Housing: "Super Savers" vs. the "Rest"...

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CyclingDuo
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Housing: "Super Savers" vs. the "Rest"...

Post by CyclingDuo » Mon Apr 22, 2019 10:18 am

This is certainly not news to most Bogleheads, but I have some questions.

I found this recent article with the following graphic interesting...

Image
https://www.marketwatch.com/story/the-n ... 7TI-QQzVxg

We see many posts on the BH threads asking questions such as "Can I afford this house?"

From time to time, a few of those who respond to such threads will chime in with advice of keeping costs low so that OP in question can become a super saver. The topic is currently on our minds due to being empty nesters (see square footage chart below), and the reality that after the kids left we only utilize about 50% of our current home for our daily needs. This means we have joined the ranks of those who are paying for utilities, property taxes, and maintenance on square footage that is underutilized. I imagine we could probably convert that underutilized space into taking on a boarder or consider converting the unused half to an Airbnb. However, we are thinking ahead to our housing needs for the next decade+.

If anything, the graphic pictured above helps guide those who struggle with the big three expenses of housing, transportation, and food regarding the amount of income directed towards housing by super savers compared to the rest. We fortunately chose our current house 16 years ago with a direct eye on keeping the costs low enough to keep housing costs in the 10-14% of income range so that we could direct income to other areas - especially saving (retirement, college educations for children, etc...). We were a family of four utilizing the full house from purchase until we became empty nesters a couple of years ago. Now we are down to two. We converted one bedroom into our "den" which we rarely use. Two other bedrooms sit unused with their doors closed until the kids come home to visit, or we have a guest come visit. One entire floor of our home, or 50% of it, is only used as our "home gym" which is rather overkill.

So I ask the questions. What have some of you done in your latter 50's/early 60's - even if housing expenses are in line with your income and you qualify as a super saver as a result - when you find yourself in more square footage/home than you realistically need for your day to day living as a result of the nest being empty? Obviously, expenses such as property taxes, utilities, and home maintenance would trim down (in the right property) if we downsized which could then guide our annual expenses in retirement for housing even lower than what we currently pay. We would need to start researching the full cost comparison to get a much better idea, but it might rise to the top of our "to do" list soon. Does the hassle of relocating keep you in your current home - even if underutilized? We haven't really begun any sort of search as of yet, but reading the linked article above and the graphic shown below has new thoughts being entertained and discussed as a result. Especially as we find ourselves with around 2000 square feet per person in our current home. :shock:

The amount of square footage per person for new single family housing in the US has continued to grow the past 40+ years.

Image

We would be curious what others have done, or what struggles you went through housing wise when you suddenly found yourselves with an underutilized home due to being empty nesters. Our circle of friends includes pretty much everyone finding themselves with these large homes that are underutilized. Due to the LCOL area, I don't see many making any moves to alter that situation, but thinking ahead to yard work, snow removal, exterior/interior painting, flooring, property taxes, heating and cooling space that is not being used, etc.... may have the potential to enhance our super saving status even more. Has anyone downsized before retiring, or did you wait until retirement to make that move? It sure is easy to get stuck in the routine, the memories of the current home, and overlook the underutilization simply out of convenience. Yet, it could also be a good time to consider a downsize and relocation while we still have all of our mental and physical capabilities.
:sharebeer

TIA

CyclingDuo
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Regattamom
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by Regattamom » Mon Apr 22, 2019 10:58 am

Thank you for posting this. We aren't empty nesters yet, but almost.

We think about downsizing sometimes (although we don't live in a Mcmansion) but if we sold our house and bought a smaller home in the same area, the price per square foot would be much higher than what we bought in at 15 years ago. How do you reconcile that with the savings on utilities, taxes, etc.?

Edit: I realize we would be selling at a higher price per square foot, but we would also have to pay closing costs, taxes and realtor fees on that higher price. Plus all the costs attached to purchasing the new home.

To sell our $425k home would cost about $37k (our state taxes home sales) and that doesn't include things that need to be done to put the house on the market or actually move out and into another home. To purchase a smaller home at about $300k would cost approx. $9k in closing costs. Together thats $46k in just closing costs. It would take a long time for us to recoup that amount in utilities and taxes (our property taxes aren't that high.)

Texanbybirth
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by Texanbybirth » Mon Apr 22, 2019 12:24 pm

So OP, you bought a 4k sq ft home when you were a family of four? Even with kids at home it seems like you fit squarely in the top right corner of the second graph you posted, with over 1k sq ft. per person. Is that right? I'm surprised you were able to keep housing to 10-14% of income at that size house. You must have been pretty big earners, congrats!

We're in a 2500 sq ft home currently with 3 kids (oldest 4), and it's still 25-30% of our gross income. We hope to have more children. A 4k sq ft house would literally break our bank, so we'll be in this house as long as we can. It also seems like it will be quite a while from now before we're empty-nesters, so I'm sorry I can't necessarily give a concrete example. I'm sure the 1,250 sq ft. per person at that point will feel like a cavern. :D
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getthatmarshmallow
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by getthatmarshmallow » Mon Apr 22, 2019 12:41 pm

Approaching this from another direction: LCOL, and our housing costs are about 15% of our take-home pay. We are at the point where we "should" upgrade to a larger house. We have 2200 sq. ft., two kids. But the consideration that keeps us here is that we *like* not being house-poor, and being able to afford other things while still saving a lot, and by the time we paid off a bigger home, we'd be wanting to downsize.

DonIce
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by DonIce » Mon Apr 22, 2019 12:44 pm

The image must be net income, since it doesn't show taxes as an expense and the %s add up to 100%. The idea of having housing cost just 14% of net income seems laughable living in a place like Seattle. I spend ~40% of net income on housing (PITI). Still also save/invest 40% of net income too though; I cut most non-housing expenses to the bone.

As for advice for the OP, yes, get a smaller place. The savings will make up for the closing/moving costs over a few years. The time and effort in maintaining a needlessly large place is also not negligible. You could consider renting out your present big house rather than selling it, depending on the rental market in your area. What makes a place "home" is the people that live there with you, not the structure that you live in. Unless your neighbors happen to be your best friends or something, you won't miss the house for long after moving.

