Smart Money: 'Catch up' by working two jobs

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DEAR BRUCE >> I started saving late in life, so now I'm playing catch-up. I am 45, have about $95,000 in a 401(k), $5,000 in a Roth and I am working a second job to bring in more money. My income is approximately $60,000 combined. I have a mortgage of $45,000, student loans totaling $35,000, and no other loans or credit card debt. Also, I have $13,000 in savings.

I don't know what I should do with my extra money, whether I should pay down my student loans or pay off the mortgage. I don't know how much longer I can keep working two jobs, but I want to keep with it for at least five years. Also, I want to sell my condo and buy a small house in a few years.

— Reader

DEAR READER >> It sounds to me like you've a good handle on things. You say you're playing catch-up. At 45 years old, you still have 20 to 25 years to work, and I suspect that you're going to have to do that.

In essence, you have student loans at $35,000 and a mortgage of $45,000. Not too shabby. I would pay down the student loans first, which very likely have a considerably higher expense factor than the mortgage. As to selling the condo and buying a small house, I don't know why you are waiting to do that.

You mentioned not wanting to work for too much longer. I urge you to work as long as you can. Your income, which is $60,000 combined, is not insignificant, but it's not a great deal of money. It seems to me that you're very disciplined and you should be congratulated.

DEAR BRUCE >> I will be closing on my house in the next couple of weeks. I want to have an attorney present in case of any problems. What is the standard rate for an attorney in this circumstance?

— Reader

DEAR READER >> First of all, you should already have an attorney at this point. You're late! There may be some issues that have to be cleaned up.

As to a standard rate, it depends to some measure on the size of the house. If you're buying an expensive home (say $600,000), it wouldn't be unusual to have an hourly rate of $150 to $175. If it's much smaller, then the rate should be much less. Get ahold of an attorney soon because you are already late in getting that very important part of the closing established.

Send questions to bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.


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