Hello All,
I am deliberating on whether I should buy a house with my girlfriend.
The long term plan is for us to save from our current jobs for 2-3 years and then purchase a sailboat to live on until we are either sustainable or sell and return back to normal life.
We currently live in a nice duplex in a quiet neighborhood. Rent is $1200 a month plus utilities (about $250 a month).
I make $36,000 a year, hopefully getting a pay raise in the next few weeks but that amount is currently unknown.
I only put 5% of my pay into my 401K until my credit cards are paid off, and then I am returning to 20% plus my employers 5% match.
DEBT:
$6000 car loan, car is only worth $3000 :[
$1500 credit card @ 9% (hoping to have this paid off by the end of the year)
$2400 credit card (interest free for another 12 months)
Girlfriend just started a new job with a pay cut down to $72,000 a year.
She is putting 10% into her 401k, plus a 5% employer match.
DEBT:
$13,000 student debt, average 6%
$2500 boat loan @ 4%
$1800 motorcycle loan @ 5%
$1000 orthodontic bill @ 0%
$Credit card is about to be paid off this month. (I'm so proud!)
We currently live in one of the cheapest real estate markets in the United states. I watched houses liquidate for hundreds of dollars back in 2008-2009, and I still see over 200 listings in my town for under $50,000. Property taxes hover around $2000 a year.
I have looked at a few flips that were purchased for under $30,000 and then list for 60,000 a few years later.
Reasons for wanting a house:
We live on the west side, my girlfriend works downtown, and I work on the east side, technically the next town over.
My commute to work is the most stressful route in town, and about 12 miles each way. Biking it is about 10 miles, which I try to do when its nice out, but it is an hour of hard work and I may or may not have vomited a couple times after getting to the office. lol
If we purchased a home closer to down town, my girlfriend and I would be more likely to bike, saving a few dollars here and there, but drastically improving our health.
I am a mechanic and an efficiency nut. I have craved building a self sustaining (or at least solar powered and energy efficient) home since I took related courses in college a decade ago. However since we rent, we cannot make any changes to the property.
We also have a one car garage which cannot hold all of my tools, projects, motorcycles, bicycles, winter tires, workbench, etc.
Having a big two+ car garage would increase my quality of life drastically.
I would like to place our "rent" budget into the equity of a home rather than give it to a landlord. Property values are increasing around these parts as the town becomes more gentrified and amenities keep popping up downtown.
Currently we blow $14,400 a year on rent. Placing that money into any of these homes would mean we would be half way paid off in two years. At which point, whenever we cut the cord and buy the boat and move, we can either rent out the home with low mortgage overhead, or sell it for hopefully a profit and retain that equity to use on the Boat life and savings.
What do you Mustachians think? Am I way over simplifying things? Is this an impossible dream?