wedding/honey moon/house down payment

[Magic Johnson]

I've updated my budget. Your comments and questions are welcome.

Item	Amount
Full Time Job Income	$4,561
Part Time Job Income	$1,209
Total Income	$5,770
Estimated Child Support	$1,504
Tax/FICA Withholding	$980
Food and Toiletries	$685
Projected Mortgage P&I	$650
Gasoline	$510
Retirement Savings	$184
Health and Dental Insurance	$174
Projected Heating Expense	$150
Projected Property Taxes	$140
Money to savings	$140
Auto Insurance	$120
New Appliance Loan	$90
Phone	$84
Credit Cards	$75
Projected Home Insurance	$70
Projected Electricity	$60
Irregular Expenses	$60
Projected Garbage	$55
Internet	$30
Life Insurance	$9
Total Expenses	$5,770

[scfr]

1. Did you ever watch the Suze Orman show? If so, then you'll understand when I say "New Appliance Loan = DENIED!"

2. Don't you owe the IRS? I don't see that on here.

3. I don't see home repairs & maintenance expense on here (since it's an older house go for 3% of the home's value per year). And home insurance seems low.

4. I know I'm venturing outside of strictly financial discussion here, but I've got to ask: Is your fiance really OK with living in the home you shared with your ex-wife?

[Magic Johnson]

1. Did you ever watch the Suze Orman show? If so, then you'll understand when I say "New Appliance Loan = DENIED!" - I hear you on that, OK.

2. Don't you owe the IRS? I don't see that on here. - Yes I do, and there's a reason for that. I plan to withdraw from my 403(b) to pay off my IRS debt, truck loan, and the one credit card that has a balance that charges interest. I'll not pay off the credit card that isn't charging interest. I understand that I'll owe state and federal income taxes and a 10% penalty, but to cash flow my mortgage, I'll need to pay off those loans.

3. I don't see home repairs & maintenance expense on here (since it's an older house go for 3% of the home's value per year). And home insurance seems low. 3% - thanks for the tip.

4. I know I'm venturing outside of strictly financial discussion here, but I've got to ask: Is your fiance really OK with living in the home you shared with your ex-wife? I actually broke up with her this weekend for reasons completely unrelated to this, but she is no longer a factor in the decision. Fortunately she agreed to return the engagement ring, and I hope to sell it for about 3/4 what I paid for it, but we'll see.

[Magic Johnson]

I removed the appliance loan and added in repairs and maintenance. I added the surplus into retirement savings.

Item	Amount
Full Time Job Income	$4,561
Part Time Job Income	$1,209
Total Income	$5,770
Estimated Child Support	$1,504
Tax/FICA Withholding	$980
Food and Toiletries	$685
Projected Mortgage P&I	$650
Gasoline	$510
Retirement Savings	$313
Health and Dental Insurance	$174
Projected Property Taxes	$140
Money to savings	$140
Auto Insurance	$120
Phone	$83
Projected Heating Expense	$75
Credit Cards	$75
Projected Home Insurance	$70
Projected Electricity	$60
Irregular Expenses	$60
Projected Garbage	$55
Repairs and Maintenance	$37
Internet	$30
Life Insurance	$9
Total Expenses	$5,770

[bjl584]

You broke up with your GF?
Wasn't the entire point of this thread to help pay for a wedding a honeymoon?
I guess all that's out the window.

So, maybe you need to regroup and ask a new set of questions?
What is the goal now?

[Magic Johnson]

I want to buy my family's centennial farmhouse from my ex-wife. That's so important to me that I first thought about it about two years ago when I first started to think about the divorce settlement. I knew that she'd get the house because the woman almost always does. I also knew that she wouldn't be able to stand living there because it's my family (her ex-husband's) family house. So, I asked my lawyer to add in a first right of refusal clause so she was required to accept a reasonable offer from me. I plan to offer $148,000 for the house, which is a reasonable offer. I'll pay for a real estate appraisal to back up my offer, and offer more if the appraisal comes in more than $148,000. If the appraiser is fair and honest I can't see how it would appraise for a lot more than $148,000.

That will make for a P&I payment of about $650/mo. (30-year mortgage, 20% down, I assumed 5.2%APR). I assumed $120 for monthly property taxes and $65 for home owner's insurance.

I have adequate assets for collateral. There's the house, and I also showed all three of the mortgage companies/banks my 403(b) retirement fund balance ($200K). I haven't yet pledged anything as collateral, I've just shown the potential lenders my statement at this point.

So I want to take cash out of my 403(b). Fortunately my ex-fiance gave me back the ring, and I'll sell it online and I hope to get 75% of what I paid for it. (I paid $1,500, so $1,125).

I'd like to borrow enough to pay off the rest of the ring ($375), plus a credit card ($2,613), plus my truck ($5,361), all together that's about $8350 that I'll remove from my 403(b).

