Dear Dave: My wife and I just relocated for my new job. Right now we're renting an apartment, and we should make about $15,000 on the sale of our old house. Should we use the money from the sale of our house to pay off all our debt, or go ahead and use it as a down payment on a new home now?
Traditionally, lots of people would tell you to use the money now to help save up for a down payment. The problem is that I'm not traditional at all.
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I love real estate, and I want you guys to own your own home again. But even more than that, I want to see you two get out of debt and stay out of debt.
I know this wouldn't be a popular plan with some folks, but if you've got no debt – along with a decent, inexpensive place to hang your hat for a couple of years – you'll be able to save money like crazy for a fat down payment. It will also give you time to become familiar with the area and find a place you both really like.
When you lose the debt, Brian, you gain control of your largest wealth-building tool – your income. That's when the fun begins.