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      08-17-2019, 07:40 PM   #1
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Question Should I pay off my car or buy a house?

Okay here is the situation. I will be cashed out from my house next year from my ex-wife. I should get 70g. I currently live in an apartment and could not afford a house payment comfortably on my own if with 50g down.

So my question is should I take the 70g and pay my car off and then use the rest to make monthly child support for the next 13 years? Or should I pay my car off and put the 50g as a down payment on a house and pay the child support monthly from my income.

Remember that even with the 50g down money would be tight but I would have a house.

If I used it to pay child support I would have to stay renting a place but I wouldn’t be worried about cash on hand every month.

I am going to talk to a financial advisor to see what they think but wanted to see what you all thought as well. I am planning on making more money in the future but that’s not a guarantee.

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      08-17-2019, 07:43 PM   #2
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Rent and pay child support only when it comes due. Renting makes for an easier life.
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      08-17-2019, 07:46 PM   #3
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Originally Posted by BMWILUVU View Post
Rent and pay child support only when it comes due. Renting makes for an easier life.
I would have more cash on hand every month and I could figure out how to get into a house if I start to make more money.

I would just put the money into an account and have the child support payment taken out every month instead of it coming out of my paycheck.
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      08-17-2019, 08:58 PM   #4
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Just depends on the lifestyle you're willing to live. I would say go Option 2 if your income is consistent and reliable, then your money is going into a solid investment(house) instead of just burning away every month as rent. If you go Option 1, set aside what you need for child support sparingly(6-12 months in advance), and put the majority into an investment account or brokerage. So that way the money isn't sitting waiting to be used, and you're at least getting a substantial return of some kind.

Personally, I would go Option 2.

Best of luck to you and your family man, I know how rough divorces can be. Seen too many in my day.
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      08-17-2019, 09:09 PM   #5
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Quote:
Originally Posted by obert View Post
I would have more cash on hand every month and I could figure out how to get into a house if I start to make more money.

I would just put the money into an account and have the child support payment taken out every month instead of it coming out of my paycheck.
I rent. When I did own, my weekends were spent on maintaining the house and my taxes went to paying for school for other people's kids. No more. More cash and free time is good.
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      08-17-2019, 09:22 PM   #6
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I am 51. In my adult life I have owned 5 homes, made money on all. I have rented 6 times, and never seen a dime of it back.
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      08-17-2019, 09:44 PM   #7
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I will have about a year and a half before I could purchase a home after I get the cash so I will put it into something so it can make some money.
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      08-17-2019, 09:54 PM   #8
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I got divorced in March and bought a house in July. I looked into renting. $900/month for a 2 bedroom in a decent city. Same city, decent three bedroom houses would cost the same since I had a decent down-payment and good credit. If you can swing it, buy.
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      08-17-2019, 10:15 PM   #9
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I got divorced in March and bought a house in July. I looked into renting. $900/month for a 2 bedroom in a decent city. Same city, decent three bedroom houses would cost the same since I had a decent down-payment and good credit. If you can swing it, buy.
House prices are insane in my area and so is rent.......a 1 bedroom in a nit so nice neighborhood is 1200 plus all the bs I am looking at close to 1500 a month. The crap studio I am in now is going for 1350 so I am moving into that 1 bedroom for the next 2 years.
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      08-18-2019, 12:18 AM   #10
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Just put the cash in the bank and wait for the storm to blow over and by then housing will be on the way down as the next recession will be here. Buy low. Sell high.
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      08-18-2019, 12:25 AM   #11
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Just put the cash in the bank and wait for the storm to blow over and by then housing will be on the way down as the next recession will be here. Buy low. Sell high.
Yeah that’s a good point.

I bought when it was low last time and we have almost 150g in equity. Double what I bought the house for.
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      08-18-2019, 12:32 AM   #12
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Is there a 3rd option?

Lump sum payment of child support. It's something I've heard about but never talked to anyone directly. In the long term might save money, assuming you move up in pay over the years and support follows.
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      08-18-2019, 12:55 AM   #13
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Quote:
Originally Posted by obert View Post
Okay here is the situation. I will be cashed out from my house next year from my ex-wife. I should get 70g. I currently live in an apartment and could not afford a house payment comfortably on my own if with 50g down.

So my question is should I take the 70g and pay my car off and then use the rest to make monthly child support for the next 13 years? Or should I pay my car off and put the 50g as a down payment on a house and pay the child support monthly from my income.

Remember that even with the 50g down money would be tight but I would have a house.

If I used it to pay child support I would have to stay renting a place but I wouldn’t be worried about cash on hand every month.

I am going to talk to a financial advisor to see what they think but wanted to see what you all thought as well. I am planning on making more money in the future but that’s not a guarantee.

So it’s not enough information to give you any type of guidance on what to do. Suitability means getting the overall gauge of the clients needs so you would need to know income, debt, age, overall goals, needs and wants, any savings currently have, liquid and non liquid assets as well as overall net worth. A 70k loan but why worry if it’s a 1% loan (for example). I would definitely reach out to a financial advisor or tax professional.

And a little tip I’ll give you is that you can you use brokercheck.com to make sure that person is who they say they are. Good luck!
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      08-18-2019, 02:17 AM   #14
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Quote:
Originally Posted by iminhell1 View Post
Is there a 3rd option?

