It makes sense if you are in an field that is not stable or you fear you can't find a job if you lose your current one.

If you are in highly employable fields not so much.

Anonymous wrote:I would try to keep most of it liquid for an emergency fund, retirement and college (prioritize in that order). $100k at 40 isn't very much unless your income is low (< $30k).

This statement is ridiculous. First of all, someone making under $30k and living in the DC metro area is going to have a very difficult time saving $100k -- even by 40. And all of the people who are going to chime in "i make $30k and have saved a million" are outliers. Do the research. Most Americans don't have $100k saved by 40, even those making well over $30k HHI.

That said, I think it's unwise to deplete savings for a house. Money is cheap right now. Keep the money in the bank and get a low-interest loan. Even if you pay PMI on a conventional loan, it's actually not too bad (much lower than the PMI on FHA loans), and the interest rates are so low, that the PMI doesn't make much of a difference. Put the savings in a high interest savings account where it is still liquid but maybe earning a little more than a regular interest account. Or consult a financial planner about other liquid investment strategies for the money.

Just my humble opinion.

Thanks for all the advice. I am a total idiot with financial planning, though not a big spender and never carry CC debt. Part of the issue is that we were living in a country with better retirement, cheap college, and free medical, so the needs to save were different and the people we know also do not have big savings and put a lot into their homes. I'm confused because we've talked to people who think it's crazy not to borrow as much as you can for a home because of the low rates. With the real estate market being weird we are having trouble finding something in the 600 range that meets our needs and likes. I guess the likes part we may need to adjust. Just seems a shame to have made this chunk of money on real estate and still end up living in a house/area we don't very much like. But maybe we just need to suck it up.

Anonymous wrote:You should be buying the cheapest house you can tolerate: I.e a condo, putting $400k of that money into the markets and saving every last penny you can. You need to start saving for retirement seriously.

+1

I would much rather put it in a house than the markets, personally.

We have paid down our house from $600k to $180k over time, refinanced and now have a lot more flexibility to save for college and retirement. Do what works for you and your comfort levels.

It wouldn't be dumb to put most of your savings into a house but it would be downright stupid to do so and then go further into debt for a house. It seems like you are here asking if you can buy a house you know damn well that, given your past irresponsible savings habits, you can't afford.

You should be buying the cheapest house you can tolerate: I.e a condo, putting $400k of that money into the markets and saving every last penny you can. You need to start saving for retirement seriously.

Put most in a house, but take a low mortgage. Get a house for under 6ook, put down 400k, and get a 15 year for the rest. That way, you can start beefing up retirement with savings from the rent and have no mortgage payment when it is time for college/retirement.

There are better things to do, financially speaking, with the money, but you sounds very fiscally irresponsible, so this will likely be your best option. Whatever you do, don't both sink in the cash and get a big mortgage. That is just irresponsibly living beyond your means given that you have failed to save anything.

You need to start seriously saving for retirement. Sure you can downsize when you retire, but what if the market has weakened and you have to sell at a loss? Or what if the interest rate environment has gone up (likely) and even downsizing won't reduce your expenses? Then what? I would take a meaningful chunk of that money off the table and put it retirement accounts, probably maxing out your 401ks and iras, I'd keep 70k of it in cash and I'd put the rest towards the house.

Have you already moved? DC is great but its very $$$. My first reaction to $3600 for a house was "hey that's not a bad!". The reason that rent is that high is because buying costs even more. Where are the jobs? DC? Va? Whether or not this is a good idea will depend heavily on stuff like this. How old are your kids, do you need daycare? ($1,500 a mo per kid here). All of these will factor heavily into what you can (or should) do. Buying in a good public school district may very well mean a townhouse instead of a single family. Or, you can face private but at a cost of $20 to $30k a year per kid. Food for thought. I've had many friends try to move here and I've told them all not to move for anything less than a 30 or 40% pay bump.

Source: millionaire

p.s. we're looking at a house that would allow us to keep about 80 liquid. Couldn't we just plan on downsizing for retirement?

Chunk is about 450K. Rent is 3600 which seems ridiculously high. It's a matter of how much we spend on a house. HHI is 120-150K. We don't want to borrow more than 417K so we can get the lowest rate on the mortgage. Thanks for the input.

How much is the chunk?

How much is rent?

Where do you want to live?

Few points:

You say you don't want risk but you think a savings acct is wrong. Whether you put it in a house or in the market, you'll be taking on risk.

2. Risk, to a degree is good. Risk means returns. If you have any hope of retiring you'll need to take some risks.

3. $100k in 401k in your mid four ties sounds quite low to me, unless your income is very very low, you should have much more. What's that going to last? 3 years? 4 at the most?

4. Rates are at historic lows. It's free money. I'd rather have that money working in the markets if I were u.

But honestly at your age you should be focused on retirement savings.

I would try to keep most of it liquid for an emergency fund, retirement and college (prioritize in that order). $100k at 40 isn't very much unless your income is low (< $30k).

We have a nice chunk of money in the bank right now from a previous home sale in another city where the property values doubled. We are trying to figure out whether to put it all back into a house (we are renting now) or buy a cheaper house and save this money for college or retirement or something. Realistically speaking, we are not financially organized people and I don't see us investing in the stock market or other property with the money. Plus I am fairly conservative so wouldn't want to do anything financially risky with the money. But a savings account seems pointless. I also don't see us saving a ton for college beyond what we have given our expenses and expected mortgage. Am wondering if we should put most of the money towards a house we like now, and whether we could pull money out of the house when it comes time for college, if needed, or downsize at that point. My husband has a secure job so I don't anticipate an unemployment scenario.

A related question: How much should we have in savings? We are in our mid-forties and I think our 401K is at about 100K but we have very little college savings for our only child. Just not sure how much of our "house money" we should set aside vs. put back into a property of about the same value as the one we sold.