wedding/honey moon/house down payment

[james.hendrickson]

Ok, I’ll chill for a while. I’m finding that the system is designed to make me chill. I just wish I could see my kids while I chill.

Yes, I have a budget.

My current net worth is $184,603.

Magic give yourself some credit man, the median net worth in the US for those in the 45 to 54 age range is $168,000 so you're doing a lot better than a lot of people.

[Magic Johnson]

Right, that’s exactly the message I’ve been trying to send all along to you guys, but a couple of you kept wanting to say I had a “mess”. Which might be true compared to all of you, but is far from the truth when I compare myself to most middle income wage earners in the US. As evidenced by the fact that I ALWAYS pay my bills no matter what.

[bjl584]

Right, that’s exactly the message I’ve been trying to send all along to you guys, but a couple of you kept wanting to say I had a “mess”. Which might be true compared to all of you, but is far from the truth when I compare myself to most middle income wage earners in the US. As evidenced by the fact that I ALWAYS pay my bills no matter what.

I'd caution comparing yourself to others as opposed to focusing on yourself.

You have a decent nest egg in retirement. Good Job
You pay your bills on time. Good job
You are living paycheck to paycheck and are contemplating liquidating part of a retirement account to give yourself relief. Need some improvement in this area

Just keep an open mind and be willing to make some changes and do some self reflection. It will be hard to change anything if you compare yourself to others and convince yourself that you have everything figured out.

[scfr]

At 3%, monthly repairs/maintenance budget would be $370 not $37. So you're missing $333 from your budget. Might seem like a lot but in addition to the routine maintenance it includes savings so you're ready to cover the new roof when the old one needs to be replaced, the new HVAC system, etc, etc. Otherwise it could become a scenaraio like "ack! The HVAC just died and now I have to raid my retirement savings again!" So much better to plan for those things that you know are going to happen eventually with a house, even if you don't know exactly when it will happen. The "rule of thumb" is 1% min and up to 3% and I suggested 3% because it's an old house. Also, you don't have a cash buffer right now so it's best to get that built up quickly if you have a house.

Here's what I see as the biggest risk to your plan: It depends on that 2nd income. Holding down 2 jobs, one of which is full-time, while having kids has got to be tough. Add the chores involved with homeownership to that and it gets just that much harder. And believe me when I say it doesn't get easier as you get older. Do you really think you can sustain that??

As you contemplate that, keep doing what you can to trim expenses. Gas: what improvements could you make to your driving habits to minimize miles and increase MPG? Food & Toiletries: What further improvements can you make? TV: Check out Clark Howard. He reviews various free options. He's my favorite "financial guru" when it comes to frugality efforts.

[Magic Johnson]

I've left an important piece of information out. I'm set to inherit my family's 200 acre farm. My parents have told me that, and they carry no debt on the farm. The current market value of that farm is at least $680,000. My parents are 75 and 78.

Usually when people sell a farm, they sell a whole farm. But it doesn't have to be that way. People can sell their farms in chunks if they want to. My family's farm is divided roughly into three chunks of varying acreages.

So, I've got about 20 years of work ahead of me. I won't be working my part-time factory job forever, but I might get a promotion at work in 3-5 years.

For my entire life I have figured out, one way or another how to pay my bills on time every single time. It's very important to me that I do that because I have pride.

[james.hendrickson]

I've left an important piece of information out. I'm set to inherit my family's 200 acre farm. My parents have told me that, and they carry no debt on the farm. The current market value of that farm is at least $680,000. My parents are 75 and 78.

Usually when people sell a farm, they sell a whole farm. But it doesn't have to be that way. People can sell their farms in chunks if they want to. My family's farm is divided roughly into three chunks of varying acreages.

So, I've got about 20 years of work ahead of me. I won't be working my part-time factory job forever, but I might get a promotion at work in 3-5 years.

For my entire life I have figured out, one way or another how to pay my bills on time every single time. It's very important to me that I do that because I have pride.

Why not just start farming their farm?

[Magic Johnson]

Because I'd have to buy at least $2,000,000 worth of equipment, and you need to farm at least 1,500 acres of ground to make a living around here. And I'm almost 50 and I have a good job.

[disneysteve]

I've left an important piece of information out. I'm set to inherit my family's 200 acre farm. My parents have told me that, and they carry no debt on the farm. The current market value of that farm is at least $680,000. My parents are 75 and 78.

