Fork in the road, which way should my savings go?

[Strider0O0]

Hey guys, after looking around on the site for a while, I like the advice I'm reading, and decided to join today. I have somewhat of a situation and was wondering what everyone's two cents were..

I'm getting married next fall. Me and my fiance are paying for the wedding ourselves. As of right now, we're saving every penny we can, in hopes of not having to get some sort of personal loan to pay for the wedding come next fall. We have a savings goal of "x" amount of dollars needed for the wedding. We've been saving since January and are right on track to meet that goal 2-3 months before the actual wedding date next fall.

However, doing so will require using all of our savings for the wedding, leaving us with nearly nothing for a house afterwards.

So as I'm sitting here, I've been wondering if it would be better to pay for the wedding with a loan instead, leaving our savings as cash for a down payment for a house?

If so, do you think we'll run into trouble getting approved for a mortgage after taking out a decent sized loan for the wedding?

If you guys need more numbers for better accuracy(such as income and credit scores, etc) I have round about figures that'll reflect our situation closely..

Wedding cost: $38,000

His income: 50k His credit 690-710

Her income: 42k Her credit 760-790

Housing market for our area ~ $260k



Thanks for any help guys. If there's anything else I'm forgetting to mention, let me know and I'll get back to you! Thanks!

[Petunia 100]

Personally, I believe it is a big mistake to have consumer debt hanging around your neck when you buy a home, particularly your first. If you and your soon to be spouse have to wait a bit to buy your first home, that's OK. Alternatively, you could choose to spend less on the wedding and buy your first home sooner.

How much are you thinking of putting down? 20% + closing? Less?

Congratulations on your engagement.

[disneysteve]

Originally Posted by Strider0O0

I've been wondering if it would be better to pay for the wedding with a loan

I don't need to see any numbers at all to answer this question.

ABSOLUTELY NOT!

No way in hell should anyone ever go into debt to pay for a wedding. If you can't afford it, don't do it. $38,000 is way, way way too much to spend for a wedding especially on your income. You two need to sit down and decide what actually matters to you. Scale it back drastically - perhaps $10,000 or so. Something easily saved for without going into debt or wiping out your savings.

You also can't afford a 260K home on your income.

[maat55]

I agree with Steve, you are spending way too much on a wedding. My guess is that after the hangover, you will heavily regret spending this amount. Be smart, have a nice 10k wedding.

The rest can build your emergency fund and a start on your down payment. You need to put 20% down and have a payment no more than 25% of your take home pay. Following this rule will keep you from buying too much house.

[Strider0O0]

ahh wups, there's a typo in my first post. she's at 42k, not 32. i'll fix that in a minute!

i'm glad you guys are saying what we've been thinking all along. we don't want to be in debt because of our wedding.

as for the price of the wedding, 38k is a number we are comfortable with. it's an inflated number(for safety's sake) for us as well, since our total cost is actually a couple thousand less than that. we both have large families and have a guest list around 200 people, so it adds up. we've already scaled back quite a bit. please understand prices for such events vary depending on what area of the country you live in. 10k wouldn't even cover the site fee at one of the places we looked at (then ran from immediately after hearing that).

as for the house, i know $260 is out of reach right now. using that 2.5 ROT, we should be looking no higher than 230, correct? i've been searching our area lately and have found a few neighborhoods in the low 220's that we're going to check out.

thanks for your input so far guys!

[Strider0O0]

Originally Posted by Petunia 100

How much are you thinking of putting down? 20% + closing? Less?

Congratulations on your engagement.

It'll really depend on what we can afford when the time comes to really start searching around. I'm very new to all of this and have just started to read about FHA programs and their requirements.

[disneysteve]

Originally Posted by Strider0O0

ahh wups, there's a typo in my first post. she's at 42k, not 32.

That's nice but makes no difference in my answer to the question.

i'm glad you guys are saying what we've been thinking all along. we don't want to be in debt because of our wedding.

as for the price of the wedding, 38k is a number we are comfortable with.

How could you possibly be comfortable with having a party that is going to cost you 5 months worth of income for one day, maybe 5-6 hours? That's over 80% of a house down payment on a 230K home - for one party.

You've been saving for 9 months and plan to save for 10 more months. That's 19 months of work that will get blown in a few hours. Is it really worth it?

I'm well aware of the fact that costs vary by region but I'm also quite sure that not everyone in those higher costs regions spends that kind of money for an affair. My daughter's Bat Mitzvah 3 years ago ran us about 25K so I'm not opposed to having expensive parties IF you can afford them. You can't, or at least you shouldn't. Maybe 10K isn't something you are willing to do but if you can't manage to throw a reception for a lot less than 38K you're doing something wrong no matter where you live. Tell us the details of this 38K wedding and I bet we can point out places to cut costs.

