Change in plans: Need new house in 5 months + new car ASAP

[buffaloboyanders]

Hi gang,

I'm an attending one year out from residency. My wife is a fellow in her second year of fellowship and we have a 6 month old. We are currently renting a house and were planning to buy in 1 year. Our landlord let us know today that at the end of our lease, April, he is planning to sell the house. In addition to this, yesterday, our second car broke down and we are currently in the process of trying to replace the car. This means we need to replace a car and figure out where we will live in 5 months. Your financial prowess would be of huge assistance to us.


Our current finances are as follows:

Cash on hand: $64,020
Easily liquidated assets (stable-coin cryptocurrency): $72,327.77
Retirement accounts (401K, Roth IRA, HSA, Brokerage accounts): ~$200,000

Liabilities:
Student loan: $15,000 (0% interest until 6/2023)


Our approximate combined annual post-tax and retirement contribution income is around $210,000. We would like to hold $30,000 as emergency funds.


I wanted to ask for your assistance in the best approach to this situation. Should we defer buying a car and instead lease or buy an old car (knowing it will have to be replaced) in order to maximize the amount we have for a downpayment?

We are fortunate that if we cannot find a suitable place to live, we could temporarily reside in the house of a parent who lives nearby.


Thanks for your consideration

[Kamban]

Rent or live in parent house till you are sure where the spouse will practice post fellowship.

Buy a reliable car - used, new but lower end model, whatever.

[JBME]

You can buy a very decent, safe car for ~$15k, which you can afford. Ideally you're not in a rush to buy the car. Be diligent about shopping around for deals. Cars prices, even used car prices, are at an all-time high, but sounds like you need a car sooner rather than later. Don't overdo it on the car. I don't think you need to get a super old car though. You can get a decent one with 40-50k miles for $15k probably depending on the car. Plan to keep it for at least 10 years after you outright buy it. So I don't think you need to defer buying a car in order to maximize the amount for the downpayment.

That's a lot of crypto...a quarter of your investments?! There's a bunch of nuances and math involved here but I'd sell that so that no more than 5% of your investments are in crypto. Let's say you sell $62k worth of crypto. That plus your excess cash beyond your emergency fund means you have nearly $100k. Subtract out 15-20kl for that car and that's what you have for a down payment.

Keep saving for the next year after you've already put 20% towards retirement ($42k). I don't know your family but if you have a small child I'd personally not want t live with my parents even if it saves me money.

[wawot1]

Is the broken car truly a lost cause? Or can you get another few years out of it with the help of a good mechanic? May be worth getting a second mechanic opinion.

If it's truly a major problem that's not worth fixing, personally, I'd go with a gently used car. I don't like the term "beater", because I think you can get a reliable but not glamorous used car for not too much money- doesn't mean it's some piece of junk.

Sounds like you have $110k in accessible funds and can probably add another 50k to that in the next 5 months if you're being not-too-spendy just from your salaries.

Good luck!

[nycEMMD]

You can buy a very decent, safe car for ~$15k, which you can afford. Ideally you're not in a rush to buy the car. Be diligent about shopping around for deals. Cars prices, even used car prices, are at an all-time high, but sounds like you need a car sooner rather than later. Don't overdo it on the car. I don't think you need to get a super old car though. You can get a decent one with 40-50k miles for $15k probably depending on the car. Plan to keep it for at least 10 years after you outright buy it. So I don't think you need to defer buying a car in order to maximize the amount for the downpayment.

That's a lot of crypto...a quarter of your investments?! There's a bunch of nuances and math involved here but I'd sell that so that no more than 5% of your investments are in crypto. Let's say you sell $62k worth of crypto. That plus your excess cash beyond your emergency fund means you have nearly $100k. Subtract out 15-20kl for that car and that's what you have for a down payment.

Keep saving for the next year after you've already put 20% towards retirement ($42k). I don't know your family but if you have a small child I'd personally not want t live with my parents even if it saves me money.

