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Discussion Starter · #1 ·
This is my situation and I humbly ask for your opinions and advice.

I just got a new job in the education field. I am going from making $25,000 a year for the past two years, to $50,000. This is a huge step for my family (wife and 10 month old daughter). In Maine where we live this is a very decent income compared to many. Things don't get hit to hard here during economic down turns because things are never that great anyways. It is kind of nice actually.

I have about $9,000 in state retirement, $3,000 in cash (not in a bank) and owe $3,000 on my Honda CRV. I have zero credit card debt but I have $20,000 in school loans as does my wife for a total of $40,000. With my new employer we can all get health care for $5,000 a year. I plan on purchasing this.

I am looking at buying a $35,000 house right down the road from my new job. In my opinion this is a very modest buy. Although I hate to go into debt it is hard to pass up such a cheap home in very good condition.

With the budget I have created after paying ALL bills and taking into account the unexpected car/house repair, if we buy this house we can still save $10,000 a year.

Buying this house is pretty much a go. I am interested in hearing your thoughts on this decision. That is the point of this post. I feel like although I am going into debt more, I am still living within my means.

I am thinking that once I have $16,000 in savings (8 months of emergency money) I will put all available savings toward paying down all debt (highest interest rates first) By the way, I am 31 years old. My wife is not currently working but hopefully will be able to bring in 10-15 grand a year eventually on part time jobs.

Sorry there is more. I am also thinking that because my wife is Canadian and we will live 10 minutes from the border, that I would like to put much of my cash in the Canadian dollar. Literally exchange the money and either put it in my safe an account across the border or in a safety deposit box. My thinking is that the Canadian dollar will be more stable in the future. It is already worth more. I know that if things go bad here most likely the whole world will follow, but if it is a slow decline the Canadian dollar will be a little more stable for a while. Enough time to exchange it back and pay off as much debt as possible if ever needed. Worst, WORST case scenario, we use it to flee to her families place in Canada.

I am obviously not a money guy. Just trying to do what is best for my family by asking for your thoughts.

P.S.- I have 8 months worth of food for us and am comfortable with my ammo/gun stocks. Always working on both.

Thank you!
 

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You are set up pretty nicely.

The only debt here that you can't walk away from are the student loans. So I would make that a priority.

See if you can work out a lease-to-buy arrangement for the house.

This way, you can make rental payments that will be posted towards your principle. And you will have 1 year to save a large chunk of money that you can just hand over, when the lease ends and the mortgage begins.

The buyer should like it, as they get rental income, which may translate to a sale. The bank likes it, as you will borrow less money.

You should like it, because you get 1 year to save towards the principle and avoid a significant chunk of interest. You can also see how housing prices behave, as a better deal may come along in a year or the seller might be willing to come down if the market comes down. If prices go up, your option is still valid.

And if you lose your job in 1 year, you are not on the hook for a 15-30 year mortgage.

Good luck.
 

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I would say you're probably be fine. Student loan debt seems heavy...whats you nut on those payments?
House price seems really low . If that numbers is correct you should be able to kill that mortgage.

Not a fan of canadian currency...it's still fiat at the end of the day. Pick up some pm's.
 

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Sounds like you already know what you're doing to me. The student loans I'm assuming are at 2% which is pretty much standard, right? If so, take your time paying those off. If the auto loan's interest is above 5%, I tend to recommend paying that off quickly as well. The nice thing about buying a house is that current tax code means you can deduct mortgage interest on your tax return. Of course, Congress could always eliminate that at any time, but it's there for now. Just keep on the path you're currently on and you'll be just fine. :)
 

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Sounds like you have a good head on your shoulders.

You're right in saying that as of right now, the Canadians are displaying much more fiscal responsibility than we are and that the future of their currency is brighter than ours.

For the time being, we have better first and second amendment rights than they do - though maybe not in Maine...

If you're only 10 minutes from the border, why not buy a house in Canada and commute to work from there? Also, as your wife is Canadian I would consider this an opportunity to obtain Canadian permanent resident status and get those documents in your possession.

