I’m going to start of by telling you that we haven’t made any decisions yet. This is your chance to read through my thoughts and either save me from my craziness or tell me that I’m not as crazy as I think I might be.
Either way, let me know what you think in the comments so I at least know if I’m crazy or not!
As a personal finance blogger I often pressure myself to make the best financial decisions possible so I can be a good role model to you all, my readers. It probably wouldn’t hurt that the best financial decisions would hopefully put me in a great financial position down the road.
However, at times I feel like I need to do something I want rather than what makes the most sense financially. Below is what has been occupying my thoughts all week.
I know, I know! We just bought our townhouse on a whim a year and a half ago. What am I thinking by wanting to buy a beachfront condo so soon?!
Don’t we still have my girlfriend’s student loans to pay off? I’m not making this easy on myself but I’m going to answer all of these questions one at a time.
I’m going to go over the fun stuff first though. We think we can afford a 2 bedroom beachfront condo on the Gulf of Mexico! This wasn’t even an option when we bought our townhouse because my girlfriend and I thought we’d be living in two different cities and potentially would have to carry the cost of two houses.
We first started looking at condos back when I visited my parents and we were in college. We never thought we’d live in this city but it was something fun to do while we were visiting.
Condo prices had started to head down from the housing crash but were nowhere near bottom. At that point there was no way we’d ever be able to afford a beachfront condo that was big enough to live in for any significant time period. Ever since then we haven’t even considered it.
Last weekend we were taking my dog for a walk and saw the condos and thought about how it’d be awesome to live in one. The condos are beachfront on the white sugar sand beaches of the Florida panhandle and have amazing views. Some have more square footage than our townhouse and they’re all one level floor plans so we’d get more use out of the space.
We decided to look on the local MLS website and found out that there were a few condos that would be within a reasonable housing budget so we kept investigating. We emailed our trusty real estate agent and are going to look at a few this weekend!
Now is your chance to stop me before I go completely crazy!
When we bought the townhouse we knew it wasn’t going to be our forever home. We thought it’d make a great first home and the low mortgage payment would allow us to save a ton of money to pay toward my girlfriend’s student loans.
My girlfriend has saved a ton of money in her budget from the extremely low cost of living in the townhouse and has put this toward her student loans. I have similarly saved a large amount to pay toward her student loans once we get married, but for now I still have this money in cash. More on that later…
Another great benefit of the low cost of carrying the townhouse is its rental potential. We could easily rent out our townhouse for a significant amount more than the costs to keep it.
If we decide to buy and live in a condo on the beach we’ll rent the townhouse out and save any money above the mortgage payment toward maintenance and repairs for the townhouse. It should sustain itself with no extra money from us.
What About My Girlfriend’s Student Loans?
My girlfriend is making great progress on her student loans all by herself so far. Our last Debt Pay Off Update from January mentioned that my girlfriend has paid off over $20,000 of student loans all by herself in just a year in a half since graduating.
The update also mentioned I have saved over $30,000 to help her pay off her loans after we get married. This money, along with our future savings in 2013 would enable us to pay off these loans by the end of 2013 assuming everything goes according to plan.
But what if we decided to pay the student loans off over a longer period of time?…
In order to buy a beach front condo we’d want to have a 20% down payment. If we follow our current plan of paying of my girlfriend’s student loans by the end of the year we wouldn’t have a suitable down payment until late 2014 at the earliest. A more likely scenario would put us in a beachfront condo in 2015 or 2016.
Our credible fear is that the condo market is coming back quickly right now. Once prices start taking off there is no way we’d be able to afford a condo we could live in because they’d be priced out of our modest housing budget.
The other factor that allows us to consider purchasing a beachfront condo is the rock bottom mortgage rates that I’ll likely never see again in my lifetime (or at least for the next 20-40 years). Mortgage rates have started to come off of their ALL TIME LOWS (that’s right, never have mortgage rates been lower than they were in the last year).
If mortgage rates rise more than a percent or two, the increased interest costs and the higher priced condo market will push our dream out of reach forever.
Why I Think I’m Not Crazy… Yet…
Paying down my girlfriend’s student debt as fast as possible is a great goal. The key to this whole plan is the fact that we’re still planning to pay my girlfriend’s student loan debt off aggressively after we purchase and move into the beachfront condo. If we go through with it that is…
Buying the condo would not stretch our housing budget to crazy levels. It’d still be well below the average housing costs most American’s live with today. It’d also be significantly below the percentages of gross and net income suggested by many personal finance experts.
Back to the student loans… according to our calculations, we’ll be able to pay her student loans off by the end of 2014 if things go perfectly according to plan. If things don’t go quite as planned it might take until 2015. Either way I still think that is pretty amazing.
How many people can say they’ve paid off $80,000 of student loan debt within 4 years of graduating from college? I’d venture to say not many.
If you think what I’ve said today is crazy… wait until I share what I’ve been thinking about on Monday! Make sure to come back and check it out. I’ll also have an update of how we’re feeling after we’ve looked at the condos.
Save me if you think I’m crazy! Encourage me if you think I’m thinking straight. I want YOUR opinion. Tell me what you think of my crazy plan in the comments below. I do value your opinion, but don’t be mad if I don’t end up taking the majority’s advice !
**P.S.** Just to clarify, the pictures are not condos we are looking at. We could never afford those… unless we won the lottery! Which we don’t play.