"0" knowledge on Investing - which way do we go?

[roddysmom]

Good morning,

 

After receiving excellent advice about tracking spending, and just reading posts that are made on the MM forums, we've gotten a good handle on our budget. We bring home quite a bit (at least according to us.. LOL), however, it just sits in our checking account not gaining anything for us like it should. The problem is, I have NO clue where to start with the savings, investing, etc!

 

I thought about trying to find a financial planner - but, I also have no idea where to even begin looking for one! Phone book?

 

 

1. We have no CD's, no 401's, no IRA's. We only have a BofA savings account with 1K in it.

 

Here's a breakdown of income & expenses:

 

Income:

 

DH: $57,200 gross/ $43,800 net - DH has enough Federal Tax taken out of his pay to cover my income since I am self-employed. We want to change this so that I can pay quarterly taxes. The *Problem* is that the tax worksheets on the irs.gov website, there's no way to figure this in for me. I'm lost here, and figure I need to go to the IRS office to get help.

 

ME: $20,800 gross. I am a SUB-CONTRACTOR for this company for 6 years. This is FOREIGN INCOME, and it is wired into our bank account weekly from another country. Foreign Income is a totally different ballgame, as I don't get a 1099, I don't get pay stubs, I get no records except the weekly wire transfer from this company.

 

EXTRA: $300/month. A friend of ours is renting one of the bedrooms and that's what he gives us. For how long? I dunno - so I don't really "count" it in.

 

 

Expenses:

 

Mortgage: $1280 - just re-financed. (more on that below)

Land: $350.00 10.5% interest, Balance 13,785.

Car Insurance: $300/month. (we are paying my son's while he is in college. His is 200 of this amount)

College Loan-Me: $100/month. 5.0% interest, Balance $8,625.00

College Loan-DH: $125/month. 8.25% interest, Balance $9,831.00

Cellphones: $100/month.

Utilities: $380/month (internet, cable, electric, water/sewer/garbage) **NOTE: I claim a percentage of these due to a home office

My Prosper Loan: $107/month. 17.0% interest, Balance $2,509.00

Credit Card #1: $300/month. 14.9% interest/fixed. Balance $4,150.00 (mine alone)

Credit Card #2: $100/month. 0% int. til Jan 1st. Balance $693.00

Credit Card #3: $???/month. 0% int. til Jan 1st. Balance is $2100.00

Groceries: $500/month.

Smokes: $160/month. (hey, I know, but I'm down from over $300/month!)

Fuel: $80/month (DH is the only driver to work, I work from home)

Entertainment: ?? $100/month (this is way high, sometimes we go for several months with doing nothing)

 

Total: $3,982 - plus whatever we drop on that one CC every month.

 

All of our other CC's are 0 balances, and we have no intention of using them.

 

Income vs. Expenses: +$1,358.00/month. (roughly)

 

We *should* be saving $1,000/month or at a minimum $250/week. We want to reach the point where my entire income is saved every week/month/year. That will come after our CC's & Loan are paid off.

 

Now for the questions:

 

1. Where do we find some type of financial planner?

 

2. We refi'd. We will be getting cash back. At the very least 10K of it is getting invested *somewhere*. The remainder is going to be used to take care of several rather expensive things that need done to the house (pool resurfaced, new windows, roof). I am NOT paying credit cards with this. BUT, my DH is wondering about paying off our Land Balance of 13K since that is at 10.5% interest and we would own it free and clear and not have that monthly payment. Thoughts? and also ?? Where or what do we do with the 10K?

 

3. I said I wanted to open up some IRA's. He said a ROTH. Can someone please explain in very kindergarten terms the differences here? (we are 47 and 44 years if that helps any calculations). I was also under the impression that you need to have a bunch of money - at least 1K minimum - to do these??

 

4. We are not "gamblers" per se - I'm not one who is interested in the stock market. So, "safe bets" are the best places for us. Options with this?

