How should I divide my finances and any suggestions?

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sjoung
Posts: 15
Joined: Tue Apr 29, 2014 3:51 am

How should I divide my finances and any suggestions?

Post by sjoung » Thu Mar 16, 2017 12:55 am

Thank you all for reading this and any suggestions are appreciated.

My family and I will be finally moving back to Seattle, USA this year as I've been working overseas for 10 years for a foreign employer and saved enough money (I think) to have a new start. Here is my situation and our goals and any suggestions or things that I may have missed can use your wisdom.

Current Situation
Wife 43, Me 47, and 13 year old child
Non home owner
Expected income when I return: $75,000
Wife's income: 0
CD, Checking, Savings: $850,000
529 Plan: $56,000
2 Roth IRAs: $250,000
Liquid stock investment: $10,000
Debt: 0

Our Goals
Use $850,000 to achieve the following.
Buy a house without any mortgage if possible.
Buy 2 cars without any loan if possible.
Start a small (nothing fancy) restaurant for my wife.

This is what I'm thinking after consulting with my wife.
House: 650,000. Seattle is too expensive right now and perhaps I can rent for a couple of years for the market to cool own or maybe I need to get a mortgage maximum of $100,000.
Small restaurant: $100,000. We may need to get a business loan.
Car no.1: $45,000 (Toyota Highlander) for wife. She hates used cars.
Car no. 2: $25,000 (Used sports sedan) for me.
The remaining $30,000 for emergency and any misc. items when we move back.

We, in most part, have very frugal lifestyle and my biggest irritation is the interest I may have to pay for the loans if we decide to go to that route. My wife is ok with paying interest to certain extent. I have worked very hard to save this much and I don't want to make poor decisions and at the same time I do want to enjoy the fruit of my labor (decent house in a nice safe neighborhood, decent car, etc.). So if you are in my situation how would you spread the money. Any suggestions, and I mean any suggestions are really appreciated as I really want to think about all options and make informative decision. Thank you all in advance.

dbr
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Re: How should I divide my finances and any suggestions?

Post by dbr » Thu Mar 16, 2017 9:04 am

My first reaction without a lot of analysis is that you don't have enough expected income to be putting all your assets into a house and a business that should on the face be thought of as a dead loss until it somehow isn't. You have no business taking out a business loan, it seems to me, but maybe there is a different view on that depending on how realistic that whole proposition is.

I would suggest renting to begin with and doing so commensurate with your income. I guess the cars are a wash, so I don't know. Is your wife interested in working at a job with a steady paycheck instead of a restaurant venture?

You should be congratulated for having acquired the wealth you have, but it would be better to put that wealth into investments with a middle of the road trade off of risk and long term growth rather than lodged unproductively and eaten away by inflation in all cash holdings. I don't think it is unreasonable to use some of the assets as a down payment on a house if your income were to support the mortgage. This might require some expertise in the current trade-off of renting vs. owning where you are.

What are the prospects for moving into a higher paying position and a less costly location in which to live?

You are right to think long and hard as you have a huge advantage in saving what you have and should not fritter away that nest egg.

Jack FFR1846
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Re: How should I divide my finances and any suggestions?

Post by Jack FFR1846 » Thu Mar 16, 2017 9:15 am

What experience does your wife have with running a restaurant? I have friends who manage or own restaurants with liquor licenses and they all tell me that the food side of things is a money loser. All of their profit comes from the bar. They also say that working 100 hour weeks is no fun. Also, 90% of restaurants fail in the first year.

I guess if this $100k is simply to entertain your wife for a year and you understand that.....well.....ok.
Bogle: Smart Beta is stupid

CoAndy
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Re: How should I divide my finances and any suggestions?

Post by CoAndy » Thu Mar 16, 2017 9:15 am

What kind of retirement savings options does your new employer have?
I would be leery of buying those cars and that business right now. Also, I might put down 20% on the home, take a 15 year mortgage and sit tight for a few months until things get settled.

bluejello
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Re: How should I divide my finances and any suggestions?

Post by bluejello » Thu Mar 16, 2017 9:19 am

Are you familiar with the Seattle area already? Do you plan to stay there long-term (at least 7-10 years) or are you just moving there for the job, and you may or may not stay there long-term?

