House Purchase - Sanity Check On Financials

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MindTheGAAP
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House Purchase - Sanity Check On Financials

Post by MindTheGAAP » Sun Mar 25, 2018 9:43 pm

Wanted to post the likely move we’re going to make in the near future (within next quarter) and get a sanity check from the board. Sure, it’s an echo chamber a little bit but there’s some great thinkers and different perspectives.

We are about to sell our place (listing it within the next fortnight) and anticipate selling for approx $400k. We’re going to clear approx $160k+ once all fees etc are taken into account.

We are looking at houses in the $750k to $825k range (we’d happily spend less but market appears require for our mix of house and schools) - we’re in Suburban Dallas and our options are either to fork out enough for good school districts or fork out for private schools - I’d prefer the former. We have three daughters with the eldest starting Kinder this summer (she’ll be 6) with a 4 and 18-mo old rounding out the tribe. Dallas (and surrounding) has gone through a fairly well publicized boom for companies relocating here and the housing market has gone to the moon as a result. The area we are looking in is affluent and property values are fairly supported due to them being well maintained and we’d be getting 1acre or more. The area is pretty well determined and there’s a floor (sadly quite a high floor) for getting into it. The goal would be, if we spend this on a house, to be settled there through our girls going off to University or the like - if not longer.

Financials:
Cash: $70k - checking, savings, CD.
Taxable Brokerage: $15k with another $1k going in each month
Retirement: $215k currently with another $40k+ going in this year - mix of 401k, Backdoor Roths

Estimated 2018 Income: $250-275k.

We would be putting 20% down on a house and the payment (PITI) would be in the $4,800 - $5,100 range depending on final property tax and insurance numbers.

Appreciate any insight or thoughts - for or against.
Last edited by MindTheGAAP on Sun Mar 25, 2018 9:55 pm, edited 2 times in total.
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

wilked
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Re: House Purchase - Sanity Check On Financials

Post by wilked » Sun Mar 25, 2018 9:56 pm

Single income or dual?

MindTheGAAP
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Re: House Purchase - Sanity Check On Financials

Post by MindTheGAAP » Sun Mar 25, 2018 9:58 pm

wilked wrote:
Sun Mar 25, 2018 9:56 pm
Single income or dual?
Single
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

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Pajamas
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Re: House Purchase - Am I bonkers?

Post by Pajamas » Sun Mar 25, 2018 10:02 pm

$800k for a house seems way out of proportion to your other assets even if you can swing the monthly payment and the income is from both spouses working with no great risk of unemployment. The value of your current house seems much more appropriate based on the information you've provided.

Seems like staying where you are for a few years would make a huge difference in your financial situation and you might be able to get that aspirational house for a more reasonable price in the future. The market has already peaked for prime real estate in many cities. Interest rates are rising and the future of the economy looks more in doubt than it has in quite some time.

The obvious question with an answer that is not obvious is why isn't your net worth significantly higher given your relatively high income in a relatively low cost state with no state income taxes?

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ram
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Re: House Purchase - Sanity Check On Financials

Post by ram » Sun Mar 25, 2018 10:03 pm

I like to buy a house at <=3 times annual income. You qualify but barely. It assumes that the income is fairly stable.
Ram

MindTheGAAP
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Re: House Purchase - Am I bonkers?

Post by MindTheGAAP » Sun Mar 25, 2018 10:07 pm

Pajamas wrote:
Sun Mar 25, 2018 10:02 pm
$800k for a house seems way out of proportion to your other assets even if you can swing the monthly payment and the income is from both spouses working with no great risk of unemployment. The value of your current house seems much more appropriate based on the information you've provided.

Seems like staying where you are for a few years would make a huge difference in your financial situation and you might be able to get that aspirational house for a more reasonable price in the future. The market has already peaked for prime real estate in many cities. Interest rates are rising and the future of the economy looks more in doubt than it has in quite some time.

