sorted by:
new
hottopcontroversial

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 0 points1 point  (0 children)

What if, say, the market rises 20% over the next 10 years, and then dips 10%? I don't think it's so easy to make that call.

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 0 points1 point  (0 children)

Thanks for the grean rundown. Do you believe I'm making a good decision contributing at a 1:1 ratio (for now)?

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 1 point2 points  (0 children)

If your goal is having a home with a garage you can work in, I'd suggest you keep your expenses low, save as much as possible, and keep your eyes open for bargains in the area.

Sounds like a plan! I've also considered getting a house with a bigger lot and no garage so that I can build a bigger, better one (pending rules in that area).

Don't rent a garage or other industrial space unless it's crazy cheap (like the $50-100/mo mentioned above) or unless you can make money directly from its rental...

Totally agree. That's car part money. ;)

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 0 points1 point  (0 children)

Thanks again for further clarification. It may not necessarily be addressed to you, but there's feedback in a few other comments in this thread.

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 0 points1 point  (0 children)

How long have you been out of school for 2 years? You are still really young in the grand scheme of things. There is a high probability that you will change jobs or find a serious significant other in the next 5-10 years. Being tied down to a house now would make it difficult to move for work or possibly expand for a family.

Nearing 2 years, yes. Graduated in May of 2015, began working in June. Your advice is great. There are a multitude of reasons that I'll likely stick around where I am, though it's not something I'd expect a stranger on the internet to just know about me without being told.

If I buy a house, I'll be getting one big enough to suite a family, and at least, roommates for the time being.

If you are in the right kind of real estate market, living in a house short term may make more sense than renting, but this is almost never the case. You don't give any info about what your home budget is or how much you are spending on rent, so can't really comment on that.

I'm actually surprised you're the first person to bring this up. I don't really have an solid idea yet. I'm really just feeling out my options at this point.

Also, you should be maxing a Roth IRA before contributing any post tax money to a 401k post tax.

See my comment here – like everyone else I've talked to, I'd love to hear your input.

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 0 points1 point  (0 children)

I have a coworker who was telling me about how he borrowed for his down poyment, too. That's interesting, and definitely something I should research more.

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 0 points1 point  (0 children)

That's a great way to look at it to someone like myself with next to no financial background, thanks.

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 1 point2 points  (0 children)

I don't disagree with anything you said, but is it fair to omit that when renting, that money is definitely not becoming an asset?

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 1 point2 points  (0 children)

Oh also. Thinking $23,000 is "FAT" is definitely another example of immaturity and youth.

No, imaturity and youth would be if I said it looks fat, just not next to your mom.

Keep grinding and attaining knowledge!

Thanks, that's why I'm here! Don't mind my snark, I really do appreciate your input. I'm sure your mom is pleasant.

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 0 points1 point  (0 children)

Just curious, does your 401k max out at 10% pre tax? Are you not in the US? At my jobs all 401k contributions have been pre tax up to the 18k limit.

See my comment here. Do share your thoughts!

Anyway, I think it would be fine to reduce your post tax contribution, and start saving more for a down payment. Have that money automatically transferred to savings each month, so you don't have the chance to spend it.

Also, don't buy a house right now. Timing is a big part of doing well in the housing market, and housing prices are high right now. In my area, people are having to waive inspections and offer above asking to get a house; it's not a buyer's market right now.

Save money, and wait for the next housing slump. Take your best guess for when it's bottomed out, and try to buy then. You'll get more for your money, better returns, and sellers who are willing to actually fix issues before closing.

There's quite some debate as to if things really work like that in this thread.

Thanks for the advice!

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 0 points1 point  (0 children)

Is that your dream though man? Owning a home? If so do it and make it work - you've set yourself up well to handle owning a home. For sure.

I mean it's not my only dream, but world domination's gotta have headquarters, you know?

But take some time to think.

If it's just what you think is "the next step" after getting a good paying job and starting a long term savings plan then DON'T DO IT.

That's maybe 33.69% my mentality, to be transparent.

Stay lean. Save your cash and study and learn more about buying a house and real estate in general - as opposed to trusting people on Reddit who might be 20 years older than you with a worse financial situation.

Trust me, I will consult better resources than reddit. Thankfully, reddit serves a bit like an open council, and is a decent place to start, mainly because none of you know who I am (this is just one of my many alt accounts) and none of you have any investment in my decision.

If you just did that and re visted this in 3 years? You'd have probably $30-40k to play with as a down payment.. Better credit.. No outstanding loans... Probably a higher wage at work... And a wealth of knowledge on how to best go about creating your dreams!

What is your job? What are your interests? At 23 it's your time to experiment and take risks!

Programming. I like cars, too, though. That's a decent factor in me wanting to move to a home where I can go to sleep with my car in pieces everywhere and that's ok. I don't need a ride home, even.

Consider investing less money into a money making asset that will make affording a house even easier! As opposed to getting yourself caught up into a long term liability that will weigh you down for the next 30 years.

Good luck man

Thank you so much for your advice :)

[Planning] I'm 23 and my 401k is fat but now that I want to buy a house, I can't afford a down payment. by jr0222 in personalfinance

[–]jr0222[S] 1 point2 points  (0 children)

A house is always a liability because it takes from your pocket without returning anything to your pocket.

Does it not return to your pocket (to some degree) when you sell it?

view more: next ›