Generally if you are moving to a new area for a new job, I think it's best to rent for at least one year to learn the neighborhoods, figure out the schools, get settled in at your job and decide if you want to stick with it for the long run, etc.

Does your wife have any experience running a restaurant? If so then opening a restaurant could be a good idea, if not I think it's a terrible idea.

In general, you are already making big changes to your life (and your wife and child's life) with this new job and international move. This is not the time to be making big commitments like buying a house and opening a restaurant. I would recommend you move to a small rental first, take your time figuring out Seattle and your new job, help you child acclimate to a new school, and then revisit the house + restaurant idea in a year.

For the cars, get whatever you want. It's not nearly as big a deal as the other decisions you are considering. Although if your wife is very insistent on new cars, it may be a better deal to lease a new car every couple of years instead of buying one.

zeeke42
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Re: How should I divide my finances and any suggestions?

Post by zeeke42 » Thu Mar 16, 2017 9:30 am

Most restaurants fail in the first year, and the reason for the majority of those is being undercapitalized. I have no experience in the restaurant industry, but $100k sounds low by an order of magnitude.

JGoneRiding
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Re: How should I divide my finances and any suggestions?

Post by JGoneRiding » Thu Mar 16, 2017 9:38 am

Do you have any retirement savings outside of the 250k in Roths? My immediate thought is this is no where near enough income to a) Live IN Seattle and b) retire at a decent age c) survive on your expected income without totally depleting the 850k. You have to decide what is important--for me it would be security and future retirement you seem to have decided its living it up in a very expensive city for the next 10 years.

If i was in your shoes I would a) lock up 1/2-3/4 of the 850k as completely untouchable. Look at houses in the outskirts (there are plenty of nice places were you can still buy for less than 300k) I would buy one of those with only 20% down and insist on living with in my means (which doesn't include spending an ENTIRE years income on cars). I would focus on what the current income can provide going forward and leave the bulk of the money alone so you can retire.

TareNeko
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Re: How should I divide my finances and any suggestions?

Post by TareNeko » Thu Mar 16, 2017 10:09 am

I think you should do some math to see the long term effect of paying cash vs taking some mortgage for your house purchase.

2Birds1Stone
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Location: New York

Re: How should I divide my finances and any suggestions?

Post by 2Birds1Stone » Thu Mar 16, 2017 10:32 am

Restaurants are a LOT of work. Vast majority fail in under 12 months.

You have enough to afford a run of the mill average lifestyle in low cost of living area without having to work full time ever again.

Skip the McMansion, buy some sensible used cards, move somewhere with good public high school.

If you work for a few more years, you should be able to retire very comfortably and do whatever you want after that.

Or you could cut down to PT work, use the employee health insurance to mitigate living costs substantially, and figure out what you really want to spend your next few decades doing.

sjoung
Posts: 15
Joined: Tue Apr 29, 2014 3:51 am

Re: How should I divide my finances and any suggestions?

Post by sjoung » Thu Mar 16, 2017 6:35 pm

[quote="dbr"]My first reaction without a lot of analysis is that you don't have enough expected income to be putting all your assets into a house and a business that should on the face be thought of as a dead loss until it somehow isn't. You have no business taking out a business loan, it seems to me, but maybe there is a different view on that depending on how realistic that whole proposition is.

I would suggest renting to begin with and doing so commensurate with your income. I guess the cars are a wash, so I don't know. Is your wife interested in working at a job with a steady paycheck instead of a restaurant venture?

You should be congratulated for having acquired the wealth you have, but it would be better to put that wealth into investments with a middle of the road trade off of risk and long term growth rather than lodged unproductively and eaten away by inflation in all cash holdings. I don't think it is unreasonable to use some of the assets as a down payment on a house if your income were to support the mortgage. This might require some expertise in the current trade-off of renting vs. owning where you are.

What are the prospects for moving into a higher paying position and a less costly location in which to live?

You are right to think long and hard as you have a huge advantage in saving what you have and should not fritter away that nest egg.[/quote


Thank you for your advise. My wife will be working part time and she has over 10 years of experience in restaurant industry. She's not looking for something big or fancy. Perhaps, "restaurant" is not the appropriate term here. She's thinking more like, small coffee shop/cafe/takeout/ 4 man operation.

