Are we in trouble?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
milestogo2
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Are we in trouble?

Post by milestogo2 » Mon Nov 05, 2018 10:58 am

I have been a long time reader but never posted.

For a longtime it seemed like we have been doing all the right things and everything seem to be on track. Lately there have been some major changes in our life and I am unsure if we handled the changes prudently. Some things did not go as planned and It might be too late but please let me know if we should be concerned.

Age:47 yrs both me and spouse
Max out 401K's and IRA's for both
529 plans fully funded for both kids.
Current savings: 900K (taxable and non-taxable)
household incme- me 150K, spouse 220K
emergency fund: 25K(building back quickly.) usually is at 100K

for the last 20 yrs we lived in chicago area and were in stable jobs. earlier this year I took a job in a startup company and we moved to texas to be in a bigger city with better job opportunities should we need new employment. my spouse works from home and travels for work. so he can work from anywhere.

while planning the move, we decided to build in texas and signed the contract. house price is 1.2 million and will be ready in Sept of 2019. our construction loan is approved all is set in place for that. We made a downpayment of 200K and the reason why emergency fund is low. we are renting paying 3K for a house while the house is being built.

Our house in chicago area has been on the market for 6 months and not sold yet. With winter around the corner it might be next spring before it sells. House is on the market for 745K. Mtg owed is 460K. We built this house for 750K. I am worried we may have to lower it even more to make it attractive. currently we are already losing money on the house with the monthly payments and upkeep. Once the house sells conservatively we should pocket 180 to 200K net.

We are still able to max out our funds and still able to save 4K a month and rebuild the emergency fund. The things that are giving me a heartburn are:

*) Currently i am unhappy with the new job and might have to look around.
*) did not expect the old house to stay unsold for such a longtime and did not expect the housing market to be so bad. the house is in a desibrable area with very good schools. so i am baffled on that.
*) The new house build is late by 4months. the original date for completion was May 2019 and now it is Sept 2019.
*) Given the above i am very uncomfortable with the 1.2 million house price. Had i known my old house would cause a money bleed I would have stayed in the 700-800K and would have bought a house not built one.

I feel like we made some bad decisions and are headed for trouble but my spouse thinks we are just in a temporary bad spot and things will get better in 6 to 8 months. Please help me put things in perspective. anything i can do to help our situation.

wfrobinette
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Re: Are we in trouble?

Post by wfrobinette » Mon Nov 05, 2018 3:02 pm

Sorry to be blunt. You made the mistake of going to a lower cost of living state and spending 50% more on a home. Plus you're now in a price range that
only a few can afford.

Drop the price of the CHI home now. Why wait 5 more months to do that?

Welcome to new construction. That delay probably won't be your last. How far along are they? What are your outs on the TX home? Get out if you can even if you lose some $.

barnaclebob
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Re: Are we in trouble?

Post by barnaclebob » Mon Nov 05, 2018 3:10 pm

If your house hasn't sold in 6 months, the price is too high. Have you not lowered it at all? What are the comps priced at and how many are there? Around here you generally lower the price every month but this was a super hot market that's now cooling off. What is the average price of a house in your area?

I wouldn't change anything about your new situation besides maybe the job until your house is sold. That way you can see how things feel without paying that extra mortgage.

milestogo2
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Re: Are we in trouble?

Post by milestogo2 » Mon Nov 05, 2018 3:26 pm

Yes we lowered the price twice. originally listed at 799K ...lowerd it to 775K and now 750K.

Since texas is a no state tax state we felt comfortable with the higher mtg. I just do not want to make decisions when i am feeling so upset and make things worse and hence looking for some outside perspective.

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greg24
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Re: Are we in trouble?

Post by greg24 » Mon Nov 05, 2018 3:29 pm

You have made some sub-optimal decisions.

But your 370k annual income and 900k savings means you are far from "in trouble".

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aspirit
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Re: Are we in trouble?

Post by aspirit » Mon Nov 05, 2018 3:33 pm

milestogo2 wrote:
Mon Nov 05, 2018 3:26 pm
I just do not want to make decisions when i am feeling so upset and make things worse and hence looking for some outside perspective.
Outside perspective? (IMO) You've purchased more house than you can afford! Twice!
Sounds like the last housing downturn. There have been many you know, research it.
Good luck!
Last edited by aspirit on Mon Nov 05, 2018 3:41 pm, edited 1 time in total.
Time & tides wait for no one. A man has to know his limitations.

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goingup
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Re: Are we in trouble?

