Buy a GTR or a House?

b1adesofcha0s · 09-10-2011, 09:44 PM

Quote:

Originally Posted by birdmanx1

That's the best advice by far! There are huge inventories on the market for distressed houses that won't go away this year or next for that matter at least till the job market improves; there would always be a GTR available when the time is right. I would build at least a year of emergency funds before thinking about buying anything, especially this early into your new job. You wouldn't want any bad surprise in the event of unforeseen job loss (not wishing this on you at all but good to plan for it)

Hmm great advice and I find this especially helpful for myself. How long after getting a new job should you wait before buying a house (which will be my first major purchase)? How much would be a year's worth of emergency funds? My situation is a little different though. You and Steve already know this, but I'm gonna be finishing school in May and hopefully will land a nice engineering job right afterwards. House is definitely the first major purchase, no questions about it. I live with my parents and they have emergency funds saved up, plus their own incomes. I will probably be paying for the house by myself with both my parents incomes being saved up for emergency funds. Appreciate the advice

Also planning to buy a GT-R after a couple years on the job and after having settled into the house

m4a1mustang · 09-10-2011, 09:48 PM

Quote:

Originally Posted by b1adesofcha0s

Hmm great advice and I find this especially helpful for myself. How long after getting a new job should you wait before buying a house (which will be my first major purchase)? How much would be a year's worth of emergency funds? My situation is a little different though. You and Steve already know this, but I'm gonna be finishing school in May and hopefully will land a nice engineering job right afterwards. House is definitely the first major purchase, no questions about it. I live with my parents and they have emergency funds saved up, plus their own incomes. I will probably be paying for the house by myself with both my parents incomes being saved up for emergency funds. Appreciate the advice

Also planning to buy a GT-R after a couple years on the job and after having settled into the house

I say wait until you have a years worth of essential living expenses saved. So enough to cover 12 months worth of rent, car payment, insurance, food expense, and other necessities.

6 months is the minimum recommended safety net, but in this environment 12 months gives you more of a buffer.

In your case, just focus on saving for a down payment since your parents have the other expenses covered.

b1adesofcha0s · 09-10-2011, 09:53 PM

Quote:

Originally Posted by m4a1mustang

I say wait until you have a years worth of essential living expenses saved. So enough to cover 12 months worth of rent, car payment, insurance, food expense, and other necessities.

6 months is the minimum recommended safety net, but in this environment 12 months gives you more of a buffer.

In your case, just focus on saving for a down payment since your parents have the other expenses covered.

Yeah that's kind of what I was planning on. Should I pay off the car first or just use that money for the down payment of house? I was also thinking about transferring the car to my name after I get full time work and I can get a loan. This way I can start building up my credit since I will be the main person on the loan. I have a better credit score than both my parents right now, but am lacking in credit history.

birdmanx1 · 09-10-2011, 10:04 PM

Quote:

Originally Posted by b1adesofcha0s

Yeah that's kind of what I was planning on. Should I pay off the car first or just use that money for the down payment of house? I was also thinking about transferring the car to my name after I get full time work and I can get a loan. This way I can start building up my credit since I will be the main person on the loan. I have a better credit score than both my parents right now, but am lacking in credit history.

Well it depends, are interests earned on your own investment > than the ones you are paying on your car? Do you have credit cards debt?

Pay off credit card debt first given the typical high interest then move down the ladder with the highest interest debts. At the end of the day things are easier when you ensure that your inflows are always higher than your outflows; credit card companies, banks are NOT your friends, keep that in mind and don't hesitate to tell them to get lost when they offer you lines of credit you don't need.

b1adesofcha0s · 09-10-2011, 10:10 PM

Quote:

Originally Posted by birdmanx1

Well it depends, are interests earned on your own investment > than the ones you are paying on your car? Do you have credit cards debt?

Pay off credit card debt first given the typical high interest then move down the ladder with the highest interest debts. At the end of the day things are easier when you ensure that your inflows are always higher than your outflows; credit card companies, banks are NOT your friends, keep that in mind and don't hesitate to tell them to get lost when they offer you lines of credit you don't need.

No credit card debt now and never will be, I'm smart enough to keep it that way. Car payments are very low ($185/month) and interest isn't too bad either. Don't know what those will be like if I get it under my name though. Just want to know if I should have the car completely paid off by the time I apply for a home loan or if that money would be better spent towards the house's down payment. Only have $10k left on my car loan.