 

5. We really have no "long term goals" other than having the house paid off when we retire, and enough to live on properly. However, we ARE looking to buy a home on the East Coast somewhere in the Charleston, SC area. My DH is figuring he can leverage the 40 acres we have and use it toward buying something in Charleston, rent out that house and eventually we can move back to the East Coast. How do you look into this? Would this be a good idea? Do we get with a broker on this? Should we just put this idea on the back burner?

 

Any other ideas and suggestions would be most welcome. I feel like I am floundering not knowing where to start now that I've tracked our spending, paid off some bills!

 

Thanks so much!

 

KH

[texasnightowl]

I apologize in advance because I'm only going to comment on a few things...at work...not much time.

 

Land: $350.00 10.5% interest, Balance 13,785.

College Loan-Me: $100/month. 5.0% interest, Balance $8,625.00

College Loan-DH: $125/month. 8.25% interest, Balance $9,831.00

My Prosper Loan: $107/month. 17.0% interest, Balance $2,509.00

Credit Card #1: $300/month. 14.9% interest/fixed. Balance $4,150.00 (mine alone)

Credit Card #2: $100/month. 0% int. til Jan 1st. Balance $693.00

Credit Card #3: $???/month. 0% int. til Jan 1st. Balance is $2100.00

 

 

Now for the questions:

 

2. We refi'd. We will be getting cash back. At the very least 10K of it is getting invested *somewhere*. The remainder is going to be used to take care of several rather expensive things that need done to the house (pool resurfaced, new windows, roof). I am NOT paying credit cards with this. BUT, my DH is wondering about paying off our Land Balance of 13K since that is at 10.5% interest and we would own it free and clear and not have that monthly payment. Thoughts? and also ?? Where or what do we do with the 10K?

 

WHY PAY OFF Land at 10.5 rather than Credit Cards at 15 and Prosper at 17? IMO, I would pay off CC#1 and the Prosper Loan. Then if you wanted to pay extra on your land, just take that $400 that has been freed up by paying off the CC and loan and pay it towards the land? Why do you not want to pay CC with the money?

 

3. I said I wanted to open up some IRA's. He said a ROTH. Can someone please explain in very kindergarten terms the differences here? (we are 47 and 44 years if that helps any calculations). I was also under the impression that you need to have a bunch of money - at least 1K minimum - to do these??

 

ROTH IRA allows you to not be taxed on the withdrawals when you are retired. You basically save/invest after tax dollars now in order to not be taxed on the money later. Good for most people depending on what tax brackets you expect to be in at retirement. You can contribute a max of $4000/yr (this year). Many ROTH custodians (ie. T. Rowe Price) will allow you to open a ROTH IRA to which you contribute per month rather than lump sum. For example, I am only contributing $100/month at moment instead of lump sum normal requirement of $1000 to open. Fidelity is $2500 to open or $200/month.

 

4. We are not "gamblers" per se - I'm not one who is interested in the stock market. So, "safe bets" are the best places for us. Options with this?

 

5. We really have no "long term goals" other than having the house paid off when we retire, and enough to live on properly. However, we ARE looking to buy a home on the East Coast somewhere in the Charleston, SC area. My DH is figuring he can leverage the 40 acres we have and use it toward buying something in Charleston, rent out that house and eventually we can move back to the East Coast. How do you look into this? Would this be a good idea? Do we get with a broker on this? Should we just put this idea on the back burner?

 

Any other ideas and suggestions would be most welcome. I feel like I am floundering not knowing where to start now that I've tracked our spending, paid off some bills!

 

Thanks so much!

 

KH

 

Other comments:

 

If your DH's employer does any matching contributions to a 401k, then you need to start contributing at least to the amount to get the match.

 

BTW: Where are you currently at? If in Texas then my mom's financial planner is level headed and good. My mom is 56 and dad is 62 and she is helping them get ready for retirement.

Edited July 31, 2006 by texasnightowl

[roddysmom]

Thanks so much for replying.. was getting ready to head into the shower!!

