Analyze my situation - net worth, saving for wedding, buying a home

[nyliguy]

Here's my net worth. Currently preparing for a wedding, fiance will be contributing as well and hopfully all my cash won't go towards $40k wedding plus $5k honeymoon. I know it seems high considering my net worth, but I live in New York were wedding gifts are normally all cash so while the wedding cost is high the gifts should cover at minimum 50% of the cost with 250 guests gifting the bride and groom $100+ each. I go to weddings and me and my fiance always cover our plates of the avarege wedding plus some by gifting $300

Currently only contributing 5% to 401k with a employeer match, in that I'm saving for the wedding and plan to put as much money down on a home as possible.

I hope after the weddingm I can start aggressivly saving for a down payment on a $400K home, than bump up my retirement savings. Once our incomes are combined we should be in better shape, as our combined income is $150k although she brings a negative net worth with school debt.

Assets

Cash $33,669
HSA $1,475
Retirement $26,517
Car $11,000
Apartment security $3,260 (2 months rent)
Total Assets $75,921

Debts

Student Loans $12,736
Credit Card $6,606
Car Loans $4,875
personal loan $3,765
Total Debts $27,982

Net Worth $47,939

[bjl584]

The wedding is WAY too expensive for your income, your net worth, and the amount of debt that you have. A $40K wedding plus a $400K house purchase plus your wife having negative net worth equals financial disaster.

You will need $80K minimum for a house down payment. Scale the wedding back and saving this much will be a lot easier.

I'd get rid of the debt way before I'd ever think about spending that much on a wedding. All but the student loans anyway, and even then $40K is too much for a wedding.

[nyliguy]

The wedding is WAY too expensive for your income, your net worth, and the amount of debt that you have. A $40K wedding plus a $400K house purchase plus your wife having negative net worth equals financial disaster.

You will need $80K minimum for a house down payment. Scale the wedding back and saving this much will be a lot easier.

I'd get rid of the debt way before I'd ever think about spending that much on a wedding. All but the student loans anyway, and even then $40K is too much for a wedding.

My networth represents now, with a wedding cost left of aproximalty $29k to pay. With 200+ guests plus parents gifts I'd assume I might get back $30k in gifts.....so between already getting help from family covering some costs of $5k and using engagement party gifts of $3k this is how I see my situation.

Suppose I take my $29k and pay off the wedding cost. Than after that between my finance and myself we would have at least $2.5k month to save. So two years after the wedding I see us having the $80k for the home. If not while I know it's not financially wise to put down less I have lots of friends that did FHA loans to purchase their home with little down payment but they pay PMI. Getting older I think taking the risk is worth it to start a family and live my life and not worry so much about money and when I'll be in the 'right' financial position to do it.

[breathemusic]

You've got a pretty decent amount of cash sitting on hand... is there any reason that you're still hanging on to all those little debts like the personal loan and car loan, etc? Why not pay those off and spare yourself the interest?

Of course, if your intent is to put all of your wedding expenses on credit cards that are going to carry a much higher interest, then you should be putting all your extra cash toward paying off as many wedding expenses as you can rather than having them build interest.

While I personally think $40 is high for a wedding, you're also in NY where everything is expensive and I think people want what they want. If you make the wedding a priority, you can find a way to make it work. Just don't get yourself in a situation where you're signing on a home when you're still paying off wedding debt and don't have a decent down payment saved up.

Sure, you don't need to have the full 20% down to buy, but you should get as close as you can.

Keep in mind that most of the people who regularly use this board are VERY financially conservative, so they're going to be all about having ALL of your debt paid off before buying a home. It's definitely a financially smart move, but I think sometimes it's reasonable to realize that people can responsibly manage their finances and still have more debt than just a mortgage. But you have to be careful about it and don't put yourself in a situation that bites you in the butt later.

My one major concern is that you're banking on getting a pretty hefty sum in wedding gifts. Sure, that very well may happen. But I don't know if it's wise to just make that assumption up front and make financial decisions that would require meeting that expectation.

[prf2009a]

My networth represents now, with a wedding cost left of aproximalty $29k to pay. With 200+ guests plus parents gifts I'd assume I might get back $30k in gifts.....so between already getting help from family covering some costs of $5k and using engagement party gifts of $3k this is how I see my situation.

