Simplifying Hive Bookkeeping
The Covid-19 pandemic and economic downturn is not the most intuitive time to buy a home. Mrs TWM and I find ourselves in a situation in which we may have to purchase the house we are renting. On the surface, this is bad timing. However, it may be advantageous in the short and long terms to help us weather future potential hardships.
Mrs. TWM and I both work for local governments. In all likelihood, we will remain employed throughout the economic troubles. However, there is a small possibility that she could lose her job. It would not be disastrous as I earn the higher income at this time. However, it would be challenging until she finds another job. Fortunately, we would have the option to collect unemployment benefits for some time. After that, we would struggle a bit.
Our best option is that we would cash out retirement money to buy the house we are renting. This means that that retirement money would be tied up in the house. A worse situation would be to take out the money for medical bills or other purchases that do not preserve some value.
Buying a home outright would also save us the monthly rent payments, which would leave us with considerable cash flow that we could save up. We would have to be extra mindful to save the extra money and to pay down other debts as quickly as possible. Other than the house, we have car payments, student loan payments, and a time share payment that, if eliminated, would leave us with plenty of free cash. And, if one of us loses our job, we would be better positioned to make it through.
We are looking into the details of how to make the purchase happen. There are rules for 401k early withdrawals and the penalties associated with that. There are the procedural things, like lining up land and title company to do the deal. There is home insurance to get quoted. There are tax implications. We should look at the potential for getting a mortgage, at least for comparison. There may also be provisions of the CARES Act that would help us with the home purchase. We should probably get an appraisal. Are there FHA programs that would help us? There is so much to find out.
Mrs. TWM and I think that we would be better off, financially, if we do buy the house. If we got a mortgage, we would be in the same position as we are now, making monthly payments. If we lost one of our incomes, then we would face a hardship. Mrs. TWM values financial security and I value cash flow. As a couple, we think that owning the house completely would bring us peace of mind. In the end, when retirement comes around, we can sell the house or rent it out. Perhaps with the amount of money we are able to save on monthly payments, we can buy other houses to rent. In other words, options open up.
We have our work cut out.
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