 

As far as not paying the Cc's off - It just seems like every single time in the past whenever we received a large sum of $$ - it went to pay off CC's. We have worked so hard - I've worked so hard - these past few years to get OUT of the CC cycle, this is the last one with a high debt on it (a portion of the 2200 CC is my son's which he is making monthly payments to). We have about 33K in CC limits, and what I listed is what is Utilized. Most of the ones we have with the 0 balances are -0- BT offers, so I could transfer the 4100 over to one of those. It's almost like a "test" for me (the last one so to speak) - that I can "do this" without depending on a huge chunk of cash. (very hard to explain, however, logically - and realistically - I have some very stupid convaluted thoughts)

 

We are outside of Phoenix, in Glendale, so a FA in Texas wouldn't work

 

Unfortunately, DH's employer has no 401K, has no kind of savings - heck, we are lucky he gets any benefits. I also don't have medical insurance. Haven't been to a doctor since 1998. Costs probably 4-500 just to add me to his work policy and I said no thanks. (Dr. would holler at me anyway.. you need to lose weight - yes, I know; You need to quit smoking - yes, I know; You need to exercise, lay off the salt, and all of those other things they preach.)

 

Thanks for explaining the IRA, much appreciated, I think I figured them out.

 

Any more questions, just give a holler.

 

Thanks again,

 

KH

[Cruise, J.D.]

1. Where do we find some type of financial planner?

 

There is plenty of good and free advice on the internet. Kiplinger, Morningstar, etc . . .

 

2. We refi'd. We will be getting cash back. At the very least 10K of it is getting invested *somewhere*. The remainder is going to be used to take care of several rather expensive things that need done to the house (pool resurfaced, new windows, roof). I am NOT paying credit cards with this. BUT, my DH is wondering about paying off our Land Balance of 13K since that is at 10.5% interest and we would own it free and clear and not have that monthly payment. Thoughts? and also ?? Where or what do we do with the 10K?

 

Paying off one debt at 10.5% makes no sense if you have another debt at 14.9% Use this money to pay down debt. You are not likely to find investments that will beat 10.5% and 14.9% consistently. Avoid the trap of "bucketing" your money and put the money where it earns you the most. It is usually not a good idea to borrow money to invest . . . that is what you would be doing.

 

3. I said I wanted to open up some IRA's. He said a ROTH. Can someone please explain in very kindergarten terms the differences here? (we are 47 and 44 years if that helps any calculations). I was also under the impression that you need to have a bunch of money - at least 1K minimum - to do these??

 

Traditional: Contributions reduce your taxable income, but withdrawals will be taxed.

Roth: Contributions are made with after-tax income, withdrawals will be tax free.

 

There are lots of calculators on the internet for comparing them.

 

4. We are not "gamblers" per se - I'm not one who is interested in the stock market. So, "safe bets" are the best places for us. Options with this?

 

I suggest mutual funds. The riskiness of your investments should depend on (1) your risk profile, (2) your time horizon, and (3) your goals. Morningstar is a good place to research funds. I like index funds that are designed to track certain markets. They are cheaper than actively managed funds and have no management risk.

 

5. We really have no "long term goals" other than having the house paid off when we retire, and enough to live on properly. However, we ARE looking to buy a home on the East Coast somewhere in the Charleston, SC area. My DH is figuring he can leverage the 40 acres we have and use it toward buying something in Charleston, rent out that house and eventually we can move back to the East Coast. How do you look into this? Would this be a good idea? Do we get with a broker on this? Should we just put this idea on the back burner?

 

I think you should develop some concrete long-term goals. It will make planning and investing much easier if you know what you are trying to do.

[Easy Rhino]

Okay, the BofA savings account earns you, what, .5%? You want to find a place to stash that that least earns you some halfway reasonable interest. HSBCdirect, Emigrant Direct, Citibank e-savings, etc. all over 5.0% or more. Find one of those accounts and make it your "emergency stash". Just close the BofA savings account, it's a waste. Also, I don't know how much you have sloshing around in checking, but if it's far beyond your regular spending needs, then move some of that into a high-yield savings as well. (I got really bad about this for a couple years, had over $10k earning 0%).

 

Depending on how aggressive you want to get, some of thise "emergency fund" can be used to pay down debt. You probably want to keep at least a little bit readily available (conventional wisdom on an emergency fund is 3-6 months spending).