I'm trying to find a local/federal government position rather than working for the private sector. $75K is just an estimate and if I return to private sector my income would be about $100K. Most likely I will take whatever job I can get.

This is something I have to figure out as my return date gets closer. Thanks again.

sjoung
Posts: 15
Joined: Tue Apr 29, 2014 3:51 am

Re: How should I divide my finances and any suggestions?

Post by sjoung » Thu Mar 16, 2017 6:38 pm

Jack FFR1846 wrote:What experience does your wife have with running a restaurant? I have friends who manage or own restaurants with liquor licenses and they all tell me that the food side of things is a money loser. All of their profit comes from the bar. They also say that working 100 hour weeks is no fun. Also, 90% of restaurants fail in the first year.

I guess if this $100k is simply to entertain your wife for a year and you understand that.....well.....ok.


She has over 10 years of experience and she's looking for something small 4 man operation (takout,cafe,coffeshop, etc). I'm also fully aware of the failure rate but this is her passion.

sjoung
Posts: 15
Joined: Tue Apr 29, 2014 3:51 am

Re: How should I divide my finances and any suggestions?

Post by sjoung » Thu Mar 16, 2017 6:42 pm

bluejello wrote:Are you familiar with the Seattle area already? Do you plan to stay there long-term (at least 7-10 years) or are you just moving there for the job, and you may or may not stay there long-term?

Generally if you are moving to a new area for a new job, I think it's best to rent for at least one year to learn the neighborhoods, figure out the schools, get settled in at your job and decide if you want to stick with it for the long run, etc.

Does your wife have any experience running a restaurant? If so then opening a restaurant could be a good idea, if not I think it's a terrible idea.

In general, you are already making big changes to your life (and your wife and child's life) with this new job and international move. This is not the time to be making big commitments like buying a house and opening a restaurant. I would recommend you move to a small rental first, take your time figuring out Seattle and your new job, help you child acclimate to a new school, and then revisit the house + restaurant idea in a year.

For the cars, get whatever you want. It's not nearly as big a deal as the other decisions you are considering. Although if your wife is very insistent on new cars, it may be a better deal to lease a new car every couple of years instead of buying one.


I grew up in Seattle most of my life. I consider Seattle as my hometown and I plan to stay there until my son graduates from college and gets a job.
She has over 10 years of experience. Right now we're on the renting side for a year or two before we buy a house. Thank you again.

sjoung
Posts: 15
Joined: Tue Apr 29, 2014 3:51 am

Re: How should I divide my finances and any suggestions?

Post by sjoung » Thu Mar 16, 2017 6:47 pm

JGoneRiding wrote:Do you have any retirement savings outside of the 250k in Roths? My immediate thought is this is no where near enough income to a) Live IN Seattle and b) retire at a decent age c) survive on your expected income without totally depleting the 850k. You have to decide what is important--for me it would be security and future retirement you seem to have decided its living it up in a very expensive city for the next 10 years.

If i was in your shoes I would a) lock up 1/2-3/4 of the 850k as completely untouchable. Look at houses in the outskirts (there are plenty of nice places were you can still buy for less than 300k) I would buy one of those with only 20% down and insist on living with in my means (which doesn't include spending an ENTIRE years income on cars). I would focus on what the current income can provide going forward and leave the bulk of the money alone so you can retire.


I've been thinking the same thing about 250K Roths. Since I was working for a foreign employer, I did not have access to any other retirement vehicle other than Roths. This is something I really need to think about. Thank you.

Traveler
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Re: How should I divide my finances and any suggestions?

Post by Traveler » Thu Mar 16, 2017 6:56 pm

Why do you need a $45K car? She can have a brand new car for $20K and you can more than fund a 401K with the difference. The federal government is on a hiring freeze right now so your job prospects may be more limited if you're primarily looking for government work. You probably did work hard to accumulate the $850K but right now it seems you can't wait to spend it all when you don't have a job, she's about to embark on a possible money-losing business venture, you have a teenager, and you're going to live in a high COL city. Something doesn't add up to me, but hopefully it works out for you.

bloom2708
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Re: How should I divide my finances and any suggestions?