[disneysteve]

Originally Posted by Strider0O0

It'll really depend on what we can afford when the time comes to really start searching around. I'm very new to all of this and have just started to read about FHA programs and their requirements.

This is a big red flag to me. You're going about this all wrong. Forget about FHA and 3% down payments. If you can't afford 20% down, you can't afford the house. And don't forget that you also need to have a 6-month emergency fund in place.

[Strider0O0]

No disrespect Steve, but I'm not asking you to go over our wedding plans. As far as you need to be concerned, all I've said is that I have a financial obligation coming up next fall that'll wipe out my savings. I am asking if it would be benificial at all to take out a loan to pay off that obligation, allowing me to use my savings for a downpayment for a house soon after instead, or if I should use my savings to pay off that upcoming situation, and then start from scratch, but with no debt, but with (next to) no savings. I'm sorry, but the price of the wedding itself doesn't concern you. Again, I mean no disrepect. Thank you.

[Strider0O0]

Originally Posted by disneysteve

This is a big red flag to me. You're going about this all wrong. Forget about FHA and 3% down payments. If you can't afford 20% down, you can't afford the house. And don't forget that you also need to have a 6-month emergency fund in place.

I've only begun to read into everything about first time home buying, so I haven't read all of the pro's and con's of their program (I do know that both exist though). What's wrong with going with an FHA loan?

[disneysteve]

Originally Posted by Strider0O0

No disrespect Steve, but I'm not asking you to go over our wedding plans. As far as you need to be concerned, all I've said is that I have a financial obligation coming up next fall that'll wipe out my savings. I am asking if it would be benificial at all to take out a loan to pay off that obligation, allowing me to use my savings for a downpayment for a house soon after instead, or if I should use my savings to pay off that upcoming situation, and then start from scratch, but with no debt, but with (next to) no savings. I'm sorry, but the price of the wedding itself doesn't concern you. Again, I mean no disrepect. Thank you.

No disrespect intended from me either but obviously I disagree with your view of the situation. You do not have a financial "obligation". What you have is a rather extravagant luxury want in mind. Should you borrow to pay for a luxury purchase? No. Should you wipe out your savings to pay for a luxury purchase? No. So neither of your choices are acceptable options. That leaves either saving longer or reducing the cost of the purchase. Saving longer doesn't really make sense so that leaves cost cutting as the only reasonable solution to your question.

[disneysteve]

Originally Posted by Strider0O0

What's wrong with going with an FHA loan?

I already answered that one.

Originally Posted by disneysteve

If you can't afford 20% down, you can't afford the house.

[Strider0O0]

Originally Posted by disneysteve

No disrespect intended from me either but obviously I disagree with your view of the situation. You do not have a financial "obligation". What you have is a rather extravagant luxury want in mind. Should you borrow to pay for a luxury purchase? No. Should you wipe out your savings to pay for a luxury purchase? No. So neither of your choices are acceptable options. That leaves either saving longer or reducing the cost of the purchase. Saving longer doesn't really make sense so that leaves cost cutting as the only reasonable solution to your question.

Well I appreciate the advice, but it's something that we will not be changing. For what it's worth, the number is closer to 32 as of right now, and might possibly be below 30 depending on a few decisions we make as the date approaches. As of right now though, we've sticking with 38k as our savings goal because it would be our worst case scenario.

[dawnwes]

If the question is "should we go into debt?" then my answer is NO!

I see that you don't want opinions on your extravagant wedding plans. However, I will say that we had over 200 people at our wedding and we spent way, way, way less than that.

My MIL made rude comments about my wedding (don't even want to get into it right now) but after 17 years, my DH is the ONLY one of her kids still married to wife #1. I told her at the wedding that I was far more concerned about my MARRIAGE than my wedding or my ring (which she also criticized.)

If it were a choice of 38K or eloping, I would be on the plane to Vegas or at the Justice's office tomorrow.

Starting your marriage out with debt and nice pictures while you can't come up with your 20% down for a house just doesn't make sense to me.

I don't see a fork here.

Dawn

[Redraidernurse]

The economy sucks, what better way to cheer yourself up than to take out a MASSIVE wedding loan to finance the princess fantasy of your dreams? All these financial fuddy duddys on here are just raining on your parade by pointing out that your plan is a TERRIBLE IDEA.

Okay, all sarcasm aside. Whoa, red flags are waving everywhere! Should ANYONE, EVER go into debt or take out a loan for a wedding? NO WAY! What a way to start a marriage! There is nothing worse than starting off a marriage tens of thousands of dollars in debt (or wiping out any savings you might have), especially if there are student loans, car loans, etc in play aleady. Your fiance thinks it's okay that you are spending almost her entire YEAR's salary on a wedding? Step back from your situation for a moment and think about how you would advise someone asking you if it was financially wise to spend an entire year's salary on an intangible object? It's not like it's a car that you can sell later if you get in a bind, a wedding will be GONE. In all reality, you will be worse off than a person going out and buying that luxury car he can't really afford because at least he can recoup some cost back.

