# spend savings to buy home?



## Huntmo1 (Nov 30, 2011)

I have a military pension that gives me a modest income for the rest of my life. Not enough to live on now with 2 kids and a mortgage, but in a few years, I was thinking about using my savings to pay off a small homestead to allow my wife and I to have a better chance of living off the pensions without having to worry about a mortgage.

Just looking for some advice/recommendations on what you would do. If I have $150-200K to buy a place free and clear, would it be smart to do that and lose that savings, or would you keep it in savings and go another route? 

If I didn't have my military pension, I know it would be smarter to keep it in there...but, the way I look at it, if my mortgage is going to be the biggest debt I have and it forces me to work many more years, I would rather pay off a home and not have that big bill keeping me from settling down and enjoying life more...

Thoughts?


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## stef (Sep 14, 2002)

Hi...
If your goal is to live w/o a mortgage, why not look somewhere where land & property are not that expensive? If you will be getting a pension for the rest of your life and don't feel the need to work a full-time ( civillian) job, why not spend only 75,000 or 85,000 to get your house and property. 

What you're proposing seems like a lot more than necessary if you're willing to relocate to a less expensive area. I know that in NW PA you could get a mansion and more than enough land for that kind of money. 

Also, it would be wise to keep a certain amount of cash. No matter where you live, expenses in the form of repair and replacements 'crop' up, if you will. Then there are taxes. I made sure that my mortgage payment included my taxes, insurance and interest each month; this eliminated having to come up with a lump sum once or twice a year. 

My philosophy is always to spend less than I can. You can be rich in land, but not have any money left over to do the things that would make it your home.

Just my 2 cents

stef


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## jwal10 (Jun 5, 2010)

Buy, just don't use more than half. Rainy days ahead....James


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## homebody (Jan 24, 2005)

Been thinking of something similar also. I would not live in a state/area that is less expensive if I already know that the culture, etc. doesn't "agree" with me. BTDT, not worth it to save a few dollars, not for us.

Since we already know where we will be moving to, we check real estate prices on the internet regularly. Have visited enough to know that the culture is more to our liking, will be much happier interacting with the people there. IMHO (and for us) THAT is more important than cheaper place. 

So, when I hear that the 3 most important words are location, location location, I agree wholeheartedly. 

When we move, we will also be paying cash as we do not want a mortage after retirement. Not living our old age in a dump, either.:happy:


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## Old Swampgirl (Sep 28, 2008)

With interest rates so low & your age not so high, you might consider putting 1/2 down & financing the rest for 10yrs. or so. Then if something comes up you'll still have some savings.


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## birdman1 (Oct 3, 2011)

Of corse you would be very lucky to find a turnkey homestead after you get your home and land you will need a tractor and implaments or a good roto tiller to raise a big garden hope fully you can find a place with enough pasture for a dairy cow or goat and ether hay meadow or local hay at a reasonable cost .if your not into milking raiseing a beef and or hog can be a big saver .a big garden can produce plenty of veggies bigger is better better to have extra of your favorites you can always can or sell if you do good on say corn or cabbage ect. farmers markets are becoming very popular and booming in most areas .My advice in summery is get as much useable farmable land as you can without haveing it sit and not be used get the tools to do the work without breaking your back as age catches up to you .let me welcome you to a wonderful lifstill as a homesteader .you can live very cheaply once you get set up with chickens livestock barn home garden and equipment paid for on any home place good plentiful water is a must if you notice older farm homes are always near a good water sorse .seem people have forgotten this .the farther out in the country you get the cheaper land gets but remmber the cost of gas and matince on your veichel gos up accordingly


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## Sonshine (Jul 27, 2007)

Personally I would buy so you don't have the payments coming out of your pension. DH retires in a couple of years and I sure wish we could pay off our mortgage before then.


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## Tobster (Feb 24, 2009)

In the years ahead, will your pension be adjusted for inflation? If so, that will work in your favor if you do take out a loan. Your loan payment will remain constant and if your pension increases, the per centage of your income going toward the mortgage will decrease, inflation will work in your favor as far as the loan is concerned. Interest rates are low and that is appealing. I like the idea of holding back at least 50% of your cash, a safety net is critical. By using a portion of the savings to make a nice down payment, you will get the best rate AND you will avoid paying PMI insurance on the mortgage. Don't forget to consider property taxes in the mix.


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## TxGypsy (Nov 23, 2006)

The main governing rule for me in these types of decisions is....never pay more in interest than you can earn in interest. 

Take your current rate of return and compare it with what you will have to spend to purchase a home. Then look at the ongoing expenses on that property. I agree....don't spend all of your savings. 

Good luck!


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## Huntmo1 (Nov 30, 2011)

Good Tip!



TxMex said:


> The main governing rule for me in these types of decisions is....never pay more in interest than you can earn in interest.
> 
> 
> 
> Good luck!


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## mekasmom (Jan 19, 2010)

I personally would spend the savings to buy a property to sustain you then live on the pension.


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## Sonshine (Jul 27, 2007)

Tobster said:


> In the years ahead, will your pension be adjusted for inflation? If so, that will work in your favor if you do take out a loan. Your loan payment will remain constant and if your pension increases, the per centage of your income going toward the mortgage will decrease, inflation will work in your favor as far as the loan is concerned. Interest rates are low and that is appealing. I like the idea of holding back at least 50% of your cash, a safety net is critical. By using a portion of the savings to make a nice down payment, you will get the best rate AND you will avoid paying PMI insurance on the mortgage. Don't forget to consider property taxes in the mix.


Usually military pensions do get adjusted, not always enough to keep up with inflation though.


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## Mike CHS (Apr 3, 2011)

Military retiree Cost of Living increases are probably going to wind up going toward that 300% plus increase in TRICARE fees if the proposals on the table go into law.


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## unregistered168043 (Sep 9, 2011)

Buy it. It'll be the wisest thing you can do with your money right now. Savings is being eroded by inflation and you aren't making much interest to combat that. Money sitting in savings is money slowly dissolving.


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## Micheal (Jan 28, 2009)

I've read and re-read your post and what others have posted and have come to the (personal) thought that there are just to many missing parts to really give an answer. Sorry!
Some thoughts though......
What's wrong with where you are - a need to buy a new place? Where?
Is there more income (now or in the future) other than your pension(s)?
Are the "savings" you have what you have put away for your retirement?
How much "homesteading experience" do you have or is it a novel idea that could get to be very expensive rapidly?
Your age, health, and physical condition considered?
What do the rest of the family really think about this?
Etc............

Again, I don't mean to - throw stones - dump cold water - shoot your idea down - nor a number of other sayings, but...........

Personally, I'd be doing a lot more thinking/discussing/planning before committing to......... but that's me!


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## rxkeith (Apr 13, 2009)

land could be a good investment if you are patient. how are real estate values trending in your area?

i would be hesitant to use life savings to pay off a house, if the military pension is your only current source of income, and you state it isn't enough to live on with two kids. if you are working, and can replace that money over the years through saving or investing, then i would pay off the mortgage if this is the place you plan on staying. when you don't have debt, you are working for yourself. you control your life, not the bank.

make a list of the risk/benefit of paying off the place vs doing something else with the money. that should help clarify things.




keith


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## Big Dave (Feb 5, 2006)

How long you have to live? What will make you happy? If I had your problem I would buy me a place. Don't like it sell. Land is where you will not lose your money. Money coming in every month. Man to me that is a no brainer. I guess I am too simple to worry about looking to far in to the future. In my opinion the future may not come.


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