Quote:
Originally Posted by KenKat
We never bought more house than we thought we could afford. We bought our first house in 1992 and put 25% down. We sold that house for a decent profit and bought our second house in 1998 with about 40% down. We stretched a little on that one but ended up ok and are still in that house today. We always had an emergency fund and some taxable investments we could tap that would carry us through if needed (which we have so far not).
I started putting money into a 401k in 1988 and have never pulled any out. I rolled everything over to an IRA if I left a job.
Putting all your money into a house is also a risk. Houses don’t always go up in value; housing in my area took a hit in the Great Recession of 08-09 and has been pretty slow to bounce back until recently. My house has been a great place to live but has only increased by a relatively modest amount overall.
I will leave you with this - don’t put too much in your house at the expense of not saving in a 401k, IRA or even taxable account:
https://www.portfoliovisualizer.com/...ocation1_1=100
$10,000 a year put into a balanced investment fund like Vanguard Wellington, starting in 1994, becomes $1.1 million today - a 9.4% per year return.
If you are able to both invest and maybe pay down the mortgage a little, great. But take advantage of investment opportunities like a 401k or IRA’s first before paying extra on the mortgage. |
Example of this. My partner and I, she is a financial advisor and I am the banker in our team, had a guy come in who had just retired after 30 years at a local aircraft manufacturing company. His plan was to use his 600K 401k to pay off his home which he owed 300K on. After the meeting he left with a 600K rollover into a managed retirement account. It just does not make sense to use a retirement fund to pay off a home and then not have liquidity. A home can have all of the equity in the world but that equity is not liquid if needed for any reason. It is better to be liquid then to have no or almost no house payment.