The obvious question with an answer that is not obvious is why isn't your net worth significantly higher given your relatively high income in a relatively low cost state with no state income taxes?
The reason behind the assets being not as high as would be expected is because I’ve been able to jump from around $140k three years ago to $330k last year following some promotions and employer change. Understand that thought completely
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

AZAttorney11
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Re: House Purchase - Sanity Check On Financials

Post by AZAttorney11 » Sun Mar 25, 2018 10:26 pm

No way. Overall assets are light, and you only recently started making “real money.” What about the 529 accounts for the kids? I’m guessing property taxes on a $800,000 house in Dallas or a northern suburb will run $20,000 to $25,000 a year. Don’t forget the cost of furnishing the new place.

I’d stay put another two or three years and really focus on increasing your cash on hand.

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Watty
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Re: House Purchase - Sanity Check On Financials

Post by Watty » Sun Mar 25, 2018 10:53 pm

MindTheGAAP wrote:
Sun Mar 25, 2018 9:43 pm
Estimated 2018 Income: $250-275k.

We would be putting 20% down on a house and the payment (PITI) would be in the $4,800 - $5,100 range depending on final property tax and insurance numbers.
At $5,000 a month that would be $60K a year so you can afford the cash flow but you will likely also need to budget a lot for the extra costs of having a larger home with a huge yard.

As was mentioned you could use more cash reserves and your income has increased a lot recently. A big question is how secure your job is. If you are something like a doctor that is real stable that is fine. If you are in a position like sales where a recession could hurt your income then that is a problem. There is also a lot in between where you could be in a position where a management reorganization could put your job in jeopardy.

At the very least you will need to make sure that you have lots of disability and life insurance. You also need lots of life insurance on the stay at home spouse since if something happened to them your expenses would soar.
MindTheGAAP wrote:
Sun Mar 25, 2018 10:07 pm
The reason behind the assets being not as high as would be expected is because I’ve been able to jump from around $140k three years ago to $330k last year following some promotions and employer change.
The two big questions are;

1) Have you had much lifestyle creep?

2) How stable is your job?

If those are OK then the house might be a bit of a stretch but if you are willing to limit your other spending for the next few years you should do fine.

Depending on what field you are in you may not be able to depend on having a high income for the next 30 years. It would be good to really focus on living well below your means and quickly building up your net worth. I never worked on that level but I have seen a number of executives do really well for a few years only to have their careers derail and leave them scrambling for any sort of job. There are all sorts of pros and cons but you might consider trying to get the house paid off by the time your first kid starts college. That would free up a lot of cash flow which would help since you might end up with three kids in college at the same time.

Sandi_k
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Re: House Purchase - Sanity Check On Financials

Post by Sandi_k » Sun Mar 25, 2018 11:44 pm

AZAttorney11 wrote:
Sun Mar 25, 2018 10:26 pm
No way. Overall assets are light, and you only recently started making “real money.” What about the 529 accounts for the kids? I’m guessing property taxes on a $800,000 house in Dallas or a northern suburb will run $20,000 to $25,000 a year. Don’t forget the cost of furnishing the new place.

I’d stay put another two or three years and really focus on increasing your cash on hand.
I agree with this. Your thinking about savings is "well, I've only had the high-paying job for a couple of years!" But then that means you're moving to lock it up in housing payments and property tax almost immediately, which will make aggressive savings (which you've delayed) even harder to achieve.

I'd say wait three years, and max all accounts + $12k after tax as planned each year. Then before your oldest goes to a new 4th grade, move then. Your youngest will be in Kindergarten, the middle kid in 1st or 2nd grade, and then you'll be set. It will also give you time to keep an eye out for a bargain, should one occur.

MindTheGAAP
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Re: House Purchase - Sanity Check On Financials

Post by MindTheGAAP » Sun Mar 25, 2018 11:53 pm

Sandi_k wrote:
Sun Mar 25, 2018 11:44 pm

I agree with this. Your thinking about savings is "well, I've only had the high-paying job for a couple of years!" But then that means you're moving to lock it up in housing payments and property tax almost immediately, which will make aggressive savings (which you've delayed) even harder to achieve.