Post by goingup » Mon Nov 05, 2018 3:39 pm

In our area (Seattle) the housing market has stalled in a breath-taking fashion. Maybe it's happening everywhere as interest rates increase and deductible allowances decrease.

Anyways, I think your situation is a bit precarious or at the very least, stressful. In your situation I might want to reconnoiter and reassess. If this housing slowdown is happening everywhere, including Texas, your $1.2 mill house may not be worth that come September. What would it cost you to exit your contract? Start exploring your options.

barnaclebob
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Re: Are we in trouble?

Post by barnaclebob » Mon Nov 05, 2018 3:39 pm

aspirit wrote:
Mon Nov 05, 2018 3:33 pm
milestogo2 wrote:
Mon Nov 05, 2018 3:26 pm
I just do not want to make decisions when i am feeling so upset and make things worse and hence looking for some outside perspective.
Outside perspective? (IMO) You've purchased more house than you can afford! Twice!
Good luck!
a 1.2 mil house on 370k of income is hardly unaffordable.

FoolMeOnce
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Re: Are we in trouble?

Post by FoolMeOnce » Mon Nov 05, 2018 3:40 pm

I don't know Texas, but that sounds like a whole lotta house for Texas. Regardless, if your incomes are stable, it looks like you'll be fine. What will your house payments be, around $5k/ month? You should still be able to save plenty with your currently incomes. And enough that you won't miss the cash from slashing your listing price dramatically if you just want to remove one headache from your current situation.

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aspirit
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Re: Are we in trouble?

Post by aspirit » Mon Nov 05, 2018 3:43 pm

barnaclebob wrote:
Mon Nov 05, 2018 3:39 pm
aspirit wrote:
Mon Nov 05, 2018 3:33 pm
milestogo2 wrote:
Mon Nov 05, 2018 3:26 pm
I just do not want to make decisions when i am feeling so upset and make things worse and hence looking for some outside perspective.
Outside perspective? (IMO) You've purchased more house than you can afford! Twice!
Good luck!
a 1.2 mil house on 370k of income is hardly unaffordable.
In your estimation maybe. Not mine.
Time & tides wait for no one. A man has to know his limitations.

milestogo2
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Re: Are we in trouble?

Post by milestogo2 » Mon Nov 05, 2018 3:46 pm

our house payment in texas will be 7k including property tax. Our house payment in chicago was 4K including tax. We have a 3K bump. Our pay checks have gone up by 2K since we moved to a no tax state. that is the reason why we picked the new house even if it a little outside our comfort zone.

47Percent
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Re: Are we in trouble?

Post by 47Percent » Mon Nov 05, 2018 3:46 pm

wfrobinette wrote:
Mon Nov 05, 2018 3:02 pm
Sorry to be blunt. You made the mistake of going to a lower cost of living state and spending 50% more on a home. Plus you're now in a price range that
only a few can afford.

Drop the price of the CHI home now. Why wait 5 more months to do that?

Welcome to new construction. That delay probably won't be your last. How far along are they? What are your outs on the TX home? Get out if you can even if you lose some $.
The issue is not the relative price of the homes as much as buying any home at all before selling the previous one.

If renting was an option while construction, why not rent till the first one is sold and then close on the new one. Of course rental period would be increased -- but if the house sold quickly as your original expectation was, then it wouldn't have mattered as much. If it took longer, then it makes all the more sense.

While rebalancing my portfolio, or harvesting capital losses, I wouldn't even take a day's worth of market risk if I have to sell and buy similar investments, even for 5% of my portfolio -- lest should I be stuck with double the amount of similar investments should the market take a dive.

With such a highly leveraged investment such as realestate, and with such huge amounts involved, lot can go wrong if you are holding $2M of real-estate when your net worth is $1M.

I would seriously consider the above suggestions.

barnaclebob
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Re: Are we in trouble?

Post by barnaclebob » Mon Nov 05, 2018 3:48 pm

milestogo2 wrote:
Mon Nov 05, 2018 3:26 pm
Yes we lowered the price twice. originally listed at 799K ...lowerd it to 775K and now 750K.

Since texas is a no state tax state we felt comfortable with the higher mtg. I just do not want to make decisions when i am feeling so upset and make things worse and hence looking for some outside perspective.
If I were in your shoes I'd get pretty aggressive on the house price and get that elephant off my back. There are tons of houses for sale in the Chicago area for 750k, a good amount have been on the market for a long time. You have to be better priced than those houses to sell. Is your listing still getting any action? What about the action following the price drops?

Darth Xanadu
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Re: Are we in trouble?