Post by bloom2708 » Thu Mar 16, 2017 7:38 pm

Much number crunching to do. Think of the property taxes and insurance on that house and those cars. $75k income will not go far. Skip the restaurant idea. You need more certain income. The restaurant may lose money or barely break even if lucky.

With 75k in income, both your cars should total less than $35k. Go slow and think this through.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

sjoung
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Joined: Tue Apr 29, 2014 3:51 am

Re: How should I divide my finances and any suggestions?

Post by sjoung » Thu Mar 16, 2017 7:43 pm

Traveler wrote:Why do you need a $45K car? She can have a brand new car for $20K and you can more than fund a 401K with the difference. The federal government is on a hiring freeze right now so your job prospects may be more limited if you're primarily looking for government work. You probably did work hard to accumulate the $850K but right now it seems you can't wait to spend it all when you don't have a job, she's about to embark on a possible money-losing business venture, you have a teenager, and you're going to live in a high COL city. Something doesn't add up to me, but hopefully it works out for you.


Thank you for your advise. In reality, I'll probably take whatever job comes along first. The most likely scenario is that I'll return to my previous employer with about 100K salary.

With a car statement. You're correct and I agree. I've been thinking the same thing.

The primary reasons for spending 650K for a house is that
1. We really don't want to get a mortgage and whatever we save on the interest we figure we would use that money to fund retirement investment (Roth, Taxable accounts, etc.)
2. The amount of 650K was determined based on good public school, location, commute, etc. Most likely we will rent for a year or two before we purchase a home.

With the restaurant venture, she's planning to buy an existing cafe/coffee shop/takeout place/maybe franchise of some sort. She understands the risk of starting a new one and She has over 10 years of experience.

Any other thoughts would be greatly appreciated.

sjoung
Posts: 15
Joined: Tue Apr 29, 2014 3:51 am

Re: How should I divide my finances and any suggestions?

Post by sjoung » Thu Mar 16, 2017 7:49 pm

bloom2708 wrote:Much number crunching to do. Think of the property taxes and insurance on that house and those cars. $75k income will not go far. Skip the restaurant idea. You need more certain income. The restaurant may lose money or barely break even if lucky.

With 75k in income, both your cars should total less than $35k. Go slow and think this through.


I agree about the cars. I will revisit this with my wife.

Regarding the restaurant, perhaps this is not the right and overstated term. My wife is looking in to buying an existing one (franchise maybe, cafe, takeout, coffee shop, etc) with 4-5 man operation. She'll get a part time job for a year or two and research and buy an existing one with a right opportunity. At least that is the plan for now.

bluejello
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Re: How should I divide my finances and any suggestions?

Post by bluejello » Thu Mar 16, 2017 8:07 pm

Ok, with the new information I'd recommend:

1. Get a new job

2. Move back to Seattle into a rental for one year, buy affordable cars, get settled in. After living abroad for ten years there will probably be some reentry culture shock, and the Seattle you come home to may be quite different from the Seattle you remember growing up.

3. Put at least 1/2 of your $850k into taxable investments. Together with your Roth that gives you a nest egg of about $650k. With $1M and a no-mortgage house, you could probably live pretty well. I'd aim for that as your goal.

4. After one year, consider buying a house in the $400k range. By then you should have a better sense of what your income and expenses look like.

5. Reconsider the restaurant idea after one year time. I like this: "She'll get a part time job for a year or two and research and buy an existing one with a right opportunity"

sjoung
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Re: How should I divide my finances and any suggestions?

Post by sjoung » Thu Mar 16, 2017 8:24 pm

bluejello wrote:Ok, with the new information I'd recommend:

1. Get a new job

2. Move back to Seattle into a rental for one year, buy affordable cars, get settled in. After living abroad for ten years there will probably be some reentry culture shock, and the Seattle you come home to may be quite different from the Seattle you remember growing up.

3. Put at least 1/2 of your $850k into taxable investments. Together with your Roth that gives you a nest egg of almost $700k.

