Hey Guys,
I’m hoping that you all can (once again) provide some advice for the next steps in my family’s financial future. My wife (30 yo) and I (32) were married about 4 months ago, and just learned that we are expecting our first child. In other words, shit is getting real. I've been pretty good about saving for retirement and a house downpayment since I graduated from college almost 5 years ago (I've posted here asking for advice several times, and my progress has been pretty steady). That being said, I have only been a renter since I graduated, and am starting to feel depressed and defeated regarding the housing market. I understand that fear is a terrible reason to make important decisions, which is why I'm looking for some detached perspective from you all.
Let me provide a little more information on our financial situation:
Location: Spokane Valley/Liberty Lake, WA
Income: I make $85k, about to get a raise to $90k. Wife makes about $40k. She will stay home once the baby arrives.
401k - $80k (currently contributing the maximum to mine)
Roth IRA - $60k (maxing out mine here as well)
HSA - $16k
Cash - $65k (this is mostly a combination of emergency fund and an eventual down payment for a house. We are contributing around $2k/month to this fund currently).
The plan has been to be patient and save up a 20% downpayment for a house (or as close to it as possible before outgrowing our 2 BR/ 2 BA apartment, likely in a year or two), but it seems like cash is becoming an increasingly unwise position to hold, especially given the fed's/government's fiscal policy that is propping up the housing market.
Eventually, we would like to build a house on some acreage in the country that my parents have offered to sell us at a significant discount, but we recognize that we aren’t in a position to do that yet (and aren’t even close). We would like that eventual house to be on the simple side (not huge), but well-built and well-designed. In the meantime, we are trying to decide what the best course of action is regarding housing - i.e. do we buy a small “starter house,” buy a house meant as a rental, perhaps a duplex (though my wife is slightly less keen on this course of action)… or do we just continue to be patient and save (and if so, should we be holding the entire down payment in cash?)? I feel like we are falling further and further behind, despite our efforts at saving for the future. I guess a big part of the question is whether what I am feeling is more of an emotional reaction (fear), or a rational position based on larger economic trends happening in the country (i.e. mortgage for real estate as a means of shorting the dollar).
A final piece of information: I recently passed the exam required for my professional license, and now have a good bit of spare time available. I am trying to figure out what the best way is to spend my newfound free time. More specifically, starting a side business, or working on the side with some contractor friends to learn hands-on skills, that could perhaps come into play down the road in a home-building scenario (my job allows for some flexibility, e.g. working 4-10's, and Saturdays are fair game).
Thank you all in advance for any input that you can provide. I have always found the advice on this forum to be thoughtful and well-reasoned, and appreciate the time that any of you take to respond.