Post by Darth Xanadu » Mon Nov 05, 2018 3:50 pm

47Percent wrote:
Mon Nov 05, 2018 3:46 pm

The issue is not the relative price of the homes as much as buying any home at all before selling the previous one.
This was my thought as well. I've never sold a house, but my family and I are considering moving out-of-state in the next year. If this happens, we will rent until our house is sold, and likely for another year or two in new location to see if buying again makes sense for us.

Edit: OP, I agree with others, try being more aggressive with sales price. Stick it out at current job until the dust settles.
"A courageous teacher, failure is."

letsgobobby
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Re: Are we in trouble?

Post by letsgobobby » Mon Nov 05, 2018 3:59 pm

Think you'll be ok, deep breath.

I would make an informed decision re: CHI house and seasonality. Either lower price aggressively to sell before depths of winter, or hold at higher price potentially for 6 months. We sold a house in DTW in January after being on market for 6 months. We lowered price twice but didn't go below fair. Ultimately we got a good offer in November and it closed in January. So it can happen. Be realistic about price, that is the biggest mistake sellers make (anchoring, and potentially confirmation bias from an overly rosy agent).

I think the TX home price is too high for your income, not that you won't be ok with it but that is a very pricey home with very high taxes for TX. If you can get out, I would. If not, you'll be fine, you'll just be saving less of your income than you could have. You won't be broke. Again, deep breath. You're doing fine.

The job dissatisfaction is another problem entirely. It does support the argument to get out of the $1.2 million home. And possibly rent instead of buy.

I'm not a TX fan myself but in February, when it's 65 degrees outside, I think you won't be miserable.

banhbao
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Re: Are we in trouble?

Post by banhbao » Mon Nov 05, 2018 4:02 pm

milestogo2 wrote:
Mon Nov 05, 2018 10:58 am
The new house build is late by 4months. the original date for completion was May 2019 and now it is Sept 2019.
wfrobinette wrote:
Mon Nov 05, 2018 3:02 pm
Welcome to new construction. That delay probably won't be your last. How far along are they? What are your outs on the TX home? Get out if you can even if you lose some $.
I'm not an expert in this area but are there any contract clauses that protect you in case of a delay? Maybe you could use it as leverage to negotiate a termination of the contract?
milestogo2 wrote:
Mon Nov 05, 2018 10:58 am
Currently i am unhappy with the new job and might have to look around.
milestogo2 wrote:
Mon Nov 05, 2018 10:58 am
my spouse works from home and travels for work. so he can work from anywhere.
Did you burn bridges when you left your old job? Perhaps your previous employer realized your value after your departure and you could negotiate a return to the old position?

ponyboy
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Re: Are we in trouble?

Post by ponyboy » Mon Nov 05, 2018 4:03 pm

milestogo2 wrote:
Mon Nov 05, 2018 3:46 pm
our house payment in texas will be 7k including property tax. Our house payment in chicago was 4K including tax. We have a 3K bump. Our pay checks have gone up by 2K since we moved to a no tax state. that is the reason why we picked the new house even if it a little outside our comfort zone.
Just because you make more doesnt mean you have to spend more. Like others said...you're far from "in trouble." You're moving to a lower cost of living area and you're spending more than a home costs in chicago...wut? Not sure why you would do that to yourselves.

3funder
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Re: Are we in trouble?

Post by 3funder » Mon Nov 05, 2018 4:04 pm

greg24 wrote:
Mon Nov 05, 2018 3:29 pm
You have made some sub-optimal decisions.

But your 370k annual income and 900k savings means you are far from "in trouble".
+1

UpperNwGuy
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Re: Are we in trouble?

Post by UpperNwGuy » Mon Nov 05, 2018 4:05 pm

I'm concerned that you are already unhappy in your new job after only a few months. Is that due to a personality conflict with someone senior to you? Or are you simply uncomfortable with the rough dynamics of a startup company? Do you think your job might be in jeopardy?

I think you should stick with the new job for a year or two unless that is completely impossible. My experience is that someone in your situation will quickly be identified by management as an unhappy camper, and therefore not someone fully committed to the startup's success. If that happens, you may find yourself without a job at a time when you are drowning in mortgages. And to be blunt, you have already posted enough personal information here that someone from your company reading this board could quickly identify who you are.

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FlyAF
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Re: Are we in trouble?

Post by FlyAF » Mon Nov 05, 2018 4:41 pm

ponyboy wrote:
Mon Nov 05, 2018 4:03 pm
milestogo2 wrote:
Mon Nov 05, 2018 3:46 pm
our house payment in texas will be 7k including property tax. Our house payment in chicago was 4K including tax. We have a 3K bump. Our pay checks have gone up by 2K since we moved to a no tax state. that is the reason why we picked the new house even if it a little outside our comfort zone.
Just because you make more doesnt mean you have to spend more. Like others said...you're far from "in trouble." You're moving to a lower cost of living area and you're spending more than a home costs in chicago...wut? Not sure why you would do that to yourselves.
Yeah I don't get it either. Move to a lower COL area w/ no state income tax, but very high property taxes, and build a much more expensive house essentially cancelling out all of the benefits of the move. I surely wouldn't have ham-stringed myself like that, but what's done is done. You can afford it and are far from "in trouble."

WannabeBogleHead01
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Re: Are we in trouble?

Post by WannabeBogleHead01 » Mon Nov 05, 2018 4:48 pm

I’d lower the price on the Chicago home.

Our story... left Chicago > 10 years ago for employment in a different state. Realtor gave us 2 prices... the first would allow us to make a little money (very little; think housing market in 2008), and the second would be a price where the house would sell in a short period of time. We chose the latter. I wrote a check to sell the house, but we had an offer in 3 days. Very happy with the decision.

riverguy
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Re: Are we in trouble?

Post by riverguy » Mon Nov 05, 2018 4:56 pm

One thing to do is to slow down and maybe think things out a little more before you do them?

I can't imagine taking a new job, at a startup nonetheless, in a new state and out of the gate building a $1.2m house, all while still having a mortgage/house in the other state while the Fed has been raising rates for 2-3 years?

delamer
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Re: Are we in trouble?

Post by delamer » Mon Nov 05, 2018 5:15 pm

I agree with several other posters that your best solution is to be aggressive with the Chicago price.

Another option is to put the Chicago house up for rent, particularly if you can cover (or nearly) the PITI.

I don’t think you are in trouble, but you can do things to help you sleep better.

mary1969
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Re: Are we in trouble?

Post by mary1969 » Mon Nov 05, 2018 5:27 pm

i live in the western suburbs of chicago. close to excellent train and 'in-town location'. a $750k home can mean a lot of different things in the chicago area. if your out in the sticks with no much access to public transportation, then you are in trouble.

my house is worth around $750k (no mortgage). given your income level, a $750k home in chicago is very reasonable. unfortunately there are not a whole of people with your income level. the ones that have your income level, want in town locations, excellent schools and public transportation.

over the years my friends that have bought over $1 mln houses have learned to regret it. mostly because the good times did not last and a few were forced to puke their house following the '08/09 financial crisis. try to get our of your texas contract unless you think your income will be real stable despite whatever happens to the economy.

good luck

sailaway
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Re: Are we in trouble?

Post by sailaway » Mon Nov 05, 2018 5:40 pm

There aren't any cities in Texas that are bigger than Chicago. Houston comes close on city population and DFW comes close on metropolitan area, so while there may be more job opportunities in your field, the way you stated it seems like you are clutching at straws to justify this move at all. Perhaps that is a reflection of your current anxiety?

I am a little surprised that so many people are saying "You're fine!" 900k, including 529 in the late 40s with a high spend seems on the low side to me. It certainly isn't anywhere near the 5 or 6 times income that guidelines would suggest for 50, but perhaps with an expenses metric they come out better. I mean, sure they aren't on the verge of bankruptcy, but I think the OP is wise to be reconsidering some life choices right now.

As for being unhappy at work, are you just having a hard time adjusting to the move and the new culture? Is your financial stress affecting your work life? Unless there is something abusive going on at work, I suggest you look into coping strategies before looking for a new job.

milestogo2
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Re: Are we in trouble?

Post by milestogo2 » Mon Nov 05, 2018 5:51 pm

thank you for giving me a honest feedback. It seems like it is time to hunker down. Will look into getting aggressive with Chicago property.

ponyboy
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Re: Are we in trouble?

Post by ponyboy » Mon Nov 05, 2018 5:52 pm

I never understand when someone is moving to a new state...why on earth they do not rent for a year? Why wouldnt you want to familiarize yourself with some areas first. I think thats one of the main reasons why people are always so stressed when it comes to things like this. They feel like they're forced to make a quick decision on a property. Dont do it...just rent for a year and see how things go.

abc132
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Re: Are we in trouble?

Post by abc132 » Mon Nov 05, 2018 6:09 pm

How and when do you plan to retire??

At 65, you are ideally going to want between 20x to 33x yearly spendings, depending how conservative you are.

With a 370k income and a 5% after inflation return, you would need to invest 50% of that 370k each year to reach 20x current earnings by age 65. You would need to invest 90% of that 370k to reach 33x current earnings.

If you go by the amount you are living off after investing (spendings), you would need to adjust to a 36% savings rate to reach 20x spendings and adjust to a 61% savings rate to reach 33x spendings.

Can you do any of these things while paying taxes and while also paying off the portion of the new house not covered by your net equity in your Chicago home?
Last edited by abc132 on Mon Nov 05, 2018 6:29 pm, edited 2 times in total.

PugetSoundguy
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Re: Are we in trouble?

Post by PugetSoundguy » Mon Nov 05, 2018 6:15 pm

I never understand when someone is moving to a new state...why on earth they do not rent for a year?
I agree in many, maybe most, situations that makes sense. In fact it is what my wife and I did (pre-kids) when we moved to a new state.

Another move may be in our future. But now we have kids in school and of course they are a handful. The idea of moving to a new city, finding a rental place, moving in, getting the kids in school, and then look for a place to buy, maybe even with a different school, and then move again, just makes my head hurt. That's why we would try to find a place to buy out of the gate.

When we are empty nesters, we can become prudent again. :sharebeer

onourway
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Re: Are we in trouble?

Post by onourway » Mon Nov 05, 2018 6:30 pm

I would lower the Chicago property's asking price aggressively enough to sell it this month. You have $200k of positive equity to work with. Do you want to sit on this property until spring and hope for the best or sacrifice some of that equity to be done with it now?

I would then try to get out of the contract on the Texas house. Build something at 1/2-2/3 the price and use that savings to beef up your retirement savings so you have the option to retire before age 65.

KyleAAA
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Re: Are we in trouble?

Post by KyleAAA » Mon Nov 05, 2018 6:41 pm

ponyboy wrote:
Mon Nov 05, 2018 5:52 pm
I never understand when someone is moving to a new state...why on earth they do not rent for a year? Why wouldnt you want to familiarize yourself with some areas first. I think thats one of the main reasons why people are always so stressed when it comes to things like this. They feel like they're forced to make a quick decision on a property. Dont do it...just rent for a year and see how things go.
It doesn't take nearly that long to familiarize yourself with various areas. 2 or 3 months should do it.

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corn18
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Re: Are we in trouble?

Post by corn18 » Mon Nov 05, 2018 6:47 pm

Howdy fellow future Texan! We are relocating from OH to the DFW area.

Not sure if you are in trouble or not. But what helped me determine if the world would end was my "You lost your job" spreadsheet. I assume a job loss in Jan 2019. How long can I last?

Step 1: Price the OH house to sell immediately. Disregard any thoughts of making $10k more, just get it off the balance sheet and free up the cash flow.
Step 2: Sit back, stay calm and see what's what

As it turns out, we can last until the end of 2019 with just our $50k EF (plus severance plus vacation buyout plus unemployment). Once I had that figured out, I stopped stressing and now we feel OK taking some risk in TX.

That analysis lead us to buying a spec home in an area we love. We have a lot of friends here already and they pointed us to Southlake/Westlake/Trophy Club so we bought a spec home in Trophy Club for $725k. We were willing to go to $1.2M but couldn't find anything we liked and did not want to build. So we took some risk and bought the spec home.

We have the same savings you have. I make about twice as much, but it sounds like your SO has a stable job. See how long you could last on his/her job alone and see what that analysis indicates.

And ditch that CHI home ASAP. No reason to carry that boat anchor. I know it sucks to sell it for less than you paid. If you want to get really depressed, add up how much you have put into it over the years. Actually, don't do that. Just imagine how nice it will feel when it is sold.

CoAndy
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Re: Are we in trouble?

Post by CoAndy » Mon Nov 05, 2018 6:53 pm

I think you guys will be fine but in the meantime, I might think seriously about reducing your 401(k) contributions down to the company matches and pile as much cash as possible until these issues are resolved.

milestogo2
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Re: Are we in trouble?

Post by milestogo2 » Mon Nov 05, 2018 7:12 pm

i don't understand the formula "need 20 times the income by age 65". maybe it applies to average incomes but not high incomes. I am positive we dont need 7 million to retire by 65.

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corn18
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Re: Are we in trouble?

Post by corn18 » Mon Nov 05, 2018 7:19 pm

milestogo2 wrote:
Mon Nov 05, 2018 7:12 pm
i don't understand the formula "need 20 times the income by age 65". maybe it applies to average incomes but not high incomes. I am positive we dont need 7 million to retire by 65.
You are correct. We make $700k year and we need $2M to retire very comfortably at age 55 (3 years from now).

onourway
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Re: Are we in trouble?

Post by onourway » Mon Nov 05, 2018 7:20 pm

milestogo2 wrote:
Mon Nov 05, 2018 7:12 pm
i don't understand the formula "need 20 times the income by age 65". maybe it applies to average incomes but not high incomes. I am positive we dont need 7 million to retire by 65.
Income doesn't matter. Expenses do.

You need about 25x annual expenses. On $370k of income with comparatively low savings and taking on a new mortgage for a $1.2M house, your expenses are probably quite high. Perhaps $250k or so including taxes? If so, you will need about $6M to retire. That's about $100k/year you need to save for retirement to get there by age 67.

abc132
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Re: Are we in trouble?

Post by abc132 » Mon Nov 05, 2018 7:23 pm

milestogo2 wrote:
Mon Nov 05, 2018 7:12 pm
i don't understand the formula "need 20 times the income by age 65". maybe it applies to average incomes but not high incomes. I am positive we dont need 7 million to retire by 65.
Historically, you can retire by living on on anywhere from 5% to 3% of your nest egg, depending how conservative you want to be.

If you plan on living off of 350k a year, yes you probably need 7 million.

If you plan to cut back to 100k a year, you might get by with 2 million.

If you go by "normal" standards that your spending will only decrease slightly in retirement, you are going to need some hefty savings rates in the ballpark of 40-50% of your gross income. Plan to cut back quite a bit in retirement if you are not willing to save this much.
Last edited by abc132 on Mon Nov 05, 2018 7:26 pm, edited 1 time in total.

milestogo2
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Re: Are we in trouble?

Post by milestogo2 » Mon Nov 05, 2018 7:25 pm

We need no more than 2M to retire. we already have a fully paid house elsewhere that we plan on retiring in. My concerns were if we can handle it on a temp basis. we dont plan on living is this house once empty nesters in 10 years.

We are on track to reach 2M in 5 years. even with the 1.2 mil house.

3504PIR
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Re: Are we in trouble?

Post by 3504PIR » Mon Nov 05, 2018 7:41 pm

milestogo2 wrote:
Mon Nov 05, 2018 7:25 pm
We need no more than 2M to retire. we already have a fully paid house elsewhere that we plan on retiring in. My concerns were if we can handle it on a temp basis. we dont plan on living is this house once empty nesters in 10 years.

We are on track to reach 2M in 5 years. even with the 1.2 mil house.
I’m assuming there is a lot of sticker shock judging by a lot of reply’s. You’re going to be fine as this works out. I’ve been in similar situations and it will get your heart rate up, but you have enough income to cover everything if this continues on. Some thing I have done in this situation include getting a top selling realtor on the job to help sell the house in Chicago. Re-list and,adjust,the,price based on their advice. A solid seller realtor can move a house quickly. They will also give you advice on upgrades and changes to make the home more sellable, if that’s required.

On your new home, ensure the build timeline is followed and avoid making changes during the process. Those will cost a lot and slow things down. Hopefully you know exactly what you want and construction will progress on time. Depending on your construction loan, a delay will likely result in a higher interest rate down the line, assuming you locked in a rate for when you convert, usually for 12 months.

You’re in great shape. This is tough, but will only end up being a blip in your lives as things work themselves out.

epictetus
Posts: 508
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Re: Are we in trouble?

Post by epictetus » Mon Nov 05, 2018 7:43 pm

if your spouse is happy in a stable job and you are unhappy in the new job one thought is to make decisions re: what you can afford re: housing based on just your spouse's income. and not making it a stretch on his/her income. if you are unhappy already in your new job would encourage you not to include your salary in your calculations re: how much house you can afford

i would encourage you to use the transition to a new state to take the pressure down a notch re: the housing costs.

if you kept on renting for a year you would probably have a lot better sense of whether or not you want to stay in the job, want to stay in TX, where you want to live in the town if you do stay, how good the prospects are if you decide to quit your job, do you want to go back to Chicago, etc., etc.

renting for a year means you can move much more easily if you decide you want/need to versus having another house to try and sell.

are you having any thoughts re: moving back to Chicago? you probably have lots of contacts there. and you have a house there that is still yours.

would encourage you to try not to be down on yourself re: the decisions you have made so far that you don't think are the greatest. and also encourage you not to keep going down a path that is not the greatest just because you started down that path. you can always re-decide and turn around
Focus on what you can control

Fm2018
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Re: Are we in trouble?

