Would love to purchase my first home. 26 y/o, just made E-6. Getting stationed in Hawaii soon where housing prices are absurd (understandable, supply/demand) and the current interest rates don’t help. I’ll be there 3 years and can’t help but wonder if I’ll regret NOT buying when I go to leave, as I hear it’s fairly easy to rent out your place there and their housing market on average outperforms the housing market in the lower 48. I’ve also just recently really started honing in on my finances, because I haven’t been great and didn’t care/know much better. My current financial situation is as follows.
Debt:
-23k credit cards
-16,500 car loan
-2,500 Ashley furniture
Savings:
-50k TSP
-9,500 HYSA
I’ve done a lot of research and understand the rates are killer, HOA’s through the roof, owning costs more than renting, etc… Just want some reassurance I guess as rent will be roughly $3k give or take without utilities anyway. Not sure if it helps, my gf will be moving with me and plans to pay $1,500 monthly whether it’s towards an apartment or a mortgage of mine. Otherwise I’d have to get another roommate. (I’m not taking any of her income into consideration when crunching numbers, just putting it out there.)
Am I way over my head and being an idiot? Should I just rent and focus on paying my debt off and try and re-balance my stupidness from my early 20’s? Or should I strive to make it work and try and rent when I leave? Any advice is greatly appreciated.
Posted by BurdzNest
10 Comments
Hawaii is a hard place to buy anyway for it to make sense, but CERTAINLY not while you’re in 23k of CC debt.
Hard no.
Yes you are being an idiot.
Your debt is obscene without even purchasing a house, let alone you thinking you can afford an entry level 500k+ house in Hawaii
You have $23k in CC debt. You can’t afford to buy until that’s long gone and then after you’ve saved up 10% to put down at a minimum. Any house you could get approved for there would be a fixer. Starter houses in need of work are $600k and up there.
Whoo boy…that debt is unsustainable. Pay off the cards before you even think of buying anything major.
If interest rates were below 3%, I’d say to take the chance; with how they are right now, nope.
Brother you need to figure that debt situation out before you get anywhere near a mortgage
Thank you for your service, from a Navy vet.
Rent for now and pay off your debt.
Try this for your debt:
Stop all investments including IRAs. Just invest enough of your salary to receive the government’s max matching contribution for your TSP. Try using either the Avalanche or the Snowball method to clear your debt. There are YouTube videos that have extensive info on these two methods. Once you have ended your debt your options will open up immediately to invest and save aggressively for other endeavors in the future.
If your cc have annual fees, ask your cc provider if they can downgrade them to no AF cards. ALWAYS pay off your cc balance every month and you should be good building up your credit history.
Refrain from going out to eat and prep your own meals. Sell things you don’t use any more. Start a side hustle for extra income. Take on a temp part time job if you need to. Stay disciplined and live within your means.
Once you end your debts, max out your TSP and/or Roth ira. Time in the market beats timing the market.
You need to get your financial house in order before you can even plan to buy a literal house anywhere, let alone in Hawaii.
You have about $42K of debt, most of which is credit card debt. Getting a half million dollar loan to buy a house now would be like asking for a risky elective surgery while you’re bleeding out.
And make no mistake, you are a financial casualty right now. Your debt is likely costing you $10K per year at present levels, and you’ve spent all that borrowed money on stuff that will only depreciate in value and won’t make you money. This is an emergency: a crisis that is robbing your future self and those who will depend upon you of security, peace of mind, and health.
Take all but $1K out of your HYSA and pay down your credit card debt. Cancel all your subscriptions. Change your cell phone plan to the cheapest one you can get. Stop eating out. Stop buying energy drinks and alcohol. Trade in your car for an old, cheap Toyota or Subaru with 150K miles on it. Cut every non-essential expense, and reduce every essential expense you can until your debts are all paid and you have $15K in a HYSA.
Then (likely after you PCS from Hawaii) you can start saving up to buy a house.
Final thought: buying a house based on speculation that the local market will only go up is unwise. Unless you have a plan on how to drive up the house value with improvements (fix n flip) or renting (roommates, duplex, traditional house rent, or AirBnB-type), don’t plan on making much money from buying a house.
Few things will ruin your finances like FOMO: the Fear of Missing Out. Looks like FOMO has already dug you so deep in consumer debt that your net worth is nearly zero. Let the FOMO go. Your future self will thank you.
23k credit card debt would make me physically ill. You need to be at a point where you are not carrying CC debt month to month. You are paying $500 or more a month just in CC interest right now.
Here is the main problem if you have the finances in order and if the current interest rates and market don’t bite you in the ass…
Selling in Hawaii when it isn’t your primary residence incurs some heavy hits from the state. Have a family member trying to get restationed there just so they can sell without the state taking all their profit. And they bought before the market went up.
Yes completely Effen dumb.
Save up 100k then we look at the drawing board