FormerDoormat

I was going to post this in my All About Me thread, but I think this post may be helpful to others, so I thought I'd start a new thread so it doesn't get lost.

My daughter and I met with my financial advisor for coffee again today. If you recall, she'd asked me to provide her with a series of financial documents to help me determine if buying the potential new house is a good move financially or not.

She said that the first order of business was to make sure I had taken care of myself properly when it comes to retirement. Only then--and only if I had positioned myself to have a comfortable retirement--would we proceed to talk about purchasing a new house.

She did a series of calculations on various retirement scenarios (what age I wanted to retire), how much money I need to have available to me at retirement (roughly 75% of my highest salary), how much money that will equate to when I'm 67 (my chosen retirement age) taking inflation into account (which typically runs 3% annually), etc.

She went on to explain that pension plans are not sure things (i.e., the company could go bankrupt), so she ran two scenarios: one with the pension and one without the pension plan. She said it's best to plan for both scenarios, so I won't be surprised if things don't pan out as I expected they would.

Now here's the sweet spot: She said with a little tweaking, I'm right where I should be retirement wise, and that leaves me in a good position to purchase the new home. She ran several financial scenarios regarding the potential purchase, based on different down payment amounts and financing options, told me what my mortgage payment would be for each option, and told me the lower, middle, and upper limits of what I could spend--suggesting, of course, that I take a conservative route.

She also checked out the reputation of the potential homebuilder and said they had an excellent rating and told me that if I bought the five-acre lot next door to the nearly done house (which has an even better water view) and then picked the house I wanted from the builder's selection of houses, it would save me $133K.

So my homework tonight was to visit the builder's website and research the cost of building one of their homes (they show the turn-key prices of the homes without the land), so I could see how much cheaper it would be to take this route. She even pointed me to a collection of homes that she felt offer similar layouts and features. Tomorrow I'm going to set up a meeting with the builder to see if they'd be willing to build a home to my specifications on the lot next door.

So, really, the sweet spot isn't that I can afford a new house (though that is sweet), it's that I am taking control of my finances, preparing for whatever the future sends my way, and becoming more independent along the way.

I thought the gift was a potential new house. But the true gift is knowledge, and knowledge is power.

Just thought I'd share....