I would like input from the MMM community on my current situation in regards to personal finance. I graduated at 22 and began earning about 55k a year. I am almost 24 and earning about 60k a year.
My assets are as follows:
old 401k: 21,000 (6,000 is from Roth contributions)
new 401k: 3,100
Roth IRA: 5,200
Cash: 6,000
I also have a car loan and student loans that I am paying back.
Car: 11,000 @ 3.75%, for 44 more months
Student loan: 14,000 @ 0% (from my parents), 35 more months
My current monthly budget includes pre-tax retirement savings to my 401k of 25% (about $1250/month) 6% of this is matched 50% by my employer.
The rest includes:
Rent - $725
Student loans - $400
Car payment - $350 (actualy payment amount is 275 but I have been overpaying by 75 a month)
insurance - $166
Utilities - $150
auto gas varies but averages about $200
Groceries - around $150
Cell phone - $30
I would like to get your input on purchasing a house within the next year. There are nice houses available in my area starting at about $100k. When I initially funded the Roth IRA, I had planned on using the first time homebuyer clause to access those funds. I believe I could roll-over my old 401k's roth contributions into the Roth IRA. If I did that, between the Roth IRA, and cash savings, I would have close to the recommended 20% for a down payment on a house.
My thinking is that the sooner I purchase a house, I will be able to save more money because of my high rent. At current interest rates, even a $90,000 mortgage is only $350 a month for 30 years. Adding in $200 a month tax and insurance, I'm still paying less than my current rent. I think this would allow me to build equity in a home instead of paying rent, while also saving money by lower monthly housing costs.
Long-term, I would like to be a landlord so ideally the house I live in would be able to rent out after its paid for or when I'm ready to move on. So when I buy the house I also need to somehow balance paying it off and saving a downpayment for another home.
What are your thoughts? In my situation is waiting to save a 20% down payment really necessary? Is it a terrible idea to tap into retirement savings to fund a down payment? Should I finance more of the house because of current interest rates on mortgages?