asbestosman wrote:So I'm in the middle of planning for my future. I want to save as much as possible, but I have some competing goals. My wife wants a "decent" house. I pull out my spreadsheet and figure that by the time I'm finished paying the mortgage, I'll have spent 2x what the house initially cost. I look at the stock market and figure I'd probably do better there except for the fact that I don't know beans about how to spread out my money and I know even less about what to expect from the individual stocks or other such options I might go for.
But on the other hand, if I pay rent, is that money down the drain? Obviously none of the rent goes toward actual property ownership on my behalf. But if rent costs 1/2 as much as a mortage, would the extra money I save do more for me in the long run from stock? What about property tax and upkeep fees that homeowners have which renters do not? What about figuring in the happiness of my wife?
My advice. Get into a house ASAP. Start small and work your way up when you can sell and take out equity. Move fast while interest rates are low. Don't muck around with adjustable rates. Granted, the equity in a house in not necessarily liquid (unless you want to borrow on it--which I DO NOT recommend for someone in your situation), but a house is a major factor in one's "quality of life." Your income will rise over time, but depending on where you live, and your profession, housing costs will probably rise faster. In other words, if you wait for the "perfect day," you'll only fall further behind in the interim. Do you budget, figure out what you can realistically afford (don't get in over your head) and jump in the housing market.
Oh, and instead of giving 10% of your income to a billion dollar corporation, put THAT into a mutual fund or other invetments. You'll find that a Putnam Mutual Fund offers a far higher return than the Mormon Church, and its returns are tangible, not theoretical.