 

Now, on to the next target, Debt. Check out the debt snowball calculators pinned in this very forum. The idea is to attack the highest rate stuff first. How many investments do you know that make you a guaranteed 17% return? (the answer is none).

 

So, first, do any balance transfer tricks you can to get as much CC debt shifted to 0% cards as possible. Then, pay off the prosper loan as fast as you can. Then pay off the 15% CC debt as fast as you can. If you're done with that, and the 0% debt still hasn't come due, then put a bunch of money into your high-yield savings, and prepare to pay towards those cards the moment they start charging interest again. Oh, and if you don't want to get tempted by the cards, then cut them up and don't use them, but that doesn't mean it's not a good idea to pay off high rate debt quickly.

 

Now you have the luxury of not paying down quite as expensive debt. The land loan and the mortgage (what's the rate on the mortgage?) and the college loans. Sounds like the land loan is a good thing to pay towards in general, but now you want to seriously start considering retirement savings.

 

You know, retirement, that thing you may want to do in 15 years or so.

 

You can each put up to $4000 a year into IRAs. I recommend this as a goal to work towards. You can have IRAs in really conservative things like bank account CD's, but I would lean towards a brokerage account. You can get something like a conservative mix of stocks and bond mutual funds. Remember, you're not touching this money until you're 60, so you have a long time to ride out any fluctuations.

 

If you start maxing out on IRA limits, then you, being self-employed, can maybe set up a SEP or solo 401k as your own personal "pension system".

 

However, if you decided to pay down debt first, and did the prosper, then the CC's, then the land loan... that would probably keep you busy for a year or so.

 

To stretch a buck, might also help if you can figure out a way to cut on utility bills. Or take away your son's car. And stop buying food.

[samthedog2000]

I just saw this today (forums are blocked at work), so if you don't mind late commentary from a newbie.

 

Ditto most of the above responses with a few additions:

 

1. Reducing current expenditures:

~Car Insurance, Cellphones, Grocery and Smokes expenses might be high. It all depends, but make sure you've shopped around for different plans, compared coverages, deductibles, fees, coupons, eating out, buying ciggies online, at a warehouse club or indian reservations, etc....

~BT that 14.9% to a 0% cc, pronto, if you can, and move that $1000 savings into a higher rate savings account. These are holes in your existing piggy bank and you should plug them quickly, IMHO. Kudos to making your son cover his debt! I love responsible parenting! I wouldn't cut up the cards myself, you don't have enough savings, the cards are your safety net. Lock them away or freeze them if they are a temptation to spend.

 

2. Future income:

~IMO I'd use some or all of that incoming $10K to pay down existing "bad" debt. Like the prosper loan & cc in the order of highest rate. I know you said you've been working on this, don't get too far ahead of yourself on the other goals before you complete this one! I agree with Cruise here, this is like borrowing $ to invest.

 

3. Goals:

~ You have them, you just may not realize! Reducing debt, savings, investing, retirement, home improvement and a new home are all goals, short term and long term. Now you need to define and refine them, with your husband, on paper. Goals are living creatures, they change, grow and adapt, they are not permanent or lifetime - so don't let defining them make you nervous. Assign a time frame and monetary value to each goal, then tackle them accordingly. Review them and re-review them, at least every six months.

 

4. Investing:

~ Sounds like you're new to the investing world. Proceed with thoughtful caution.

-A. complete #3 Goals, above.

-B. educate yourself about investing. Morningstar (check out the tutorials) and Kiplinger are good places to start. May I also suggest, Motley Fool (more tutorials), Smartmoney, and MSNmoney. You'll learn about the what, whys and hows and the costs associated with. Online, books, classes at comm colleges, universites or seminars at financial services offices are other places to learn.

-C. define your risk tolerance/profile. You can google those terms for more information. This will determine what level of risk you're willing to accept with your investments. It can be different for short and long term goals and it can change over time.

