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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127815  
Subject: Re: Buying Retirement PLace in Fl Date: 10/25/2013 10:40 PM
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Me and my wife currently have a 2 family house in which we owe about $350k and no equity.
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We have about a 730 credit score but our debit is a little high. We are paying it down.


From http://boards.fool.com/lease-versus-financing-car-30934485.a...

Me and my wife both lease a car. One of the leases willbe up in a few months.

From http://boards.fool.com/thanks-a-lot-am-yeah-the-house-things...

Yeah, the house things uggghhh....and it dropped in value to about $300k.

From http://boards.fool.com/retiring-55-30921624.aspx

I currently have a 401k with about $160k in it and a Roth IRA with about 10K and about 10K liquid savings

So, you have $10k in liquid savings, are $50k upside down in your house, are leasing 2 cars, between you and your wife have a little over 1 year's worth of income in your retirement funds and you want to buy a condo that you can vacation in 2 - 3 times a year, and retire to in 20 years? That's probably a really quick way to lengthen the time that it will take you to retire there.

I'd say you need to get a much better hold on your finances, before even thinking about buying a vacation/retirement condo, including, but not limited to:

- Pay off your consumer debt

- Build up an emergency fund with at least 6 months of expenses

- Get at money saved up to pay your mortgage down (currently the $50k that you are upside down) and pay closing costs (probably 8% - 10% of your home's value, or currently $25k - $30k) in case you need to sell the house quickly, so that you don't have to bring money that you don't have to the table. You can either use this money to pay down the mortgage (saving you interest), or put it in a separate savings account, as a back up to an e-fund.

- Assuming you have reasonable choices in your 401(k)s, you and your wife should each be maxing out your 401(k)s. If you don't like the choices in your 401(k), at least contribute enough money to get the maximum employer match (if any), and invest what you would have put into maxing out the 401(k) into taxable accounts.

- You and your wife should each be maxing out a Roth IRA

- Quit leasing cars - buy them and run them into the ground. Finance the first couple if you have to, but also be putting money away for a replacement so that you don't have to ever finance a car again.

- Save up money for a 20% (or more) down payment on the vacation/retirement place

Once all that is in place, then you might want to think about buying a vacation/retirement home. But, as others have said, 20 years prior to retirement is a long time to be buying your retirement home. A lot of things could change between now and then, with the home, the neighborhood, your physical situation, etc.

AJ
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