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July 11, 2014

Dave Says: Playing with house money 

NEW CASTLE — Dear Dave: My wife and I just became debt-free, and we’re saving for our first house. We have about $75,000 in savings, and we’d like to buy a home with cash in the next few years. Where do you think we should place our money so it’s working for us while we save? — Andrew

Dear Andrew: I don’t advise playing the market on the short term. If I were in your shoes, and looking at possibly a two- to four-year window, I’d just pile the cash in a money market account or possibly a balanced fund.

I’m a big fan of growth stock mutual funds when it comes to long-term investing. The problem with that in this scenario would be the volatility of the market. By the time you’ve saved up more money and spent time deciding on a house, the market may be down. All you’re looking for in this scenario is a wise, safe place to park it and pile it up while you prepare.

Congratulations, Andrew. Debt-free is the way to be when you’re looking to buy a nice, new home! — Dave

Dear Dave: I have job offers from two tech companies. One is in San Antonio and pays $55,000 a year, while the other is in Silicon Valley making $100,000 a year. My friends are advising me to move to California, but I feel like I’d have more money in my budget if I moved to San Antonio. What do you think? — Aaron

Dear Aaron: The good news about Silicon Valley is you’d be around a ton of really smart people in your industry. I mean, it’s the epicenter of the tech world, right? You’ll learn a ton and have lots of opportunities, so there’s definitely an upside.

The problem is that the Silicon Valley area is one of the most expensive places to live in the entire country. The real estate prices and cost of living are ridiculous! Still, if it weren’t for the cost of living argument, it would be a no-brainer for me. Then, it wouldn’t really be so much about the income and prices as it would be about the career opportunity.

Still, you have to consider the economic factors involved here. With that in mind, it’s not an exaggeration to say you might actually put more money in your pocket at $55,000 in San Antonio than you would $100,000 in Silicon Valley. That’s entirely possible!

I think things are going to come out pretty even — economically speaking — once you adjust for the cost of living. I’m a huge fan of Texas. It’s a great business market and tax situation down there. But really, in my mind the question comes down to your personal comfort level and quality of life. And that’s something you’ll have to answer for yourself! — Dave

 

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