Author Topic: 180K to play with  (Read 1492 times)

Arizonian

  • 5 O'Clock Shadow
  • *
  • Posts: 3
180K to play with
« on: September 09, 2016, 08:57:15 AM »
Goooood Friday to you all!

I'm looking to sell my primary household where I'd estimate a capital gain of around 180K after fee's and paying off my mortgage. If I were to do this, what would you recommend to do with the cash ? I would like to buy into another under valued property within a year or so (Budget maybe $50-75K for this)

Other background:
29 - GF of 3 years, kids forecasted within 2-3 years if things go right
No Debt outside of existing mortgage
Arizona cost of living is reasonable- would be looking to rent temporarily at around $1500 a month for something decent
Living a relatively frugal- MM lifestyle
Just transitioned into equipment leasing and finance industry for which my job risk is a bit higher than before, expecting to make $100K+ if things go right
Current Investments: Only 9-10K in American Growth Fund - IRA

Thank you all for the input,
Zona

TheAnonOne

  • Handlebar Stache
  • *****
  • Posts: 1560
Re: 180K to play with
« Reply #1 on: September 09, 2016, 11:36:45 AM »
Goooood Friday to you all!

I'm looking to sell my primary household where I'd estimate a capital gain of around 180K after fee's and paying off my mortgage. If I were to do this, what would you recommend to do with the cash ? I would like to buy into another under valued property within a year or so (Budget maybe $50-75K for this)

Other background:
29 - GF of 3 years, kids forecasted within 2-3 years if things go right
No Debt outside of existing mortgage
Arizona cost of living is reasonable- would be looking to rent temporarily at around $1500 a month for something decent
Living a relatively frugal- MM lifestyle
Just transitioned into equipment leasing and finance industry for which my job risk is a bit higher than before, expecting to make $100K+ if things go right
Current Investments: Only 9-10K in American Growth Fund - IRA

Thank you all for the input,
Zona

If your going to be buying another house in the next 5sih years, I would hold onto the 180k (or whatever you will need for a downpayment) and move the rest of your money into vanguard (VTSAX)

That American Growth Fund is probably eating you alive with fees!

MustacheAndaHalf

  • Handlebar Stache
  • *****
  • Posts: 1891
Re: 180K to play with
« Reply #2 on: September 09, 2016, 12:21:04 PM »
As mentioned, American funds tend to have higher fees.  If you search for your fund on morningstar.com, the "Expenses" tab shows the fees.  While I might have looked up a different fund, the one I see there charges 0.65% expense ratio (per year).  Vanguard Total Stock Market charges 0.05% per year when you have $10,000 minimum or use the ETF class.

Capital gain has nothing to do with the mortgage - it's a price comparison between when you bought and when you sold (minus commissions - often 5-6%).  In any event, there's a $250k exclusion from capital gains if you've lived in the house at least 2 of the past 5 years.

I don't follow why you're selling your current house to buy another one a year from now.  Will the next house be complicated by your girlfriend maybe wanting to pay mortgage / gain equity?  Then if things don't go as smoothly as you expect, it's a more difficult problem than a house you own 100%.

You didn't mention if your work offers a 401(k) plan.  Invest to the match.. and if you have extra money and pre-tax contributions make sense, maybe up to the annual limit.  Did you already contribute to a Traditional or Roth IRA this year?  Might consider that as well.