That will free up cash that will go toward my new home owning expenses.

I don't know when my wife is going to move out, but I'm sure it'll be before school starts, and probably before mid July. I know she's at least put an offer on a different house. I assume she'll come to a settlement on that house.

But before she can put the house on the market, she is bound by our divorce decree to offer me the house first. And as long as I make a reasonable (FMV) offer, I can buy the house.

I think about worst case scenarios, and the worst case scenario is that she just sits on my family farm house, and lets it rot. She'd have to keep paying property taxes, and the bank would probably eventually take it. Then hopefully I'd get it then.

But she's not going to do that, and she knows it's worth around $150K, and she'd need whatever equity she has for a down payment on the new house. So, I figure she HAS to sell, and she HAS to offer it to me first, and I want to buy it.

[bjl584]

I want to buy my family's centennial farmhouse from my ex-wife. That's so important to me that I first thought about it about two years ago when I first started to think about the divorce settlement. I knew that she'd get the house because the woman almost always does. I also knew that she wouldn't be able to stand living there because it's my family (her ex-husband's) family house. So, I asked my lawyer to add in a first right of refusal clause so she was required to accept a reasonable offer from me. I plan to offer $148,000 for the house, which is a reasonable offer. I'll pay for a real estate appraisal to back up my offer, and offer more if the appraisal comes in more than $148,000. If the appraiser is fair and honest I can't see how it would appraise for a lot more than $148,000.

That will make for a P&I payment of about $650/mo. (30-year mortgage, 20% down, I assumed 5.2%APR). I assumed $120 for monthly property taxes and $65 for home owner's insurance.

I have adequate assets for collateral. There's the house, and I also showed all three of the mortgage companies/banks my 403(b) retirement fund balance ($200K). I haven't yet pledged anything as collateral, I've just shown the potential lenders my statement at this point.

So I want to take cash out of my 403(b). Fortunately my ex-fiance gave me back the ring, and I'll sell it online and I hope to get 75% of what I paid for it. (I paid $1,500, so $1,125).

I'd like to borrow enough to pay off the rest of the ring ($375), plus a credit card ($2,613), plus my truck ($5,361), all together that's about $8350 that I'll remove from my 403(b).

That will free up cash that will go toward my new home owning expenses.

I don't know when my wife is going to move out, but I'm sure it'll be before school starts, and probably before mid July. I know she's at least put an offer on a different house. I assume she'll come to a settlement on that house.

But before she can put the house on the market, she is bound by our divorce decree to offer me the house first. And as long as I make a reasonable (FMV) offer, I can buy the house.

I think about worst case scenarios, and the worst case scenario is that she just sits on my family farm house, and lets it rot. She'd have to keep paying property taxes, and the bank would probably eventually take it. Then hopefully I'd get it then.

But she's not going to do that, and she knows it's worth around $150K, and she'd need whatever equity she has for a down payment on the new house. So, I figure she HAS to sell, and she HAS to offer it to me first, and I want to buy it.

There are a lot of "what if's" here.
I'd focus on what's in front of me now instead of what might happen, but that's just me.
Withdrawing retirement money will cause a lot of people to scream at you, as it is generally a bad idea.

[Magic Johnson]

Thanks for your reply. If you are willing, list every single what if, and I will answer every single on of them.

To be clear, I am doing this. It’s a 100% certainty.

At this point it’s a question of optimal management of the decision, and that’s why I’m here.

My 403(b) is held with TIAA-CREF, and I would argue they are the best in the world. And the long-term impact to my retirement when I make my withdrawal (according to an exercise on the TIAA website is about $25K.

savingadvice.com isn’t my only source of information. As good as you all are, you’re not the only game in town.

[bjl584]

By your own admission, you said you are broke.
Broke people shouldn't buy houses.

You did mention you were looking for houses, but you never mentioned a specific family farm house till now.

I'm not sure if the changing details are trickling out by design or just by accident.

All I can say is good luck to you, but I feel like the board is being trolled.....

[Magic Johnson]

"By your own admission, you said you are broke.
Broke people shouldn't buy houses.

You did mention you were looking for houses, but you never mentioned a specific family farm house till now.

I'm not sure if the changing details are trickling out by design or just by accident.

All I can say is good luck to you, but I feel like the board is being trolled....."

Your board is not being trolled. I have real world questions for real world people. Some of those people right now are the three mortgage officers that I asked for money. Some of those people are my family members who want to see me buy my family's original farmstead. My aunt is going to gift me money for the 20% down payment. She might want me to pay her back after my 16 year old turns 18, and that will free up about $350 per month that I can pay her back with over 10 years, starting in 2024. My parents have told me that they will lend me $3,000-$4,000 for the down payment, and that I don't have to pay them back until this next December. I have already started the process to remove enough money from my 403(b) to pay off all of my debts except my 0% APR credit card so that I'll have more cash flow to service my new debt.

