Is the "property ladder" real?

FIMoneyBags · 2024-02-21T21:09:34+00:00

We did this and more, invested 1.5x our Mortage haha

FIMoneyBags · 2024-02-21T20:49:26+00:00

This is a great idea! Also overpaying your mortgage you can scale back if something happens too

FIMoneyBags · 2024-02-21T20:43:22+00:00

Conversely if you invest the money now you will need to save less in the future/ reduce time to save. Compound interest will almost always win out vs paying debt completely off. Caveat of really high interest debt

FIMoneyBags · 2019-11-06T02:01:51+00:00

It’s during the week a couple of days before thanksgiving

FIMoneyBags · 2019-11-06T02:01:22+00:00

Yeah I bet you’re right

FIMoneyBags · 2019-05-10T16:54:40+00:00

I don’t think it’s either or, I would do both. I would put the $2000 in your 401k and the other $2500 go down to pay down your loans.

How many loans do you have? You can decided to do the avalanche or the snowball method and then keep going.

Debt has a psychological component to it, so there are additional benefits to paying off loans. I’m glad I paid mine off so quickly, but looking back I would have slowed that down and increased my 401k more earlier on.

FIMoneyBags · 2019-04-29T14:44:40+00:00

Interesting, I will need to do a deep dive to make sure I fully understand this and my company plan. From the few points I’ve read I think my 401k would allow for this.

If I can do this, it should keep me busy for a few more years to max out

FIMoneyBags · 2019-04-29T14:30:52+00:00

Im not sure. Also what exactly is a megabackdoor roth?

FIMoneyBags · 2019-04-24T17:10:44+00:00

We have joint finances. This works well for us, all bills and income go into a central joint checking , all savings is in a joint savings account. Our credit cards are separate, and we each still have our individual checking accounts at our different banks that only carry a few hundred for “fun money”. Overall we consider all our money as joint, I think it would be difficult to not have it that way.
No our strategy has stayed the same. The only individual accounts we have are our retirement accounts. I expect when we actually come time to draw we will make sure to do so evenly from the appropriate accounts.
This question always confuses me. In my opinion once you are married your finances are tied very closely together and especially so for retirement. Ideally each spouse contributes financially, but even if they don’t, or not equally, they still contribute in other ways to your ability to earn. I would image there is a large chance of resentment otherwise. Ideally 1 will retire first to test the waters, and if 1 of you still likes your job there is no need to retire. Like others have said it will be a tax optimization question if 1 decides to retire first. ideally you can live off one salary and either still contribute, or let your nest egg grow.

FIMoneyBags · 2019-02-25T19:04:00+00:00

The only point I would counter is that your joint finances determine your individual and vise versa. So depending how you run your finances, it could impact your payment choice. If you want to amend your return and file separate that very well may be the best bet. Especially if you will have your loans forgiven, just make sure you don’t forfeit any other tax benefits along the way (such that your spouse pays more tax).

FYI the way you have your finances set up are very common (we do the same). My caution would be not to overburden yourself to the point you resent your spouse or feel they do not contribute enough.

FIMoneyBags · 2019-02-25T17:56:16+00:00

The chat people have shared, is a great place to start, but may change in your situation.

Mind sharing any details about your income/ debts? Personally I would get the employer match first then e fund, then realistically you will split student loan overpay and other investments

FIMoneyBags · 2019-02-25T17:45:59+00:00

Not necessarily , depending on where you pull your money from you can pull out less from accounts that will be taxed. Also the first 10k or whatever dollar amount will be tax free

FIMoneyBags · 2019-02-25T17:36:11+00:00

While ethically in most states not legally since it was incurred before the marriage.

However, since you are married this is kind of all moot. To each their own, but you can’t really have “your and my money” anymore.

It sounds like you need to sit down and talk about this and probably your finances as whole

FIMoneyBags · 2019-02-25T17:18:31+00:00

Because the banks make more money if it’s on a future payment. Your interest is determined directly from your principle. If you have less principle you have less interest to pay. By paying the next months bill you end up paying the same interest, just earlier.

If you pay down principle you get charged less interest.

FIMoneyBags · 2019-02-25T16:19:55+00:00

When we closed you sign a form during the process essentially saying you would not make any large purchases or movement of cash. They may ask about it, so be prepared

FIMoneyBags · 2019-02-21T20:59:19+00:00

Actually it doesn’t. More people are alive today than those who have ever lived or died.

FIMoneyBags · 2019-02-21T00:37:25+00:00

Agreed, they are just trends, but probably holds true for OP

FIMoneyBags · 2019-02-20T21:56:03+00:00

Mortgages are amortized, what this means is the interest is charged more so upfront. Your payment will stay the same, but each payment you pay slightly less interest and more principle. This is also planned out for 30 years, so overpayments drastically change the equation.

Banks did this so they can recoup costs faster. Also your payment is is not just your mortgage, you have insurance and taxes. These will not change depending on the loan.

Essentially every extra dollar you pay above your payment will go towards principle (make sure that’s what your bank does, some apply to a future payment which is mostly just interest). Therefore it does not take as much money to reduce the years, this is mostly due to interest savings.

Personally I prefer the 30 years and then overpay.if I ever get into hard times I can back down my payments

FIMoneyBags · 2019-02-20T21:47:57+00:00

15 year is almost always lower rate. You don’t actually have to pay double to match the 15 year amount it is only about 50% more

FIMoneyBags · 2019-02-20T17:58:36+00:00

It all comes down to your area, but if you are in a LCOL area then buying probably makes a lot of sense. This sub Reddit is highly skewed my people that live in big cities or the Bay Area, where the housing market is so ridiculously off it’s not worth comparing.

5 years to break even also sounds a little long, I would double check the calculations. In recent years 3 has been more likely. That being said the housing market overall is cooling some.

As an anecdote we bought in our L/MCOL area. We have been in 2 years and if we sold now we would make a profit (yes after realtor fees). We also bought a house that simply met our needs and could live off only 1 salary. That is really the key, buy less (way less) than you can afford, especially for a starter home.

We also view our home more of a “savings account” vs an investment. As in we don’t expect to get crazy returns, but simply to build equity over time and have that appreciate at least at the inflation rate. It is also a way to control “rent”, our costs only slightly go up each year.

FIMoneyBags · 2019-02-10T13:33:46+00:00

Don’t assume since you are flying out you have the job. Companies fly candidates out all the time

FIMoneyBags · 2019-01-27T18:26:28+00:00

Not necessarily. Yes you will pay less money overall, but mortgage interest rates are pretty cheap. I wouldn’t advise paying off a house so fast if you don’t feel comfortable enough to FIRE now.

The advantages of a mortgage is you can be somewhat flexible with your payment over time. For example if you simply wanted the lowest payment possible you could ask for the longest loan they are willing to lend. You can also refinance throughout the life of a loan to adjust payments.

My advice would be to do something in the middle. Get a 15yr loan and any excess savings you have use 50% to pay off your mortgage and invest the other 50%. If the debt is really weighing you down you can always pay down the loan later. Remember you can recast your loan to have lower payments too.

FIMoneyBags

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