Author Topic: Saving for a house down payment with student loans  (Read 331 times)

avelasco52

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Saving for a house down payment with student loans
« on: May 16, 2020, 01:11:34 AM »
Hello,
I am new to this forum, so thank you in advance for any input. My wife and I are currently employed as physical therapists with quite an enormous student debt: $107k for me and $150k for her. My loan interest is 4.25% and currently my wifeís is zero (affected by coronavirus)

Right now, we have no kids, have almost been married 1 year, and we are looking to save for a home, and we are on a pretty loose timeline: some time in the next 5+ years. We live in Southern California and are thinking somewhere in the $300s range for a first home. Admittedly, I know very little about buying a home.

Our combined pretax income is about $160-180k (of course this year will be different + normally my hours vary), and so far we have been mostly focusing on aggressively repaying student debt. We have very minimal living expenses and usually spend between $2k-3k per month on average between the two of us if we donít have to make any large purchases.

I currently have a brokerage account with Edward Jones with a mix of mutual funds I had originally created to save for a home which now has about $10k in it. Since reading more blogs and learning more about investing, I moved my other brokerage and retirement accounts I had with EJ (Roth IRA and money market) to Vanguard. I havenít transferred the house saving account because none of the accounts could transfer in kind, and was not sure if liquidating would be the best option.

Any suggestions for good investment vehicles for a house down payment in my situation? I would like to move the money that I currently have saved to perhaps a safer type of investment.

ColoAndy

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Re: Saving for a house down payment with student loans
« Reply #1 on: May 16, 2020, 08:12:43 AM »
I would personally attack those student loans first. 

The_Big_H

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Re: Saving for a house down payment with student loans
« Reply #2 on: May 17, 2020, 01:02:35 AM »
The only good investment vehicle for saving up for a near term purchase is money market or really short term high grade bonds treasuries).

I think youíll find most mustachians are going to say donít even THINK about buying a house until you are debt free including those massive loans. You already have one mortgage of sorts when you look at the size of those combined.

Those need to be paid off in 5 years. Target $60k a year ($5k a month) I think is realistic if you are making $160k pre tax
Personally I would not invest a dime beyond my company match and toss everything at the higher % student loan as I could until gone. Then the other. 

The learned ability to live well on half your paycheck trying to pay off these loans segues nicely into saving a 20% down payment and a 15 year note after that.

You do not want your house to be a boat anchor

Also, best of luck finding a home $300k in SoCal.  I hope that wherever you live long term you really heed the advice of MMM when it comes to commuting and choosing a place close to work.  $300k house in SoCal sounds like an hour commute

You do not want your house to be a boat anchor way out in the middle of nowhere.
« Last Edit: May 17, 2020, 01:06:03 AM by The_Big_H »