Trying to figure out whats my next move (homeownership).....

[Savingmonster]

And everywhere I turn is buy a Condo.. but I am so undecided on that one..seems to be the more popular thing, and without a doubt I would jump into it IF I didn't live in nyc..

I will soon be 36 yrs old
I have no debts at all (paid off my student loans last yr)
I don't own, nor do I want a car
No children, nor...... hmmmm..
Make 74k a yr
Rent is 1,150 per mnt
100K in my 401k
Only about 12k in savings (things to all the debt I had to pay off)

The home/condo ownership things worry me, becuz I obviously don't have enough in my savings account for a downpayment on a home,.. I have a fear of being In debt, without nothing in my savings account. I don't know if I am being foolish, I don't know.

Recently, I was advised to use some of my 401k money for the downpayment on a home, it sounded good at first, but I am scared to death to digg into my 401k... I don't mean to sound like a wuss on here, but a big part of this has to do with digging myself out of crazy debt..

I was considering a co-op, but was told they r harder sell... I love renting and it works for me, but I know in my hearts of hearts, I need to own something even if it's not 100 percent ownership, thus the co-op thought...it may not be smart financially to rent till I retire...

Thing is with me is this, I want to retire at 59/60 and just walk off into the sunset, go to an island, live modestly (but comfortable) and travel... I don't see myself living in America after age 60, esp nyc, as much as I love my city now..I see hm ownership as a benefit in my case, because I see it as a way of funding my home on the islands hahaha.. extra money...but I just plan on going crazy on my 401k, contributing 15 percent as I am now and in a couple of yrs I would like to start a Roth and going crazy on that... so by time I retire, I will be just fine....

Do u guys on here think I am being stupid by not being more aggressive? Is a homeownership a must in my case, Should I spend a couple yrs to save up for the nice downpayment for a condo, or should I use that money, put it in a Roth instead? And continue to save AND use what's left a to fund my travels (I love to travel)

Btw, I joined this bored about 7year ago when I was in all types of debt, n it motivated the hell outta me to get out if it.. helped me ALOT!!!! Sorry for rambling I didn't realize I wrote so much...

[humandraydel]

Home ownership is definitely NOT a "must". If I were you I would continue to save in a Roth and after 5 years re-evaluate. It'll probably take you 5 years to save enough for a down payment anyway. A lot can change in 5 years - you might get married and have kids and want to move out of NYC.

[MonkeyMama]

I would not buy without 20% down and savings. Taking the money from your 401k is terrible advice.

I am not clear exactly on why you want to buy a home. Just because you think you should? Or because everyone else thinks you should?

I am from a high cost region and we bought a condo very early on because it made tremendous financial sense. I can't say I would be particularly motivated in a $1,150/month rent situation though. That's only about 20% of your income. Actually, as a single person I did rent. We just bought when we married, because we could not afford the rent to get a bigger space and to live together without roommates. All this to say, I would gladly rent if the rent was reasonable. & your rent sounds mighty reasonable to me.

[LizfromtheBronx]

Your rent is incredibly reasonable for NYC - are you expecting it to go up? Or are you stabilized?

I am in a similar situation (albeit not as in good of financial shape - kudos!) I'm 35, tired of playing the rent game, but buying an apartment here is sooooo incredibly expensive. On my income, using the 3x rule, I can afford to buy a studio in a crappy and/or far-flung neighborhood. Problem is, if I'm buying, I'd want something a little bigger than that to allow for life changes (I'm single now, but I do want to get married and have at least one child someday...) I have a lot more work to do before I even think about starting to save a down payment...but it's something that is often on my mind.

Sorry I have no advice for you...just wanted to say I feel your pain!

[Savingmonster]

The rent goes up every two yrs, since I do 2 year leases.. I don't even know the exact percentage, but it's 7-8 percent ever two yrs... I been there since 2006, when I first got it was $875....

Yes, I agree the 401k borrowing thing was horrible advice.. when a friend told me this, I had to do my own research, of course, it did not make any financial sense...

I was thinking of owning a home, for the tax advantages 1 and to actually have something to sell when I retire.. this way, I can have the money to pay for a home in the "tropics" lol... but others r telling me to do it, but it's just I am comfortable in my current situation, I feel like I have a lot of breathing room, stress free...thanks the previous debt and this site helping me getting out of it, I am terrific to face any more debt, esp big purchases...

But I may not need to ever purchase a home... the closest I may do is purchasing a co-op... decisions decision...

[Savingmonster]

Your rent is incredibly reasonable for NYC - are you expecting it to go up? Or are you stabilized?

I am in a similar situation (albeit not as in good of financial shape - kudos!) I'm 35, tired of playing the rent game, but buying an apartment here is sooooo incredibly expensive. On my income, using the 3x rule, I can afford to buy a studio in a crappy and/or far-flung neighborhood. Problem is, if I'm buying, I'd want something a little bigger than that to allow for life changes (I'm single now, but I do want to get married and have at least one child someday...) I have a lot more work to do before I even think about starting to save a down payment...but it's something that is often on my mind.

Sorry I have no advice for you...just wanted to say I feel your pain!

Right Liz, same here, in nyc it's just soooooo expensive.. I also don't want to move far away from the city, where I have to take buses and metronorth just to get to work, or just to come to the city to hang out.... just have a fear of using all my savings, having a house/condo and being totally broke living paycheck to paycheck..It would only feel right say, I have 70 In savings and I am able to put down say 30-40k for a downpayment.... I guess it can be accomplished if I stop traveling and just save... BUT I just don't want to compromise the traveling. I just don't want to be in any kind of debt... I will try add more to my savings, and see where I am in 3-4 yrs.. I just always want to be in control when it comes to these things...

[snafu]

@savingmonster, 1st congratulations on getting debt paid off. You made a plan and put it into action to get the results you wanted. I hope you've laid to rest the idea of using Retirement funds [401k] for a DP, bad idea on so many fronts. Not everyone 'needs' home ownership and it's horribly illiquid as an investment. There are a lot of costs over and above mortgage to buy, maintain and sell. Your rent is remarkably low for NYC.

If you are looking to invest aggressively look into international Mutual Funds or ETF. Germany looks like a good bet and with all the harby bargy in Crimean, this may be a good opportunity for an aggressive purchase depending on your risk tolerance. You have to be able to sleep at night. What do you think?

[Savingmonster]

@savingmonster, 1st congratulations on getting debt paid off. You made a plan and put it into action to get the results you wanted. I hope you've laid to rest the idea of using Retirement funds [401k] for a DP, bad idea on so many fronts. Not everyone 'needs' home ownership and it's horribly illiquid as an investment. There are a lot of costs over and above mortgage to buy, maintain and sell. Your rent is remarkably low for NYC.

If you are looking to invest aggressively look into international Mutual Funds or ETF. Germany looks like a good bet and with all the harby bargy in Crimean, this may be a good opportunity for an aggressive purchase depending on your risk tolerance. You have to be able to sleep at night. What do you think?

Thanks a lot, best decision I've ever made, making crazy sacrifices to getting out of debt. I feel more in control. Yes, I've laid the idea of using the 401k as a DP... I will look into the International Mutual funds to see if at some point I'll give it a shot.

[humandraydel]

Have you looked at the NY Times Rent vs Buy calculator? I suspect it will tell you that your breakeven point is 10 years. In that case I wouldn't buy something just to have something to sell. Just save/invest money in a taxable account and when you leave NYC you can buy a house with cash.