Quote:
Originally Posted by jeebuss31
Hey Jim,
I want to personally take the time and thank you for writing this up. I'm sure it took a lot of your time and I do appreciate it. With that being said, maybe there are some things I wasn't being specific.
Currently, I have 5% deducted from my pay and my company matches it. My wife (higher income of the two) also has 5% deduct from her paycheck and company matches. So you can say that we both have 10% and combine at 20%.
Right now, we live in a townhouse. We pay 900.00 a month(so we set aside a lot). As of today, we have $78,000 combine cash, so if we decided to go with an 318,000 loan, we can pay 20% down(no time to wait). The house would be $396,000.
Base on the feedbacks here and our families, we shouldn't have issues living comfortable now. But we're planning to have a kid in 3 years so by then, if there's no issues with the new built home, we should have ($700.00nest savings x 36months= $25,200). And that won't include our 2 other accounts: mad money account and combine funds account which include leftover from paying mortgage,debt, bills, and other payments.
My concern and I think you've address this. What happens if one of us drops to part time? We could still gross 113k-120k,but with all the savings we've accrued, could we still travel and do things? I wouldn't consider dropping part time until the kid is 2 or so. So that could be a total of 6 years of saving.
We've both been blessed with great families who will donated some of there furnitures,bbq grill etc etc.
Again, being a 1st time home buyer thank you for your patiences. I know this process can be frustrating.
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FYI 10% of x+ 10% of y is still 10% of (x+y); you are not saving 20% in 401ks. Just 10%. Look to increase 401k savings.
I don't think I understand the question- you have the money for the house, but need to figure out the budget? Or you need to save more to get into house? Or something else?
Here is what you need to plan for
a) make sure you have 3X monthly expenses in savings account.
b) when you close, make sure you have around 5k in "extras accounted for- paint, vacuum, cleaning, lawn care (mower), fertilizer, pest control, leaky roof whatever
c) get around 3-12 months expenses in a moderate account. This is for larger purchases (new roof, new driveway, new hot water heater) which occur randomly once every 10 years. If you are thinking of kids and want money to subsidize part time work, then increase this with more contributions (but only increase after d is taken care of).
d) get retirement savings up to 15% of gross pay combined. If you get 5%, plus 5% matching, you need to find another 5%- which is around 6k for you- and set this aside in 401k or Roth IRAs. If you do not have a Roth, I would start one now (5k max per spouse per year).
Get in general habit of spending less than you earn. You are doing this already if you have amassed that kind of savings, I think you could do better.
You can look at ratios forward backwards and sideways. Having cash on hand trumps the ratios. If your back end ratio is 45%, but you have 12 months expenses in the bank, that might be better than 35% with only 2-3 months expenses in the bank.
Plus look at tax return with new house payment- you will get around 3-5k more back based on your income and mortgage size (what are property taxes?).