[disneysteve]

Originally Posted by Strider0O0

the number is closer to 32 as of right now, and might possibly be below 30 depending on a few decisions we make as the date approaches. As of right now though, we've sticking with 38k as our savings goal because it would be our worst case scenario.

Well, 32 is better than 38 and below 30 is even better though still probably too much for your situation. I'm curious what constitutes a "worst case scenario" in regards to wedding planning. As I said, we hosted a 25K affair just 3 years ago so I'm familiar with all that goes into planning and executing a big party for 200 guests. We did numerous things to keep costs down because we could have easily spent well over 30K.

[KTP]

awww, let them have their 30K wedding and buy a house they can't afford using one of the government programs for little down payment.

In a couple of years when they are underwater they can just cry to the current politician in power that they will vote for him if he will reduce their mortgage. They will explain that all of the other responsible people who put down 20% or more and have not thrown huge parties or financed a lot of vacations can pay for it.

It is the current plan for everyone else in the USA in trouble, so why not them too? You guys are being unfair.

[riverwed070707]

I won't be as snarky as the others have been. While I would NEVER pay 30k+ for a one-day affair (my wedding cost $5k), I think you have the right to chose your priorities. It's great that you're planning and saving for what you want. HOWEVER, if you choose to move forward with the extravagant wedding then you're making that your priority and you need to realize that means no house for a while. It's probably going to take you another 2-3 years to save your DP after you've wiped out savings. If that's a worthwhile sacrifice to you, then enjoy your party and good job on saving. Just don't turn a good decision into a mistake by deciding to take out a loan after all or financing too much house. You can have your cake and eat it too, its just going to take longer than the timeframe you have in mind.

[bjl584]

Originally Posted by Strider0O0

Hey guys, after looking around on the site for a while, I like the advice I'm reading, and decided to join today. I have somewhat of a situation and was wondering what everyone's two cents were..

I'm getting married next fall. Me and my fiance are paying for the wedding ourselves. As of right now, we're saving every penny we can, in hopes of not having to get some sort of personal loan to pay for the wedding come next fall. We have a savings goal of "x" amount of dollars needed for the wedding. We've been saving since January and are right on track to meet that goal 2-3 months before the actual wedding date next fall.

However, doing so will require using all of our savings for the wedding, leaving us with nearly nothing for a house afterwards.

So as I'm sitting here, I've been wondering if it would be better to pay for the wedding with a loan instead, leaving our savings as cash for a down payment for a house?

If so, do you think we'll run into trouble getting approved for a mortgage after taking out a decent sized loan for the wedding?

If you guys need more numbers for better accuracy(such as income and credit scores, etc) I have round about figures that'll reflect our situation closely..

Wedding cost: $38,000

His income: 50k His credit 690-710

Her income: 42k Her credit 760-790

Housing market for our area ~ $260k



Thanks for any help guys. If there's anything else I'm forgetting to mention, let me know and I'll get back to you! Thanks!

Why are you willing to completely wipe out your savings for a wedding? If I were you I would scale back the wedding and use the money that you've saved to start your new life as a married couple. House, furniture, maybe a car. Those things will get you much further toward building a future together than spending every dime you have on a wedding. A wedding is a want, not a need, so there's no reason to get extravagent with it. The local justice of the peace will marry you for $250. That's a bit extreme, but you can have a nice wedding for less than $10,000.

Scale back the wedding to something more reasonable, then focus your savings efforts on saving 20% down for a house AND saving up a 6 month emergency fund. And, 260K is too much house for you at your income level. I'd scale back to a 200K house.

[pumpkinpie]

Ok - I have to add my two cents in here since I am facing a similar situation on both accounts. My wedding cost is projected into the 30k range, I have $110k in student loan debt, and would like to purchase a house before the wedding (gasp!). So more debt, more income, but I will have some significant help with the wedding cost.

I initially avoided the "expensive" wedding too. My fiance, my family, and his family, all stopped me from squashing the wedding. I am glad they talked me out of it (as if I had any choice). A couple of points:

You have a life, and you shouldn't wait to do nice things because you aren't comfortable with the amount of cash you have sitting in a bank account. At this rate, I won't be debt free until my 40s at the earliest. So I am learning to live with debt and be moderate about spending.

A 30k wedding is not an expensive wedding in many parts of the country. I am doing it in a suburb of MD, intenionally avoiding DC and still am not having anything special. It's a racket, but it is what it is.

As long as you are setting goals and being judicious about spending and saving, I think your wedding is your choice as is the purchase of the home. (FYI 250k won't buy you a condo near me). I wouldn't personally take out a loan for the wedding, anyway you can move it back to save more beforehand? We are waiting a year and half to help ourselves and our parents have some time to save.