Whatever you do, you need to be saving a lot more to have a good chance at retirement at a reasonable age. With a combined salary of $150,000, I'd recommend:
- contributing the maximum allowed amount to your 401k, $18,000/year each,
- contributing the maximum allowed to an IRA, $5,500/year each, and
- investing about that much again paying down your debts, and when those are paid off, in a taxable account.
In total, that's $47,000/year in tax advantaged accounts, plus whatever you put into taxable accounts. Your $150,000 yearly income, less $90,000/year in savings is still an income of $60,000. People live comfortably and raise families on a lot less. Consider how fortunate you are. You could retire in 10 years, if you wanted, by increasing your savings and decreasing your expenses. Seriously, I'm speaking from first-hand experience.
If you stay on your present course (saving $2,000/mo), at a 7% real return, you'll need about 37 years to accumulate $3,800,000 (in today's dollars), which is enough to:
- pay off your $245,000 in debt
- buy that $500,000 condo
- have an extra $3,055,000 which will yield enough investment income to equal your current after-savings income.
Even if those student loans are forgiven, that only knocks off about 2 years. If you are in your late 30s now, there's a decent chance you'll be dead before you retire.
As for buying a house or not, this depends a lot on your personal circumstance and how the rental market in your city compares. In your decision, don't forget to consider:
- Living in a house probably means living away from the city. Do you work in the city? How much time will you spend on gas and car maintenance? How much could you save by living really in the city and not needing a car at all? How much of your time will be lost commuting?
- If you are currently living in a city, it's likely because you enjoy an urban lifestyle. Will you get the same enjoyment if the city is a long drive away?
- Houses come with expenses that rentals do not. Property taxes, insurance, usually more utilities, maintenance, etc. Maintenance in particular is more expensive than you might think. A significant portion of the costs come from infrequent but huge expenses, like replacing the roof. Budgeting $200/mo for maintenance is not unreasonable. More might be wise.
Renting is not necessarily throwing money away any more than buying a house is. If you take out a mortgage, you'll be "throwing away" a lot of money anyway. Look for a "loan amortization calculator" to see how much goes to interest versus principal. For a $500,000 loan at a 3.5% rate, you will be paying approximately $1400 per month in interest versus only $800 towards the principal. When you deduct insurance, taxes, maintenance, etc from that $800, you may find you are still throwing away most of your monthly payment on interest and expenses you wouldn't have if you rented.
The money you do "save", after interest and expenses, isn't really saved. Housing markets go up and down, but on average, over the long term, they go up just enough to keep up with inflation, meaning a 0% real return.
If renting means less cash out of pocket per month, you can put that extra cash towards investments that yield a much higher return. Sure, you may need to continue making rental payments in perpetuity, but you can save enough extra money to pay for the rental in investment income.
Again, it depends considerably on how the housing and rental markets compare where you live. Popular cities (San Francisco, New York, Paris, etc.) tend to favor renting. Unpopular cities (Detroit, St. Louis) and rural areas tend to favor buying.
Further reading: Mr. Money Mustache: Rent vs. Buy: If You Have to Ask, You Should Probably Rent