to save just over 50% of her pay now.
401K: 11K
FICO Score: 822
We currently pay $1021 in rent living in The South. We have one car (2010 - 3K left on it, but it will be paid in full this year). We have zero commute because we work from home. Our goal is to own a home with a good amount of land in the country (about 5 acres) where we can grow our own food and frolic. (I grew up on a farm and so I have experience in this area). Continuing to work remotely would be ideal for this, but we do not know how long we will work for these companies and so we may need to find local jobs.
We are factoring that the home/property we would like to buy is 200K and so we would need a downpayment of 40K; we could get this together in 12 months.
We are both expecting tax refunds this year of about 3K (each) and I should be receiving a 10K bonus next month.
So onto the questions:
1) Should I pay more of my student loan debt before buying a home?
2) Should we buy a home in the city in case we need to find local jobs?
3) If 'yes' to question 2, what do we do about our dream home in the country?
4) How should we invest our money?
5) How should we invest our savings for a down payment?
6) How will our credit scores affect our ability to obtain a mortgage?