Hello, r/personalfinance. I'm considering a few financial moves, and wanted to ask for opinions and advice regarding my situation. I'll go into detail and describe the moves we're considering making.
We're a 29 and 25 year old childless couple, both employed. We currently live in one of her parents' "extra" homes, rent free. Yes, it's a huge advantage, and an opportunity we're trying not to squander.
Income - $5500-6000/mo. combined take home. This is after 6% 401k (employer match) and health insurance comes out.
Expenses - We're spending about $2000/mo. total.
Debt - I owe $32,000 on my student loans (6.125% interest), she owes about $13,000 on her '15 Kia Soul (0% interest). In the past year, we have paid off about $16,000 in student loans and paid off my '16 Honda Accord ($22,000).
Assets - $30,000 cash, $10k in 401k, and a 2016 Accord (about $16-18k value today)
Now, my questions and proposed moves. We're wanting to buy a home, and almost pulled the trigger last weekend on a new build. I got cold feet, and we decided to pump the brakes and reevaluate our situation. We're not in a rush to move out of our current house, but want to turn it over to her parents soon so they can sell/rent it. They've been generous for long enough, and are near retirement. Also, we each commute about 45 minutes one way every day.
My latest plan is to buy a much cheaper, but still reliable car to get to work and back. $5,000 max. Then, sell my Accord, and using those proceeds and our savings, pay off my student loans in full. This saves ~$10k in interest over the next 10 years. Then, we plan to save until March, when I get my annual bonus ($4-6k?). This should put as at about $40k in the bank. Leaving a $10k emergency fund, that leaves $30k for a down payment and closing costs on a house. My thinking is that having less debt will make the home purchase much more comfortable and wise.
Am I missing anything? Do these sound like wise moves to make? Giving up my car is a bit of a sacrifice, but I was stupid to buy a new car in the first place. By selling now I avoid losing another year of rapid depreciation. I still have to pay the "stupid tax" for my mistake. Besides, financial stability and freedom will bring much more happiness than the car.
Thanks for reading! I look forward to hearing what some savvy folks think.
Submitted September 25, 2017 at 05:16AM by joshstanman http://ift.tt/2hpL68s