Jags4186
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by Jags4186 » Mon Apr 22, 2019 12:53 pm

Texanbybirth wrote:
Mon Apr 22, 2019 12:24 pm
So OP, you bought a 4k sq ft home when you were a family of four? Even with kids at home it seems like you fit squarely in the top right corner of the second graph you posted, with over 1k sq ft. per person. Is that right? I'm surprised you were able to keep housing to 10-14% of income at that size house. You must have been pretty big earners, congrats!

We're in a 2500 sq ft home currently with 3 kids (oldest 4), and it's still 25-30% of our gross income. We hope to have more children. A 4k sq ft house would literally break our bank, so we'll be in this house as long as we can. It also seems like it will be quite a while from now before we're empty-nesters, so I'm sorry I can't necessarily give a concrete example. I'm sure the 1,250 sq ft. per person at that point will feel like a cavern. :D
It’s really important to keep in mind the area of the country when looking at these square foot numbers.

https://www.zillow.com/homedetails/625- ... 1088_zpid/

Here’s an example of a house that is 2.5x larger than my house but cost $40,000 less than we paid and has 0.25x the property taxes.

I think for the most part if you live in areas of the country that really developed in the 2 decades post WW2 you generally live in a smaller house. Most large houses I see driving around are either pre-1930 builds or builds since the 1980s.

When I see someone on here say they live in a 4000sqft house I imagine they live in something like this:

https://www.zillow.com/homedetails/361- ... 3125_zpid/

I think if you were to ask me or most people...that’s a mansion.

Lee_WSP
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by Lee_WSP » Mon Apr 22, 2019 1:11 pm

I think that this graph is potentially very misleading. Does it account for incomes and location?

Because it is simply not feasible for someone making 20k a year to be saving 29% of their income. Whereas someone making 200k a year can live in a very very very nice house whose mortgage payment only equates to 11% of their income.

Admiral
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by Admiral » Mon Apr 22, 2019 1:29 pm

Our house is 1850 ftsq or around 2000 incl basement, half of which is finished. Built in 1850. Family of four.

Our mortgage housing cost (PITI) is 11% of our gross, 20% of our net. (Large down-payment accounts for that, plus incomes that have risen a lot since purchase, and an extremely low interest rate.)

It is plenty big enough. In fact we have one room that is barely used. This is a city house, and I get that people move to the suburbs to get more space. We never needed it and don't want it... and didn't want to pay for it.

We have been saving 20-25% of gross but will probably cut back for the next 10 years or so.

To answer the question in the OP: We plan to renovate one floor plus another bathroom, add a half bathroom, and stay for the next 25 years, God willing. It will be paid off in 10 years.

SDLinguist
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by SDLinguist » Mon Apr 22, 2019 1:36 pm

DonIce wrote:
Mon Apr 22, 2019 12:44 pm
The image must be net income, since it doesn't show taxes as an expense and the %s add up to 100%. The idea of having housing cost just 14% of net income seems laughable living in a place like Seattle. I spend ~40% of net income on housing (PITI). Still also save/invest 40% of net income too though; I cut most non-housing expenses to the bone.

As for advice for the OP, yes, get a smaller place. The savings will make up for the closing/moving costs over a few years. The time and effort in maintaining a needlessly large place is also not negligible. You could consider renting out your present big house rather than selling it, depending on the rental market in your area. What makes a place "home" is the people that live there with you, not the structure that you live in. Unless your neighbors happen to be your best friends or something, you won't miss the house for long after moving.
The fact that the numbers are post tax also makes it look like nobody is saving enough. Especially not the non-super savers if we go by guide of 1/3 savings, 1/3 housing, 1/3 living.

MrBeaver
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by MrBeaver » Mon Apr 22, 2019 3:21 pm

I was curious, so I pulled up our spending/saving (as a percentage of net after-tax income). I put life insurance into 'Household' because I didn't really know where to put it. Observations:
  • I have to assume the 'super savers' group here is not adjusted to have similar income statistics as the country as a whole. Our transportation costs are 10% higher than the non-supersavers, and 55% higher than the supersavers by percentage, and we purchase 3-5 year old cars and drive them into the ground (10-15 years). Either that, or these reported amounts completely ignore maintenance of their vehicles and are only looking at a loan payment from the dealership.
  • I didn't include the ~20% extra of my compensation that my employer pays for my medical expenses (employer portion of insurance premium). If I did, medical care would come to more than I pay for housing, transportation, utilities, and essential household expenses combined. And that's with an income ~60% higher than median. And this grows even higher were I to include medicare taxes as 'health spending' instead of taxes. No wonder health care is a big issue.
Image

fourkids
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by fourkids » Mon Apr 22, 2019 4:58 pm

Great grid.
I just looked at my budget, and how funny that my "savings" is exactly 29% and my "housing" is exactly 14%.
I guess I really am a super saver. Yay me.

veindoc
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by veindoc » Mon Apr 22, 2019 6:05 pm

Housing is at 8% but savings “only” 24%. This is gross income. What the heck am I spending my money on???? :shock: and I defined savings broadly at retirement, mortgage pay down and college. Time to take another look at the books.....

trustquestioner
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by trustquestioner » Mon Apr 22, 2019 6:10 pm

People drastically overspend on housing largely because of the 30 year fixed rate mortgage, an anomaly unique to America. And because of interest and property tax deductibility.

We spend less than 10% of our income for more house than we need. This country is nuts with how we use land and finance housing.

sailaway
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by sailaway » Mon Apr 22, 2019 6:16 pm

getthatmarshmallow wrote:
Mon Apr 22, 2019 12:41 pm
Approaching this from another direction: LCOL, and our housing costs are about 15% of our take-home pay. We are at the point where we "should" upgrade to a larger house. We have 2200 sq. ft., two kids. But the consideration that keeps us here is that we *like* not being house-poor, and being able to afford other things while still saving a lot, and by the time we paid off a bigger home, we'd be wanting to downsize.
It isn't like 2200 sq ft is actually small, so I don't see why you "should" upgrade.

stoptothink
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by stoptothink » Mon Apr 22, 2019 6:28 pm

sailaway wrote:
Mon Apr 22, 2019 6:16 pm
getthatmarshmallow wrote:
Mon Apr 22, 2019 12:41 pm
Approaching this from another direction: LCOL, and our housing costs are about 15% of our take-home pay. We are at the point where we "should" upgrade to a larger house. We have 2200 sq. ft., two kids. But the consideration that keeps us here is that we *like* not being house-poor, and being able to afford other things while still saving a lot, and by the time we paid off a bigger home, we'd be wanting to downsize.
It isn't like 2200 sq ft is actually small, so I don't see why you "should" upgrade.
It's 700sq. ft more than we have, with the same size family. We've even had the in-laws living with us for extended periods of time (over a year at once) and never felt we needed more space. But yes, we got "advice" from everybody when we were looking that we'd feel "cramped" and we get constant comments from friends/family/peers about how nuts we are living in a home that is worth about 1x HHI.

