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Reader Case Study - Is a house too much to ask?

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RidetheRain:
Life Situation:
IRS filing: Single
Location: Orange County, California
Household:

* 1 dog, 1 cat. Young and in good health.
* Serious boyfriend. We have uneven salaries, he pays half of rent and the electric bill (I'm not fun to live with when I pay for electric) after his student loans and costs of going to work that's it for his income. I'm excluding his income and spending and treating him more as a dependent in this study. It seems most clear that way.
Money:
Gross Salary/WagesMonthly Salary 9100ESPP Sale665<-- Lump sum divided for monthly view, non-budgetedPre-tax deductions Health Insurance:$100401k:546 (w/ match = 1092)Rec. Increase: 910
Taxes:

* Federal:  1544
* State: 595
* Other: 770Other Deductions:

* Employee Stock Plan: 624
purchased at 15% discount every 6 mo
I contribute 8% (max is 10%)
Budget:
CategoryCurrent BudgetedRecommended ChangesHousing1968Rent 1048Utilities85Food380Phone 40Internet 50Renter's Insurance 15 (required minimum coverage)Medical 350Supplies50Auto255Gas85Insurance,Registration, etc170Pet170Food&Supplies90Vaccines/Medical80Entertainment528Cable-Cutter13Dining Out60Fast Food130Gifts25Piano60Misc200Debt800Auto Loan300Student Loan500Total Spending3731Total Saving1190726 <-- from 401k update
Net Worth
Assets:

* EF: 8000
* Cash: 4000
* Car: 10,000
* 401k: 12000Liabilities:

* Auto Loan: 11,000 remaining (2.5%, 3 years)
* Student Loan: 52,000 remaining (0% - parent loan)
The Bottom Line:
I'd like to buy a house as part of my overall RE plan. Having a predictable housing cost and a place where I can call the shots so far as energy savings and upgrades are really important to me since my rent has increased by about 7-8% per year. My plan is to move away from California to somewhere in the middle Southern states (Arizona, Texas, Oklahoma, etc) that have more affordable housing when I'm ready to purchase. Does this plan seem like a good idea, or should I be trying to up my 401k or something now and wait until I have a little more cash flowing? I don't even know what kind of dollar amount for a down-payment makes sense. I've thought about saving roughly 60,000 but I don't know if that's a lot or a little. Internet searches all assume I'm supposed to magically know what is normal. I'll be honest, math isn't my strong point so I barely know how I'm doing.

Also, face-punching is cool. I know there is some stupidity up there.

farmerj:
401k: 546 (w/ match = 1092) => That's a terrific match. You are contributing enough to get all of it, right?

Rent   $1048 =>  I'm assuming that's just your share of the overall rent because you're in California.

Do you qualify for an HSA/Health Savings Account?

"I'd like to buy a house as part of my overall RE plan."

Downpayment should be ~20% of the total price of the house, which depends on both your standards and your target area. Have fun browsing Zillow. You'll also want a buffer in case of untoward events immediately after the home-purchasing process.

Penalty-free withdrawals can be made from IRAs for qualified first time homebuyers, the actual description of which really stretches the definition of what a "first time homebuyer" is. There's a lifetime $10,000 limit. The Roth IRA is usually the best vehicle for this.

http://finance.zacks.com/tax-impact-ira-withdrawal-firsttime-home-buyer-2068.html 

Mikila:
What is your timeline for buying and how much are you planning to spend?  Let's say you want to spend 150,000- it's in one of those cheaper housing states you mentioned, hypothetically, of course.  The math is 150,000 * .20 (assuming you want to put down 20%)/ the number of years before you will need the money/ 12 months = the amount you would need to save per month to reach your goal. This is very simplistic, not factoring interest or closing costs, but that should give you a starting place. 

Right now the best thing you could do for your future self is probably to max out your retirement accounts first.  401k, then IRA.  That should save you a pretty penny on taxes, so that your bottom line *net pay* will not drop by the full amount of your added 401K contributions.  There is a paycheck calculator out there somewhere.  Here is one I found in a quick google search, there are others, take your pick.  https://www.calcxml.com/calculators/pay02

PlainsWalker:
Others have offered good advice on the financial side of things. Since you mentioned my home state I will pipe up on locations. It's always good to hear a Californian talking about moving to the central plains. A lot of Okies pulled up their stakes and headed off to the west coast during the dust bowl. Very few have moved back. There is a bit of a cultural difference between L.A. and OKC (managed to say that with a straight face). Oklahoma is a very red state in the buckle of the bible belt. Kind of the polar opposite of the west coast.
That 60k you're talking about saving for a down payment would outright buy a reasonable house out this way.

RidetheRain:

--- Quote from: PlainsWalker on March 07, 2017, 04:20:58 PM ---There is a bit of a cultural difference between L.A. and OKC (managed to say that with a straight face).

--- End quote ---

No worries :) I grew up in a red household and you'll notice the student debt of an out-of-stater (Indiana). California only taught me one political lesson: keep your mouth shut!

My brother lives in OKC and the rest of the family is on that side of the Rockies too. I'd be able to visit!

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