Hello from Illinois - Rent or Buy (my 1st post)

[JDConnell]

Hi all,

I will be 59 in August and I am now spending most of my time lately trying to figure out 'my' ER plan.

I believe I have enough money, but I still worry about that.

I was divorced 10 years ago and moved into a trailer park home to save money. I planned on leaving after a year but I am still there. The rent has gone from 525 to 700 per month. Also, I could do without my neighbors.

I have $375k in various accounts, 401K, stock market, CD and so on. I own a farm that is work 500K (I want to keep it for my daughter) that nets about 15k per year.

Do I take 40K as a down payment and make mortgage payments of 700 or continue renting?

Anyone have any ideas or insights experience with this?

Thanks,

Jim

 

[megacorp-firee]

Welcome JD. There are many here who can help you figure it all out.

Here is a quote from another post that may be helpful to make you more comfortable with your retirement decision:

...
To FIRE, you need to figure out
1) what you want to do when you are no longer working full time
i.e. part time work (not quite FIREing in my mind), new career, hobbies, traveling, give back type of volunteer work, ...etc.
2) what that will cost;
a) figure out what your current budget is; where do you spend your money
b) how will retirement change the budget (up or down)
3) inventory your assets and income and see if you can support FIRE

It's not really having a million dollars, ... it's having enough money to support the life style that you want to live.

You have to do the homework and math to see if you are comfortable with FIREing.

To figure out the rent/buy issue, since the monthly dollar amount you spend is the same, with the mortgage, you get tax benefits, so the actual amount you lay out is less. You need to figure out if you would need the $40K to generate your retirement income.

Good luck to you JD.

 

[Sam]

Do I take 40K as a down payment and make mortgage payments of 700 or continue renting?

Welcome Jim,

Buy or rent is a very personal decision. So let's only look at the financial side:

1) 40K down payment: What the opportunity cost?

2) 700 mortgage payments: Does that also include property tax, home insurance, maintenance and repair, and HOA if applicable.

3) Appreciation (or depreciation) of home value.

4) Possible tax saving with the home. Very unlikely considering the modest mortgage payment.

Good luck,

 

[Brat]

If you are renting I assume your expense includes everything but power and heat. For that $700 isn't bad. The neighbors issue is really what you should consider.

Depending on your zoning it may be possible to put a mobile home on the farm property. You can shop around for a used one and save a bundle but you will still need to have septic, water and power - none of that cheap.

The other option is to rent elsewhere in your community. Often people will rent to long time residents for a modest sum when they know that the home will be well cared for. Put the word out with your local dealers and something might materialize.