Home ownership vst savings vs marriage

[wrk4lvg]

So here I am on the cusp of a nearly 0% debt-to-income ratio. I've picked up a part-time job in an attempt to ramp up my savings even more. I already contribute 6% (company matches 100%, the won't match over 6%). It's my understanding through these forums that I now need to work on my EF which is at least 3 months expenses which is roughly $4300. I'm at $3200.

Then from there I'm reading that I need to put more towards savings of some kind. Roth, more towards saving, or some other form of savings/retirement.

Now enter my GF of 3 years. She's a keeper, there is no argue about that. However, engagement rings are not cheap. Lets' say 3k to be conservative.

Then there is her debt. 1 CC, 2 dept store cards, 1 student loan (not 100% on the amounts, but that is a discussion we will be having and very soon) and car payment. The car payment is the largest debt and is scheduled to be paid of 03/12.

We do get roughly the same bonus amount each year 3-5k/yr. We did briefly look at homes in the area the other day and noticed that 200k is the starting point. Looking at our combined income of roughly 90k, it looks like home ownership is not in our cards. I simply can't see where 40k would come from in nothing short of 6-8 years. This means a 30 yr mortgage would put us into our 70s.

Have we (Me 32, her 34) missed the boat on home ownership? Should we just simply look at paying down her debt and continue to rent and just focus on savings indefinitely (regular savings and retirement)?

I apologize in advance if I've left out more information, but I've been pretty overwhelmed by the amount of info I've gained here already and it's pretty depressing to see just how badly we will undoubtedly suffer as a result of not starting this venture 10 years ago.

[disneysteve]

I think you need to clarify her debt situation first so you know exactly what you are dealing with.

As for getting married, an engagement ring is only as expensive as you want it to be. You can buy a ring for a couple hundred dollars or less. There is no law that says you must spend thousands, no matter what the diamond commercials try to convince you of. So get that thought out of your head.

A couple earning 90K should certainly be able to afford a 200K home. That is a very reasonable amount. And it shouldn't take 6-8 years to save the down payment. I'd say 4 years tops. If either or both of you can pick up some overtime or extra work, you could do it even faster.

[littleroc02us]

Worried that you'll never have home ownership? Hogwash! I was 33 before I became money smart. Prior to that I racked up almost 50k in school loans, cc's and other stupid debt. I listed my debts from smallest to largest and paid the minimums on all of the them except the smallest until it was paid off and then moved on to the next. Meanwhile I stopped retirement contributions and savings. I worked extra jobs and sold things. In 3 years all was paid off, some with the help of my wife.
Based on your post I don't know how much debt your GF has racked up, but it looks like she's the spender. Before you get married I would have a clear understanding on what she owes and that your worried about her finances. I wouldn't marry her unless she has told your clearly and shown action to reduce her debts without your help. Home ownership can happen sooner than you think. Also, you don't need a 30 when you can get a 15 year mortgage with 20% down. I would love to see the numbers on this whole situation to help you better. Also, what girl would ask a man to buy a 3k ring when she is so deeply in debt.

[wrk4lvg]

Looks like that talk is happening this weekend.

Will come back with definitive info soon...

[scfr]

A couple of observations:

1. Most importantly, don't despair. You guys are just in your early 30's. With good health & some luck, you will be able to continue working for at least another 30 years. As long as you stay on target and continue working on your finances, you will be just fine.

2. I know you plan to talk to your girlfriend about your debt. That's a very important discussion. Get yourselves on the same page regarding your finances now, before you tie the knot. David Bach has a book called "Smart Couples Finish Rich" (in fact that is where my user name comes from). I don't know if it is still available, but there used to be a companion workbook for that book, exercises that couples would go through together. If you can find the workbook, I strongly recommend buying it (check the book out from the library to save money, but paying for the workbook is worth the money) and go through it together with your girlfriend. She may not be at the point where that is something she wants to do, but hopefully you can make her understand that all you want is to build a good future for the 2 of you together.

3. Engagement rings are optional. You guys could decide to not get an engagement ring. You could opt for an inexpensive (perhaps second hand) or free (family heirloom) ring. You could agree to postpone the ring and make in an anniversary gift (5th or 10th for example).

4. Home Ownership: For the time being, I'd put thinking about this on hold. Get the debt paid off, build up some savings, possibly get married, and get a year or two under your belts as a married couple with good financial teamwork. Then, think about homeownership again. Remember that there are less expensive options out there (like condos, moving to a different area, etc). Also, a mortgage does not have to be 30 years. It can be 15 or 20 or 25 years or any term you like. Also, with a fixed mortgage, if your pay goes up over time but your mortgage payment remains the same (which will almost certainly happen), you can start making extra principal payments and pay it off early. It can happen, but thinking about it right now will probably just bring you down. Focus on the other things first.

[snshijuptr]

Engagement rings are not expensive, diamonds and department stores are. Here is how you buy an awesome engagement ring for a few hundred, not thousands:

1) Shop at pawn shops and jewelry marts. Just search for 'jewelry mart' in Google maps. If you live near a big city go there. These places have the exact same rings as Robbin's Bros and Macy's, and the jewelers know there stuff.

