My windfall -- apartment or condo?

In My Humble Opinion
1

As some of you may recall, my dad died in January. And I’m coming into a fair pile of cash. Also, at a new job, I’m earning more money than ever before.

I’ve paid off all my debts, including my student loan. I’ve bought a new car. When all is said and done, I’ll have something in the neighborhood of $32K. No dependents.

I’m still living in the apartment I had as a college student. It’s ok, and cheap, but I’m really getting tired of having to walk up the street to do laundry (none in the building). So I’m gonna go for a “lifestyle upgrade”.

Or should I? I have NO retirement savings, and I’m over 40 (I was an old college student, finished in '98). Frankly, I’m terrified of any investment riskier than a CD or Savings Bond.

Which is one reason I’m resisting the advice of friends to buy a house or condo (and, for me, it would be a condo), as a solution to BOTH lifestyle and investment.

In Madison, I might find a minimalist condo for about $120K, which I could barely afford if I can get th financing. Most of the prices I’ve come across for pretty nice places are $150-200K.

But I can afford a great apartment, even without biting into the estate money. Fireplace, pool, fitness center, DSL, etc. And still having the principal to put into a retirement fund (and still having a fear of financial risk).

I guess I’m a late bloomer. A lot of people are faced with decisions like this in their early 20’s, if they get a decent job out of college. I have to tell you that the temptation for immediate gratification is not any less now than it would have been then.

My two best friends are NOT among those encouraging me to buy. One doesn’t think I can afford, or get financing for, a nice condo. She might be right, I haven’t researched it that closely. The other said, “Go for a place with a nice pool”. His opinion was more or less, “Live like a king for a few years, and you’ll still have your pile if you change your mind”. He’s an over-40 divorced homeowner with two small kids.

2

Can’t tell you what to do. But I don’t think you’ll have much trouble qualifying for a mortgage unless you have bad credit.You have way over 10% to put down.One thing you might want to consider is the future- you may be able to easily afford that great apartment now, but it doesn’t mean you always will- rents may rise faster than your income. I bought my house in 1987 for $150,000. My original mortgage payment on a $110.000 mortgage was about $800. I might have been able to rent a three bedroom apartment in a decent part of NYC for $800 then (but I don’t think so), but there’s no way I could now.
Doreen

3

I have spotty credit. I’ve had credit cards suspended for non-payment, but I’ve always paid them off 100% eventually. You’d think that would count for some extra credit! With all the late fees I’ve paid over the years, they’ve had a BETTER rate of return from me than their steady paying customers. :slight_smile:

Perhaps I need to do more to repair my credit. But now that I’m out of debt, I don’t like the idea of taking out another loan to do it.

4

The late payments may not have affected your rating. I’ve had plenty of late payments, late enough for the charging privilges to be suspended, but when I got my credit report everything said “paid as agreed”. Apparently, just the fact that you’re charged a late fee doesn’t mean they report you as late.
Doreen

5

It might be worth a couple hundred dollars to speak to a financial planner. You can tell him where you want to be in 5, 10, 15 years and he can help you come up with a reasonable plan to get there. Two things I would dare to say from your post:

  1. To hit 40 with no $$$ set aside for retirement is a little worrisome – not hopeless by any stretch – but beginning to be a little bit of a concern

  2. I would ignore any advice that was “Live like a king now - to heck with tomorrow” That way 68 year old paperboys trapped in crime ridden neighborhoods lies …

Sorry about your Dad.