4. After one year, consider buying a house in the $400k range.

5. Reconsider the restaurant idea on one year time.


Thank you and I have a question regarding the house purchase. The reasons I came up with 650K in cash is that we really don't want to have a mortgage and we figure we can save on the interest to help fund our retirement. I don't know if you are familiar with Seattle area but we are looking for a house in U-District (university district) as I figure my son will likely attend University of Washington and this will allow for us to not pay for the dormitory lifestyle as he will be 10 minute bus ride to and from school. After graduation and when he gets a job, our plan is to rent out the house and retire in SE Asia. I figured about 3-4K from the rental income will be sufficient for us to retire in SE Asia without touching our Roths. What do you think? Any thoughts would be greatly appreciated. Thank you.

inbox788
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Re: How should I divide my finances and any suggestions?

Post by inbox788 » Thu Mar 16, 2017 9:03 pm

Borrow! Invest!

You can still get 4% 30 year mortgages, but not for long. You can still get 2% auto loans. Take advantage of the low interest rates and keep liquid. Maybe invest half and keep the other half if things turn south, especially if you're interested in pursuing restaurant business. I'd recommend against it, but a bored housewife can do more damage shopping, and that's not tax deductible, whereas a business loss might be.

Why did you not invest some of the cash before?

bluejello
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Re: How should I divide my finances and any suggestions?

Post by bluejello » Thu Mar 16, 2017 9:28 pm

sjoung wrote:Thank you and I have a question regarding the house purchase. The reasons I came up with 650K in cash is that we really don't want to have a mortgage and we figure we can save on the interest to help fund our retirement. I don't know if you are familiar with Seattle area but we are looking for a house in U-District (university district) as I figure my son will likely attend University of Washington and this will allow for us to not pay for the dormitory lifestyle as he will be 10 minute bus ride to and from school. After graduation and when he gets a job, our plan is to rent out the house and retire in SE Asia. I figured about 3-4K from the rental income will be sufficient for us to retire in SE Asia without touching our Roths. What do you think? Any thoughts would be greatly appreciated. Thank you.


I am also a US citizen currently living in SE Asia, and I have 3 rental properties back in the U.S. I would not recommend it. It only works for us because we have family living near the rental homes who manage it for us, but even so I am thinking about selling at least one of the properties.

I think you are planning too far ahead. Your son still has 5 years until college. What if he doesn't go to U Washington? What if he gets a full scholarship to an out of state private college? What if he wants to live in the dorms instead of with mom and dad?

I think a better plan would be to rent a house that suits your needs for the next 5 years until your son goes to college. Then re evaluate your housing needs at that time.

Meanwhile, invest your $850k into a stocks and bonds portfolio. I'd recommend a target date fund or lifestrategy moderate growth. 4% withdrawal from $850k is $34k, which is plenty to live on in SE Asia. And 10 years from now when you retire it will probably be even more with growth.

I would not count on rental income from a house across the world to fund your retirement. Also, if you are renting out a house close to a university you will probably have student tenants, who are the absolute worst. Not a good plan.

Dottie57
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Re: How should I divide my finances and any suggestions?

Post by Dottie57 » Thu Mar 16, 2017 9:50 pm

JGoneRiding wrote:Do you have any retirement savings outside of the 250k in Roths? My immediate thought is this is no where near enough income to a) Live IN Seattle and b) retire at a decent age c) survive on your expected income without totally depleting the 850k. You have to decide what is important--for me it would be security and future retirement you seem to have decided its living it up in a very expensive city for the next 10 years.

If i was in your shoes I would a) lock up 1/2-3/4 of the 850k as completely untouchable. Look at houses in the outskirts (there are plenty of nice places were you can still buy for less than 300k) I would buy one of those with only 20% down and insist on living with in my means (which doesn't include spending an ENTIRE years income on cars). I would focus on what the current income can provide going forward and leave the bulk of the money alone so you can retire.


Totally agree about locking up the money and house.

sjoung
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Re: How should I divide my finances and any suggestions?

Post by sjoung » Thu Mar 16, 2017 11:25 pm

inbox788 wrote:Borrow! Invest!

You can still get 4% 30 year mortgages, but not for long. You can still get 2% auto loans. Take advantage of the low interest rates and keep liquid. Maybe invest half and keep the other half if things turn south, especially if you're interested in pursuing restaurant business. I'd recommend against it, but a bored housewife can do more damage shopping, and that's not tax deductible, whereas a business loss might be.

