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Started By
Message
Save for house or retirement?
Posted on 8/26/14 at 9:29 am
Posted on 8/26/14 at 9:29 am
I'm 24 years old and just started working full-time, after graduation. I'm currently living at home, with little expenses, so I'm trying to save as much money as possible. I get paid every 2 weeks, and set aside $725 of my paycheck for savings. I plan on opening a Roth IRA, but I also want to save up enough for a down payment on a house as soon as I can. I don't want to live at home long, but don't want to throw money away by renting.
What should someone my age be doing right now- saving for a house, or making sure I max out my Roth IRA? Obviously both would be ideal, but I can't afford that so I need to make one my major focus.
What should someone my age be doing right now- saving for a house, or making sure I max out my Roth IRA? Obviously both would be ideal, but I can't afford that so I need to make one my major focus.
4
Posted on 8/26/14 at 9:35 am to Tigerfan56
I would go Roth....your yearly contribution is limited and it will go a long way in 30-40 years time. Rent and think of it as paying for your freedom...not throwing $ away.
Posted on 8/26/14 at 9:36 am to eye65
Personally I would want a house that I could enjoy first. Financially, that may not be the best decision but I would seek enough enjoyment out of having my own place to justify it.
Posted on 8/26/14 at 9:40 am to LSU1018
House.
Tax advantage of deductible interest is better than the Roth deal.
Once you get the house, focus on saving in your Roth instead of prepayino your mortgage.
Tax advantage of deductible interest is better than the Roth deal.
Once you get the house, focus on saving in your Roth instead of prepayino your mortgage.
Posted on 8/26/14 at 9:50 am to Tigerfan56
with interests rates as low as they are, do you really need to save that much for a house right now? especially if you are single guy that will more than likely only be living in the house for a few years
Posted on 8/26/14 at 9:59 am to Salmon
quote:
with interests rates as low as they are, do you really need to save that much for a house right now?
Well I have no credit. I was under the impression that, given my lack of credit, I would need about at least $20,000 down to qualify for a mortgage.
Posted on 8/26/14 at 10:03 am to Tigerfan56
Depends on where you buy.
You can get a Rural Development loan without any money down if you buy in certain areas. You also have to be in a somewhat low income bracket. But the underwriters will look hard at your finances.
You can get a Rural Development loan without any money down if you buy in certain areas. You also have to be in a somewhat low income bracket. But the underwriters will look hard at your finances.
Posted on 8/26/14 at 10:05 am to Tigerfan56
Even if you have good credit, you're going to want to have at least 20% in hand in order to get the best interest rates. BUT, you've overlooked one important point: up to 10K from your Roth can be used toward a home purchase, provided it's been in the account for at least 5 years. That's contributions AND earnings.
And in any event, all contributions from a Roth can be withdrawn without penalty (just not the earnings).
And in any event, all contributions from a Roth can be withdrawn without penalty (just not the earnings).
Posted on 8/26/14 at 10:08 am to LSU1018
quote:
Personally I would want a house that I could enjoy first. Financially, that may not be the best decision but I would seek enough enjoyment out of having my own place to justify it.
real estate isnt a sure fire thing and I agree with this. There is the notion of trading up in a few years, but i know several people that are stuck in their current place due to buying at the wrong time.
I would wait. Life changes a lot between 24 and 30, you are probably going to meet someone, and they might alter where you want to live and how.
Posted on 8/26/14 at 10:11 am to hungryone
quote:I wouldn't use the roth to save for a house... I would keep them separate.
up to 10K from your Roth can be used toward a home purchase, provided it's been in the account for at least 5 years. That's contributions AND earnings.
And in any event, all contributions from a Roth can be withdrawn without penalty (just not the earnings).
Posted on 8/26/14 at 10:21 am to Tigerfan56
Saving for retirement should always be the number 1 priority...you realistically only get one chance in life to save for retirement.
House? you can always lease or get a mortgage loan
Kid's College? they can always get a student loan
Retirement? can't borrow money to fund your retirement...
House? you can always lease or get a mortgage loan
Kid's College? they can always get a student loan
Retirement? can't borrow money to fund your retirement...
This post was edited on 8/26/14 at 10:23 am
Posted on 8/26/14 at 10:24 am to Chicken
What he said. Save for yourself first.
Posted on 8/26/14 at 10:30 am to Chicken
What the Bird man said
Posted on 8/26/14 at 10:42 am to TheHiddenFlask
quote:
House.
Tax advantage of deductible interest is better than the Roth deal.
Once you get the house, focus on saving in your Roth instead of prepayino your mortgage.
All of this
Posted on 8/26/14 at 10:56 am to Tigerfan56
$725 every 2 weeks is $18,850 a year. Max out your Roth and you’ll still have $13,000 to save towards a house. Live at home for a couple of years and you’ll have a decent down payment on a starter home. Owning a home is a big commitment. Don’t forget insurance, taxes, utilities and upkeep.
Don't forget to check into your employer's 401K, if offered.
Congratulations on the new job and for thinking ahead.
Don't forget to check into your employer's 401K, if offered.
Congratulations on the new job and for thinking ahead.
Posted on 8/26/14 at 8:41 pm to PlanoPrivateer
Lots of good suggestions and different angles.
Currently, the tax advantages of owning a home are huge. Getting into single family residence will be one of the best decisions that you ever make (assuming you won't have to move in a couple of years).
I had an IRA from when I was 18 years old working at Outback Steakhouse. I withdrew that and turned it into my first downpayment on a home. The tax advantages for the past 15 years have been bigger than any benefit I could have dreamed in a retirement vehicle.
You get ahead in life by owning things (not renting/leasing). Owning things with annual tax benefits is gravy.
Good luck.
Currently, the tax advantages of owning a home are huge. Getting into single family residence will be one of the best decisions that you ever make (assuming you won't have to move in a couple of years).
I had an IRA from when I was 18 years old working at Outback Steakhouse. I withdrew that and turned it into my first downpayment on a home. The tax advantages for the past 15 years have been bigger than any benefit I could have dreamed in a retirement vehicle.
You get ahead in life by owning things (not renting/leasing). Owning things with annual tax benefits is gravy.
Good luck.
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