I'm sorry but no matter what age you are, if you can afford to buy real estate, especially if it is in an area in which real estate appreciates readily, then I think you should do so.

I think it is unfortunate when people become "house poor" to the point of excluding many other activities but the notion that investing in real estate isn't necessarily a good idea "when you are young" is shortsighted IMO.

This is from my personal experience.
In 1992 I paid $105,000 for a small, 40+ year old house. $6,000 down payment for an FHA adjustable mortgage.

Three years later sold the house for $145,000. Profit $40,000. The return on the $6,000 is astronomically high (like 200% per year).

Based on advice from my father, I approached buying a house as business proposition. It's okay to buy a house that needs to be painted, has no central air, or whatever. Just get it a good price.

Just one person's personal experience.

Hey halsar - as you can see, there is no clear answer :) So much depends on your own financial situation, your goals, and where you live.

Here is what we chose to do and we think it was a good choice:

My husband and I are in our early 30s and we chose to buy a house a couple years ago. We live in a high cost of living area, so mortgage payments are high (not because we bought an extravigant house, just fact of life around here). We also didn't put 20% down, no PMI either - the way real estate increases around here, that 20% is a moving target and hard to achieve without some nice stock options or an inheritance. We are not stretched too thin though - still saving a nice chunk each month for retirement.

To buy our house, we had to forego some travel, which was tough, but we decided the house was a priority. We wanted to own a home for personal reasons and financially it made sense for us to buy - we get some nice tax breaks, which we desperately needed, we have earned some nice equity in the past couple years, and by starting early with the house, we will be able to be mortgage-free before we hit retirement, even in our high COL market. We are planning to stay in this area, so moving before we earned enough equity to cover selling costs was not an issue for us.

So, like I said, we put off travel for a couple years - we still went places, just car trips, camping, and so on.

We bought the house in Oct 04 and last month we took a 2 week trip to Germany. That was our first big trip since we bought. There were things to buy when we bought the house and improvements to make, so that is where our money went for awhile, but then we started saving for vacations again.

Our goal is at least 2 weeks away a year either in one lump or in 2-3 trips, alternating between international and domestic destinations. So this summer was Germany, next summer will be New Orleans, and then the year after back to Europe, most likely. If we didn't have the house, we could travel more, obviously, but for us it is nice to have the security of homeownership and that nice equity that keeps building. And of course, the tax benefits. We have found that we can have the house and travel as long as we are realistic about it.

Anyway - so that is what we did and it has worked out well for us. What you guys decide to do depends entirely on your priorities and your situation. Just make sure you think through your options and make sound decisions.

There's obviously no correct answer to your question. Everyone has their own priorities. I say travel & purchase a condo or townhouse (instead of aiming for a large home requiring a "huge mortgage payment").

My parents each grew up in poverty, during the Depression. Until they married, they had never ever been on a vacation. My dad was a social worker, my mom was a stay at home mom, so we never had much money. But we took a vacation every year. Not out of the country; always driving, staying at the equivalent of a Motel 6, but by the time I was out of high school, I think we had visited 41 states.

But we were renters. My parents never could save enough money for a down payment. They bought their first and only house after 24 years of marriage! In my mind, it was foolish of them to spend money on a vacation every year; if we had skipped vacation for maybe 3-5 years, they could have saved enough for a down payment.

It is more important to (eventually) buy and own a home, than to travel abroad.

The beauty of America (and I'm not saying that this isn't true in many other countries) - - is that there is abundant opportunity to strive to do both.

Success doesn't just lie there, especially not for some unfortunate people. But if you put your mind to it, you can do the more important thing, and then... almost simultaneously... do the second also.

Best wishes,

Rex

(oh... and one more thing... congratulations on your new life in marriage)...

I'm with Rex and others who say a house is more important.