Why did you not invest some of the cash before?


I did not know when I'll be returning to the US as my contract was renewable every 2 years. I really did not know we were going to be overseas for 10 years.Also I did not have US address where I can set up investment vehicle at the time. I finally found a local bank willing to setup an account with me overseas.

sjoung
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Re: How should I divide my finances and any suggestions?

Post by sjoung » Thu Mar 16, 2017 11:30 pm

bluejello wrote:
sjoung wrote:Thank you and I have a question regarding the house purchase. The reasons I came up with 650K in cash is that we really don't want to have a mortgage and we figure we can save on the interest to help fund our retirement. I don't know if you are familiar with Seattle area but we are looking for a house in U-District (university district) as I figure my son will likely attend University of Washington and this will allow for us to not pay for the dormitory lifestyle as he will be 10 minute bus ride to and from school. After graduation and when he gets a job, our plan is to rent out the house and retire in SE Asia. I figured about 3-4K from the rental income will be sufficient for us to retire in SE Asia without touching our Roths. What do you think? Any thoughts would be greatly appreciated. Thank you.


I am also a US citizen currently living in SE Asia, and I have 3 rental properties back in the U.S. I would not recommend it. It only works for us because we have family living near the rental homes who manage it for us, but even so I am thinking about selling at least one of the properties.

I think you are planning too far ahead. Your son still has 5 years until college. What if he doesn't go to U Washington? What if he gets a full scholarship to an out of state private college? What if he wants to live in the dorms instead of with mom and dad?

I think a better plan would be to rent a house that suits your needs for the next 5 years until your son goes to college. Then re evaluate your housing needs at that time.

Meanwhile, invest your $850k into a stocks and bonds portfolio. I'd recommend a target date fund or lifestrategy moderate growth. 4% withdrawal from $850k is $34k, which is plenty to live on in SE Asia. And 10 years from now when you retire it will probably be even more with growth.

I would not count on rental income from a house across the world to fund your retirement. Also, if you are renting out a house close to a university you will probably have student tenants, who are the absolute worst. Not a good plan.


Thank you. Good information. I will revisit this issue with my wife.

JGoneRiding
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Re: How should I divide my finances and any suggestions?

Post by JGoneRiding » Thu Mar 16, 2017 11:44 pm

Oh fyi seattle/king county just added A HUGE tax increase to car ownership. All my friends are whining like crazy all over fb. I don't know the exact calculations they are using but I would assume 500-1000 extra a year on cost of car ownership for a nice car (some are paying 300 for cheap cars and others close to 600 that i know have a bit nicer, no one i know with brand new) where before the whole state was paying 35 plus some minor fees here and there.

HopeToGolf
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Re: How should I divide my finances and any suggestions?

Post by HopeToGolf » Fri Mar 17, 2017 2:28 am

After not living in the U.S. for a decade, I think you should rent for a year and then make a call on housing. The cars seem a bit expensive for your income but you have the cash. Do not blow all your hard work by spending so much your first year back....slow down.

Just curious, did you and/or your wife get a windfall or earn a lot more than $100k per year? Assuming you've worked 20-25 years your savings seems great and might explain why it appears you are moving from being frugal to wanting to live in a HCOL area and driving new pricey SUVs, used $25k cars and starting businesses.

sjoung
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Re: How should I divide my finances and any suggestions?

Post by sjoung » Fri Mar 17, 2017 3:31 am

HopeToGolf wrote:After not living in the U.S. for a decade, I think you should rent for a year and then make a call on housing. The cars seem a bit expensive for your income but you have the cash. Do not blow all your hard work by spending so much your first year back....slow down.

Just curious, did you and/or your wife get a windfall or earn a lot more than $100k per year? Assuming you've worked 20-25 years your savings seems great and might explain why it appears you are moving from being frugal to wanting to live in a HCOL area and driving new pricey SUVs, used $25k cars and starting businesses.


Thank you for your advice. We will probably rent for one to two years.

