The Setting

I'm lucky enough to have a family that could both teach me great financial habits and provide me with the means to graduate from college mostly debt-free. My dad is the money manager in the family and my financial mentor, and he's helped me do everything from open my first bank account to pick my first stocks, but my mom, who knows very little about her own finances (she lets my dad handle that) probably gave me the most important piece of advice. She told me that a girl should always be able to rely on herself. So I'm not waiting for a guy to come around and sweep me off my feet, at least in the financial sense.

My financial education probably started my sophomore year of college, when instead of paying for all my costs, my parents started just handing me a check for a certain amount every month. I had to figure out how to make that amount work for my rent, food, and anything else I wanted to do. They covered all "essentials" like tuition, books, car expenses, and most clothes at first, so that I couldn't mess up too much. As time went on, I became responsible for more and more of my own spending categories, until my dad got laid off in my last semester and I offered to start taking on all my finances myself. That's why I have a tiny amount of student loan debt, but since I was lucky enough to graduate in one of the record-low interest rate years, it's at 2.6%.

I make a very comfortable salary for someone my age (between $70-75k/ year with bonus) and because of that, allow myself to live fairly comfortably. I have my own 1 bedroom apartment at $1050/month + utilities, and a 1-year old car which I could have bought outright but chose to finance because it was at 1.9% which I currently pay $506/month for. My life also includes some nice clothes, nice restaurants, and great vacations. I do not, however, live above my means, and I'm a big believer in frugal living and conscious spending. Sometimes I'm better at it, sometimes a bit worse.

In the 3 years I've been out of college, I've saved about $15,000 in retirement accounts and $26,000 in regular savings. My retirement accounts are all in stocks and mutual funds, but I haven't started to invest my regular cash in anything more risky than high yield savings (5%+) or CDs yet. That's probably my next step. I already have a new car (which I plan to keep for a good, long while) and more than enough for an emergency cushion, so my next goals are to start a Roth IRA, invest my non retirement funds, and save for a down payment. The last part is a bit daunting since a 20% down payment on a 1-bedroom condo in my area will run somewhere in the $80,000-$120,000 range. I'll probably get some help from my parents, take advantage of first time homeowner programs in my state, and possibly borrow from my retirement accounts all of which could allow me to put less than that down, but those are still some pretty big numbers.

A monthly payment on a condo like that is likely to run me somewhere north of $2000 including principal, interest, property tax, and HOA fees. That's more than double my current rent and about 50% of my current take-home income. Also known as: a pretty scary thought.

There's 2 other options I can consider, both of which would involve buying a 2-bedroom apartment and having a roommate. In one, I would buy the apartment and rely on a roommate to help me make part of the mortgage payment. In the other, my parents are looking to get an apartment for when they retire - we'd go in on it 50/50 and I'd live there with a roommate. I'd pay my half of the mortgage and the roommate would probably pay my parents to cover part of their share. It's better for my parents than trying to find renters and having to maintain the place themselves, and it would help me build equity so I can buy the next place myself. Then either I'd move out and my parents would buy me out, or I'd buy out my parents (more likely the former).

So anyway, I'll have some options, but right now the name of the game is getting a whole lot of money saved up, most likely trying to get to 6 digits. That'll involve balancing my lifestyle with my savings goals. I want to continue to live comfortably, but from now on I've got to realize that the more I spend now the longer it'll take me to get into a condo of my own. There's always a trade off.