You'll probably be able to travel again after you've bought your home. Having kids and a mortgage does NOT necessarily mean you have to give up travel. (We are proof - 3 kids, college and we still manage Europe 2-3 times a year.) Besides, your income will probably continue to up as you get older.

Get the house. Feel secure. Have kids. Travel with and without kids. Enjoy!

All things are possible with a budget. Pay yourself first...you just have to define which facet of SELF is in need of payment!

A good rule of thumb would suggest that 33% of your combined net income should be used toward housing.

If, for example, you are both making $50,000, then, you would set aside, after tax, around $25-28,000 (depending on where you live-tax rates vary so from country to country).

Assuming that your rent is no more than half of that, you would be able to save $13-15,000 p.a. towards a house. The trick is discipline: when you get a raise you still have to maintain the percentages and not just the absolute amount.

Similarly, vacation planning works the same way: you might plan on 5% of your net for vacations and that might come to $3500 at this stage of life, meaning you only get to go to Europe every second year, but, just wait until you are making $300,000 a year! (This could happen...)

We travel to Europe, the Carribean or Asia every year, often twice, now (mid-fifties) and vacation in our own country for two/three weeks and always have, We did choose to live in that modest house this thread keeps talking about and made do with one car. We own our own house and a vacation home by the ocean outright, though admittedly we carried a mortgage later than some.

Many of our friends had much fancier houses than we did, bigger, newer, model cars (and more kids-we just had one, though I hasten to add, THAT was NOT due to a budgetary constraint).

I am sure many of our colleagues thought we were mad to spend so much on travel- but we have no regrets. I have been to too many funerals of folks that were going to make that big trip someday to ever doubt the wisdom of our decisions.

If you put your money into a house, you could consider home exchange as a way of cutting travelling costs. Or put it another way around, if your rental agreement would allow it, use it as a way to save money towards a deposit on a house while still taking opportunities to travel.

Aside from all the talk about a house, if you do what one poster mentioned above, as I do too, set aside a vacation fund.

Be committed to it and don't touch it except for vacation. Start small and then before you turn around you are paying for your vacation in CASH!

What I think is irresponsible is to put vacations on revolving credit. I always pay for them in CASH!

And at your age, buy your home if you can, keep it modest and low maintanance as much as you can, keep your cars for as long as you can and really think about purchases that can go into a vacation kitty instead.

We are luxury travelers and why? Aside from growing up in the luxury hotel business, I save enough cash to do this. Yes, I'm older than the OP with a much larger income, but still, if you save it, plan for it, and vow to not put it on revolving credit, those habits can go along way.

If your disposable income only allows you to afford PB&J sandwiches and sleeping in the car, I hate to think of what else you are skimping on. Health Insurance? Emergency fund for loss of employment? Are you making only minimum payment on Credit Card debt if any? Now that you graduated, are you going to get hit with a lot of student loan debt?

If you are OK with all of the above and can sleep peacefully at night....travel as much as you want. I, personally, could not sleep.

I started traveling to Europe when I was 28, second trip was three years later, only over the last three years we have been able to afford a major vacation every year.

Halsar:

It is good you are thinking about it. Travel is where we spend our discretionary income as well...a good deal of it, in fact. However, we don't consider money socked away in 401Ks, stocks, real estate and other investments discretionary. We consider those investments prudent financial planning and nothing discretionary about them...they are mandatory.

My point of view is that it is completely unwise to not have savings and investments. You never know when your "rainy day" is going to happen beit a horrible Katrina-like catastrophe, a lost job, an Enron, a horrible illness or accident..whatever. Not having resources to deal with these unfortunate occurences is irresponsible. Also, as pointed out earlier, money saved now is going to be worth more than money saved later. So, if you can do both, great. If not, then scale back your travel plans to what you can afford given the other priorities and ramp up as your income and finances allow.

Finally, it would just kill me to rent, especially in this housing market. Why give away so much money when you could be building equity? It would also kill me to pay PMI.

Good luck in your decision. You are fortunate to have such an interesting dilemma.