-D. after working through goals, education and risk tolerance you should be able to determine, do you want professional personalized advice? If you go it alone, you could save money but can you handle the ups and downs and the research and review, or would this result in willfull obliviousness or sleepless nights. If you pay for advice, via up front fees or commissions from the money a broker invests for you, well you've just paid money that could have been invested - was it worth it to you? Ask friends and relatives for recommendations for planners. And/or look them up in the phone book and visit with them. Find someone you like if you go that route.

-E. take action and invest your money. But only after you've worked through A-D. Since you don't have a large chunk of money to start an account with, you don't need a chunk anyway, seriously consider setting up a systematic investing plan, automatically transferring money from your bank or your husbands paycheck to your investments.

-F, ad infinitum. Review your investment returns, goals and tolerance, and continue your education. Then determine if you need to adjust your investment portfolio. Do this every 6 months or every year, whatever is comfortable.

 

Caveat: I'm sorry, but there's no such thing as a 'safe bet' or a safe investment. There is some type of risk associated with every type of investment. Stocks, bonds, cds, and mutual and index funds are worthy investments and traditional IRAs, Roth IRAs, SEP IRAs and 401Ks are all worthy investment vehicles.

 

CAUTION:

You don''t have any health insurance but you have said you smoke and need to lose weight and haven't seen a Dr in 8 years. This is a planet sized problem. You could wipe out your available credit, your savings and retirement with one major health incident. You need to investigate health insurance options for yourself. Negotiate with your husbands employer, maybe a salary increase for him to balance out adding you to his coverage. Consider a change of employer for him or yourself. Or take out a single policy on yourself through an independent insurer (shop around for the best rates and coverage). I don't believe you qualify for state or federal assistance, so if/when something happens, it'll all be on you. Needless to say, if you were covered you could visit a doctor, get a prescription for an anti-smoking medication and wean yourself off the ciggies. You'd be healthier and the savings from the smokes could offset the cost of health insurance. Health is a GOOD long term investment.

 

Do some research into HSA's (Health Savings Accounts). These are fairly new investment vehicles but they could help you meet your health coverage and your retirement goals, at the same time.

 

Hope this helps a little.

[Athena53]

I wanted to say the same thing as Sam about health insurance. A whole lot of the people who get thrown into bankruptcy do so because they had huge uninsured medical expenses. OK, you don't want to go to the doctor and have him/her decide it's time for someone to peer into your darker corners through a long tube- I'm not ready for that either- but what if you fall on your basement steps and break an ankle? Not buying health insurance is a really bad way to save money.

 

As for investments- go to the library and browse through the section on investments. There will be boring, ponderous tomes with formulas that make your eyes cross but there will also be books you can relate to. (Last week I saw one called "Girls Just Want to Have Funds".) Find one that works for you and start studying.

 

My feeling is that beginning investors are best in some good no-load mutual funds- as long as they can tolerate the downside when the market sinks. Financial advisors need to eat, too, and there's not too much they can make off of small accounts unless they start selling you stuff that may be inappropriate (annuities, variable life) but carry high commissions. I've been investing for 30 years and still keep most of my $$$ in mutual funds- I leave the stock-picking to the experts.

Edited August 6, 2006 by Athena53

[lgilbealt]

My opinion is invest your own money don't let a broker invest for you especially in this rocky market. The reason they call them brokers are they are broker than you and I. Brokers are basically just sales people and really don't know alot about the market, they are trained to sell what there company offers and that's it. Mutual funds are very risky. I had an account at morgan stanely and paid 15.00 in fees everytime I wanted to make a trade, and I told him what to buy he never had any tips or advise. What was I paying him for? So I opened an account at http://www.tradeking.com and only pay $4.95 per trade I'm sure there are cheaper online services but I like them. Best advise get financially educated there are several books out there to help you. The millionaire next door (Thomas Stanely), the millionaire mind (Thomas Stanely), rich dad poor dad (Robert Kiyosaki), The New Buffetology (Mary Buffet). They will get you started.

[54regcab]

I'd pay off everything that has a 10% or more interest rate before investing ANYTHING in the market. You aren't going to beat 10% in an investment account without taking on risk.