Miguelito
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by Miguelito » Mon Apr 22, 2019 7:18 pm

One question I have that is not trivial is that based on taxes not being shown, it would seem these numbers are after-tax (Fed+state+FICA). If so, would the full, deductible 401k contribution be included in that savings rate? Same for the mortgage cost (interest)?

Similarly, a 15 vs. 30-year mortgage can make a big difference, but at least that can be explained since in the US most mortgages are 30-year.

But in general, one thing I notice at least in my area is not just that people buy too much house (guilty as charged), but that they pay taxes on land they don't need/use (like woods or wetlands) and then pay to maintain it (huge lawns, long driveways). My house is larger than it needs to be but it is compact and on a smaller lot. Easy to maintain myself and about 30% less taxes than typical homes its size. That said, I bet people in our income range would have bought a bigger house still.

The one thing bigger houses get you is not necessarily more rooms, but larger rooms. My current house is 50% bigger than my last house, but the only new room is an office that accounts for 10 to 15% of the additional square footage.

smitcat
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by smitcat » Mon Apr 22, 2019 7:45 pm

I just cannot see the value of comparing net after tax %'s without numbers.
These are certainly geared for the savings years but are being utilized to ask about retirement years.
Not sure how any comparison will be useful in to folks from different areas in general.

pdavi21
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by pdavi21 » Mon Apr 22, 2019 8:30 pm

I get a kick out of essential expenses. If they were really essential, how is person A spending less than person B?
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

getthatmarshmallow
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by getthatmarshmallow » Mon Apr 22, 2019 8:36 pm

sailaway wrote:
Mon Apr 22, 2019 6:16 pm
getthatmarshmallow wrote:
Mon Apr 22, 2019 12:41 pm
Approaching this from another direction: LCOL, and our housing costs are about 15% of our take-home pay. We are at the point where we "should" upgrade to a larger house. We have 2200 sq. ft., two kids. But the consideration that keeps us here is that we *like* not being house-poor, and being able to afford other things while still saving a lot, and by the time we paid off a bigger home, we'd be wanting to downsize.
It isn't like 2200 sq ft is actually small, so I don't see why you "should" upgrade.
"Should" was in scare quotes for a reason! The house is 1100 plus a mostly finished basement. If we didn't have two home offices it would feel palatial. Another full bath would be nice, but I think we're staying put. More house would be just more to clean.

getthatmarshmallow
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by getthatmarshmallow » Mon Apr 22, 2019 8:36 pm

sailaway wrote:
Mon Apr 22, 2019 6:16 pm
getthatmarshmallow wrote:
Mon Apr 22, 2019 12:41 pm
Approaching this from another direction: LCOL, and our housing costs are about 15% of our take-home pay. We are at the point where we "should" upgrade to a larger house. We have 2200 sq. ft., two kids. But the consideration that keeps us here is that we *like* not being house-poor, and being able to afford other things while still saving a lot, and by the time we paid off a bigger home, we'd be wanting to downsize.
It isn't like 2200 sq ft is actually small, so I don't see why you "should" upgrade.
"Should" was in scare quotes for a reason! The house is 1100 plus a mostly finished basement. If we didn't have two home offices it would feel palatial. Another full bath would be nice, but I think we're staying put. More house would be just more to clean.

getthatmarshmallow
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by getthatmarshmallow » Mon Apr 22, 2019 8:36 pm

Duplicate

getthatmarshmallow
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by getthatmarshmallow » Mon Apr 22, 2019 8:38 pm

Duplicate

mnnice
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by mnnice » Mon Apr 22, 2019 9:16 pm

CyclingDuo do you think you want to stay in your present area post retirement? If you ( and DW of course) are planning on staying in the same general area I would consider making the change sooner vs later.

If your house was half the size you would only lose your gym space. You can buy a lot of gym membership with just the tax savings.

That being said I can a card carrying member of small house fan club. I know it’s not for everyone. We live in about half the square footage with twice the people. We actually downsized with teenagers at home. We plan on downsizing again when our nest empties.

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by SoonerD » Mon Apr 22, 2019 11:42 pm

stoptothink wrote:
Mon Apr 22, 2019 6:28 pm
sailaway wrote:
Mon Apr 22, 2019 6:16 pm
getthatmarshmallow wrote:
Mon Apr 22, 2019 12:41 pm
Approaching this from another direction: LCOL, and our housing costs are about 15% of our take-home pay. We are at the point where we "should" upgrade to a larger house. We have 2200 sq. ft., two kids. But the consideration that keeps us here is that we *like* not being house-poor, and being able to afford other things while still saving a lot, and by the time we paid off a bigger home, we'd be wanting to downsize.
It isn't like 2200 sq ft is actually small, so I don't see why you "should" upgrade.
It's 700sq. ft more than we have, with the same size family. We've even had the in-laws living with us for extended periods of time (over a year at once) and never felt we needed more space. But yes, we got "advice" from everybody when we were looking that we'd feel "cramped" and we get constant comments from friends/family/peers about how nuts we are living in a home that is worth about 1x HHI.
I live in < 1,000 square foot home. Smaller than any of my siblings while my net worth is greater than all theirs combined. An example of not listening to the seller/profiteer for advice on what to buy. One sibling, an Ivy Leaguer, was telling me it's impossible for a family to get buy in America on one income. I wonder if sibling's larger home and elite private colleges for offspring contribute to that belief? I'm retired as youngest one and they're all still working. Never let the realtor, F.A, college enrollment counselor, car salesman, butcher, insurance salesman, etc. tell you what to buy with your money! That's how to become a super saver, in my opinion.

