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Author: cdr46 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127474  
Subject: Re: how to buy a condo? Date: 11/8/2001 5:52 PM
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dknypinay i'd like to move out of my parent's abode 
and buy a condo. quick facts about me: i have a 
student loan $68/mo, car payment $400/mo, 
cell phone bills $200/mo, 401k $100/mo, 
life insurance $200/mo and make about $38K. 
how much should i save for a condo thats $124,000?
any suggestions... 

Wow...I was not going to respond to this message since 
it is so old, but I will anyway.

There is much missing from your post; and, one heck of a lesson!

How old are you?
What is your degree?
Do you plan on going on to Graduate school?
Do you anticipate regular salary increases?
What do you anticipate as your salary ceiling?
What is the maximum you can contribute to your 401k
What is the maximum matching contribution rate of your employer?
What investment choices do you have within your 401k?
Have you established a ROTH IRA?
Are you healthy?
Are your parents and grandparents from healthy "stock"?
Are you covered by term insurance at work?
Are you covered by disability insurance at work?
Are you covered by health insurance at work?
Do you have an emergency fund of at least 3 - 6 months of after-tax income?
Are there marriage plans in the future?
If you died tomorrow, would anyone be hurting financially? How much and for how long?

You can review these books at www.amazon.com or obtain them free at your local 
public library.  If you read but one book I strongly suggest you read this one:
"Retire Early", by John F.Wasik (all of his books are excellent)
"What Wall Street Doesn't Want You To Know", by Larry E. Swedroe
"How To Make Money In Stocks", by William O'Neill
"What's Wrong With Your Life Insurance", by Norman F. Dacey
"Consumer Reports Life Insurance Handbook", by Jersey Gilbert, Ellen Schultz
"Bogle on Mutual Funds", by John C. Bogle
"Robbing You Blind", by Mark Dempsey
"Common Stocks and Uncommon Profits", by Philip A. Fisher
"Learn to Earn, by Peter Lynch
"The Coffeehouse Investor", by Bill Schultheis
"The Intelligent Investor", by Benjamin Graham
"Buying Stocks Without A Broker", by Charles B. Carlson
"The Fortune Tellers", by Howard Kurtz

You might want to add the following web sites to your favorites:

http://depts.washington.edu/balib/busref/busweb/catlist.cgi?catid=6
http://personal.vanguard.com/educ/inveduc.html
http://www.efficientfrontier.com/
www.nyse.com  www.nasdaq.com  www.amex.com
www.smartmoney.com  www.insure.com  www.bloomberg.com
www.kiplinger.com  www.bankrate.com  www.aaii.org/
www.investors.com/  www.better-investing.org/
http://www.oneshare.com/ is a good site, but you can buy shares for little cost 
directly from many companies such as www.ge.com .  Check out www.dripcentral.com also.

I would suggest that you learn about how fees effect the return on 
your investments over the long haul.  Some good sources are:
http://majestic.vanguard.com/FP/DA/0.1.cost_comp_intro
http://www.fundalarm.com
http://partners2.financenter.com/consumer/all_planning.fcs

I have prepared a spreadsheet assuming you are 25 - study it.
You have some decisions to make.

I would suggest that you cut your car expenses by 50%
at a minimum.  Do you really need a cell phone?

Good luck to you.

$38,000.00 	Annual income before tax		
 3,166.67 	Monthly Income before tax		
124,000.00 	Condo goal		
20%		Ideal down payment		
 24,800.00 	Ideal down payment		
 99,200.00 	Ideal Mortgage		
6.00%		Interest		
 30		Term in years
		
Assuming you could purchase your Condo with a 20% down payment
your total monthly liabilities would be 49.35% of your income before
taxes

Your Liabilities less taxes, food, utilities & entertainment			
$594.75	Monthly P&I		18.78%	
 68.00	Student loan	         2.15%	
 400.00	Car payment		12.63%	
 200.00	Cell phone		 6.32%	
 100.00	401k			 3.16%	
 200.00	life insurance	         6.32%
???????	Condo Insurance	?????			
???????	Condo maintenance fee ??			
???????	PMI (if down payment is less than 20%)			
				
If you invested your monthly insurance premiums this could be the outcome.				
Note:  4.5% is the typical guaranteed rate of return for insurance policies.				
What did your "father" the salesman say you would have at age 55 and 65?				
25	Current age			25	Current age
55	Age you want to retire		65	Age you want to retire
30	Years to save for goal		40	Years to save for goal
Investment Return		Investment Return	
4.5%	$152,447		4.5%	  $269,236 
6%	$183,560		6%	  $349,804 
7%	$222,434		7%	  $459,198 
8%	$271,173		8%	  $608,544 
9%	$332,480		9%	  $813,452 
10%	$409,826		10%	$1,095,866 
11%	$507,684		11%	$1,486,705 
12%	$631,817		12%	$2,029,613 
13%	$789,663		13%	$2,786,307 
14%	$990,830		14%	$3,844,203 
15%   $1,247,745		15%	$5,327,299 

Good Luck


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