Isamu · 09-11-2011, 12:28 PM

Quote:

Originally Posted by b1adesofcha0s

No credit card debt now and never will be, I'm smart enough to keep it that way. Car payments are very low ($185/month) and interest isn't too bad either. Don't know what those will be like if I get it under my name though. Just want to know if I should have the car completely paid off by the time I apply for a home loan or if that money would be better spent towards the house's down payment. Only have $10k left on my car loan.

having a credit card isn't a bad thing, its actually GOOD to have one one your credit report.. I have a "really good" credit score. and part of that is due to a credit card..

but as everyone has said. Buying a house is an investment. ESPECIALLY in todays market. here in ND, sadly it's a sellers market... so prices are high, like big city prices. and my city has 30k people... lol
with that said, 250k now will net positive returns in a few years.

Quote:

Originally Posted by ZCarMan

In this economic downturn we are in, only in a very few places such as D.C. do you see some homes actually appreciating and that is mostly in the city itself. With all the foreclosures on the market and those set to go into foreclosure, combined with the fact banks are not lending to anyone but to those with the best credit, for many it may not be a good time to purchase a home. If I were going to purchase anything in real estate it would be a duplex or condo to rent out. More and more are forced to rent today which for a lot of folks isn't a bad thing. My rule of thumb, "If it isn't bringing cash flow in, it's sending cash out". Couple of books worth looking at, "Rich Dad, Poor Dad" and "The Millionaire Next Door".

this is mostly true, however, home values and land values are still going up, it just happens that in a lot of areas people aren't buying because they can't get the loans.. so people are selling cheaper then what their homes are "worth" which is an awesome thing IF you are a buyer

birdmanx1 · 09-10-2011, 10:00 PM

Quote:

Originally Posted by b1adesofcha0s

Hmm great advice and I find this especially helpful for myself. How long after getting a new job should you wait before buying a house (which will be my first major purchase)? How much would be a year's worth of emergency funds? My situation is a little different though. You and Steve already know this, but I'm gonna be finishing school in May and hopefully will land a nice engineering job right afterwards. House is definitely the first major purchase, no questions about it. I live with my parents and they have emergency funds saved up, plus their own incomes. I will probably be paying for the house by myself with both my parents incomes being saved up for emergency funds. Appreciate the advice

Also planning to buy a GT-R after a couple years on the job and after having settled into the house

My best recommendation is to go with at least 12 months of living expenses. The best advice I can give you is to live like a college student for the next 5 years after your graduation. In that timeframe your income will double and easily triple, you will get more out of your dollar (less charges, no children, no mortgage...) If you get used to leaving not just beneath but way beneath your means anything extra should easily go towards retirement, IRA/mutual funds accounts, stock brokerage accounts, emergency funds, and other investment activities. Automation is your friend.

Don't rush to buy a house for the sake of buying one; my personal rule for the mortgage is that it should be less than 28% of your biweekly paycheck and always count your income not that your spouse/GF/parents. Don't listen to real estate sales people, they have the worst financial ethic, (trust me I know a few and the kind of interests they are paying on their own home) Living way under your means gives you piece of mind and ensures you to save for what's more important long term all the while giving you rooms for personal trips all over the world

b1adesofcha0s · 09-10-2011, 10:06 PM

Quote:

Originally Posted by birdmanx1

My best recommendation is to go with at least 12 months of living expenses. The best advice I can give you is to live like a college student for the next 5 years after your graduation. In that timeframe your income will double and easily triple, you will get more out of your dollar (less charges, no children, no mortgage...) If you get used to leaving not just beneath but way beneath your means anything extra should easily go towards retirement, IRA/mutual funds accounts, stock brokerage accounts, emergency funds, and other investment activities. Automation is your friend.

Don't rush to buy a house for the sake of buying one; my personal rule for the mortgage is that it should be less than 28% of your biweekly paycheck and always count your income not that your spouse/GF/parents. Don't listen to real estate sales people, they have the worst financial ethic, (trust me I know a few and the kind of interests they are paying on their own home) Living way under your means gives you piece of mind and ensures you to save for what's more important long term all the while giving you rooms for personal trips all over the world

Outside of the Z, I live a pretty conservative lifestyle (spending wise) compared to most college kids and I don't see that changing really, it's just how I am. Obviously I'd have to find out where I will be working and what my salary will before I decide. If we were to get the same house we were aiming for last year (or at least similar price), the mortagage is only a few hundred more per month than what my parents are paying for rent. That's what really annoys them most and why they want to buy a house ASAP. They can afford one, but just couldn't get approved for the loan.