Suppose I take my $29k and pay off the wedding cost. Than after that between my finance and myself we would have at least $2.5k month to save. So two years after the wedding I see us having the $80k for the home. If not while I know it's not financially wise to put down less I have lots of friends that did FHA loans to purchase their home with little down payment but they pay PMI. Getting older I think taking the risk is worth it to start a family and live my life and not worry so much about money and when I'll be in the 'right' financial position to do it.

You're on the wrong board if that is how you view your situation. If you do not like the advice you are getting I would at least encourage you to take pieces of the advice and apply it to your situation. In particular get rid of your debt. You can knock that out easily at $2.5K per month and get yourself into a much better situation.

[nyliguy]

You've got a pretty decent amount of cash sitting on hand... is there any reason that you're still hanging on to all those little debts like the personal loan and car loan, etc? Why not pay those off and spare yourself the interest?

Of course, if your intent is to put all of your wedding expenses on credit cards that are going to carry a much higher interest, then you should be putting all your extra cash toward paying off as many wedding expenses as you can rather than having them build interest.

While I personally think $40 is high for a wedding, you're also in NY where everything is expensive and I think people want what they want. If you make the wedding a priority, you can find a way to make it work. Just don't get yourself in a situation where you're signing on a home when you're still paying off wedding debt and don't have a decent down payment saved up.

Sure, you don't need to have the full 20% down to buy, but you should get as close as you can.

Keep in mind that most of the people who regularly use this board are VERY financially conservative, so they're going to be all about having ALL of your debt paid off before buying a home. It's definitely a financially smart move, but I think sometimes it's reasonable to realize that people can responsibly manage their finances and still have more debt than just a mortgage. But you have to be careful about it and don't put yourself in a situation that bites you in the butt later.

My one major concern is that you're banking on getting a pretty hefty sum in wedding gifts. Sure, that very well may happen. But I don't know if it's wise to just make that assumption up front and make financial decisions that would require meeting that expectation.

Good advice on not expecting the gifts, I have friends that say "you'll make it all back, I did" and I'm hesitant to beleive that and thought saying 50% was a better assumption, although you're right and I might not get much back. I'm certainly not banking on the money returned and still plan to aggressivly save after I'm done paying for the wedding.

The personal loan was a $5k@ 1.75% 2 year, so I consider the $92 paid in interest over the two years some insurance that I have the cash for wedding expenses.

The car loan I had for a few years and in the end of the loan so payment is mostly princple so I dont see it making sense to pay it off, as I already paid the interest on it. Hindsight I shouldve paid it off more than the monthly payments and saved at the same time but I was trying to grow my savings.

What's not reflected in my Net Worth is the $10k I already spent on an engagement ring. Soem might say this was way too much as well, but being a frugal guy I didnt want to show my frugal ways on the one I love and the cost and beauty of the ring shows I'm not always a cheapskat and sacrificied to show that to my fiance.

I think if we did not have the wedding expenses, we could have $2.5k month to save for the down payment and pay off the student loans that are very VERY high ($80k combined for us both). Once we knock out some of the loans or consolidate them the monthly payment will go down and we can save and pay more towards the debt principle. Our income will also increase from $150k combined as we both have corporate professional jobs and early in our careers.

Thanks for commenting, I appreciate the feedback.

[nyliguy]

You're on the wrong board if that is how you view your situation. If you do not like the advice you are getting I would at least encourage you to take pieces of the advice and apply it to your situation. In particular get rid of your debt. You can knock that out easily at $2.5K per month and get yourself into a much better situation.

I apologize if it seems like I don't like the advice. If anything, I'm falsy denying my sitiation and making the 'best of it' as I'm already in it for the wedding and just see the ability to aggressivly save after the wedding and get back on track with paying down debt and saving.

My finance gets a year end bonus (hopefully $5k)and all our tax refunds and such go to student loan payments. Our goal will certainly be to pay off the debts fast. I'm just trying to balance it all and still live my life.

I haven't vacationed in years, don't spend much on myself, follow a strict budget all in the name of getting married, buying a home, having children....so if I seem to not be taking the advice it's just me wondering how I can do it all and not wait for the perfect moment in life when my finances are in order to buy a home and start a family.