I don't think this changes anything for your situation. At 75 and 78 unless they're in very poor health, it could be 15-20 years before that inheritance happens and many things can change during that time (like long term care needs, for example). I'd definitely not factor in any inheritance when you're doing any of your planning. I'm 57. My mom is 91. A good friend of mine just lost his mother in law the other day. She was 99. Hopefully you won't see that inheritance for a very long time.

[Magic Johnson]

"I don't think this changes anything for your situation. At 75 and 78 unless they're in very poor health, it could be 15-20 years before that inheritance happens and many things can change during that time (like long term care needs, for example). I'd definitely not factor in any inheritance when you're doing any of your planning. I'm 57. My mom is 91. A good friend of mine just lost his mother in law the other day. She was 99. Hopefully you won't see that inheritance for a very long time."

What that I said implied that anything is different, or that I'm planning on this ground for my retirement?

Because I listed my parents age, did I imply that they're going to die soon? Because I didn't write anything closely related to that.

Because I listed the value of the farm, did I somehow imply that I plan to sell it? I don't plan to sell the farm when I inherit it, because It's s source of great pride to pass a farm to the next generation whether you farm it or not. I want to pass that farm to my kids so that they have that financial security of having the farm. Why in the world do you think my parents are sitting on an asset in excess of a half million dollars that generates them somewhere between $40-50K per year, before property taxes?

My family has owned this farm since 1882. I'll be damned if I'm the kid that sells it. But I will sell a chunk or two if I have absolutely no other option. That will be a hard decision. Buying this house is an easy decision.

[Magic Johnson]

You need to understand rural sociology to get where I’m coming from.

In a US rural community, an owner of farmland is rich. Farmland offers financial security that you never want to spend, other than the rental income that it generates, whis isn’t as much as if you had sold it.

But anyone who sells farmland is considered either a failure or a sellout.

[Magic Johnson]

When my grandpa was in his mid 80s and couldn't make decisions anymore about whom should rent the ground, and what the rental rate should be, he retained ownership of the ground, but transferred decision making to my dad. I was in the room when this happened, and I witnessed all of it.

Along with decision making, my grandpa also transferred the entirety rental income to my dad. I would guess dad also paid property taxes, but I'm not 100% sure.

I'm not planning on anything, but what do you suppose my dad is most likely to do in 10 or 15 years when he can no longer make the decisions required by being a landlord?

[disneysteve]

What that I said implied that anything is different

Sorry if I missed your point. You said that you left out an important piece of information. If you don't expect to inherit it soon and, even when you do, you don't plan to sell it, what is important about it to your current situation?

[scfr]

Any rental opportunities with the house you plan to buy (either rooms in the house or outbuildings or garage space)? Somehow you need to come up with some extra money to make your plan fit your circumstances.

[Magic Johnson]

"Sorry if I missed your point. You said that you left out an important piece of information. If you don't expect to inherit it soon and, even when you do, you don't plan to sell it, what is important about it to your current situation?"

What if I had said that my folks were 62 and 64? Would that have communicated a certain set of assumptions about their health and longevity? What if I had said that they were 92 and 94? Maybe another set of assumptions about health and longevity.

My point is that they are 75 and 78. Draw from that all the assumptions you have about their health and longevity.

I have a retirement income projection spreadsheet, where I have my current retirement fund values, assumed contributions, assumed growth, and assumed withdrawal rates. I have my assumed Social Security income starting at age 70. I don't know when I'm going to start drawing SS, but I had to pick an age, so I picked 70.

I assume in my spreadsheet that I'll start collecting rental income from the farm the year my mom turns 99. I don't know when my parents are going to die. I had to pick a number, so I picked the year my mom turns 99.

How likely is it that either of my parents will be alive the year my mom turns 99?

"Any rental opportunities with the house you plan to buy (either rooms in the house or outbuildings or garage space)? Somehow you need to come up with some extra money to make your plan fit your circumstances."

I don't know. I'd make a terrible landlord. I can't fix appliances and leaky faucets. I hire that stuff usually. I'd hate having to collect rent, especially if they were chronically late, and especially if I was sharing a living space with them. Some people seem to enjoy challenges like that. I don't. Instead, I work 60 hours a week at two jobs, and take weekends off.

[mumof2]

So when you retire are you going to retire to the farm? and do you have any siblings that might want the land as well...and what happens if your children don't want the land...I'm just curious!!