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by willthrill81 » Tue Apr 23, 2019 12:22 am

For us, it simply made sense on multiple levels, financial not being the least of them, to have a small home. Ours is 3/2 with 1,200 sq. ft., and it's great for our family of three. We've had moderately big, moderate, and small, and we like small.

Smaller homes tend to result in:
1. less mortgage interest
2. less property tax
3. smaller utility bills
4. less maintenance expense
5. smaller homeowner's insurance premiums
6. less space to fill with unnecessary stuff

Once our mortgage is paid off next year, all of our housing-related expenses (i.e. taxes, insurance, maintenance, utilities) will total about 6% of our gross income. That will make saving even easier. We'll be 'super-duper-savers'. :D
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by Tlmlb » Tue Apr 23, 2019 12:47 am

I think the key here is functional/adaptable to changed circumstances. Bogleheads are into value. Many of the previous posts reflect that sentiment.

For example, I got the house when I divorced. It was a very nice SFR ranch 3 bd 2 ba that we had remodeled and served our family well. Well, living there by myself there were rooms I rarely entered and never used on a regular basis, so I decided to downsize. I downsized to a loft in a historic building. I love it and dare say I use every sq. foot to a high use including great studio/office, pool table, bar, 2 baths, gourmet kitchen, dining area, living room area and a bedroom.

Oh, how much did i downsize? The Ranch was 2,168 sq. ft. The loft? 2,327 sq. ft.!!!!

I propose that while the percentage allocated to housing is important, the value received is even more important.

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by GCD » Tue Apr 23, 2019 2:34 am

mnnice wrote:
Mon Apr 22, 2019 9:16 pm
If your house was half the size you would only lose your gym space. You can buy a lot of gym membership with just the tax savings.
I suspect CyclingDuo could keep a home gym even with a sq. footage reduction given the numbers he is talking about.

With that said, some of this is about convenience and saving time. I have had a home gym for about 17 years. I have owned some sort of exercise equipment for over 25 years. Depending on where I lived, not having to go to the gym has saved me 20 minutes to an hour every time I work out. Most people go through an evolution where they spend time to save money and eventually get to a point where they spend money to buy time. The purpose of my home gym wasn't just to acquire stuff.

At my most extreme workout schedule and location, having a home gym saved me about 5 hours a week. How someone values X hours a week when they are working & raising kids versus being able to retire Y months earlier will be a complicated and personal equation.

The same could be said for location and commuting time. That may well have a bigger impact than square footage on a home price.

hoeboe
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by hoeboe » Tue Apr 23, 2019 6:17 am

We are in the middle of executing on just such a downsizing. Selling our custom built home of the last 14 years and moving from 4000 sq ft with acreage, pool, and huge garage space to a 2600 sq ft home about 15 minutes away. Doing this since our youngest is set to graduate high school in the next month.

Yes- we will be saving a ton as everyone has mentioned not even accounting for the mortgage- approximately $24k a year which means about $40k pre-tax income in my tax bracket. We will also clear enough from the sale to go mortgage free if we wish and still bank a lot of savings. Maintenance is simple. So it's easy to rationalize for the Boglehead brain.

However, my recommendation is to also get an emotional buy in. The REAL reason we're doing this is to live in a more interesting place. A walkable community with restaurants and entertainment nearby. As empty nesters, we are going to have a lot more time. Our new location provides quick access to community, friends, live music, library, and generally things to do. It's a perfect location to execute an early retirement.

This makes it easier to leave the place where we've raised our kids, especially for my spouse. Same in my mind as retiring to something rather than from something. Move to a more desirable place rather than from a big, expensive place.

Hoeboe

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CyclingDuo
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by CyclingDuo » Tue Apr 23, 2019 7:16 am

Texanbybirth wrote:
Mon Apr 22, 2019 12:24 pm
So OP, you bought a 4k sq ft home when you were a family of four? Even with kids at home it seems like you fit squarely in the top right corner of the second graph you posted, with over 1k sq ft. per person. Is that right? I'm surprised you were able to keep housing to 10-14% of income at that size house. You must have been pretty big earners, congrats!
Not "big earners", but rather living in a LCOL area when it comes to housing. Bigger homes in our area were going for $220K - $275K at that time in 2003 and there was not much between what was available in new construction compared with purchasing older construction, smaller dwellings that were about 55-60% the cost. Many new developments in the area were offering tax abatements for new construction, so the lure of that worked its magic on us. :greedy

At the time, we made the decision to be a single income family for 4 years when we purchased the house while DW stayed home with the young kids for those years. The house was brand new construction and came with a 5 year tax abatement plan (year one was 0%, and it ramped up 20% every year until the full 100% of property taxes) that the city was offering at the time. As my salary increased each year, the abated property tax rose each year. By the end of the tax abatement, DW was back to full time work and we were a dual income household again. So the housing costs were "timed" to keep them low during the single income salary years with no, to low property taxes, and then income ramped up as the full property taxes kicked in. We also went with a larger downpayment to help keep costs low for the duration as we had goals of saving for retirement and college educations for the kids. When we purchased it, the goal was for a family of four. We were not thinking ahead to utilities, maintenance costs, yard work, snow removal, landscaping, etc.... that we would have after the nest was empty 15 years later. Part of that decision was due to not knowing how long we would be staying. Now that we've reached the 16 years later point, I imagine it is normal to rethink.

Having owned a home in the San Francisco Bay Area as our first home years ago, we know all too well the difference in home ownership costs between a HCOL are and a LCOL area.

Regardless, in our area - these larger square footage, newer construction homes (built after 2000) are quite common. Some examples...

https://www.zillow.com/homes/for_sale/W ... ect/11_zm/

https://www.zillow.com/homes/for_sale/W ... ect/11_zm/

https://www.zillow.com/homes/for_sale/W ... ect/11_zm/
Texanbybirth wrote:
Mon Apr 22, 2019 12:24 pm
We're in a 2500 sq ft home currently with 3 kids (oldest 4), and it's still 25-30% of our gross income. We hope to have more children. A 4k sq ft house would literally break our bank, so we'll be in this house as long as we can. It also seems like it will be quite a while from now before we're empty-nesters, so I'm sorry I can't necessarily give a concrete example. I'm sure the 1,250 sq ft. per person at that point will feel like a cavern. :D
It would be no problem for us to adjust to smaller living quarters, as our first home in San Francisco area was less than 1300 square feet, and we lived in apartments in major cities in the US and abroad before and after that home purchase (a total of 20 years of apartment living, in fact). So we know the pros and cons of urban vs. suburban life in terms of amenities, costs, space, etc... .