I was lucky to get this project position 10 years ago by a foreign employer. My current salary is $140K and my employer pays all local taxes, housing & utilities, and gave me a company vehicle for me to use including gas, maintenance, insurance, etc. Our biggest expense was a private international school ($28K) a year and US income tax. We only spent on food and yearly overseas vacation. This allowed us to save close to $90K per year.

We are still frugal and always will be but one thing we have in common is that we don't like to borrow ANY kind of money from anybody or any banks thus we were thinking about purchasing a house with cash thinking that with my expected salary I can easily cover the property tax and insurance with $75K job. This would allow us to funnel interest money to our retirement accounts. And If I get laid off, I can still get a low paying job to maintain our frugal lifestyle and not have to worry about any mortgage. That was the original thinking.

As far as the cars go. We are the type of people who buy cars and drive it until we can no longer drive it (usually 12+ year) due to mechanical or safety issues and we like the modern safety technology that is offered these days. I'm sure a lot of people have different opinions about this but that was the rationale behind car decision.

One of the many things I have certainly learned from reading everybody's suggestions is that I may have to re-calibrate my mind about using the money for future retirement investment. It may appear that I want to spend everything I have but I'm really trying to provide a stable lifestyle for my family by eliminating and or significantly reduce risks associated with potential job loss, having a mortgage, having monthly car payments.

Thank you and please let me know what you think.

ReadyOrNot
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Joined: Sun Aug 21, 2016 1:51 pm

Re: How should I divide my finances and any suggestions?

Post by ReadyOrNot » Fri Mar 17, 2017 2:13 pm

Seems reasonable. If you really know the present situation in the Seattle area well. Things may have changed a lot if you haven't kept current -- then be patient as you re-learn enough not to make big mistakes. Not clear if you intend to live and work and start a business in Seattle or just nearby. Not clear how much house you require -- yes, you can find $650K houses in most of the likely areas, and have a pretty good chance of getting one if you can pay cash. But there is a big range from mid-20th century houses built for the working class then, or the newer McMansions favored now which may be more expensive. (and down to older smaller places in south Seattle or south of Seattle which are much less than that, but which may not meet your standards for house or neighborhood). Or a newer condominium, if you are willing to live in a condo. Yes, renting first is a good way to test out living in something which you might not have considered before. And to experience the commute, depending on the distance you have guessed you could live with.
If your wife has experience with running a restaurant in Seattle, it might be different in the suburbs.
(I know of a family that ran a restaurant successfully in a Seattle neighborhood, was paid off by one of the city agencies to leave for one of the endless stream of city projects, re-located in Bellevue, but was not successful with the different customer base, different preferences of customers for this particular ethnic restaurant type on the Eastside.)
$45K for a car seems pricey to me, but I don't know your requirements. You probably know that Subarus have been unusually popular in the Seattle area for years, so maybe your reasons are similar.
Last edited by ReadyOrNot on Fri Mar 17, 2017 7:35 pm, edited 1 time in total.

onourway
Posts: 373
Joined: Thu Dec 08, 2016 3:39 pm

Re: How should I divide my finances and any suggestions?

Post by onourway » Fri Mar 17, 2017 2:30 pm

To me, getting a 15 year mortgage after paying perhaps $200k down, leaving me with $850k in investments for long-term and retirement sounds a lot more palatable than using nearly everything to pay cash for a house and then being way behind on my retirement savings. Mortgage interest rates are still low and the leverage they afford you in the purchase of your primary residence shouldn't be ignored. This will also help force you to purchase something that is within your means. If you were to think of the entire $850k in cash and $250k IRA's as your retirement funds (ie. un-touchable), you'd be in a very good position to secure yourself and your family for the future. Treating that money as expendable cash is likely to lead you to developing a lifestyle you can't support on your $75-100k income.

HopeToGolf
Posts: 277
Joined: Fri Dec 24, 2010 4:04 pm

Re: How should I divide my finances and any suggestions?

Post by HopeToGolf » Mon Mar 20, 2017 5:21 am

Sjoung

I think your revised plan to rent a year or two is a good idea.

With your wife as a restaurateur, do you need two cars right away? Again, I am trying to get you to slow down. When I moved to a new area after not owning cars for a while, we owned one car and my wife dropped me off at a train station so I could commute to work.

