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My husband and I would like to purchase a small cottage in the future. The price range we are looking at is between $40,000 to upwards of $100,000. We have a car loan and also owe a lump sum of back taxes but have no other debt. What would be our best bet for saving and financing for this future purchase? Thank you.
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I don't know your situation, how much income you make, and if it's from two incomes... But if I were you, with my situation, I'd get rid of the tax debt and car loan and aim to have an emergency fund that would last for 6 months of expenses. With no debt, we could save my wife's entire income while using mine to pay bills. Within a year or so, we could pay cash for the cottage.
Some may think you could save for a 20% down payment. That's fine. But my biggest concern would be having no debt and a bit of savings first. -
At that low cost, you'd probably not be able to get a loan - or if you did, it would be a LOC from your house.
So I would first pay off the car and taxes - no debt will be a smart move for you regardless of future plans.
Then I would make sure you have at least 3 months in an emergency fund and then start splitting the savings between EF and cottage funds. Plan to save the cost in full before looking and buying.Comment
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