Anyway, I appreciate all the responses and thoughts as we begin the process of reviewing all of our options.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by CyclingDuo » Tue Apr 23, 2019 7:18 am

hoeboe wrote:
Tue Apr 23, 2019 6:17 am
We are in the middle of executing on just such a downsizing. Selling our custom built home of the last 14 years and moving from 4000 sq ft with acreage, pool, and huge garage space to a 2600 sq ft home about 15 minutes away. Doing this since our youngest is set to graduate high school in the next month.

Yes- we will be saving a ton as everyone has mentioned not even accounting for the mortgage- approximately $24k a year which means about $40k pre-tax income in my tax bracket. We will also clear enough from the sale to go mortgage free if we wish and still bank a lot of savings. Maintenance is simple. So it's easy to rationalize for the Boglehead brain.

However, my recommendation is to also get an emotional buy in. The REAL reason we're doing this is to live in a more interesting place. A walkable community with restaurants and entertainment nearby. As empty nesters, we are going to have a lot more time. Our new location provides quick access to community, friends, live music, library, and generally things to do. It's a perfect location to execute an early retirement.

This makes it easier to leave the place where we've raised our kids, especially for my spouse. Same in my mind as retiring to something rather than from something. Move to a more desirable place rather than from a big, expensive place.

Hoeboe
Great post, Hoeboe! Many thoughts in your comments that we can identify with and look forward to considering.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by CyclingDuo » Tue Apr 23, 2019 7:21 am

GCD wrote:
Tue Apr 23, 2019 2:34 am
mnnice wrote:
Mon Apr 22, 2019 9:16 pm
If your house was half the size you would only lose your gym space. You can buy a lot of gym membership with just the tax savings.
I suspect CyclingDuo could keep a home gym even with a sq. footage reduction given the numbers he is talking about.

With that said, some of this is about convenience and saving time. I have had a home gym for about 17 years. I have owned some sort of exercise equipment for over 25 years. Depending on where I lived, not having to go to the gym has saved me 20 minutes to an hour every time I work out. Most people go through an evolution where they spend time to save money and eventually get to a point where they spend money to buy time. The purpose of my home gym wasn't just to acquire stuff.

At my most extreme workout schedule and location, having a home gym saved me about 5 hours a week. How someone values X hours a week when they are working & raising kids versus being able to retire Y months earlier will be a complicated and personal equation.

The same could be said for location and commuting time. That may well have a bigger impact than square footage on a home price.
Yes, the home gym only occupies one third of the "family room" on the lower level. It could easily be located in a smaller space (weights, bench, treadmill, exercise bikes). The time factor of not having to travel to and from a gym is also worth its weight in gold. Especially since we are big cooks and something is usually in the oven during the work out routine.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by GCD » Tue Apr 23, 2019 7:35 am

CyclingDuo wrote:
Tue Apr 23, 2019 7:21 am
The time factor of not having to travel to and from a gym is also worth its weight in gold. Especially since we are big cooks and something is usually in the oven during the work out routine.
Absolutely. I didn't add multi-tasking (laundry, cooking, etc.) into the time savings. It would be even greater than my previous estimate given those factors.

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by CyclingDuo » Tue Apr 23, 2019 7:38 am

mnnice wrote:
Mon Apr 22, 2019 9:16 pm
CyclingDuo do you think you want to stay in your present area post retirement? If you ( and DW of course) are planning on staying in the same general area I would consider making the change sooner vs later.

If your house was half the size you would only lose your gym space. You can buy a lot of gym membership with just the tax savings.

That being said I can a card carrying member of small house fan club. I know it’s not for everyone. We live in about half the square footage with twice the people. We actually downsized with teenagers at home. We plan on downsizing again when our nest empties.
As you can well imagine, we certainly have been reviewing staying here or not. :beer

There are plenty of housing opportunities throughout the entire metro area, so the combination of being empty nesters in our final pre-retirement years, new job situation, etc... all give us fodder to consider downsizing to the small or at least smaller house club.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by mnnice » Tue Apr 23, 2019 8:10 am

CyclingDuo wrote:
Tue Apr 23, 2019 7:21 am
GCD wrote:
Tue Apr 23, 2019 2:34 am
mnnice wrote:
Mon Apr 22, 2019 9:16 pm
If your house was half the size you would only lose your gym space. You can buy a lot of gym membership with just the tax savings.
I suspect CyclingDuo could keep a home gym even with a sq. footage reduction given the numbers he is talking about.

With that said, some of this is about convenience and saving time. I have had a home gym for about 17 years. I have owned some sort of exercise equipment for over 25 years. Depending on where I lived, not having to go to the gym has saved me 20 minutes to an hour every time I work out. Most people go through an evolution where they spend time to save money and eventually get to a point where they spend money to buy time. The purpose of my home gym wasn't just to acquire stuff.

At my most extreme workout schedule and location, having a home gym saved me about 5 hours a week. How someone values X hours a week when they are working & raising kids versus being able to retire Y months earlier will be a complicated and personal equation.

The same could be said for location and commuting time. That may well have a bigger impact than square footage on a home price.
Yes, the home gym only occupies one third of the "family room" on the lower level. It could easily be located in a smaller space (weights, bench, treadmill, exercise bikes). The time factor of not having to travel to and from a gym is also worth its weight in gold. Especially since we are big cooks and something is usually in the oven during the work out routine.
You might have supper in the oven but it is not going to take an hour to get to the Y. :) q. My primary fitness activity is yoga. Technically I could do it at home easily. However, my home practice always end up being lame. Following an instructor is more interesting and on the long shot that it is not is it hard to walk out without being disruptive to others :wink: I also see more 60 and 70 somethings at the gym who seem to be getting some of their social needs that they previously got met at work.

The tax abatement has come back. I suspect you might be less of a fan when trying to sell.

