Over the past few weeks – since I announced my intention to start working towards saving for a home – I’ve been doing a lot of research about the path to homeownership. I’ve talked to friends and my parents, read all of the thoughtful comments on this post, checked out books from the library, and read literally hundreds of Internet articles. What can I say? I like to be well-informed 🙂
Anyway, in the course of this research, one piece of advice kept popping up again and again, to the point that I just can’t ignore it. I’m sure that what I’m about to say won’t surprise you, and it didn’t surprise me either, I was just kind of hoping that I could some way circumvent it, since it’s terribly boring. The advice:
If you’re planning to buy a house, you need to have a large emergency fund.
See, you knew it. Sigh. I don’t know why I have this weird, mental resistance to building up my cash savings. I guess it just feels so….blah. I can’t think of another word besides boring, which shouldn’t be a reason to avoid it. But for some reason I have been. For years. If you’re a long-time reader of this blog, you know that I’ve gone back and forth about whether or not a big emergency fund is necessary for me approximately, oh, one million times. Ok, not a million. But close.
So, the bottom line is, 2013 needs to be the year I plump up my emergency fund if I ever want to be in a good position to become a homeowner. That’s goal do-over (again) #1: build my emergency fund to $10,000.
Also, rather than saving for a downpayment in a separate account, I’m going to use my Roth IRA as my primary downpayment savings vehicle, so the goal of maxing out my Roth remains. I know this is a controversial move, but for me I think it’s the right thing to do in my case. The Roth is very flexible when it comes to making withdrawals, and there’s more potential for growth than if I were to put the money into a regular savings account. Also, my Roth is not my only source of retirement funding; I also have a defined-benefit pension coming my way, so I’m not compromising my old-lady future by making a Roth withdrawal at some point in the future for the purposes of buying a home.
Thanks for hanging in there guys – I know I’m a chronic mind-changer when it comes to my money, but I just can’t help do re-writes of my goals when new information or a new perspective emerges.
How are your 2013 financial goals going, now that we’re about a month into the new year?