Hi gang,
I just got off the phone with my daughter. She
wanted to know if it would be better to roll
all of her gain ($40k) into the down payment
of a new house or put it into a money market
and pay the increased monthly payment out of
the money market for the next 3 years. She is
married with a girl (5) and a boy (3). The kids
share a bedroom now but that won't work much
longer. They are on a real tight budget and the
move would increase their monthly payment by
about $500. My daughter's thinking is that her
husband's salary should increase by $500 within
3 years to make up the difference. In the meantime
they would use the money market.
I am a little rusty on the tax law but I think the old
rule of a one-time tax free sale has been changed to
allow any number of sales. That might be a deal
breaker if not true.
I am thinking that they should put 1 year of payments
in Vanguard's Prime MM fund and the rest in Short
Term Corporate. They could then move money to the
MM when necessary.
They want to buy in Frisco Texas which is a small
town north of Dallas in one of the fastest growing
areas of the nation. She is a bright girl but an artist
and is a little vague on the concept of leverage. I
explained as best I could that she should put the
least down possible and invest the rest.
When they get more comfortable paying the mortgage
out of current income I will introduce them to the
wonders of balanced index investing.
Let me know if Dad got it right (or wrong).
Cheers,
Charlie
I just got off the phone with my daughter. She
wanted to know if it would be better to roll
all of her gain ($40k) into the down payment
of a new house or put it into a money market
and pay the increased monthly payment out of
the money market for the next 3 years. She is
married with a girl (5) and a boy (3). The kids
share a bedroom now but that won't work much
longer. They are on a real tight budget and the
move would increase their monthly payment by
about $500. My daughter's thinking is that her
husband's salary should increase by $500 within
3 years to make up the difference. In the meantime
they would use the money market.
I am a little rusty on the tax law but I think the old
rule of a one-time tax free sale has been changed to
allow any number of sales. That might be a deal
breaker if not true.
I am thinking that they should put 1 year of payments
in Vanguard's Prime MM fund and the rest in Short
Term Corporate. They could then move money to the
MM when necessary.
They want to buy in Frisco Texas which is a small
town north of Dallas in one of the fastest growing
areas of the nation. She is a bright girl but an artist
and is a little vague on the concept of leverage. I
explained as best I could that she should put the
least down possible and invest the rest.
When they get more comfortable paying the mortgage
out of current income I will introduce them to the
wonders of balanced index investing.
Let me know if Dad got it right (or wrong).
Cheers,
Charlie