Post by Fm2018 » Mon Nov 05, 2018 8:08 pm

On a separate note.....

Is that only I who thinks $900K in savings at a $370K income at the age of 47 is on the low side? Plus $1.2m house in Texas? That is one biggggg house. Overall, I think, since you make a good money, you have a lot of room to turn things around fast. You just need to work out the numbers and stick to a plan.

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jabberwockOG
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Re: Are we in trouble?

Post by jabberwockOG » Mon Nov 05, 2018 8:19 pm

Fm2018 wrote:
Mon Nov 05, 2018 8:08 pm
On a separate note.....

Is that only I who thinks $900K in savings at a $370K income at the age of 47 is on the low side? Plus $1.2m house in Texas? That is one biggggg house. Overall, I think, since you make a good money, you have a lot of room to turn things around fast. You just need to work out the numbers and stick to a plan.
A $1.2 million house in Texas equates to a roughly $25,000+ annual property tax bill, a bill that is a permanent year to year expense that never gets paid off or goes away. Cost of living large I guess, pretty silly move in my opinion.

abc132
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Re: Are we in trouble?

Post by abc132 » Mon Nov 05, 2018 8:23 pm

Fm2018 wrote:
Mon Nov 05, 2018 8:08 pm
On a separate note.....

Is that only I who thinks $900K in savings at a $370K income at the age of 47 is on the low side? Plus $1.2m house in Texas? That is one biggggg house. Overall, I think, since you make a good money, you have a lot of room to turn things around fast. You just need to work out the numbers and stick to a plan.
https://www.investors.com/etfs-and-fund ... nd-income/

As listed, they have 3x earnings by age 47. I agree with you that they should be in great shape with that income if they come up with a plan and stick to it.

Hearing that rich people don't need 20x yearly spending tells me they probably don't have a plan. It's a huge red flag. 6x seems to be considered adequate. I know of no financial site that recommends 6x spending at age 65.

The linked study says 16x earnings is a 80% chance of having 30 years worth of money. It also shows that rich people need a bigger multiple of yearly spending, because other sources such as social security make up much less of the gap.

delamer
Posts: 6272
Joined: Tue Feb 08, 2011 6:13 pm

Re: Are we in trouble?

Post by delamer » Mon Nov 05, 2018 8:27 pm

Fm2018 wrote:
Mon Nov 05, 2018 8:08 pm
On a separate note.....

Is that only I who thinks $900K in savings at a $370K income at the age of 47 is on the low side? Plus $1.2m house in Texas? That is one biggggg house. Overall, I think, since you make a good money, you have a lot of room to turn things around fast. You just need to work out the numbers and stick to a plan.
Without knowing how long they’ve been at that income level, how much they have saved for their kids’ education, or whether they had substantial student loans of their own to pay off, I wouldn’t be quick to judge about the savings level.

I wouldn’t want an $800K mortgage at age 47 even if it was only 2X income, however. And I think that is what the OP is second-guessing, especially since the Chicago house hasn’t sold.

il0kin
Posts: 141
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Re: Are we in trouble?

Post by il0kin » Mon Nov 05, 2018 8:40 pm

Your net worth appears to be somewhere around $0 at age 47. Yes, you made a mistake!

nasrullah
Posts: 152
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Re: Are we in trouble?

Post by nasrullah » Mon Nov 05, 2018 8:45 pm

milestogo2 wrote:
Mon Nov 05, 2018 10:58 am

*) Currently i am unhappy with the new job and might have to look around.
*) did not expect the old house to stay unsold for such a longtime and did not expect the housing market to be so bad. the house is in a desibrable area with very good schools. so i am baffled on that.
*) The new house build is late by 4months. the original date for completion was May 2019 and now it is Sept 2019.
*) Given the above i am very uncomfortable with the 1.2 million house price. Had i known my old house would cause a money bleed I would have stayed in the 700-800K and would have bought a house not built one.
You’re still in good shape, and you’re going to be fine long term. My advice is to approach this one piece at a time and focus on lowering your stress, not mimizing your perceived losses.

1. Your house has been on the market for a long time. This is due to several factors: we’ve enjoyed atypical housing markets where demand was high, supply was low and houses moved very quickly. Interest rates are going up, this impacts purchasing power, but more importantly the pychology of purchasing. The season is very typical for slowdowns in the market - who really wants to move in the winter/holidays/when kids are in school.