Options are always good.
 

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Discussion Starter · #6 ·
Thank you all very much for your responses. It always feels good to get opinions that fall in line with yours. I do feel life I am a financially responsible person and value the opinion on many on this site.

Thank you

Yes, the students loans are at 2% so good point about those david.

I would say you're probably be fine. Student loan debt seems heavy...whats you nut on those payments?
House price seems really low . If that numbers is correct you should be able to kill that mortgage.
My monthly payment is $130 and my wife's is $200. I also feel like I could knock of the mortgage pretty fast! I didn't mention that I also own 40 acres free and clear that could always be sold if needed. It is valued around 20-25 thousand.

Interesting idea about the lease to own Sundsvall. Something to look into.

Thanks again!
 

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Just my opinion:

1. Canada is having a housing bubble and banking problems, and is all set to kasplode, just like the US did in 2007. Be cautious when investing in Canada. (My ex gf told me about the housing market.) Their postal service just ended a strike a week or so ago, service had completely stopped and retired folks did not get checks for one week.

2. Buy the house now while prices are low. Then pay off your student loans as fast as you can. Skimp and save to get rid of all debt.

3. Before paying off your mortgage, make a $20,000 emergency fund. Use that for only medical emergencies, not going out to eat. The next time you need a new car, save up and pay cash.

I bought my house in 2004 at the peak of prices. I wish I had waited a few years, but I had no idea the crash was coming until summer 2006. Bad luck, but I made the best decision I could with the info I had. I wanted to stop wasting money on rent, and get some equity. Well, I lost my whole down payment on this house when my house devalued.
 

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a $35k house and land at $500/acre...wow, I'm jealous. I can't seem to locate any land in the mid-Atlantic states for less than $1,000/acre.
 

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IMO, you have too much debt and not secure enough of a financial system to own the land. You should do 1 of 2 things.

1) Sell the land, build an emergency fund and pay off debt.

or

2) Make an income off the land. Lumber lease, sell topsoil, farming lease, or sell timber yourself. Use the income to build an emergency fund and pay off debt.

Buying the house or renting? Good and bad on both, but I'd rent until that emergency fund was very strong (minimum 6 months savings/food preps) and the car loan was paid off. If the roof leaks or furnace goes out, it would be the landlords problem and wouldn't wipe out your efforts at gaining financial freedom.

Good luck :thumb:
 

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Kodie, i think your plan is solid, but i would not depend on crossing the border when/if things here go bad. SOP for a major event in the United States calls for an entire border shutdown.
BTW, keep the land if possibile
 

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You can't go wrong with a house that's in good condition, close to work and a low price. I say get it right away before someone else shows up. I think your plan is good. Don't sell the land unless it's incovenient getting there. Cash in the bank could lose much of it's value but the land will not if it's already paid for. I disagree with octotat as to the house. Your big financial problem are the school loans but right now they can wait for you to pay the car which should not take long with your new income. Put money in savings but try to pay as much on the car as you can because once it's paid off your real income will increase. You are doing a great job so far. Just don't let yourself be blinded by your income increase and decide you can afford to buy a few "toys".
 

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Sounds like you have things well thought out.

On those debts, I don't think it will take you long at all to get totally out of debt.

Not sure what to say about Canadian vs. U.S. banks

Keep us posted.
 

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For those talking about paying off the student loans ASAP, let's work through the math, shall we?

Student loans are at 2% interest.

Plenty of stocks / mutual funds pay 10+% interest.

Take savings, invest in one of these stocks / mutual funds. (I just bought more NLY the other day, which when re-investing dividends gave me an approximately 15% return last year.)

Pay the 2% on the student loan, keep the 13% return in profit to re-invest in more stocks or pay off the car or invest otherwise.

Quickly paying off any loan whose interest is less than the rate of inflation is not a smart money move at all.
 

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Sounds good!!!

