Current net worth of -$51,000. Promotion and pay raise coming in August/September. 1300 mile move; desire to buy a home in 1-2 years...Let's just say I have a lot of questions. : personalfinance

Current net worth of -$51,000. Promotion and pay raise coming in August/September. 1300 mile move; desire to buy a home in 1-2 years…Let’s just say I have a lot of questions. : personalfinance

edit: So it appear the 1-2 year hope for a home has been pushed to more like 2-4 years. The way I see it, I am doing fine with my $29k income and the promotion will come with a $20k raise. Thus, all the extra (after taxes 15k) will go into paying my student loans off.

I have been saving up preparing for this potential promotion. Unless something happens, I should have around $4,000 to move across the country in August/September. Not much, but everything I own will fit in my car. So that will be easy.

I will be moving from Nebraska to North Carolina.

According to glassdoor and payscale, my promotion should come with a $50k-$55k salary. Current salary is $29,000.

On $50k, my income should be $3,100 per month after taxes.

I don’t anticipate my expenses to increase much. They should remain around $1,700 per month, but I am going to work on cutting that even further once I get established. Charlotte and Omaha have similar cost of livings:

Current Debt

  • $41,000 in student loans at an average 6.2% interest rate (All federal loans)

  • $9,000 collection I am negotiating for pay for delete (they already removed it from my reports, now we are just finalizing amount).

I have read several articles stating that I shouldn’t necessarily go “all in” and pay off my student loans super fast. Yet I have read some articles that say to pay it off fast because it’s an immediate 6.2% return on investment. I think paying it off over a longer period of time is better for my financial goals. Just want to make sure I am thinking right.

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What I want to do

After moving to NC, I want to rent for the first year or two and save everything else. Preferably I will rent a simple, cheap studio apartment.

After the relocation, I want to build my emergency fund to $5,000. That should take 3-5 months after I get settled in to my new town. I currently have $4,000 to move. Hopefully I will be able to save $1,000-2,000 of that by being really frugal during the move.

During that 12-24 months of renting, I should be able to save $1,500 per month. After renting and saving, I want to put a down payment on a 4BR/2BA house and rent out the other rooms. I had a friend of a friend do this and he just paid off his 30 year mortgage 24 years early on a $130,000 house.

I want that!


Median home prices in Charlotte are $170,000.

Using that $170,000 as a benchmark, I would need a $34,000 down payment. That would take me roughly 2 years to accumulate if I saved $1,250 per month, which I can easily do after promotion and my emergency fund is established.

Using Khan Academy’s mortgage calculator a $170,000 mortgage with a 20% downpayment and a 5.5% (I have no idea what interest rates will be when I go to apply for a mortgage), my mortgage would be $775.

Rent for 4 bedroom houses vary considerably based on location. The lower end is about $1200 per month rent for a 4BR/2BA and middle seems to be around $1,600 or so. That comes out to about $300 to $400 per room.

Let’s assume everything stays the same (it won’t stay the same, but it’s all I have to work with).

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If the mortgage costs $775 per month, I rent out three rooms at $333 a piece ($1000 total for me), and let’s say I put 30% of that away each month for repairs/maintenance. That drops to $766. If I use that $766 to put towards the principal of the mortgage and I pay the actual $775 mortgage myself, it would be paid off in 9 years 6 months if bankrate’s calculator is correct

Really, what I need to know is, based on my situation with $51,000 in debt but $41,000 of that is in federal student loans, how do I get to where I want to be?

Should I just pay the minimum on my $41,000 student loan and get the house sooner. Should I pay off the student loan faster and postpone the house?

If it helps I am single, never married, no kids, 30 years old.

tl;dr: Expected promotion should allow me to save up for a house and drop a down payment near $40,000. Or I could put all of that towards my student loan over the course of 2 years and work on the house after student loans are paid off. Which is the best route?

edit 2: the following thread is a good example of why I am thinking about this now for everyone getting butt hurt in the comments: