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Subject:  Re: Need advice on paying off debt... Date:  6/23/2014  2:36 AM
Author:  aj485 Number:  308288 of 312992

In terms of the debt i did pay some off but I had a little more from student loan transfer(basically i had higher rate student loan - did balance transfer from CC then paid off the higher interest student loan so it "appears" debt is the same as before).

So what was your total debt (student loan plus credit card debt) back in January vs. what it is now? And how much have you added to savings since then? If the total of the debt paid off plus the amount you've added to savings is in the $8k - $10k range, you can probably go ahead and fund your Roth. If it's not, then you need to think again about your strategy - (1) if you are truly disciplined enough to save enough money to pay off the debt, or if you should be paying as you go and (2) how much in interest and/or BT fees you will have to pay in order to fund your Roth, and if it's worth paying that.

As for the housing I was actually thinking of buying a house/condo and renting out part of it to reduce cost. I know it is not a long term strategy as i have a family of my own but i think it might work in the short term?

Purchasing a residence rarely works out to be a good short term strategy. In some markets that exhibit bubble characteristics, it can work - as long as you get out before the bubble bursts. But in most cases, the frictional costs of buying and selling mean that to break even vs. renting, you really have to commit to the purchase for at least 5 years.

Since you say you have a family, but it sounds like the place you are thinking of buying doesn't sound like it will be large enough to house your family, nor does it sound like your family is there with you or that where you are now will be your family's permanent home, it seems like you are in a temporary living situation. That's a perfect reason to rent, rather than throwing your money away on purchasing a short term home.

But to really save money on rent i would need to get a roommate either renting or buying.

Well, finding a roommate to rent a place with sounds like a much more reasonable alternative than buying a temporary place.

You don't 'invest' in a mortgage. All parts of the PITI (Principal, Interest, Taxes & Insurance) mortgage payment are expenses (just like rent), except the Principal part of the payment, which is just moving money from a liquid asset (your checking account) into a pretty illiquid asset - your home's equity. And in the early years of the mortgage, the expense part of the cost far outweighs the asset transfer. I'm about 18 months into my current mortgage, that I got at 20% down with a rate of 3.25%, and the principal part of my mortgage is still less than 30% of my monthly PITI cost. For you, with current rates about 1% higher, and little/nothing down, so you will have to pay PMI, MIP and/or interest on a 2nd mortgage - you will be lucky to have 8% - 10% of your monthly PITI be principal, or maybe $100. You would be much more likely to actually save $100/month by renting a slightly larger place with a roommate.

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