Taitai

Disposable income. If after you've paid your rent and other monthly expenses (food, clothing, insurance, auto, gas, etc.) put away for your retirement and savings towards a downpayment on a home and at minimum 6/month living expense if one of you are without a job - if there's money left for travel go for it.

Until you know where you definitely want to live, that your job won't take you away in a year or two, save for the downpayment and take holidays as your "disposable" income allows.

As you see above, there is no absolutely right answer.

I still rent in NYC (Manhattan), though tempted often over the years to buy, but just couldn't get a handle on having that obligation. There have been times I've been out of work, and had sufficient means to cover living, but not if I had that mortgage and monthly expenses hanging over my head. At this point, my rent is too good (read: low), that I couldn't afford to live elsewhere, whether rental or purchase.

Over the years, acquired the designer clothing, have the jewels and furs and always managed to vacation at summer homes or long weekend and travel around the States; later fell in love with international travel... and never looked back.

Take your time in making a decision; no one is chasing you to do anything just now.

IMO tripgirl made a very good and sensible comment. Don't put trips on your credit cards unless you can pay the next statement in full. I know a lot of people that charge their trips and do not pay off their statement each month. With the interest rates that credit cards charge that is a receipe for disaster..or at least that is my two cents worth.

In my county, Bergen, in NJ.....a tear down is $800K, so you better have at least 20%.

many have mentioned the 'bug'.

has there been any studies showing there are people seriously addicted to travel to the point that they rob etc to keep the habit?

I am no financial whiz and live in a modest home, but I found that I was actually able to travel more when I bought a house because of the income tax refund. Yeah, I should probably invest or save that money, but I use the cash for travel. The security of owning a home is important to me.

Don't know where you live, but here with interest rates still at a low and the housing market stalled, mortgage payments are equal or less than rent payments with the advantage of tax benefits and equity. A good real estate agent should be able to put together a mortgage with minimal down payment. You have to live somewhere -- traveling or not -- it might as well be somewhere with a future instead of tossing good money into renting.

Halsar,

Have you thought about buying a two or three family house that you can live in and be able to have some rental income too? I did that for my first home, I still own it 10 years later, and now live in a single family with my husband. The two family will be a big part of my retirement plans, either for income, or lump sum sale. A duplex is nice as you are not on top of one another.

I would say travelling is out of balance with other obligations when you start charging it instead of budgeting and paying cash like another poster does.

I believe you can do both, so many people do! Start a down payment fund, and a vacation fund. Some things have to give, maybe you don't eat out as much, or drive an old car longer, but given your priorities it is worth it.

A house and kids don't mean the end of travel. A "huge" mortgage payment that you can barely afford? That might. If you don't have to have a brand new home in a subdivision as your first home, you can do it. When you pre-qualify, don't buy as much house as you can afford, think what would happen if we lost one income, could we still do it? Try if you can to do it based on one income (hard I know), but that's where rental income comes in handy.

Good luck with your decision, but I say you can't go wrong (LONG TERM) with owning your own home, unless you have a rent control apartment!

This is an interesting question and it seems like perhaps you have not sat down and had what I like to call "the financial reality check." This is when you sit down (I did it in college before I was fully financial independent) and do your books. How much are you bringing in? How much is going out? What can go? What must stay? I did a ton of experiments and found that I was capable of living on extremely limited resources (that was the "no shopping, no eating out, no alcohol" month). I also came to appreciate what I considered necessary and what I did not. Travel, though fun, amazing, and a lifeline for me, is not necessary. Also, this desire to collect passport stamps is unnecessary. There are places that are close and cheap and very much destinations.

Sit down, put things in order, and realize that life is as much science as it is creativity, and if you want both travel and to own a home, you need to figure out he formula that will make it happen. I worked everything out with percentages and maxes and mins and was realistic enough to make a workable and acceptable system. Worth every painstaking minute.