Friday, November 03, 2006

How i plan on buying a home at the age of 25

I originally wanted to make this post about my top 10 goals, but when i looked at the list i realized that majority of my goals were leading toward owning a home. The toughtest part of buying a home is coming up with the downpayment so thats what im going to concentrate on. So heres what i came up with.

My Stats:
current saved so far: $0
Projected saved : $50,000

Buying a house:
My current status is at -6,423.23, this includes credit cards, car loans and whatever i felt like i owed.My goal is to have at least 50k saved up for downpayment on the house so here is the plan. After this december, i should be completely debt free! So i can start investing my money in an mutual fund. My general idea on how i plan on going about this is %75 percent of my check goes to the savings and the rest goes to paying life. Now heres all my sources of income:
Estimate per month while in school
1.) Work1 1,200
2.) Work2 600
3.) refund check 3,400 x 2 (once per semester)
4.) Girl friend's refund check 1,400 x 2 (once per semester)
*note: Basically, we're getting married so her refund check is going into savings also : )
-------------------------------------------------
Total amount in 8 months = 24,000

soooo....take %75 of this, which comes to 18,000. Now keep in mind this is only 8 months out of the time im in school. So lets also consider 1 month for winter break and 3 months for summer vacation, comes to 4 months.
Estimae per month while out of school

1.) Work1 2,200
2.) Work2 600
-------------------
Total amount in 4 months = 11,200

..and %75 of this comes to 8,400.Okay so we'll combine these two, only taking %75 and i get (18,000 + 8,400 = 26,400). I can save up a total of 26,400 per year if i can stick to this rule. Now, lets say i were to invest this in a mutual fund. According to a compound interest calculator this is what i got:

Inputs:
---------------------------------
Current Principal: $0.00
Annual Addition: $26,400.00
Years to grow: 4 years
Interest Rate: 5% *(fairly pretty low)

Outputs:
---------------------------------
Future Value: $119,476.67 *(Sweet!)

So, in conclusion i can have $119,476.67 by the time im 25. Now you guys are thinking....wait a minute, what about rent, food and all the other crap life has to offer. Well, i happen to have my room and board completly paid for til i graduate and that also includes food. So, this is pretty really realistic for me, i just have to stick to it.

Things to remeber:
-Keep up good credit score
-Keep researching the martket
-Keep girlfriend

2 comments:

Binary Dollar said...

Andy,

I'm glad you're crunching numbers. If you save up $100,000 by age 25, you'll be my new hero.

moneyliving said...

Wow! what a plan, I guess strict discipline can give major results.

I must ask why you have to remember to " keep girlfriend " LOL