Sold our out of state house!!!

[Anonymous]

FINALLY!!! We moved from CA 2.5 years ago and were unable to sell our old house. We did rent it out but for a loss of almost 2k a month. It finally just sold and we are so happy. We didn't make any money off of it but are excited to just be done with it. I feel like this huge burden has been lifted. Anyways, for the last 2.5 years we have been renting and would like to buy a house out here-- of course we have no down payment though. However, in order to cover the loss each month from the rental we stopped contributing to our 529s (though we continue to max out retirement). Each kid only has about 15k in their 529 with the oldest being in 5th grade.

I am confused as to what to do. Save for down payment or save for college. Our rental is stable and we have 2 more years on it. If we get our act together I could see us getting a big chunk together for a down payment. But then we wouldn't be putting anything into 529s.

Thoughts?

[Anonymous]

Congratulations. What a relief. I'd stay the course if your rent is table.

[Anonymous]

Congratulations! We also own a long-distance house we can't sell and are taking a loss on rent. I know how relieved and excited you must be. What a great feeling.

As for your real question... I don't know. Are you in a school district you like for high school options? Will your financial obligations change with high school (i.e., are you in public school now but plan to move to private at some point)? Is your current home livable for the long-term? Do you think you'll stay in this area forever, so that you want a "childhood home" for your kids that they'll visit when they are 20/25/35? Or will you be moving once they are older, anyway?

If you save the $2k/month you are no longer spending on your mortgage, you will have $48k after two years and your oldest will be in 7th grade. You will have $72k after 3 years and your oldest in 8th grade. Or, $96 after 4 years with the oldest in 9th grade. I might make a decision based on his/her high school options, assuming you are not going to pay more for highschool than you are paying for school now.

If you feel you need to move for high school, put $22k into college and $50k into a down payment. If you don't feel you need to move before high school, put $46k into college and buy a house in 4 years with $50k downpayment. Or tweak, accordingly. I am not a financial planner, though, so there might be more creative things you can do.

Also, if you think you'll move once your kids are in college and you won't have a 'forever house," then I might just keep renting and put all the money towards college until you feel they are fully funded, then start saving for a down payment on whatever your next plan is.

Congratulations again!

[Anonymous]

Hmmmm.....we have a lot to think about I guess. Thank you for your thoughts though. I am leaning towards getting a forever home-- though I thought our CA home was that!