Change of Plans (Yet Again), I'm Going to Save Up for a House

"Wobbles the Mind" (wobblesthemind)
09/03/2019 at 17:47 • Filed to: New Goals

I severely underestimated the benefits of minimizing recurring monthly payments alongside now being 100% debt free. The primary benefit is in the speed of accumulation, which is something that never comes across in financial discussions but is as potent in the short term as compounding is in the long term.

If I keep away from major lifestyle changes for another 10 months, I can have a paid off home by 2022, remain debt free, and be in an awesome position for marriage, kids, career, giving, and starting all the projects I have in mind including my ridiculous dream garage by 34.

Since the sacrifice isn’t much, and all the cars I love are only getting cheaper, I’m going to continue to defer my dreams and leave Langston Hughes, rhetorically speaking .

DISCUSSION (11)

M.T. Blake > Wobbles the Mind
09/03/2019 at 17:53

“Do it!!!”, said a guy who did it.

Chariotoflove > Wobbles the Mind
09/03/2019 at 18:02

Well done.

Thomas Donohue > Wobbles the Mind
09/03/2019 at 18:04

If I understand correctly, you want to save up so you can buy a house for cash ( without a mortgage) in 2022?

Keep in mind that mortgage rates right now are very, very low. I admire your debt-free situation, but a 15 or 20-yr mortgage at 3% or less on a reasonably priced house isn’t the worst thing. Especially one that needs to be renovated, if you’re into that kind of thing.

Plenty of investments will likely return way more than that over the next 20 years.

*Past performance is not an indicator of future value. Also, I definitely did not stay at a Holiday Inn last night . Nor am I in any way the best person to give financial advice. Etc.

MrDakka > Wobbles the Mind
09/03/2019 at 18:09

This is my plan as well, but for 2024/5 and an apartment/condo instead of a house

RallyDarkstrike - Fan of 2-cyl FIATs, Eastern Bloc & Kei cars > Wobbles the Mind
09/03/2019 at 18:12

Good decision...I still live at home right not to save up for a house....not doing too badly at all, actually...it will be very nice to be able to get one and have not all that much debt when the time comes...

SilentButNotReallyDeadly...killed by G/O Media > Wobbles the Mind
09/03/2019 at 18:25

If Old Me could go back in time and tell Young Me this lesson...that would be awesome. Of course, Young Me wouldn’t listen because they are some things that can only be learned through actual experience ...debt is one of them.

Wobbles the Mind > Thomas Donohue
09/03/2019 at 18:36

I can finance a bit, just more in line with a “new BMW X7" level loan rather than an “affordable house” level loan.

(You gave different numbers, but I’m, going to use these ones since they work more for where I am). A $200,000 mortgage over 15 years at 4% would cost me $22,227 in interest during the first three years. Add in increases in furnishing, upkeep, taxes, and so forth and you can see that me renting for 3 years at $10,000 per year is cheaper since I havent added in money to actually attack the mortgage principal nor have I been in the home long enough to build any real equity without doing the work.

My issue with the investing argument is that the house IS the investment since the function is the same as trading a security, buy low and sell high. Problem is that a house costs money to hold unlike a stock (excluding ETFs, mutual funds, and what not). If I invested the money, I would still be taking 4% out of my return to pay for holding my other investment (the house). That means I would need to return 4% above the market just to be break even with the average annual return.

I don’t want to pay 4% simply to hold an investment and then have to outperform the market just to break even with the market.

Y ou’re 100% correct on financing something reasonable at a low interest rate. Big time matters.

Wobbles the Mind > Chariotoflove
09/03/2019 at 18:50

It’s all to afford used British and Italian cars. I still think a 2013+ GranCabrio costs less than a 1st gen Panamera 4s to keep though... If I can manage to do both a GC and a house , I promise you I will!

superdave847 > Wobbles the Mind
09/03/2019 at 18:58

This depends on what housing market you’re looking at.

Chariotoflove > Wobbles the Mind
09/03/2019 at 19:53

Owning a home and avoiding other debt is the most important thing for security. Once those are accomplished, I think everything else in life tastes sweeter.

Neil drives a beetle and a fancy beetle > Wobbles the Mind
09/03/2019 at 21:22

Fiscal responsibility as a car person is a major downer...(me on a week to week basis- “I’m going to get a 135i” “no, no, no... pay everything down” “man I want a 135i” “imagine what you could do with the money from the car payment and insurance payment ”)

I like your plan though; a house is a great bet.