Savings beginner with questions about the plausibility of the "rough" plan

The question would be what investment option you have that on the one hand is so secure that you will definitely come out with a profit in five years, and on the other hand yields a sufficiently large return to make it worthwhile?

The idea of using low interest rates on loans and paying off little in order to save in parallel is not new. Banks offer (or offered) this as a bullet loan, which is for example covered by a correspondingly large whole life insurance policy. Ideally, you would then have paid 3% interest, but that would be more than compensated by the 5% from your life insurance. But which product offers that nowadays?

And why use a short fixed interest period because of that? If such a product existed, it would rather generate the required return in the long term. So one would rather consider whether one could "beat" the 2,x percent fixed loan interest over 30 years, for example on the stock market. But if you then add variance with short fixed terms, it may help you achieve a partial victory, but over the entire term it rather entails more risks. What if the market is down at the time of the extension? What if you are not fast enough in the case of rising interest rates?

Partial repayments don't really help here, because on the one hand you are usually not liquid and on the other hand you would have to be able to repay the loan in full, since repaying 10% or 20% of the loan amount early through partial repayments at best limits the damage a bit, but does not avoid it.

I also like the idea and can well imagine that it actually works over a period of 20-30 years. But then only with the corresponding fixed term and the necessary discipline to exit "on time."

I just can't really figure out how it could even work with a repayment rate of 1,800 EUR per month.

I was a bit bored and went through all 14 pages here. I believe that even for homebuilders, you are above average with your income. At least, I think I mostly read about incomes between 4,000 EUR and 4,500 EUR here. But you don’t want/can’t pay an installment appropriate to that amount. Then I think, it can only be because of lifestyle. And I wonder, even if it doesn’t contribute to a solution, why you still have almost no equity in your early to mid-30s despite this income, and I suspect lifestyle behind that again.

I take the position that I am happy to restrict myself for a certain period of time for the dream of owning a house. Not everyone shares this opinion. With your income, in our case, no restriction would even be necessary, but that is probably due to lifestyle again.

This is not meant to be offensive, but it went through my mind after the 14 pages here and so I’m just writing it down below…

Best regards!

Had a bit of boredom and waded through all 14 pages here. I think even for home builders you are above average with your income. At least, I believe I mostly read about incomes between 4,000 EUR and 4,500 EUR here. But you do not want/can't pay a rate appropriate to that amount. Then I think to myself, it can only be due to the lifestyle. And I ask myself, even if it doesn't contribute to the solution, why you still have almost no equity in your early to mid-30s despite this income, and again suspect the lifestyle behind it.

I am of the opinion that I gladly restrict myself for the dream of owning a house over a certain period of time. Not everyone shares this opinion. With your income, there wouldn’t even be any need for restrictions for us, but that’s probably again due to the lifestyle.

This is not meant badly but it was on my mind after the 14 pages here and that’s why I’m just writing it down here...

Best regards!

Hi Sirhc,

well, I wouldn’t have thought that with our salary we lie here in the "midfield". Or rather, I really can’t imagine that…

As for the currently low equity, that’s because I lived in Angola for years and although the pay was excellent for the local conditions, it’s not really usable here in Germany. So now, at 35, I’m just starting to save. Since January I’ve been saving x500,-/monthly and managing well with the money. (So far, at the end of the month there was still some left over, so I could transfer this money to the house account).

Let me explain again why I cannot/want to pay a rate of e.g. 1,800,-:

Assuming e.g. 4,500,-

Loan repayment: 1,800,-
Additional costs: 300,-
Reserves: 300,-
Food: 900,- (2 adults + 1 child, as soon as it’s there )
Insurance: 300,- (life insurance, legal expenses, building, dental supplementary)
Car: 450,- (small car! installment, insurance, taxes, gas)
Daycare: 400,-
-----------------
Total: x4,500,-

Note that I have a company car. Imagine if I still had to finance my own car?!

So, the money is gone already and I definitely haven’t made any “splurges”, no vacation saved, no toys for the child, no clothes, hairdresser visits (wife), indoor playground, or or or…

Sorry, but just buying a house and then getting by "just barely" is not my intention. And imagine there comes another child.

So, either I have some error in thinking, or I am too ignorant, or many here live "just barely", or the money just isn’t enough.

I would be interested in your calculation based on (2 adults + 1 child).

Please don’t misunderstand me. I would be glad if you were right. But as you can see from the above example, that’s not really doable.

And I haven’t inherited or won the lottery. Furthermore, e.g. home savings contracts, which grandma and grandpa opened for you as a child, were already used up during the years abroad. (That experience is priceless anyway). So I earn everything myself. (I’m not the only one there.)

Best regards Mattheu

So, either I have some kind of thinking error, or I am too ignorant, or many here live "on the edge," or the money simply isn’t enough.

The money simply isn’t enough. With a rate of 1200 euros, you can "only" afford a house for about 300,000 euros. You can possibly optimize a bit on the expenses (for example, I find the 300 euros for insurance somewhat high for the given policies), the food is estimated as "organic only," and the car is also a bit expensive (new car?), but more than 1500 euros probably won’t be possible. This means your project (all included) should cost a maximum of 350,000 euros (375,000 if you include the equity).

If I were in your position, I would probably ask myself how important Hamburg is as a location. Does the family/friend circle live there, or is it "only" because of the jobs? And if the answer is yes, wouldn’t it also work somewhere else, even if you earn a bit less there?

Morning Vanben,

Hamburg is indeed important since we both work there.
We are talking about the construction area in Schleswig Holstein, not Hamburg. So I'm already out. Unfortunately, just in the "wrong" direction. In other directions, it gets a bit cheaper... However, the family is in Schleswig Holstein. So it should go in that direction.

The demand in this area is currently incredibly high. Therefore, prices are correspondingly high. I can't find a single property under 450,000,- that even remotely comes into question. (You can gladly check what is available... e.g. postal code 20000 and surroundings).

The car costs are currently much lower!!! At the moment, the madam pays about 75,- EUR all in monthly. But I can't count on that for the future. So you assume buying a new/used one. That costs anyway... and the fuel costs are then also higher because you first have to get into Hamburg.

In principle, I also would not mind a nice condominium. But that also costs money. And not a little.
That's why I want to inquire here in the forum among other things and see what is doable.
Thanks to you, I am already further today than I was months ago. In the end, I am still far from done.

Best regards
Mattheu

so, that we lie here in the "midfield" with our salary, I would not have thought. Or rather, I really can’t imagine that...

Based on e.g. 4500,-

Savings: 300,-
Food: 900,- (2 adults + 1 child, once it’s here )
Car: 450,- (small car! Installment, insurance, taxes, petrol)

Note that I have a company car. Imagine I would have to finance my own car myself?!

Sorry, but buying a house just to then come out "tight on the margin" is not my intention.

Hello again,

so if your point of view were the standard, then most people probably couldn’t afford house + car(s) + child(ren).

You are now calculating with 4,500, but you are actually at about 4,800 EUR? In my opinion, your income is somewhat above the incomes frequently mentioned here, so not average but above. But as I said, that’s just my assessment, I can’t verify it.

In my opinion, you can do without savings in the first years. I think you spend an extremely large amount of money on food (even if "care" is included here as read somewhere earlier in this topic). The installment for the small car can’t last forever (unless it’s a "for only 79,- EUR" offer), so this item will decrease as well. I would definitely try to pay off the car before taking out a loan. The company car is also real money’s worth. Also, in your calculation you can add +190 EUR income from child benefit.

Best regards