Quote:
Originally Posted by adaway
Thanks for your thoughtful response.
Retirement plan contributions:
1200/yr + 8% + match = >20%
ER fund is in local savings mm….I plan to look into online savings to take advantage of higher interest rates.
Order of priorities shifted because I felt that for this first year of changes I don’t think it will be significant that I address priority #2 (SL) to the fullest, because I would feel more comfortable getting a head start to priority #3 (House/other fund.) So for one year, paying 50/mo additional to 600/mo for SL should work for the time being and then the following year I can adjust it up while tweaking down House/other fund…just feeling that I want to finish ER fund and boost House fund ASAP and that one year of paying a little over min for SL will not have a significant negative impact on my plans.
The suggestion on taxes and home buying are great ones. I do my own taxes and I use turbotax but in the past I have more often taken the standard deduction. I will plan to work on the form as you describe to use it as a learning exercise and to see what difference it would make with a home purchase. I appreciate you sharing your experience with buying on less than 20%. That is something I will consider.
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When looking at Turbotax, there is a specific section for owning a home. Mortgage interest, property taxes, home improvements are all tax deductable. If you have a home office and work out of it, more will become tax deductable.
You may want to price out a 1 BR condo (look at asking prices in paper for example). Then plug the amount into a mortgage calculator to see what interest rate would be, and more importantly for tax purposes, what the yearly paid interest would be. Most online mortgage calculators would give you an "ammortization table" which shows total payment, principal payment and interest payment broken down. Add up the first 12 interest payments to get interest paid for a year.
If you pay points on the mortgage, the points are also deductable the first year. Points reduce interest rate (usually pay 1% of loan amount for one point, and one point drops interest rate .125 or .25 %.