Reply to Dialing back 401k until both kids are in PK3

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[quote=Anonymous]We're looking at buying a house that needs some work, but is in a great school district and otherwise fits our needs. We can afford the down payment and the monthly payment within our current budget (which maxes our 401ks), but don't have the cash to make the place really livable. We have a 1yr old in daycare and a 3 yr old in PK with aftercare expenses.

We've had some relatives offer us a loan to get some work done on the house. They'd lend us $50k, and we'd document and model it by IRS standards (https://www.nationalfamilymortgage.com/afr-rates/) and pay back over 5 years.

So we'd be paying back our relatives $833/month, which we'd be taking directly out of our current 401k allocations. This is almost exactly the difference in cost between our daycare and PK3 before/aftercare - meaning that in 2 years, we'll be able to go back to fully funding our 401k when our 1yr old is in daycare.

I know we'll be missing out on compounding interest during that 2-year period...but it probably needs to be weighed against the increase in the value of the house, right?

Thoughts on this tradeoff?

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