Buy some pre 1965 U.S. silver coins they are the better than the $3,000 in FRN's (IMO) they are money too. You might even buy Canadian silver. PM's are a hedge against the devaluing of the dollar. You cannot be to diversified.;)
 

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I would not look into the rent to own plan, lots of problems with insurance and who plays the bank, ect....

with a house thats 35 thou you should be able to scrap together the 20% down to avoid PMI.

with interest rates so low you should have a low, low payment, and with making 50 grand a year,,no problem paying your morgage, making one extra payment per year(cuts a 30 year morgage by 7 years)

I wouldn't convert my money to another currency other than phyiscal gold and silver.

one thing people forget about when keeping a stash of money at home,,is not keeping it in small denominations,, make sure you have ones, fives, tens, twenties, ect..

Good luck I hope this info helps...
 

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Dude, the housing bubble burst. Now is the time to buy low. A home price less than one year salary is GOOD! Other than that do not increase your standard of living. Most folks who get a raise immediately spend it.

Setup several checking accounts (this system has vastly improved our situation). Account 1 gets your direct deposit. Account 2 gets automatic transfers from account 1 each payday equaling 1/2 of your monthly bills. Account 3 is a savings account that gets automatic transfers of $20 each payday from account 1. Each payday increase the automatic transfer to account 3 by $10 until you feel a pinch, then make NO more changes.

Do not use your ATM card for purchases other than gas and groceries. Withdraw $100 at a time from the ATM for pocket money. Handing over cash psychologically feels like real/more money so you will spend less. Also you won't lose track of the $3 transactions (resulting in a $40 cup of coffee).

Also have only one person (whoever is more responsible) handling the money. If the wife wants money, give her cash. If your spouse is not responsible with money (like mine), setup a separate account for her with automatic transfers (allowance).

We have three checking accounts and two savings accounts. It may seem complicated, but it's really not once its setup correctly. It's equivalent to having envelopes with money inside labeled "Rent money" "Grocery money" etc.

It's really this simple:
1. Make more money than you did last year.
2. Don't spend any more than you did last year.
 

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Oh, dont setup a two-week mortgage plan. Stay with a monthly plan but automatically transfer 1/2 of the mortgage into a "bills" account to pay it with. If you get paid every two weeks, you will get ahead of the mortgage and can send in an extra payment. Making extra payments gets it paid off early without being locked into a shorter term plan with higher payments.
 

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Hey man,

I would advise you to look into Dave Ramsey. He has 7 baby steps which are very good. Me and my wife use them and we have done very well. His steps are save 1000 cash for emergency fund, then start paying off debt as fast as possible, then once all debt is paid off then save 3-6 months emergency fund, then pay off house and invest to build wealth.

I would be very cautious buying the canadian dollar. The reality of it all is that canada has way more debt then the US government. I would never invest in a socialistic society's currency. Look at thier debt compared to thier size and the US's. They are in way worse shape than we are.

Also remember that a hundred dollars a month invested in the stock market, from the age of 25 to 65 is over million dollars. Safe investmenting is buying mutual funds, they buy gold, stocks, bonds (yuck!) and other things. They are very good and it isnt hard to find one that can do average. (Despite what naysayers say) I am only 23 and I have mutual funds, IRAs, stocks, penny stocks, and I love this stuff. By the time I retire I will have millions because of dave. His stuff has helped millions of people.

I live completely debt free and I would encourage others to do the same. Once you get that awesome house I would encourage you to pay off debt as fast as possible. All of it. Financial peace is so worth it. Great job on your job and good luck man!

Dave says to pay on the smallest debt first, attack it, once it is gone, use that money to pay off the next biggest debt and keep rolling the money over until you have paid it all off. This process works, because complicated plans often fail.

A little history note: Confederate Stonewall Jackson used a similar approach to war, whenever they would go into battle he would attack the smallest element of enemy and then go to the next smallest and so on and so forth until he fought the largest last. His reason for doing that was so his men could get the taste of victory, and so they had that mentality when they went into the big battle. It works in personal finance as well.

Good luck man! You have started great!
 
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