[BuckyBadger]

I agree with many of the others. I think that you are setting yourself up for a VERY difficult time down the road.

However, you have your rebuttals to everyone's comments, so you obviously don't believe that your current plans will lead to any problems. You're basing a lot of your decisions on a lot of very beneficial assumptions.

You'r already bought the ring, you've already (from what I understand) committed to the $40k price tag. You seem to be asking for assurance or validation that you're not digging yourself into a pretty deep hole, but I really don't think you're going to get that here.

You make $150,000 a year. You are over $100,000 in debt. You want a $400,000 house. You assume you'll make $20k in cash gifts. You assume that you'll both keep your jobs and get big raises. You assume that you'll be able to knock out and consolidate loans. You assume that you two will not have any costly emergencies.

My personal opinion is that you can not afford a $10k ring and a $40k wedding, but it's probably too late for that advice, isn't it?

[nyliguy]

I agree with many of the others. I think that you are setting yourself up for a VERY difficult time down the road.

However, you have your rebuttals to everyone's comments, so you obviously don't believe that your current plans will lead to any problems. You're basing a lot of your decisions on a lot of very beneficial assumptions.

You'r already bought the ring, you've already (from what I understand) committed to the $40k price tag. You seem to be asking for assurance or validation that you're not digging yourself into a pretty deep hole, but I really don't think you're going to get that here.

You make $150,000 a year. You are over $100,000 in debt. You want a $400,000 house. You assume you'll make $20k in cash gifts. You assume that you'll both keep your jobs and get big raises. You assume that you'll be able to knock out and consolidate loans. You assume that you two will not have any costly emergencies.

My personal opinion is that you can not afford a $10k ring and a $40k wedding, but it's probably too late for that advice, isn't it?

What makes you say I can't afford it, I have the cash to pay it all in full. The debt is student loans at low interest rates, and can be paid down if needed. But why put cash towards it and not have the opportunity cost to use the money on other things.

If I took my cash and use it on the wedding and my own debts, I would be back to zero and able to save more a month and grow my networth at a faster rate.

I'm not 100% rebuttaling, but rather enforcing my opinion that there's a way to balance debt and still spend.

[BuckyBadger]

What makes you say I can't afford it, I have the cash to pay it all in full. The debt is student loans at low interest rates, and can be paid down if needed. But why put cash towards it and not have the opportunity cost to use the money on other things.

If I took my cash and use it on the wedding and my own debts, I would be back to zero and able to save more a month and grow my networth at a faster rate.

I'm not 100% rebuttaling, but rather enforcing my opinion that there's a way to balance debt and still spend.

You say that you have the cash to pay for it, yet you have $100,000+ in debt. It doesn't matter if it's student loan debt or not -- ignore that and you still have $30,000 in debt.

If I borrowed $30,000, then I would have $30,000 in "cash" to pay for something, too. But I would still owe that $30,000 to someone.

And it seems dangerous to spend 1/3 of your combined annual gross salary on a wedding. But that's just my opinion.

We spent $10,000 on our wedding 5 years ago. (Plus $10k from my dad for a $20k wedding.) We had no debt. We made about what you make with one of us working and one of us in grad school. For what it's worth, we maybe got $2k in cash gifts.

[nyliguy]

"while the wedding cost is high the gifts should cover at minimum 50% of the cost."

You know what they say, when you assume you make an "ass" out of "u" and "me". You should not count on receiving any money for your wedding. If you do receive money, use it to pay off other debts or build your EF.

A $40,000 wedding seems quite high, as others have said. My wife and I were married about 8 years ago and had a very nice wedding for about $3,000. I realize that was 8 years ago and we live in Indiana, but if you figure 4% inflation over those 8 years, in today's money that would be about $4,100. I know things are more expensive in New York than in Indiana but I find it hard to believe that it would be 10 times greater. I would look at cutting back some of the cost of the wedding.

"all our tax refunds and such go to student loan payment."

If you are getting a large (over $200 IMO) tax refund, you should re-evaluate your withholding. Why let the government use your money interest free when you could have it to pay bills or invest? By the way, great idea to apply any extra money to get out of debt.

"with a wedding cost left of aproximalty $29k to pay."

