I have $3,700 in my hospital 401k avaiable december 20 2008. I’m loosing my house need to make a payment, need transportation.
Can someone wants to help me and buy from me now and collect december? please help give some advice. mai

Um, I don’t know how much you have saved for retirement, ef, etc. But it sounds like you can swing it because you are able to pay an extra $1k month on your current mortgage.

>>>>…kids are expensive, and more importantly, there’s a good chance one of you will want to take off more time after baby is born or even quit work altogether.

Oh, so true, so true!

Let me share with you briefly a bit on the approach I take:

Do you have an adequate emergency fund?
Are estate planning documents in place?
Are you properly insured (auto, home, life, disability, umbrella, earthquake?).

Have you figured out when you would like to be financially independent (I do not like the word retirement!) so you will have enough to last you until your preferred age of expiration:-)

Will you have kids? If yes, have you accounted saving for their college if you would be picking up at least some of it?

The above is the sacred long term money and you need to start socking it away ASAP, the more the earlier the better! The rest of your cash flow is gravy…Can you swing the house payments AND expenses that come with it easily WITHOUT touching the long term funding? Well, if you do and you are okay with what’s left over, go for it and enjoy it. Hopefully you have a safe job you enjoy and allows you to grow your income.

I personally prefer to have some cushion built in since no one is safe these days in our economy. Proof is all around me in foreclosed homes with former workers in the auto industry…We went house shopping today…Right in Ann Arbor you could get a 3,200 square foot house with full basement and deck and 3 car garage for a little over $350,000…, 4 seasons (winter is not that bad lately thank you global warming)commuting time to Ann Arborless than 10 minutes:-)

I can deeply relate to your situation, as I am in the NYC r.e. market, which has similar characteristics. Try $1.3mm for a 2BR/2 bath apartment, not including the $1600/month building fees/taxes. That is what many of my co-workers are paying right now. The market is still strong in NYC – no frothy – but t still strong with no signs of abating. It’s not uncommon to spend 40-50% of pay on housing in this town, so your situation does not seem all that unusual to me.

As others have stated, the big question is priorities and future expectations. Awhile back we unpgraded our housing even though it would clearly mean I would be cutting off the possibility of early retirement. But, you know what – I’ve come to the realization that my lifestyle in the hear and now is more important to me than early retirement.

Ultimately, it comes down to choices and tradeoffs and only you can really decide that. Sounds like you and your spouse have been approaching the decision the right way.

I appreciate the advice from the rest of you guys, but I think Cindy and NCN seem to be more in touch with the market in the area of the country where I live and work.

Leslie, I used to have the approach you are describing. But after living out here for 8 years, my attitude about owning a house has changed, and the balance of investment vs. home has shifted more toward the investment side.

The people who keep concentrating on the %… 47% of my take home pay is $3700/month. What you guys are telling me is that if I want to take a $500,000 loan, I should have $7,725 extra spending money per month [would need to make $11,885 because 35% of $11,885 is $4,160]. Likewise for a $600,000 loan, I would need to have $9,100 left over per month, and for $700,000, I would need to have an extra $10,444 left over. For what? That just makes any sense at all to me. Not that I make that much, but if I did why should I be advised to have $10,444 left over? Richer people don’t have to pay more for milk, bread, and water.

D, your suggestion was one of the best, and you reminded me that last year I paid an additional $20,000 toward my house in two $10,000 payments. In 2005, I paid $10,000, and in 2004, $5000. So I have, in effect, been doing what you suggested for the past 3 years – and my money market account has continued to grow by $2000 to $3000 per month (last year), nonetheless. A quick review, and with the added $20,000 I paid last year, I could have paid for a home that costs somewhere between $900k and $1m – probably about $930k. Honestly – I haven’t felt any setback whatsoever, and I had several reasons for paying the additonal $20,000:

- Too much in my money market account – and I have to pay tax on the interest I draw on it each year. After a while it felt like I should put the money somewhere else. I appreciate how everyone feels about retirement plans, and I contribute to mine, regularly. But I like to control how much I want to lock up until I retire, because the better I do now, the less I’ll need when I retire. This felt like a safe way to move my money to some place where it might do more good.
- At some point I wanted to have my house paid off much more quickly, and $20,000 additional per year, would make me debt free in 7 years. [$30,000 would be 5 years! But hey, I had to draw the line, somewhere].
- I really don’t like seeing how much I pay on my mortgage going toward interest, and paying the additional $20,000 means I pay more toward principal than toward interest each month.

NOW…

I have a decision to make, and like I said – I will move (not I might move). Unlike Chris, who knows people who live in $250-300k homes in affluent neighborhoods with excellent schools, you can’t buy a tear down in San Francisco for less than $500,000. I live in $700k house which is at the low end of what I estimate the prices for houses like mine in this neighborhood. This is a working class neighborhood, with marginal schools. In contrary to what I hear about the real estate market on the national level, the prices of houses here are still on the rise.

Thanks again for your comments and suggestions. You’ve all given me a lot of helpful ideas and things to think about!

Overall, I would 2nd what D stated in living off the “expected mortgage” for 6 months and see if it truly is doable.

And to add to Basil’s comment, didn’t we prove that time travel can be achieved with a simple flux capacitor and fueled by extracting hydrogen atoms from garbage per Dr. Emmett Brown.

-Medicated