I also have an aversion to debt. I pay cash for cars… and I try to buy ones I can keep for 7 years. I pay off my credit cards every month. And I take the money I save on interest and put it toward retirement. I’m sitting on a healthy bundle of cash, yet when it comes time to buy a place I probably won’t use all of it on the down-payment.
I like the security of having liquid assets. It makes me feel like my wife and I work each day at our own whim. If either of us feels compelled to quit on principle, we’ve got cash to cover us until we find something else. Saving for retirement helps me to remember that I won’t always have to work. There’s a future out there where every day feels like Saturday.
If I could get in the Delorian an go back to 29 y/o, I would have saved more. These are just my ideals. Don’t think of that 130k in retirement savings in today’s terms… think of it in terms of what it will be worth when you are sick of working. Don’t bet that your house will pay for your retirement. It’s hard to spin downsizing as anything but depressing. If you’re worried about a stock market downturn, then put your money where you think the boomers are going. They certainly aren’t going to be buying $300k starter homes.
For what it is worth, here’s my advice. When its the right time to buy, put down as much cash as you have on hand while maintaining a liquid amount to make up for a year’s income. Finance the rest with a fixed 15 year mortgage… you can burn that mortgage on your 45th b-day! Keep contributing as much as you possibly can to your 401k. Live within your means and teach everyone around you how rewarding that can be. You’ll know the the time is right when prices fall and interest is such that you can comfortably make the payment on that mortgage out of 30% of your take home pay. Your take home pay will of course be lessened by your $15k/yr contributions to retirement.
You are way ahead of most people your age by even thinking critically about this stuff. Congratulations.