DH would really like to live elsewhere and told me awhile ago not to suggest anywhere further north until our present location was in the Southern Hemisphere. We are tethered by the school situation for four more years.

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by CyclingDuo » Tue Apr 23, 2019 8:56 am

mnnice wrote:
Tue Apr 23, 2019 8:10 am
You might have supper in the oven but it is not going to take an hour to get to the Y. :) q. My primary fitness activity is yoga. Technically I could do it at home easily. However, my home practice always end up being lame. Following an instructor is more interesting and on the long shot that it is not is it hard to walk out without being disruptive to others :wink: I also see more 60 and 70 somethings at the gym who seem to be getting some of their social needs that they previously got met at work.

The tax abatement has come back. I suspect you might be less of a fan when trying to sell.
Yes, I imagine the new construction with the abatement will taper some of the existing home sales compared to surrounding urban areas that do not have abatement. I drove through a few of the new developments here yesterday to take a look.

As odd as it seems - compared to what we are thinking about considering by going smaller - five of our newest neighbors are all retired couples who bought from families that moved out of their large homes. Not sure if we moved that we would be trend or countertrend for our neighborhood demographic...? :shock:

The drive is 15 minutes in one direction to the Y from our house. I tried it for a year when it first opened, but got tired of waiting for all the machines I like to use in the weight area, and I've got my exercise bike dialed in with my favorite saddle, clipless pedals, and software. Since we had the investment in our own equipment that did the job and there was no waiting in our home for using any of it, plus with the big screen entertainment box, we quickly shelved the Y. We use our workouts as our own social hour and unwind from the work day as a couple. :D That being said, if we did downsize, we would most likely take advantage of facilities that are close to, or even on premise if we couldn't fit what we do have and use in the new space. Although our main gym - when weather cooperates - is always out on the bikes.

We are keeping our eye on the new city center development (all brick designed with a 1950's look) on the Great Western Trail...as well as similar developments.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by mnnice » Tue Apr 23, 2019 9:25 am

CyclingDuo wrote:
Tue Apr 23, 2019 8:56 am
mnnice wrote:
Tue Apr 23, 2019 8:10 am
You might have supper in the oven but it is not going to take an hour to get to the Y. :) q. My primary fitness activity is yoga. Technically I could do it at home easily. However, my home practice always end up being lame. Following an instructor is more interesting and on the long shot that it is not is it hard to walk out without being disruptive to others :wink: I also see more 60 and 70 somethings at the gym who seem to be getting some of their social needs that they previously got met at work.

The tax abatement has come back. I suspect you might be less of a fan when trying to sell.
Yes, I imagine the new construction with the abatement will taper some of the existing home sales compared to surrounding urban areas that do not have abatement. I drove through a few of the new developments here yesterday to take a look.

As odd as it seems - compared to what we are thinking about considering by going smaller - five of our newest neighbors are all retired couples who bought from families that moved out of their large homes. Not sure if we moved that we would be trend or countertrend for our neighborhood demographic...? :shock:

The drive is 15 minutes in one direction to the Y from our house. I tried it for a year when it first opened, but got tired of waiting for all the machines I like to use in the weight area, and I've got my exercise bike dialed in with my favorite saddle, clipless pedals, and software. Since we had the investment in our own equipment that did the job and there was no waiting in our home for using any of it, plus with the big screen entertainment box, we quickly shelved the Y. We use our workouts as our own social hour and unwind from the work day as a couple. :D That being said, if we did downsize, we would most likely take advantage of facilities that are close to, or even on premise if we couldn't fit what we do have and use in the new space. Although our main gym - when weather cooperates - is always out on the bikes.

We are keeping our eye on the new city center development (all brick designed with a 1950's look) on the Great Western Trail...as well as similar developments.
DH had some enthusiasm for it too. Bike trail, space for flowers and veggies, and a craft brewery in the neighborhood. All of his favorites.

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by jharkin » Tue Apr 23, 2019 10:27 am

CyclingDuo wrote:
Mon Apr 22, 2019 10:18 am

So I ask the questions. What have some of you done in your latter 50's/early 60's - even if housing expenses are in line with your income and you qualify as a super saver as a result - when you find yourself in more square footage/home than you realistically need for your day to day living as a result of the nest being empty? Obviously, expenses such as property taxes, utilities, and home maintenance would trim down (in the right property) if we downsized which could then guide our annual expenses in retirement for housing even lower than what we currently pay. We would need to start researching the full cost comparison to get a much better idea, but it might rise to the top of our "to do" list soon. Does the hassle of relocating keep you in your current home - even if underutilized? We haven't really begun any sort of search as of yet, but reading the linked article above and the graphic shown below has new thoughts being entertained and discussed as a result. Especially as we find ourselves with around 2000 square feet per person in our current home. :shock:
Well I'm not in my 50s yet, but I will chime in on what we are planning to do in the future when we get to your situation - downsize right at retirement.

The way I see it, our hosing lifestyle will follow a bell curve. When we first got married in our early 30s we bought what we could reasonably afford on one income expecting children, but that was pretty small... so we now in our early 40s find ourselves with 4 people sharing one bathroom and only 350sq.ft. per person. Over time as income grew the PITI has fallen to less than 10% of gross income. (first 10 years)

Stage 2 starts now when we will move up to what for us seems big, but will probably still be modest compared to average, maybe 500-600 sq.ft. per person. This will reset PITI to around 15-18% gross to start. (next 15 years)

Then after the kids graduate college we will enter stage 3 and probably sell the house and buy a modest retirement property. I expect that we will be able to sell and use net proceeds to buy a smaller house in a lower cost area. PITI will drop to a very low %. (remaining years)

I used to be all gung-ho about aggressively paying down the mortgage, but with this plan in mind I think I will just get a 30yr for the second house and only pay the fixed payment, and just pay it off when we sell to downsize.

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by CyclingDuo » Tue Apr 23, 2019 11:29 am

jharkin wrote:
Tue Apr 23, 2019 10:27 am
Well I'm not in my 50s yet, but I will chime in on what we are planning to do in the future when we get to your situation - downsize right at retirement.