With the $33,000 in cash that you have, you basically have your wedding covered. I would try to cut back some on the wedding and honeymoon. If you could cut $3,000, you would have enough money right now to pay for the wedding, honeymoon and still have $1,000 in an EF. If you receive money for your wedding, you can build your EF and also pay off your debt.

Before you buy your house, you should be completely debt free, have an EF of 3-6 months expenses and have a 20% down payment for your house. You should also get a 15 year fixed rate mortgage. I know you probably won't wait until you are in this position, but the closer you are to being in this position, the better it will be for you.

Remember, if you are not financially prepared to buy a house, your dream house could turn into a night mare.

Congratulations on your upcoming wedding and best wishes to your and your future bride!

Thanks for the tips, I agree and will do my best (against my Fiances' will) to be in the best possible position with knocking out the debt and saving 20% for the home. I put $400k home but $325 would be more realiztic, in regards to the down payment amount and considering property taxes here run close to $1,000/month.

I see what you're saying on assuming wedding gifts, and it's not me banking on this or anything but just based off of my experience with all our friends. Our wedding consists of 80% friends whom which we attended each others weddings and basically know everyone gives each other cash gifts. Also, my brother and sister who were married recently I also know my parents gave a large sum of money as a wedding gift.

[nyliguy]

We spent $10,000 on our wedding 5 years ago. (Plus $10k from my dad for a $20k wedding.) We had no debt. We made about what you make with one of us working and one of us in grad school. For what it's worth, we maybe got $2k in cash gifts.

No debt, one working earning $150k yet I'm curious how did you pay for your tuition in two of you getting an undergrad degree, masters, and PHD?

[BuckyBadger]

No debt, one working earning $150k yet I'm curious how did you pay for your tuition in two of you getting an undergrad degree, masters, and PHD?

Grad school in the hard sciences. We were paid to go to school as research assistants. Our tuition was paid for and we were paid a salary. When we got married, my husband had just finished his PhD and started at his first post-graduate work.

Through a combination of scholarships, working throughout the year, and parental help, we were both able to complete undergraduate degrees at top tier institutions with no student loans.

Post graduate degrees don't have to cost anything -- you just have to pick the right ones. Med school, law school, and grad school in the social sciences will cost you dearly. Grad school in the hard sciences will still pay your way.

[breathemusic]

I'm a little less conservative than some of the others here... I still think that you can reasonably balance a little bit of Student loan debt with a mortgage, and maybe even not have a full 20% down.

Sure, having zero debt and 20% down is ideal, but it's not unmanageable if you don't do it that way. And of course there's always the risk of someone losing their job, etc. But that's where it's up to the individual to make a realistic assessment of their own skills vs. what the job market is like in their particular specialty etc and make that determination.

Though I think it would be worth paying off at least some of your student loans before buying a house so that all of your minimum payments aren't so high.

Bottom line, it seems to me like it's really too early to know what the best course of action is. Just concentrate on getting through the wedding and having that and the ring all paid off. I think once you get all your gift money and know what is still left to be paid, you'll be in a better situation to assess your finances. Until then, it's all just assumptions and guess work.

[phantom]

Thanks for the tips, I agree and will do my best (against my Fiances' will) to be in the best possible position with knocking out the debt and saving 20% for the home.

That line "against my Fiances' will" puts some red flags in my mind. It is very important to be on the same page with your future spouse about money before you get married. Money fights are a leading cause of divorce after all. If you haven't talked to her seriously about money yet, do it right away. Try to reach some consensus about how the two of you want to handle money before you get married. Although, I have to agree with most of the advice in this thread, I believe that being in agreement with your fiance is more important than being in agreement with the people here. (Of course, I'm assuming she isn't completely crazy when it comes to money, because you've given me no reason to think that she is.)

From reading through this thread, I get the impression that you would be more of a saver than you currently are if not for the people around you. You're spending a lot on your wedding and hoping to get a lot of it back because that's what your friends do, and you bought a $10,000 engagement ring to show that you could. If you truly have reservations about whether or not these things are worth so much money, I think you need to step back from what is expected and what everyone else does and decide whether or not it's what you really want to do. If the cost of the wedding is already set in stone, so be it. But, for things that haven't been set yet, like how you will handle buying a house, you and your fiance should give some serious thought to whether you want to do it the way everyone you know does or whether you want to try to find a better path.