tjlazer · 09-11-2011, 05:53 PM

Quote:

Originally Posted by birdmanx1

Don't rush to buy a house for the sake of buying one; my personal rule for the mortgage is that it should be less than 28% of your biweekly paycheck and always count your income not that your spouse/GF/parents. Don't listen to real estate sales people, they have the worst financial ethic, (trust me I know a few and the kind of interests they are paying on their own home) Living way under your means gives you piece of mind and ensures you to save for what's more important long term all the while giving you rooms for personal trips all over the world

Sounds nice and all, but damn who actualy makes that much to keep their mortgage under 28% of their BIMONTHY income! (That's what you meant right? Never heard of getting paid twice a week unless... lol) Hell, if you can keep your mortgage with tax and insurance under your BIMONTHY pay check you are doing good!!!

birdmanx1 · 09-11-2011, 06:34 PM

Quote:

Originally Posted by tjlazer

well the thing of it is, it's not like he is going out to spend big money and splurging on unneccessary things while only being on the job for 3 months. He is getting a home. If he doesn't buy it he has to pay rent, so the not buying anything because he is only on the job for 3 months mentality isn't really valid. On a GT-R? Yes it is--big time. Like was said, now is a great time to buy! In 6 months or a year the prices and interest rates go go much higher. (hope they do I need my equity to go up!)

TJ, being on the job for only 3 months, should there be any layoffs or downsizing, there is no guarantee that the OP would retain his job (Not wishing this, but it happened to many in this current environment). I always laugh when people make the argument to "buy NOW, buy NOW, the interest rates will go up in 6 months", the same was said a few months ago; the same was said a year ago, the same was said 2 years ago, fact is the current interest rates are even lower

Why should one risk losing emergency funds, retirement savings for the sake of saving up on interests?

Quote:

Originally Posted by tjlazer

Sounds nice and all, but damn who actualy makes that much to keep their mortgage under 28% of their BIMONTHY income! (That's what you meant right? Never heard of getting paid twice a week unless... lol) Hell, if you can keep your mortgage with tax and insurance under your BIMONTHY pay check you are doing good!!!

My mortgage is under 28% of my biweekly income. By biweekly, I meant being paid every other friday (26 times a year) TJ

It's nothing out of the ordinary when one keeps outflows low and automates saving early on - my brother-in-law has his house paid off in Fairfax and he is 33. My community has a lot of Ravens players and many neighbors have the "keeping up with the Joneses/Kardashians" mentality, $200,000 worth of cars in the driveway, no furniture in the house

b1adesofcha0s · 09-11-2011, 06:52 PM

Quote:

Originally Posted by Isamu

having a credit card isn't a bad thing, its actually GOOD to have one one your credit report.. I have a "really good" credit score. and part of that is due to a credit card..

but as everyone has said. Buying a house is an investment. ESPECIALLY in todays market. here in ND, sadly it's a sellers market... so prices are high, like big city prices. and my city has 30k people... lol
with that said, 250k now will net positive returns in a few years.
this is mostly true, however, home values and land values are still going up, it just happens that in a lot of areas people aren't buying because they can't get the loans.. so people are selling cheaper then what their homes are "worth" which is an awesome thing IF you are a buyer

I have credit cards. What I meant was that I pay them off every month so I don't build up any debt

Quote:

Originally Posted by birdmanx1

TJ, being on the job for only 3 months, should there be any layoffs or downsizing, there is no guarantee that the OP would retain his job (Not wishing this, but it happened to many in this current environment). I always laugh when people make the argument to "buy NOW, buy NOW, the interest rates will go up in 6 months", the same was said a few months ago; the same was said a year ago, the same was said 2 years ago, fact is the current interest rates are even lower

Why should one risk losing emergency funds, retirement savings for the sake of saving up on interests?

My mortgage is under 28% of my biweekly income. By biweekly, I meant being paid every other friday (26 times a year) TJ

It's nothing out of the ordinary when one keeps outflows low and automates saving early on - my brother-in-law has his house paid off in Fairfax and he is 33. My community has a lot of Ravens players and many neighbors have the "keeping up with the Joneses/Kardashians" mentality, $200,000 worth of cars in the driveway, no furniture in the house

Ballin like a boss

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