Buying a home after short selling other home.

[couchrobt]

Like mentioned by many here, it is best to use the 401k for emergency purposes. Buying a house is not that urgent. If you can try to get a smaller place and yes, rent for a while. It is a small sacrifice.

[FoolFromAZ]

Here is the update. I short sold my house around the time I created this thread. my credit was completely messed up. We moved to rental house and stayed there for an year. during that time, I still kept looking for a house to buy as houses were very cheap those days. Finally bought a house on my wife's name in 2012 June. We put down only 5%. before buying this house, i had given offer for another house as well. that was with a bank (short sale). Bank accepted the offer. I could not let the deal go as I was getting a house for 25k below market price. we took loan from our 401k and bought that home as well. prices have gone up since then.

now we own both houses. primary home we still owe 230K (current market price is 325K), investment home, we own 130k (current market price is 300k). we get 1500$ rent from that home. As I mentioned then, i continued maxing out my 401k and my wife's 401k. I have 128K in my 401k and my wife has 100k in her 401k. I have 22K loan still in my 401k and my wife has 16k in her 401k.

we still have 15k cc debt. all are 5% or below interest rate. 29k on HELOC (4% int rate). I have 3K in my checking account. 13k in my roth IRA. no emergency fund. still I am driving odysey that I bought in 2008. paid for car. my wife is driving 2002 accord. paid for.

now I am making 107k with 10% bonus every year and my wife makes 77k with no bonus.

we are not on any budget. like I said we are maxing out our 401ks and money deducted for our 401k loans. finally whatever we get, we pay our monthly expense, incase if we have anything left after paying all the cc min, we pay the heloc off. we have 11k available in our heloc currently.

for emergency we use that 11k and if needed we can take loan from our 401ks.

somehow its working out for us. let me know your comments. where do you think I can make a change.

[corn18]

You're paying the minimum on the credit cards?

[FoolFromAZ]

You're paying the minimum on the credit cards?

yes I am paying the minimum as interest rate on most of them is 0 atleast for next yr or so. only one of them has 5%. still I am paying minimum.

[corn18]

Ok, I'll let everyone else chime in with their thoughts, but I will tell you that 6 months ago, I was you and 1 year ago, I was you x 10.

Make a budget, reduce expenses, get those credit cards and HELOC paid off ASAP and start saving more money. If that advice does not make sense to you or your initial reaction is to argue, then please read the book The Millionaire Next Door. If the CC and HELOC debt still don't bug you (even @ 0%), then I cannot help. That's the advice I received on here when I first checked in a few months ago. I am now debt free except the mortgage and spend less than I make. I have the folks on this forum to thank for that. But I certainly argued a fair bit before the light went on.

Hope they help you as much as they helped me.

Tom

[breathemusic]

I don't really understand why you're maxing out your 401K and your wife's 401K when you still have CC debt, 401k loan debt, and a HELOC loan. Cut back on the 401K contributions in the short term and pay off the debt asap. Then you can go back to maxing out your retirement contributions. You guys make a decent income between your jobs and the rental income so it probably wouldn't take you that long to pay it off if you watched your spending.