High debt and buying a house

posted 3 weeks ago in Not Wedding Related
Post # 2
Member
9225 posts
Buzzing Beekeeper

@lulubelle2017: I personally like YNAB. It forces you to account for every dollar and only allows you to budget money you actually have (rather than based on your salary). Otherwise there’s no real secret – spend less than you earn and throw as much at debt as you can. There are lots of resources online but they basically same the same thing – you just need to find the one that resonates with you. Dave Ramsey’s not my personal favorite (no way I’m paying off a 2.625% tax deductible mortgage early rather than investing in the stock market) but he is very popular. 

Post # 3
Member
282 posts
Helper bee

Will your pension adjust for inflation? How do you plan to retire if you have debt? I assume that you have no savings. Dave Ramsey has good financial advise and he is a conservative Christian so you need to know that going in. 

Basic money advise though- First, track all of your expenses. Then, using that data, do the actual math to see where you’re spending your money. Now you can make a budget. It might be too late for this but never carry a credit card balance, pay it off in full each month. Credit card debt is financial poison.

Post # 6
Member
228 posts
Helper bee
  • Wedding: September 2020

I usually feel like personal finances are pretty common sense but based on what you’ve shared, a financial planner may be worth the expense rather than a DIY using online tools.

Personally, I wouldn’t be comfortable with anything you’ve mentioned aside from putting in the effort to accelerate debt payoff. I wouldn’t be considering retirement nor adding a mortgage and I certainly wouldn’t drain my retirement account to use as a down payment.

Post # 8
Member
2797 posts
Sugar bee
  • Wedding: August 2017

My vote is financial planner, together with your husband.  It may make sense in the long run if he has any extra $$ to pay off your (assuming high interest) credit card debt (and then cut up the cards).  I like listening to Dave Ramsey, but I agree with LilliV that my goal isn’t to pay off my mortgage early when I want to invest to have a healthy amount in retirement.  But his baby steps program may help you tackle this, or it may help motivate you.  But I would enlist a financial planner either way.

Post # 9
Member
228 posts
Helper bee
  • Wedding: September 2020

A mortgage very often does makes more sense than renting. But in order to qualify for a mortgage, not only are your credit score and down payment important, but equally important is a good debt-income ratio. That’s why I’d think a financial planner may be able to help you attain your goals as quickly as possible without tapping into your husband’s retirement. 

View original reply
@lulubelle2017:

  • This reply was modified 2 weeks, 3 days ago by bcaggee.
Post # 10
Member
9225 posts
Buzzing Beekeeper

View original reply
@lulubelle2017:  there are two schools of thought on debt repayment. Do highest interest first to save the most interest or start with the lowest balance first to pay it off fast and help you motivate to keep going. Whichever one actually keeps you on track is the best for you.

As for the mortgage vs rent – the monthly may be lower on the mortgage but you’re responsible for 100% of repairs and maintenance which can quickly add up and put you back in debt if you don’t have a healthy cushion. We recently had a plumbing leak and boom -$1,000 gone just like that. Especially as you move into retirement you may not want that hassle. 

Post # 11
Member
2797 posts
Sugar bee
  • Wedding: August 2017

View original reply
@LilliV:  agreed about ownership and unforeseen costs!  We keep an account with $10k in it just for emergency home expenses.  And like you, I had a plumbing incident (an upstairs washing machine flood that wrecked our kitchen under it), the insurance deductible was only $1000, but the damage is $50k+ 😬.  Even expected things like replacing decks, windows, roofs, etc are a huge chunk of cash.  

Post # 12
Member
282 posts
Helper bee

My husband and I run a group for young adults to teach them about finances. We do it because it’s something that my husband knows and there is nowhere else to learn it! The kids’ parents call him for advice all the time! I commend you for wanting to learn! Leave the 401k’s for later. You don’t want to take money out. As for what to pay off first, interest rate is key. Those “retirement seminars” (especially the ones in steak houses) are marketing ploys! Don’t go! Instead, take a personal finance class at a community college or online through a University (that’s not trying to sell you something.) Money is math. Take the amount you have access to and subtract the amount you actually use. Most people underestimate how much they use. Record keeping is key. I could ask my husband what we spent on Christmas cards for the last five years and he could tell me. Yeah, he’s a little obsessive but it makes it very easy to budget! Writing down every expenditure shows you where you may be able to cut back. 

As for retirement, there are formulas available online to see what you need to have in savings, assets, etc. It’s basically math with some insurance actuary who-dies-first calculations thrown in. 

Post # 13
Member
222 posts
Helper bee

Taking out a mortgage on the eve of retirement isn’t a great plan

Leave a comment


Find Amazing Vendors