Buy a home or set up a retirement plan?Q A I am a 43-year-old married woman who has $25,000 in my savings account Savings Account A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates. Notes: and $2,000 in an ING savings account that is not growing as fast as I'd like. I would like to purchase a home, but the market is overpriced o·ver·price tr.v. o·ver·priced, o·ver·pric·ing, o·ver·pric·es To put too high a price or value on. overpriced Adjective costing more than it is thought to be worth Adj. and my income is only $28,000. Should I start a retirement plan or purchase a home? Y. Williams Brooklyn, NY Since you recognize that living in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of presents a financial barrier to your dream of homeownership, it would be prudent to hold off on your plan to purchase unless you can add the income of your spouse spouse A legal marriage partner as defined by state law to the mix. Based on your salary, buying a home on your own is not your best option. With your spouse, however, you could consider purchasing in New Jersey, where prices might be a bit more affordable, or you could look at purchasing a one- or two-bedroom condo in your area to start, then trade up to a larger home in the future. A $180,000, 30-year mortgage at 6% interest produces a monthly payment of $1,079, excluding property taxes, insurance, and maintenance fees (if you buy a condo). As for your retirement fund, you should take the $2,000 you have in the ING account and open a Roth IRA Roth IRA An individual retirement plan that bears many similarities to the Traditional IRA. Contributions are never deductible, and qualified distributions are tax-free. A qualified distribution is one that is taken at least five years after the taxpayer established his/her first and contribute to it regularly. You can contribute up to $5,000 in after-tax income in 2006, and you won't pay taxes on your investments when you withdraw your money for retirement starting at 59 1/2 years old. Mail your money management questions to Honey Hatters, BLACK ENTERPRISE 130 Fifth Ave AVE Avenue AVE Average AVE Alta Velocidad Espanola (train between Madrid and Seville) AVE Alta Velocidad Española (Spanish: High Speed Train) AVE Audio Video Entertainment AVE Advertising Value Equivalent ., New York, NY 10011 or send an e-mail to scottm@blackenterprise.com. |
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