Lump sum payment of child support. It's something I've heard about but never talked to anyone directly. In the long term might save money, assuming you move up in pay over the years and support follows.
I wouldn’t pay it all at once.......that would benefit her more than anything. I would slowly give it to her and hope it benefits my daughter monthly.

Option 3 I guess would be to sit on the money and let it earn some sort of interest in an account and wait to buy a home and pay the support from my checks.

One of the shit things is I know she doesn’t need the money because she has a two income house. The support if she wants it can just be play money for her while I struggle.
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      08-18-2019, 01:55 PM   #15
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Talk with a family lawyer. I had a buddy years ago that had a ton of back pay to catch up on ... IIRC about 10 years worth, he had no idea, mailing problems, etc.
He'd gone to court and the backpay went into a 529 for his kid. Mother never seen a dime.
I'm sure in your case the ex will have to agree to anything. But there should be options where you don't have to give her money and can do something beneficial for your daughter.


And the support system just need far more options. I've known of far too many who live off support and the kid sees none of it.
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      08-19-2019, 09:07 AM   #16
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Quote:
Originally Posted by obert View Post
House prices are insane in my area and so is rent.......
Wow! Ouch. I didn't see your location on the mobile app. On desktop now, so yeah, ouch.
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      08-19-2019, 09:18 AM   #17
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1. How much do you owe on the car? What's the interest rate?

2. Not sure why you would lump sum anything...stay liquid and if you see a place in the market that makes sense for you to invest, let that money make you money instead of it flying out the window all at once.

3. As far as buying a house, maybe look at homes that have a separate entrance, etc. which gives you an opportunity to get paid rent which can in turn help pay down the monthly mortgage payment. Doesn't sound like you'd be interested in a "roommate" type of situation, so having separate quarters would make a lot of sense since it seems like you don't need a whole lot of room for yourself anyway.
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      08-19-2019, 09:42 AM   #18
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From someone whose children just became adults and fought this battle for 10 years, my recommendation would be to stuff the money for child support in an account and pay it monthly from there. DO NOT USE IT FOR ANYTHING ELSE. I lost my job 3 times in 10 years. I'm not sure what the child support laws are there, but here getting behind is a nightmare!!! You spend a bunch of time in court over being in contempt, risk losing your license, your tax return goes to the court/ex and it's extremely difficult to get caught back up, pay bills, etc. Pay your car off, so that in the event that something happens with your job, you still have a car and don't have to worry about repossession. I ended up in this boat. No car, no job, no way of being able to provide for the kids when they were at my place; all while the ex was trying to screw me out of every penny she could.

Someone mentioned before about home ownership comes with lots of maintenance. There is always work to be done, appliances needing to be replaced and various repairs needing completed. This takes time and money. Time and money that can be spent with your kids. Pay the car off, save that money from the car payment and use it for rent. Stash the money for child support, so that you don't have to worry about getting into a situation to where you are behind with it. Rent an apartment, not a house; this way your time isn't consumed by yard work and whatnot. Spend time and money on your kids......and the occasional female as you will want this time and money available then too. if you still want to buy a home once the kids become adults, do that then; you'll have more time and money when that time comes.

Right now, just focus on kids, work, maintaining your health and sanity. This is a drastic life change. Try not to take on too much right now. Good luck. If I can be of any assistance shoot me a PM.
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      08-19-2019, 09:46 AM   #19
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You should immediately pay off the car. Having a loan on a 7 year old car is ridiculous.

The number one way to building wealth is to not have any debt (with exception of a home).

You should absolutely buy a home, but only if you can meet the following criteria. If you cannot meet ALL of the items below, continue to rent until you do so:

1) A down payment of a minimum of 20% of the cost of the home. No PMI.
2) A payment that is no more than 25% of your total take home pay.
3) A fixed rate mortgage for a maximum term of 15 years.
4) You plan on living there for at least 5 years.

So long as you can meet all four of those items...and.... you don't have any other debt of any kind - buy the home.

Otherwise, wait.


EDIT: I see you live in a relatively high cost of living area. This doesn't change anything I just said. Simply living in an area that is expensive does not give you a pass on basic math.
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      08-19-2019, 09:50 AM   #20
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Sell the BMW, get a cheap reliable beater, dump all the money into the house and child support and spend the rest living comfortably. Once the house is paid off, you can use that extra income to get something real nice to drive.
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      08-19-2019, 09:53 AM   #21
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Quote:
Originally Posted by Run Silent View Post
You should immediately pay off the car. Having a loan on a 7 year old car is ridiculous.

The number one way to building wealth is to not have any debt (with exception of a home).

You should absolutely buy a home, but only if you can meet the following criteria. If you cannot meet ALL of the items below, continue to rent until you do so:

1) A down payment of a minimum of 20% of the cost of the home. No PMI.
2) A payment that is no more than 25% of your total take home pay.
3) A fixed rate mortgage for a maximum term of 15 years.
4) You plan on living there for at least 5 years.

So long as you can meet all four of those items...and.... you don't have any other debt of any kind - buy the home.

Otherwise, wait.


EDIT: I see you live in a relatively high cost of living area. This doesn't change anything I just said. Simply living in an area that is expensive does not give you a pass on basic math.
Listen to this man.
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      08-19-2019, 10:08 AM   #22
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