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Just looked through the FF flow chart again and ha...
# budgeting
b
Just looked through the FF flow chart again and had a question - at what step would you save up for/buy a house? Between step 14 and 15? I also didn't realize FF only takes donations from people who reach FI 😂
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m
Haha we definitely accept all donations
It would be step 22
I will make that more clear in the chart. Thank you!
b
You're welcome. But is it feasible to be maxing out on 401k and HSA before saving to buy a house? I can't imagine being able to do that in the forseeable future.
Btw before I go further I want to say the chart is fantastic. Gives a clear and viable path to financial freedom.
m
That is definitely not my intended takeaway for the chart. Can you review it again and see if another meaning can be inferred? I'm asking it this way so we can make it better.
b
You said buying a house is step 22 but 18 and 19 are maxing out on 401k and HSA, respectively, unless I'm misunderstanding something.
O wait should it be step 17?
b
I think that certain saving accounts are highlighted due to their tax advantages, but it's important that there be savings (perhaps simultaneously) for earlier needs, like buying a house and future simchos. Not all savings should be locked away in retirement funds. I know for myself we definitely prioritized buying a home before anywhere near maximizing retirement funds.
Would also point out that you shouldn't necessarily have to max out each investment step before moving on. It should be ok to incrementally increase retirement funds (in a 401k) while also saving for other large long term or shorter term expenses.
m
@broad-australia-98095 I believe you are misunderstanding. Step 15 says to only max out the green steps UNTIL you are on track to meet your FI goals. Until you are on track to meet your FI goals, you shouldn't be buying a house. You need to make sure you're setting yourself up for success.
In other words, my prescription is not to max out retirement accounts before saving for a house. My prescription is to make sure you have an actual plan for your future goals before you make the single most expensive decision of your life to buy a house, which for almost everyone I have seen, ends up being more expensive than renting.
If your simulation shows that you need to be investing 1k a month to fund your future goals, then until You're investing that $1,000 a month you can't risk taking on the obligation of buying a house. This is so important because your housing costs will drastically impact the ability that you have to invest each month. So you want to ensure that you know how much you're investing costs need to be before you lock yourself into a housing payment
If you can't tell, I get this exact question a lot with almost every family 😂
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Specific relevant section
b
@bumpy-minister-26192 ya that's how I imagined it.
@mysterious-tomato-10057 I'll read the article later but from what you said I think I understand - you're saying max out contributions to a point where when you do buy a house you don't have to be putting too much away to reach FI? In other words, if you buy the house now you won't be able to afford both the house and FI but if you focus on FI first you can buy a house without having to put away as much for FI?
m
I'll rephase and let me know if this helps. Put away a monthly amount that your plan is succesful for FI. Once you are comfortable putting away that monthly amount, then you can start thinking about how much you can spend to buy a house that won't impact that monthly investing goal you need to hit.
b
Ya that's basically what I understood from your comment. I would suggest putting a more obvious note when to buy a house, that was one of the first things I was keeping an eye out for. (I know there are a lot of notes already in there)
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