 

Chop up the CC's until they are paid in full. Carying CC debt is a symptom of spending more than you make, it does no good to stash $1,000 per month in an investment account while using CC's to pick up the difference in lifestyle.

 

Paying off the land isn't a bad idea either, which basically negates the "cash out" portion of your refi. You said last time you paid off the CC's with 'windfall money" you simply racked them back up again, this is quite normal behaviour. If you invest the "windfall money" you will simply drain your retirement accounts to supplement lifestyle instead of racking up the CC's again. You can then work on systematically paying off the CC's and have money to invest, it's more likely to "stick" if you do it a bit at a time. When you work hard to pay off debt and in vest a bit at a time it's much less tempting to drain all your hard work than it is to use "windfall money".

Edited August 6, 2006 by 54regcab

[Athena53]

Brokers are basically just sales people and really don't know a lot about the market, they are trained to sell what their company offers and that's it. Mutual funds are very risky. <snip>

 

Those are awfully broad generalizations. First, I stand by my original advice that it's more important for the OP to get educated (and you made some very good suggestions about books) than to find a financial advisor at this stage. I've been investing independently since I was 19 and got a financial advisor 4 years ago. He was a trader on Wall Street, and yes, he knows just a LITTLE bit about investing. In 4 years he's started from nothing to having $50 million of accounts under management, Why did I get an advisor now? Well, the investments (thanks be to God) have reached the point that I really want another brain looking at how everything is doing because there's so much at stake. If he were a retreaded English major who didn't know a Put option from a hole in the ground, I would have seen through him immediately. But he knows his stuff, and I know that he knows his stuff because I do, too. That's why educating yourself is important.

 

And SOME mutual finds are risky. What about limited-term tax-free AAA-rated municipal bond funds? Low return, but vey little risk. Depends on what you buy.

 

And before the English majors come after me- DH is an English major. He's a brilliant man and I value his common-sense opinions on everything, including our investments. But my point is that you need to find out what a potential FA's background is and what they've done since then to sort out the experts from the people who are only capable of selling what they were told to push that week.

Edited August 6, 2006 by Athena53

[samthedog2000]

Check out your current or future financial planner and/or firm, www.nasd.com . Click on NASD Brokercheck. I really like their Mutual Fund Expense Analyzer, too. It's a good investor education/information site. So is www.sec.gov .

[lgilbealt]

Investing is a big learning process. I'll tell you a story that I saw on video of a woman named Kim Snider she was young woman working for a company who made into the management field, it was a good company who offered her stock options and natrually she took them. So some years later the company goes public and boom overnight she is a millionaire. She buys a house quits her job. She used the same firm who took her company public to manage her money/assets. Well within I think it was 6 months to a year she was broke, but the mutual fund manager was still taking his commission and doing a terrible job obviously with her money. All brokers aren't bad but it is not an easy task to find a good 1. Invest a little of that extra cash in yourself a financial course of some sort and get rid of that land it is doing nothing but taking money out of your pocket between payments and taxes. Get rid of the credit cards period........ Every bank gives you a debit card if you don't have the money to buy it then don't buy it. Think of it this way if your husband or yourself lost your job how long before you loose everything? If you got rid of the land and credit cards you would roughly have about $800.00 per month to pay off the loans faster after that accomplishment you would have $1200.00 a month. You could invest that money in your business that is an asset. I have been through this myself with credit cards and debt. After following this advise myself I actually have some money in a savings account getting 5.35% and I own some large cap stocks Home Depot, Yum, Coke and a couple others. The best thing about it is not stressing over foolish bills and money. I am far from rich but doing and feeling a whole lot better about myself and money. It is amazing how interested you get in money when you start saving some.

[roddysmom]

Morning,

 

Wowsers! Tons of replies and lots to mull over!

 

Thanks everyone for replying!

 

Lgilbealt - "Get Rid of the Land"? Um, no, that is NOT an option! We purchased the land for 600.00/acre (yes, that is six HUNDRED an acre) only 6 years ago. We have gotten offers from developers ranging from $120,000 up to $200,000 for the entire lot. So, the purchase price of $24,000 has TRIPLED in just 6 years. That is an investment. (also, we don't have a business, not sure where that came from. Though I am "self-employed" - I'm a sub-contractor for this same company. There's no "investment" in our "business" - because it's not.)

