Hi Mustachians,
Over the past 6 months I've made some changes to my spending, living situation, and career. I took a new, better job, moved cross-country to be close to family, and am laying out my financial footprint for my future. I'm looking for advice and opinions on a few scenarios I'll post below.
Currently:
-I live at home, and pay $0 in rent, breakfast/dinner/utilities/cellphone included. Yes it's awesome.
-I am $900 away from being done with student loans (5% rate)
-$6k balance @ 0% on credit card, rate good until 6/2015 - driven by paying down student loans at an unsustainable rate, but made sense based on interest rate. I expect to fully pay off this card in the next 3 months, and have $0 in interest. Also this does not have a large impact on my credit utilization %.
-After car/food/expenses I have ~$2k/mo that I can save, plus a $50k inheritance coming sometime in the next year (probate now).
My goal is to purchase a multi-family residence and live in one unit while renting the other 1-2 out. This plan may change, as the market in the Boston area has exploded recently and rents have not caught up to property prices yet. Once I have a down payment saved (goal is $100k + $30k buffer), I will reassess market and plan.
Scenario 1:
401(k) - 6% contribution, raising to 8% in January, to max out company match (3% and 4% respectively)
remainder of savings in 0.87% savings account, or possibly an index fund.
Scenario 2:
401(k) - max out $17,500 contribution
remainder of savings into same savings account or index fund
Scenario 3:
Pay off vehicle faster (non-mustachian but non-negotiable, plan to keep it indefinitely) - $22k @2.9%
max out 401(k) or just 6%/8% for company match
remainder of savings into savings account or index fund
I take my bonus/tax refunds and have applied them directly to student loans in the past, however now they will go toward my down payment fund.
Scenario 1 is what I'm currently doing, but both scenario 2 and 3 are appealing. I am planning to max out my 401(k) in 2015, but am hung on the decision of paying off vehicle vs. down payment. Financially it makes sense to pay it off, but the interest over the life of the loan is a few weeks of work, whereas paying it off early would delay my home purchase by ~8 months.
Thanks!