The way I see it, our hosing lifestyle will follow a bell curve. When we first got married in our early 30s we bought what we could reasonably afford on one income expecting children, but that was pretty small... so we now in our early 40s find ourselves with 4 people sharing one bathroom and only 350sq.ft. per person. Over time as income grew the PITI has fallen to less than 10% of gross income. (first 10 years)

Stage 2 starts now when we will move up to what for us seems big, but will probably still be modest compared to average, maybe 500-600 sq.ft. per person. This will reset PITI to around 15-18% gross to start. (next 15 years)

Then after the kids graduate college we will enter stage 3 and probably sell the house and buy a modest retirement property. I expect that we will be able to sell and use net proceeds to buy a smaller house in a lower cost area. PITI will drop to a very low %. (remaining years)

I used to be all gung-ho about aggressively paying down the mortgage, but with this plan in mind I think I will just get a 30yr for the second house and only pay the fixed payment, and just pay it off when we sell to downsize.
Good post!

Since I have the morning off from work, I've spent the morning reading articles and blogs on upsizing, downsizing, right sizing, aging in place, and on and on. It's all very interesting.

Read this one as well from trends back in 2014 about my demographic (Baby Boomers):

https://www.washingtonpost.com/news/get ... eb65fdadcf

Surprised to see in that linked article that 46% of Baby Boomers actually wanted to upsize. That might be what we have been seeing in our little neighborhood over the past 18 months with 5 of the recent home purchases near us coming from retired Baby Boomers. We may just have to fire up the grill and fire pit and have nightly social hour. :beer

There are way too many variables for each individual situation, but suffice it to say the discussion is now open in our minds with no rush to do anything in short order with regard to housing. Plenty of time to explore all options.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by GCD » Tue Apr 23, 2019 12:45 pm

mnnice wrote:
Tue Apr 23, 2019 8:10 am
You might have supper in the oven but it is not going to take an hour to get to the Y. :)
Actually it does take a half an hour one way to get to some specific gyms. I'm not talking low end stuff like Planet Fitness, Anytime Fitness, etc. As CD mentioned above, the hassle of changing up the equipment to your size, waiting in line for various pieces of equipment, etc. is all a time suck. Obviously this has a different impact on people depending on their preferences. Some people need an Olympic sized pool, others tennis or racquetball courts. With the bad traffic in most large urban areas, getting to a gym with your preferred set-up can be quite time consuming.

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by mnnice » Tue Apr 23, 2019 1:09 pm

GCD wrote:
Tue Apr 23, 2019 12:45 pm
mnnice wrote:
Tue Apr 23, 2019 8:10 am
You might have supper in the oven but it is not going to take an hour to get to the Y. :)
Actually it does take a half an hour one way to get to some specific gyms. I'm not talking low end stuff like Planet Fitness, Anytime Fitness, etc. As CD mentioned above, the hassle of changing up the equipment to your size, waiting in line for various pieces of equipment, etc. is all a time suck. Obviously this has a different impact on people depending on their preferences. Some people need an Olympic sized pool, others tennis or racquetball courts. With the bad traffic in most large urban areas, getting to a gym with your preferred set-up can be quite time consuming.
You probably are better off with home gym. I know CD’s zip code (it’s mine too) and “traffic”really isn’t a thing there. I personally haven’t found the issue he had with waiting for machines at the Y (same Y branch) just different fitness routines and workout times. I also know by being married to one that cyclists are nearly all gear heads at heart and like things the way they like them. :)

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by fortfun » Tue Apr 23, 2019 1:29 pm

We live in a MCOL, university town. Our house is too big, even with a family of 4. We rent the basement to a college student. Local college housing is 12k a year. If our kids go to our local university, we may just have them use the basement apartment. After that, I think we will need to continue renting it out or downsize. Due to depreciation, we pay very little taxes on the income that is generated by our basement rental. However, we will need to live in it for 2 or 5 years before selling, so that complicates things a bit.

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by Riley15 » Tue Apr 23, 2019 1:52 pm

willthrill81 wrote:
Tue Apr 23, 2019 12:22 am
For us, it simply made sense on multiple levels, financial not being the least of them, to have a small home. Ours is 3/2 with 1,200 sq. ft., and it's great for our family of three. We've had moderately big, moderate, and small, and we like small.

Smaller homes tend to result in:
1. less mortgage interest
2. less property tax
3. smaller utility bills
4. less maintenance expense
5. smaller homeowner's insurance premiums
6. less space to fill with unnecessary stuff

Once our mortgage is paid off next year, all of our housing-related expenses (i.e. taxes, insurance, maintenance, utilities) will total about 6% of our gross income. That will make saving even easier. We'll be 'super-duper-savers'. :D

Agree on the smaller side homes. We are actually also a family of three with a 3 year old and looking to buy a home now.

I haven't seen too many 3 bed, 2 bath in around 1200 sqft, unless it's 1200 sqft per level. Usually they are much larger here in the northeast. Is that a SFM or townhouse/condo?

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by willthrill81 » Tue Apr 23, 2019 2:18 pm

Riley15 wrote:
Tue Apr 23, 2019 1:52 pm
willthrill81 wrote:
Tue Apr 23, 2019 12:22 am
For us, it simply made sense on multiple levels, financial not being the least of them, to have a small home. Ours is 3/2 with 1,200 sq. ft., and it's great for our family of three. We've had moderately big, moderate, and small, and we like small.

Smaller homes tend to result in:
1. less mortgage interest
2. less property tax
3. smaller utility bills
4. less maintenance expense
5. smaller homeowner's insurance premiums
6. less space to fill with unnecessary stuff

Once our mortgage is paid off next year, all of our housing-related expenses (i.e. taxes, insurance, maintenance, utilities) will total about 6% of our gross income. That will make saving even easier. We'll be 'super-duper-savers'. :D

Agree on the smaller side homes. We are actually also a family of three with a 3 year old and looking to buy a home now.

I haven't seen too many 3 bed, 2 bath in around 1200 sqft, unless it's 1200 sqft per level. Usually they are much larger here in the northeast. Is that a SFM or townhouse/condo?
Single-family home. Most of the homes in our area are significantly larger, but some of the newer developments, such as ours, include smaller homes. Many in our neighborhood are under 2,000 sq. ft.
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by AerialWombat » Tue Apr 23, 2019 2:19 pm

Lee_WSP wrote:
Mon Apr 22, 2019 1:11 pm
Because it is simply not feasible for someone making 20k a year to be saving 29% of their income.
This is not an accurate statement. A person at this income level most certainly can save 29% (more, actually) of their income — as long as they have no debt.