Have you decided how you will educate your offspring? After seeing that you paid for a private international school, the Seattle public schools may or may not work. If you plan to use private schools and make only $75K then you have more complexity in your budget.

I think you are heading down the right path. We relocated and bought a house in a HCOL area. While things have worked out fine, I love the advice of not planting roots too quickly especially when you have so many moving parts (cars, kids, schools, commute, expensive real estate, new job, new entrepreneurial venture, etc.).

Good luck.

sjoung
Posts: 15
Joined: Tue Apr 29, 2014 3:51 am

Re: How should I divide my finances and any suggestions?

Post by sjoung » Mon Mar 20, 2017 8:47 pm

HopeToGolf wrote:Sjoung

I think your revised plan to rent a year or two is a good idea.

With your wife as a restaurateur, do you need two cars right away? Again, I am trying to get you to slow down. When I moved to a new area after not owning cars for a while, we owned one car and my wife dropped me off at a train station so I could commute to work.

Have you decided how you will educate your offspring? After seeing that you paid for a private international school, the Seattle public schools may or may not work. If you plan to use private schools and make only $75K then you have more complexity in your budget.

I think you are heading down the right path. We relocated and bought a house in a HCOL area. While things have worked out fine, I love the advice of not planting roots too quickly especially when you have so many moving parts (cars, kids, schools, commute, expensive real estate, new job, new entrepreneurial venture, etc.).

Good luck.


Thank you for your advice. Good information.

We will rent for awhile. The other reasons why set a budget for $650K for a house is that the area we want to live has great public transit option which may allow me to purchase only one car, good public school, proximity to the university (saving money on dormitory lifestyle), etc.

I get the impression from the many great comments posted here is that many people have a view of investing perspective and while this is certainly a solid advice, I'm very conservative in terms of money and I just ultimately want to hedge against a potential job loss and at the same time I don't want to be a slave to any sort of debt.

Thank you again for your comment.

sjoung
Posts: 15
Joined: Tue Apr 29, 2014 3:51 am

Re: How should I divide my finances and any suggestions?

Post by sjoung » Mon Mar 20, 2017 9:10 pm

ReadyOrNot wrote:Seems reasonable. If you really know the present situation in the Seattle area well. Things may have changed a lot if you haven't kept current -- then be patient as you re-learn enough not to make big mistakes. Not clear if you intend to live and work and start a business in Seattle or just nearby. Not clear how much house you require -- yes, you can find $650K houses in most of the likely areas, and have a pretty good chance of getting one if you can pay cash. But there is a big range from mid-20th century houses built for the working class then, or the newer McMansions favored now which may be more expensive. (and down to older smaller places in south Seattle or south of Seattle which are much less than that, but which may not meet your standards for house or neighborhood). Or a newer condominium, if you are willing to live in a condo. Yes, renting first is a good way to test out living in something which you might not have considered before. And to experience the commute, depending on the distance you have guessed you could live with.
If your wife has experience with running a restaurant in Seattle, it might be different in the suburbs.
(I know of a family that ran a restaurant successfully in a Seattle neighborhood, was paid off by one of the city agencies to leave for one of the endless stream of city projects, re-located in Bellevue, but was not successful with the different customer base, different preferences of customers for this particular ethnic restaurant type on the Eastside.)
$45K for a car seems pricey to me, but I don't know your requirements. You probably know that Subarus have been unusually popular in the Seattle area for years, so maybe your reasons are similar.


I'm really looking for 3 bed 2 bath house/townhome in a location where public transit options are plenty. I'm not really into McMansions at all. I'm looking in the areas of U-district, Green Lake, Northgate, Ravenna, WallIngford, Eastlake, Monlake, etc.

In regards to the restaurant, this will take little longer figure and your point is well taken.

$45K car is expensive and right now I'm thinking in more in line of $30K Honda CR-V or Subaru Forester. One of the reason that I did not originally consider the CRV or Forester is that they are very loud. While the latest models are supposedly more quiet but my past experience with those models were too loud for our taste. Rav 4 is probably the quietest but it is so unattractive to us. We'll test drive all of them and hopefully rational logic will dictate our purchase.

Thank you for your comment.

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