 

As far as taxes on it? Let's see, the total cost for Association dues and taxes are $270/year.

 

~~~~~~~~

 

I've seen mention of the book "The Richest Man in Babylon" - and just curious is that is one I should definitely add on my "read" list. The others that have been mentioned, I've written those titles down also.

 

We've decided to knock out any credit card debts that we have - so all of those are getting paid off by the end of the month. However, we are not "getting rid of / cutting up" any of them. I won't use Cap1 any longer except maybe once every 3-4 months and just add put a frappacino or something on it. Just so it keeps them active - since they are my old tradelines. Since Cap1 won't lower my interest rates on them, I don't need to use them and give them money. As for the worrying about using the others - nope. I use to be a spender. It took almost losing the house back in 03/04 to get me to change. I don't "NEED" "things".

 

Going to knock out the Prosper Loan. It served it's purpose and came in handy when I needed emergency dental work.

 

Also decided to research and get a health plan for me. I did look into Blue Cross a couple of months ago, and I found one I could get for around $168/month.

 

Definitely opening up 2 IRA's - one for me, one for DH.

 

Dumping a starter savings into Emigrant - when you have some money initially in a savings it makes it soooo much easier to add money every week.

 

DH wants to purchase another home - I said I won't discuss it at least for 6 months until we have better control over the Re-Fi money, have researched everything, gotten scores up over 700 for both of us. He wants to use it as a rental. We'll see. Right now, I don't even think about it as it just SOUNDS so risky to me. So, a good chunk of funds are getting saved somewhere "just in case".

 

Once we reach the point where I can deposit my paycheck every week, then I will feel like we can "breath easier". If I lost my job - it wouldn't be catastrophic. On the other hand, if DH lost his - yes, it would. So, the ER Fund definitely needs to be built up.

 

So far, (in addition to the things we know need to be done on the house) that is what we've decided.

 

Thanks again everyone for the replies!

 

KH

[lgilbealt]

very hostile on your land responses. If it does not put money in your pocket it is a liability. If you were offered that much for the land sell it and pay off all your debt. By you saying I won't use the credit cards is great but if something happens in your life and need to you will use them and be back to square one.

[captaincredit]

Stop smoking.

[maporsche]

I would be very careful about considering a rental property in the Phoenix area right now. I live in Youngtown, probably no more than 15 miles from your house in Glendale. There are SO MANY houses either on the market for sale, or on the market for renting. If you're considering anything over 150K as an investment property you'll be lucky to make enough to pay the mortgage/taxes/insurance/etc.

 

I'm renting my house when I move to Chicago, just because I don't want to try to sell it right now with the market this saturated. I will not be making any money on the property when I rent it out (but I'll be saving thousands that I'd currently lose trying to sell), and I doubt it would be easy to do in the market.

[samthedog2000]

Also decided to research and get a health plan for me. I did look into Blue Cross a couple of months ago, and I found one I could get for around $168/month.

 

 

[Cruise, J.D.]

So, the purchase price of $24,000 has TRIPLED in just 6 years. That is an investment.

 

Yes, that is a nice return. There is nothing wrong with holding real estate as part of an investment portfolio. You know your local real estate market better than us, but don't forget the old maxim: Buy Low, Sell High. Don't get wedded to an asset just because it is of a certain class.

[Zamura]

I would sell the land now if I were you. I realize it has a good chance of going higher - though the real estate market *is* currently stalling. BUT, I think your quality of life will be so much better if you have NO debt and substantial savings. Why not start a better of quality life NOW. That is worth, IMO, the few extra thousands you may (or may not) make by holding on to that land a little longer.

 

By quality of life I mean the lack of financial stress on your life. Speaking from my experience when I was living paycheck to paycheck with CC debt and no savings I know that I went to bed every night feeling guilty and bad about myself. I know now that I go to bed proud that I'm so financially smart and plotting on how to improve my wealth each day.

Edited August 16, 2006 by Amberelise