Renting a room in somebody else’s house for $500-$600/mo, inclusive of utilities, is easy to find in most parts of the country (except VHCOL). Couple hundred a month for food. Bus pass or insurance/gas on cheap used car. Still at or under $1,000/mo, and they are saving 1/3 of net income.

I have been this person, and know others that still are.
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Re: Housing: "Super Savers" vs. the "Rest"...

Post by willthrill81 » Tue Apr 23, 2019 2:25 pm

AerialWombat wrote:
Tue Apr 23, 2019 2:19 pm
Lee_WSP wrote:
Mon Apr 22, 2019 1:11 pm
Because it is simply not feasible for someone making 20k a year to be saving 29% of their income.
This is not an accurate statement. A person at this income level most certainly can save 29% (more, actually) of their income — as long as they have no debt.

Renting a room in somebody else’s house for $500-$600/mo, inclusive of utilities, is easy to find in most parts of the country (except VHCOL). Couple hundred a month for food. Bus pass or insurance/gas on cheap used car. Still at or under $1,000/mo, and they are saving 1/3 of net income.

I have been this person, and know others that still are.
I agree that it's difficult but possible in some areas. I know of people who save around that percentage and don't even earn $20k annually.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by Lee_WSP » Tue Apr 23, 2019 2:29 pm

AerialWombat wrote:
Tue Apr 23, 2019 2:19 pm
Lee_WSP wrote:
Mon Apr 22, 2019 1:11 pm
Because it is simply not feasible for someone making 20k a year to be saving 29% of their income.
This is not an accurate statement. A person at this income level most certainly can save 29% (more, actually) of their income — as long as they have no debt.

Renting a room in somebody else’s house for $500-$600/mo, inclusive of utilities, is easy to find in most parts of the country (except VHCOL). Couple hundred a month for food. Bus pass or insurance/gas on cheap used car. Still at or under $1,000/mo, and they are saving 1/3 of net income.

I have been this person, and know others that still are.
I disagree as to your cost of living calculations. I'm sure it works in the least expensive parts of the country. But more importantly, your own math doesn't work out.

20k is $1,400 a month in income
subtract $1,000 a month of expenses
$400/month = 24% of gross income.

I also said feasible, not impossible. Adding any entertainment or extraneous expenses to that bare bones budget would blow it up. Most people cannot live that way for long.

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Re: Housing: "Super Savers" vs. the "Rest"...

Post by AerialWombat » Tue Apr 23, 2019 2:48 pm

[quote=Lee_WSP post_id=4509501 time=1556047751 user_id
20k is $1,400 a month in income
subtract $1,000 a month of expenses
$400/month = 24% of
I also said feasible, not impossible. Adding any entertainment or extraneous expenses to that bare bones budget would blow it up. Most people cannot live that way for long.
[/quote]

$20k divided by 12 is $1667, not $1400.

I am assuming that the person so inclined to save much of their income at this level is also inclined to eliminate all income tax on it (largely due to their saving activity).

There are millions of Americans that live on this income level their entire lives. Don’t forget that the BH crowd is most certainly not representative of most of the country.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

mariezzz
Posts: 847
Joined: Mon Oct 02, 2017 11:02 pm

Re: Housing: "Super Savers" vs. the "Rest"...

Post by mariezzz » Tue Apr 23, 2019 2:49 pm

stoptothink wrote:
Mon Apr 22, 2019 6:28 pm
sailaway wrote:
Mon Apr 22, 2019 6:16 pm
getthatmarshmallow wrote:
Mon Apr 22, 2019 12:41 pm
Approaching this from another direction: LCOL, and our housing costs are about 15% of our take-home pay. We are at the point where we "should" upgrade to a larger house. We have 2200 sq. ft., two kids. But the consideration that keeps us here is that we *like* not being house-poor, and being able to afford other things while still saving a lot, and by the time we paid off a bigger home, we'd be wanting to downsize.
It isn't like 2200 sq ft is actually small, so I don't see why you "should" upgrade.
It's 700sq. ft more than we have, with the same size family. We've even had the in-laws living with us for extended periods of time (over a year at once) and never felt we needed more space. But yes, we got "advice" from everybody when we were looking that we'd feel "cramped" and we get constant comments from friends/family/peers about how nuts we are living in a home that is worth about 1x HHI.
You deserve to be in the category "saint" .. unless you have an unfinished basement or attic & the area of those isn't included in your official square footage due to ceiling height, or unfinished status, or whatever.

In part, the weather in the area matters, or whether you have a garage that provides additional storage or functional space (workshop) or 'cave' space for kids/adults to use.

That being said, at one time (1950s, 60s, 70s), there were more than a few families in upper midwest with 6+ kids (or 8, 10, 11, 13) living in 2 bedroom ramblers of relatively small square footage (800-1000 ft sq) plus an unfinished basement, where kids slept, egress window or not. I grew up in relatively cramped quarters & survived, but can't imagine going back to that voluntarily.

Lee_WSP
Posts: 1208
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Housing: "Super Savers" vs. the "Rest"...

Post by Lee_WSP » Tue Apr 23, 2019 3:03 pm

AerialWombat wrote:
Tue Apr 23, 2019 2:48 pm

$20k divided by 12 is $1667, not $1400.
you're math is not taking taxes into account. After taxes, the person is left with $400 per month.

You also let out health and dental.

RW-Expat
Posts: 76
Joined: Sat Mar 21, 2015 3:02 pm

Re: Housing: "Super Savers" vs. the "Rest"...

Post by RW-Expat » Tue Apr 23, 2019 3:18 pm

Interesting thread, ran our numbers and it seems we are big savers but spend a bit more too, quite happy with that. Housing kept low thanks to paid off mortgage. High discretionary due to vacations, pets and eating out - which I have no plans on curtailing, in fact I'd like to increase spending on experiences!

% Category
59% Savings
25% Discretionary
7% Housing
3% Household
2% Transportation
2% Medical
1% Utilities
1% Charity/Gifts

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