Dear Helaine: I recently received a $10,000 Christmas bonus. I own a home in a city I no longer live in that I rent out to reliable tenants, earning a modest profit. Besides my mortgage, my only other debts are $4,500 remaining on a student loan and $13,000 I still owe my parents for helping me out when I was laid off several years ago. (I'm paying them $350 a month.)
My work is solid, so I am wondering if it makes sense to buy another home in my current city. Between the bonus and accumulated savings, I could put down 5 percent, just like I did with the home I already own. I'm paying $1,200 in rent, and I estimate that if I bought a two-bedroom condo, my expenses would come to $1,800 a month all in, and I could rent out the second bedroom on Airbnb to offset costs.
The only snag is that I might need to purchase a car soon. I currently use a friend's vehicle since he travels 90 percent of the time for work and leaves the car with me. But there is a possibility he will relocate and take the car with him. If that happens, I could lease a vehicle, buy a cheap motorcycle or use the bonus money on a car. So how would you spend the bonus? -- Bonus Bucks
Dear Bonus Bucks: I think you are risking biting off way more than you can chew financially. It's quite possible you are going to need to purchase a car within the next year. I'd suggest putting the bonus money aside in a savings account, so you have it if you need it. If it turns out you can continue to maintain your car-sharing arrangement, you might want to consider accelerating the rate you are paying your extremely generous parents back for their financial help when you needed it.
As for homeownership, I'm going to make a different suggestion. It sounds like you are treading water on the property you are now renting out. I'd suggest putting it on the market, and using the proceeds and other accumulated savings to buy the two-bedroom condo you desire in the city you live in now. This will allow you to put down more than 5 percent -- something I would strongly recommend. The higher your mortgage payment and other monthly charges, such as private mortgage insurance, the less financial latitude you'll have if you encounter financial headwinds. You don't really want to need to turn to Mom and Dad yet again if you lose another job, do you?
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