New to BP and the podcast. I need to save. 401k Questions?

[Scott Rosslow]

I listened to the recent pod cast about being frugal to save money. 

I fell into the rat-race like many before me with my first 'investment' house which i live in. I can cover the bills but the house is eating away at like 50% of my paychecks. I refinanced into a 2.75% 15 year loan to get rid of PMI but it increased my payments slight from the 30 yr FHA.

I have a bad habit that I am on the way to crushing of eating out for lunch 5 days a week. My first step to try to save is the cut out going out to lunch. which should save me roughly $200 month. I liked the idea of house hacking and started looking for a house that had a studio or duplex along with it. My girlfriend (who i am saving for a ring as well) isn't sure she wants to have renters on site.

I have long tossed around the idea of stopping my contributions to my 401k/roth to save to have cash for a deal. I contribute somewhere just less than 10% of what I make to my 401k (no matching). Should I skip on the 401k and add it to my savings?

[Carl Schmitt]

If you've built up a decent balance in your 401k, have you considered taking a loan from it as a down payment?  I know mine allows a loan of 50% of the vested balance that gets repaid directly from your paycheck.  

You briefly mentioned a roth as well. Roth IRA contributions are available for withdrawal at any time.  If you touch the earnings, though, you'll be subject to tax and 10% penalty.  

Give it some time with the girlfriend.  Mine wasn't a big fan of the house hacking idea at first either.  2 things changed her mind (in my opinion).  

1- She saw me constantly reading bigger pockets and would ask what I was reading.  I would give her examples of others that had success with it.  The idea of living for free or close to it became appealing.

2- She saw people she knew in real life that are currently house hacking or did in the past.  She babysits for a family while finishing law school.  It didn't dawn on her until 6 months after I told her about house hacking that they were doing exactly that.  

I think there can be a misconception that rental properties are only in bad areas.  You CAN have the best of both worlds- a tenant that helps cover the mortgage and a desirable neighborhood.