I am a real person who is going to but this house, and I'm looking for all the help I can get to manage that decision, including this completely free board on the internet.

I am broke from a "cash in the bank" standpoint. I am not broke from a "money in the 403(b)" standpoint. I still have about $180K in that account if needed, which hopefully I don't need anymore.

You're right about me not mentioning anything about the farm house until this past weekend. I just found out that my ex is moving, and that triggered all of this. My sister is moving too, and that piqued my interest in buying her house (also a family house) briefly, but it's a small house and needs lots of updating. The farm house is a better house.

And I did just break up with my girlfriend, which makes my position way more flexible and I can see how a casual observer would see that as "convenient". Honestly, the availability of the farm house cemented the decision to break up with her so I could make this decision all by myself, but there were other factors already at play in breaking up with her.

Zillow.com says the house is worth about $153,000. I say that's high, and I'm going to pay to have the house appraised as soon as my ex grants access to the house to my appraiser.

Without an appraisal, my best guess is that the house is worth $145-148K, which is a decent house around here (rural Michigan, about 1.5 hours north of Detroit). I can't possibly see how that house would appraise for more than $150K or less than $125K, but that's why you hire an appraiser.

As far as the mortgage. My credit score is +740, and I make $55K through my full-time job. Very understandably, I can't use my part-time factory job income in the mortgage calculation because I've only been there for a little over a month, and I could quit at any moment. So, the income that's being used to calculate my repayment capacity is $55K/yr. My biggest cash flow hurdle is that a bit more than 25% of my gross income goes to child support. That will decrease as my minor kids age (16, 14, and 12 years old).

But there is some number that the mortgage lenders will loan, because that's what mortgage lenders do, they lend money to generate their own income. At this point, the only question is whether the number they come up with allows me to offer closer to $125K or 150K. The current number I'm using for my own budgeting is $145K.

But I've got enough money that I could liquidate my 403(b) and pay cash, but I obviously don't want to do that, especially because I'm fairly certain that I'll get approved for a mortgage that will allow me to offer at least $125K. My aunt is giving me the money for the down payment and my parents are lending me the money for the closing costs.

I am going to buy the house it's just a question of exactly when and exactly how I'm going to come up with the money. You are not being scammed.

The biggest "what if" that I've come up with is what if my truck (2010 Ford F-150) breaks down and I have to buy a new vehicle.

I've also decided that it's time to start making contributions again to my retirement fund, at least so I can start utilizing some of the employer match again.

I'm going to buy a house, I need to save up for a future vehicle purchase, and I want to start saving for retirement again.

What say you, Saving Advice?

[mumof2]

Just wondering if it would be worth putting the retirement $300pm into an ice acct for a year to help get some into that account...then focus on your retirement? that way you will have a little bit of wiggle room if something happens and then cut up the CC....also why do you pay a 1/3 of your income to child support (I live in a different country so not sure how it is calculated there....just curious

[Magic Johnson]

I don't pay a third of my income to child support. I pay 26.2% of my income to child support. I'm supporting three kids is I guess why it's 26.2%.

Another reason it's quite so high right now is that I switched jobs back in October, and I got a substantial pay increase. I work for the federal government, and it took a long time for Friend of the Court to get in touch with my employer, and I was paying my old rate based on my old job until I think this past March. So, I'm paying that amount that I got behind in arrears until it's paid off. Then my child support will decrease, but not by a whole lot. I expect I'll be in the 22-24% of my gross income range after that.

[james.hendrickson]

"By your own admission, you said you are broke.

What say you, Saving Advice?

Magic, why not just chill out for a couple of months?

So, I'm divorced, right. After my divorce I made a ton of decisions, not all of them good ones. Especially regarding dating and mental health. So, why not just relax for 30 or 60 days or whatever and give your head a chance to clear after the break up?

Honestly man, you seem like a super committed hard charger when it comes to money. A lot of the opportunities you're looking at will still be around in a couple of months. No need to make a potentially expensive decision now while you're still recovering from the break up.

If you wanted to keep moving forward, you could always grab a couple of passive income sources or make a couple of stock trades to keep yourself occupied.

[james.hendrickson]

I don't pay a third of my income to child support. I pay 26.2% of my income to child support. I'm supporting three kids is I guess why it's 26.2%.

Another reason it's quite so high right now is that I switched jobs back in October, and I got a substantial pay increase. I work for the federal government, and it took a long time for Friend of the Court to get in touch with my employer, and I was paying my old rate based on my old job until I think this past March. So, I'm paying that amount that I got behind in arrears until it's paid off. Then my child support will decrease, but not by a whole lot. I expect I'll be in the 22-24% of my gross income range after that.

Magic, do you....

1) Have a budget?

2) Track your net worth?

[Magic Johnson]

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.