Current monthly rent: | 1,750 | |
$420k house (proposed): | 2,700 | In four months, we've found one such house |
$400k house (proposed): | 2,550 | Hard to find. Perhaps found one in 4 months |
$350k house (proposed): | 2,250 | Will require persistence and/or luck. Very rare. |
Credit cards: | n/a | I have cards but always pay off the entire balance |
Car | 160 | Gas, Insurance, Repairs |
Groceries | 700 | We eat good food @ home !! |
Social activities | 300 | probably more than we really spend |
Pre-school (for 2y/o) | 200 | approx. 2,400 for coming year |
Phones | 70 | 2 phones; Google Fi. Includes $10 per month to pay for one of our phones |
Internet & basic cable | 75 | I hate the internet monopoly in this country |
Travel | 470 | immigrant tax !! haha … we travel once a year to see family (4 x $700) and each set of parents visits once a year (4 x $700) |
Medical (co-pays, etc) | 60 | a little high |
TOTAL EXPENSES | 1,970 | |
MONTHLY EXPENSES LAST YEAR: | 2,911 | included $6,000 ($500 per month) in costs unique to last year. We also got quite loose with spending because for the first time in years, we had some financial breathing room. We've tightened up again !! |
I think the problem is that you don't really have enough of a down payment saved up to buy a 420k house comfortably. Ramp up your savings until you have at least enough to put 20% down -- that will both eliminate PMI and reduce your monthly mortgage payment. It will also show you what you can REALLY live on when you are focused. Since you mentioned you got fast and loose with things last year, do your best to really reign things in this year and see if you can save 3k/month toward your house downpayment. If you can, then absorbing slightly larger housing costs once you buy should still leave you with plenty of wiggle room.
1. TSP or save?
By getting serious, we can free up @ least 2k per month for savings. Although I would like to save this for a house deposit, I would also like to max out my TSP ($800 more per month). My inclination is to max out the TSP first, establish that as our baseline expenses, then build a cash stash for a home purchase from there. That would lengthen the path to our 20% deposit but that's OK ... Any thoughts on how best to do that split?
2. Short-term investment strategy to fight inflation
Of course, having a pile of cash just sitting around in a low (no) interest savings account seems a little silly. Are there any short-term investment vehicles that you would recommend to make this money work for me at least a little? A 24-month CD yields 1.3% - thoughts if could do better?