He said it's in stablecoins, there's nothing to sell, it's tokens pegged to the USD 1:1. So he has 72k in USD denominated in stablecoins. That doesn't go up or down, it just stays at $72k (plus the interest he earns on it). He's basically saying "I have 72k worth of USD just sitting in my crypto bank account, earning a lot more interest than if it was in a noncrypto bank account"

[JBME]

Thanks for the clarification. He wrote just before this a separate cash category and then said "Easily liquidated assets" which to the average joe suggests it is not cash since cash is already liquid and therefore "easily liquidated" isn't the same. From what you wrote there's no need to make this a separate category from cash. Either way, my points still stand

[CordMcNally]

Rent or live in parent house till you are sure where the spouse will practice post fellowship.

Buy a reliable car - used, new but lower end model, whatever.

Bingo.

[Marko-ER]

Wow, risking that much money in "stable" coin crypto? I wouldn't.

[nycEMMD]

Wow, risking that much money in "stable" coin crypto? I wouldn't.

Your comment that "you wouldn't" doesn't hold any weight as I'm assuming you don't know what a stablecoin is. So can you tell me, what is a stablecoin? Can you name a few? Could you tell me what the risks are or which ones possibly hold more risk?

[Dusn]

Your comment that "you wouldn't" doesn't hold any weight as I'm assuming you don't know what a stablecoin is. So can you tell me, what is a stablecoin? Can you name a few? Could you tell me what the risks are or which ones possibly hold more risk?

https://www.federalreserve.gov/newse...r20211117a.htm

The above website lists some possible risks.

At a minimum, stable-coins don’t have a long enough history for the benefit-risk ratio to be fully known. That alone is a risk.

[nycEMMD]

https://www.federalreserve.gov/newse...r20211117a.htm

The above website lists some possible risks.

At a minimum, stable-coins don’t have a long enough history for the benefit-risk ratio to be fully known. That alone is a risk.

I understand the risks of stablecoins, don't worry about it. You missed my point. My comment was directed at the person I quoted. It seems like people that have no understanding of crypto always come and give crypto advice to other people on this forum. That's like me, a physician, going to a chemical engineering forum and starting to give advice on different processes for petroleum extraction. I need the quoted poster to answer those questions. My guess is that he ahs no clue what stablecoins really are but somehow decided that his opinion on the matter was very important

[Lordosis]

Seems like we found a trigger

[Tim]

Seems like we found a trigger

Hmm. some worry about FDIC coverage and the coverage of the brokerage firms and the PBGC. Some don't. Some chose to ignore the risks in their accounts.
You are supposed to get your money back. Pretty simple. What could go wrong?

[Otolith]

To answer original posters question.
1. Everyone will tell you to rent for a few years (which is a good idea) though when we did a forum poll practically no one did this...
2. Personally I would make sure you and your wife like your location/jobs prior to buying. Agree with others that it may take 1-2 years after spouse starts her job.
3. I would find out roughly how much you would want to spend on a house, touch base with a mortgage officer, and see how much you need to put down to get the rate you want (maybe its only 5%)
4. Then create a savings plan to meet that down payment goal
5. Just don't buy your dream car and buy one with cash that will work well for a few years

I still hold that if people don't want to wait to buy, then just buy something well within budget and something that can be rented if you leave or want to buy bigger house later. I.E if you rush to buy try to look at it as an investment rather than a forever home. Otherwise wait a little bit and just buy your forever home....

[zlandar]

I understand the risks of stablecoins, don't worry about it. You missed my point. My comment was directed at the person I quoted. It seems like people that have no understanding of crypto always come and give crypto advice to other people on this forum. That's like me, a physician, going to a chemical engineering forum and starting to give advice on different processes for petroleum extraction. I need the quoted poster to answer those questions. My guess is that he ahs no clue what stablecoins really are but somehow decided that his opinion on the matter was very important

I understand what a stock is. It doesn't mean I know whether it will go up/down.

I don't need to understand crypto to question why the OP has so much of his net worth in it. This is a forum. People can ignore advice they don't agree with.