Victor Lake and Kelly Boardway, 41 and 46, dream of settling down in an eco-friendly home outside of Las Vegas.
The couple anticipate relocating at least twice more in the next six years before they both exit the military, where he's an officer who pilots ships and she's a health care administrator.
Though they plan to continue working in the private sector until age 65, Victor and Kelly already know what they want their "retirement" house to look like: A three-bedroom eco-friendly Spanish-style ranch, situated on an acre or two just outside Las Vegas, where they got married.
"We're tired of cookie-cutter homes," says Kelly. "And we've lived so many places, we want to set down roots for good."
As for going green, Kelly gained eco-awareness growing up on a farm, and Victor says seeing how people lived around the world taught him that "you can have a fulfilled life without using an abundance of resources."
The couple would like to build in 10 years, allowing them a few years to test out Vegas as their new home base after they leave the military.
Their dream home could become a financial nightmare if they're not careful.
Though Vegas was hit hard in the real estate crash, prices there are now on the rise -- up 30% in the past year, says Dave Tina, president of the Greater Las Vegas Association of Realtors. Land northwest of the city, which has the open space Kelly and Victor want, now goes for about $175,000 an acre and could double in price within 10 years.
Building a green home -- which includes everything from special insulation in the foundation to energy-efficient appliances -- now costs at least $200 a square foot, vs. $100 for a conventional home, says Bart Jones of Merlin Contracting, a builder in the area.
As the materials become more common, that gap will close, but Kelly and Victor are still looking at $250 a square foot in a decade.
All told, a 2,500-square-foot ranch on two acres could top $1.3 million by the time Kelly and Victor are ready to build.
Saving for a down payment on a house that size could be challenging, since their salaries -- now $240,000 combined -- vary depending on where they are stationed and could drop significantly if they are relocated to a low-cost area. The couple are also leery of taking on a huge mortgage, since they're not sure what their post-Navy job prospects will be like in Vegas.
"They can make this happen," says Marc Roland, a financial planner in San Diego. "But they'll need to cut back on their spending and ratchet up savings while they can count on a $200,000 plus income." Here's how:
Cap the debt. Even though the couple will have military pensions, Roland advises them to borrow no more than 50% of the home's cost.
His aims: to make sure they can afford the payment even if their post-Navy pay doesn't match their current earnings and to keep their mortgage obligation from squeezing their lifestyle when they retire for real.
Scale back -- a bit. To borrow 50% on a $1.3 million home, they'd need a $650,000 down payment. Since that might be a tough amount to accrue by 2023, they could plan for a smaller house on less land; 2,000 square feet on 1.5 acres cuts the cost to about $890,000, which would mean $450,000 down.
Stop overpaying their mortgage. Kelly and Victor bought their current home for $575,000 in 2005, near the peak of the market. At the trough, its value fell below $300,000. They've spent the past few years double-paying the mortgage so they aren't underwater.
With the market rebounding in San Diego, they should be able to eke out about $40,000 when they sell -- so no need to keep doubling up, Roland says.
Build a down payment. To get to $450,000, they should set aside, in a short-term bond fund, $45,000 from their $90,000 emergency fund (leaving six months of expenses), plus the extra $2,362-a-month mortgage payment. Finally, they should track their spending to find $600 more a month in savings.
"We don't have a budget," says Victor. "We go out to eat when we want and spend weekends at the Four Seasons."
They'll have to give up some luxuries, but Kelly says it's worth making sacrifices "to have a place we can always call home."
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