2) Don't use a diamond. Use her birth stone, a cubic zirconia (only jewelers can see the difference and sometimes only with a hook), or nothing at all.

3) Not all rings look like a single stone with a band. This is absolutely the most boring ring style possible. Shop around and go with what you think she will love.

My family is in the jewelry and pawn business, and this is the advice I and my friends/family all received.

There I just saved you a couple thousand of future debt.

[mohawkstrip]

I wouldn't feel under pressure to buy a house right now. There's plenty of time and opportunity to do that when you're ready. I personally think home ownership is a bit overrated except in select cases. You can be saving money you would have put into maintenance/taxes/insurance.

[FrugalGirl321]

Have we (Me 32, her 34) missed the boat on home ownership? Should we just simply look at paying down her debt and continue to rent and just focus on savings indefinitely (regular savings and retirement)?

I will also add that on your income, and with a 20% down payment, you should easily be able to swing a 15 or 20 year mortgage. I wouldn't even look at a 30 year at your age, income, and down payment. The payment difference is going to be only $400 and $200 on a 15 and 20 year, respectively.

[SimplySaving]

You've gotten some great advice already on here. I just want to reiterate don't be discouraged!! It DOES seem very overwhelming at first - no matter when you start. But once you start getting really serious about saving and being smart with your money - you'll be surprised what can happen. My husband received two unexpected raises since we started the Dave Ramsey plan which has allowed us to get through those baby steps faster than we ever thought we could. Don't get discouraged... just keep on keeping on.
Also - it is VERY important that you and your girlfriend are on the same page money wise. I might even look into taking a Financial Peace class together. It will really help you get on the same page - it's important that you both have the same level of distaste for debt or it will undoubtedly cause arguments and stress in the future.
I also agree about the ring - get something cheap for now or none at all. It will feel SO much better to buy your wife that expensive ring once you know you can afford it and have both worked hard towards that goal.
I would definitely not jump into home ownership just yet. Get all your other ducks in a row before you add that stress and extra cost (you never know what will go wrong with a home). But I doubt you will end up being as far off as you think if you both get really crazy about saving every penny. Good luck to you both!

[wrk4lvg]

You've gotten some great advice already on here. I just want to reiterate don't be discouraged!! It DOES seem very overwhelming at first - no matter when you start. But once you start getting really serious about saving and being smart with your money - you'll be surprised what can happen. My husband received two unexpected raises since we started the Dave Ramsey plan which has allowed us to get through those baby steps faster than we ever thought we could. Don't get discouraged... just keep on keeping on.
Also - it is VERY important that you and your girlfriend are on the same page money wise. I might even look into taking a Financial Peace class together. It will really help you get on the same page - it's important that you both have the same level of distaste for debt or it will undoubtedly cause arguments and stress in the future.
I also agree about the ring - get something cheap for now or none at all. It will feel SO much better to buy your wife that expensive ring once you know you can afford it and have both worked hard towards that goal.
I would definitely not jump into home ownership just yet. Get all your other ducks in a row before you add that stress and extra cost (you never know what will go wrong with a home). But I doubt you will end up being as far off as you think if you both get really crazy about saving every penny. Good luck to you both!

We live down the street from FPU HQ

In fact, we did go to our first class, but they didn't bring an extra FPU kit. Ordering it online was going to get it to us after week two and by the time I remembered to get to D.R. office to just pick it up, they were closed.

That being said, I've given her the quickie budget spreadsheet last night and she said she will have it all filled out by this weekend for us to go over hers as well as mine. I'm going on DR site now to re-enroll in the next course. They had a special over the christmas break for the kit that was like $85 and I didn't pull the trigger. Why? Cause I didn't want to put it on my CC! Can't win for losing.

Either way, the ball has been set in motion and I'm excited about the journey. I'm thankful that all my debt will be gone by next month. That is 1/2 the battle. I don't know 100%, but her debt should be fairly moderate, but will know for sure soon enough.

Look forward to updating all and thank all of you for putting in the time you do on all these threads for all of us.

[littleroc02us]

We live down the street from FPU HQ

They had a special over the christmas break for the kit that was like $85 and I didn't pull the trigger. Why? Cause I didn't want to put it on my CC! Can't win for losing.

Would they even let you put it on your cc? Seems hypocritical...

[wrk4lvg]

Would they even let you put it on your cc? Seems hypocritical...

I think he gave a loop hole and justification for it, but I may be mistaken. I'd have to double check.

*EDIT*

I stand corrected. Debit Card and Bank Draft only. Then I'm guessing I didn't want to spend that much on debit and couldn't put it on my CC.

Hindsight, it was for the better. Would have been self defeating at that point. Not the case this time around.

[disneysteve]

I'm going on DR site now to re-enroll in the next course. They had a special over the christmas break for the kit that was like $85 and I didn't pull the trigger. Why? Cause I didn't want to put it on my CC!

Dave Ramsey's website absolutely does not accept credit cards. I'm 100% sure of that as it has been discussed on the show numerous times.

[wrk4lvg]

Dave Ramsey's website absolutely does not accept credit cards. I'm 100% sure of that as it has been discussed on the show numerous times.

100% correct

[littleroc02us]

Whehw!!! I was nervous that I've been listening to a hypocrite.