Unless you’ve been ignoring everything your realtors have been telling you, fire them immediately. Look on Redfin for recent houses sold in your neighborhood in the previous 6 months. Look for a pattern in realtors that are moving real estate. Hire them, listen to what they say, spend some money on curb appeal/positioning if necessary, list it for what they tell you. Focus on selling it. Think about it this way, you could spend $30k on mortgage and sit on it for six months and then take a $50k reduction, or you can take the $50k reduction now and save $30k. A good realtor is going to know how to get you interest from multiple buyers and a competitive bid situation. But your goal is to move.

2. You said you were unhappy with your job. Is this on the low end of the scale where you don’t want to spend the next 5 years there, or on the high end where you are being abused/harassed/so stressed out that your hair is falling out? If it’s serous and affecting your health get out now. If not, and you haven’t already started looking for a new one - why haven’t you? It’s easier to be picky in a job search if you already have one. So if you can afford that luxury I’d stick with it until you find the right place.

3. Your options with the new house are going to be limited by the contract you are in. I haven’t seen any details that provides much insight there. The general “joke” with construction is that it takes twice as long and is twice as expensive - or was that three times as long and expensive? Depending on where you are in the process you could list this for sale as well and give the buyer an opportunity to pick their own finishes, You might take a financial hit on doing this, but if you are concerned about the size of the house / expense I would optimize for lowering your stress.
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

Fm2018
Posts: 15
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Re: Are we in trouble?

Post by Fm2018 » Mon Nov 05, 2018 8:51 pm

delamer wrote:
Mon Nov 05, 2018 8:27 pm
Fm2018 wrote:
Mon Nov 05, 2018 8:08 pm
On a separate note.....

Is that only I who thinks $900K in savings at a $370K income at the age of 47 is on the low side? Plus $1.2m house in Texas? That is one biggggg house. Overall, I think, since you make a good money, you have a lot of room to turn things around fast. You just need to work out the numbers and stick to a plan.
Without knowing how long they’ve been at that income level, how much they have saved for their kids’ education, or whether they had substantial student loans of their own to pay off, I wouldn’t be quick to judge about the savings level.

I wouldn’t want an $800K mortgage at age 47 even if it was only 2X income, however. And I think that is what the OP is second-guessing, especially since the Chicago house hasn’t sold.
You are right I migh have been quick to judge. Judging was not my intention (to each his/her own). I only wanted to give them a nudge that they may need to look at the broader balance between saving and consumption.

Bacchus01
Posts: 1935
Joined: Mon Dec 24, 2012 9:35 pm

Re: Are we in trouble?

Post by Bacchus01 » Mon Nov 05, 2018 9:11 pm

barnaclebob wrote:
Mon Nov 05, 2018 3:39 pm
aspirit wrote:
Mon Nov 05, 2018 3:33 pm
milestogo2 wrote:
Mon Nov 05, 2018 3:26 pm
I just do not want to make decisions when i am feeling so upset and make things worse and hence looking for some outside perspective.
Outside perspective? (IMO) You've purchased more house than you can afford! Twice!
Good luck!
a 1.2 mil house on 370k of income is hardly unaffordable.
Technically, true. With a higher household income, however, we wouldn’t go nearly that high. Also, depending on where I’m TX, $1.2M is a VERY high end house.

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sergeant
Posts: 934
Joined: Tue Dec 04, 2007 11:13 pm

Re: Are we in trouble?

Post by sergeant » Mon Nov 05, 2018 9:36 pm

barnaclebob wrote:
Mon Nov 05, 2018 3:39 pm
aspirit wrote:
Mon Nov 05, 2018 3:33 pm
milestogo2 wrote:
Mon Nov 05, 2018 3:26 pm
I just do not want to make decisions when i am feeling so upset and make things worse and hence looking for some outside perspective.
Outside perspective? (IMO) You've purchased more house than you can afford! Twice!
Good luck!
a 1.2 mil house on 370k of income is hardly unaffordable.
It might be. Depends on other expenses. We are looking in Texas and discovered 3%+ property tax rates in an area my DW likes. I wouldn't feel good paying $36,000 a year in property tax even with a 370k income.
Lincoln 3 EOW!

milestogo2
Posts: 8
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Re: Are we in trouble?

Post by milestogo2 » Mon Nov 05, 2018 9:42 pm

my property taxes are 20K. Like i said my monthly payment mtg and tax is 7K. Not sure where or why people are coming up with random numbers.

More info: we have 100k in our child 529 plans.

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