I'd say wait three years, and max all accounts + $12k after tax as planned each year. Then before your oldest goes to a new 4th grade, move then. Your youngest will be in Kindergarten, the middle kid in 1st or 2nd grade, and then you'll be set. It will also give you time to keep an eye out for a bargain, should one occur.
Not so sure I’m “delayed” on savings since I’m not quite 30 yet. Property taxes would be $14-18k a year.

As for waiting to move, we’ll pretty much either move this summer before Kinder or remodel our current house with an addition and new kitchen to make it work for us. My wife moved a lot during her childhood and has no intent to inflict that on our kids (moving schools often didn’t give the missus warm fuzzies) so we want to try to stick it out throughout their schooling in same schools. Current house and target area are in different districts.
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

Sandi_k
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Re: House Purchase - Sanity Check On Financials

Post by Sandi_k » Mon Mar 26, 2018 12:10 am

Regardless, you get ahead by living below your means - not maxing out a house purchase the minute you qualify. You're 30 (younger than I thought, so that's a plus), but you still are encumbering your income to a ridiculous level with very little in general, non-retirement savings to back you up should illness, disability, or other catastrophe occur.

Wait 2-3 years. Really.

Archimedes
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Re: House Purchase - Sanity Check On Financials

Post by Archimedes » Mon Mar 26, 2018 3:19 am

It’s a bit of a stretch for you. It is great to get into the “forever house” at your stage of life. You could potentially stay there for 20 years and raise your family there.

If your income is rock stable and growing, and your marriage is rock stable, then the purchase is fine. If the income is not so stable and growing, you could be precariously overextended.

We stretched a bit into the forever house in 1991,at your stage in life, with a 20% down payment. It worked out beautifully due to an appreciating house in a top school district in an area with a strong economy, with a stable marriage and growing, stable household income.

If those “ifs” are in the plus column you can make this somewhat risky move. Otherwise not a good idea.

gotester2000
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Re: House Purchase - Sanity Check On Financials

Post by gotester2000 » Mon Mar 26, 2018 5:15 am

OP,

What are your expenses after adding housing - seems like the house will eat 90k - 100k/yr ?

What is stability of earning 250 - 275k/yr?

I would buy something in 500k range with your current stats unless you can throw more numbers. Why do you need a 1 acre lot?

MindTheGAAP
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Re: House Purchase - Sanity Check On Financials

Post by MindTheGAAP » Mon Mar 26, 2018 6:32 am

gotester2000 wrote:
Mon Mar 26, 2018 5:15 am
OP,

What are your expenses after adding housing - seems like the house will eat 90k - 100k/yr ?

What is stability of earning 250 - 275k/yr?

I would buy something in 500k range with your current stats unless you can throw more numbers. Why do you need a 1 acre lot?
I would need to consult YNAB instance for that but can - we don’t typically spend a lot on a recurring basis.

Stability is reasonable at this moment in time. Also had job offers for similar recently.

Less on the “need” 1 acre lot but more is that you don’t find lots less than an acre. Some are multiple. Septic and not mains sewage has been used throughout that area.
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

Frisco Kid
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Re: House Purchase - Sanity Check On Financials

Post by Frisco Kid » Mon Mar 26, 2018 7:10 am

OP is under 30, single income with 3 kids and recently had a large salary increase. Proposed home borders on being affordable but feel OP is pushing a bit too hard. Regarding this being a forever home, I don't believe at a young age it is possible to even identify your forever home. Life happens and things change. OP mentioned a remodel in their future if they stay put, can't imagine that with 3 young kids. If you are determined to do one OR the other if the new home is move in ready/turnkey and you believe your employment is secure go for the new house but realize lifestyle creep could bury your finances in short order. This is a classic situation where a younger person may proceed with the new home purchase whereas an older person with more life experience would likely suggest staying put.

gotester2000
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Re: House Purchase - Sanity Check On Financials

Post by gotester2000 » Mon Mar 26, 2018 7:37 am

MindTheGAAP wrote:
Mon Mar 26, 2018 6:32 am
gotester2000 wrote:
Mon Mar 26, 2018 5:15 am
OP,

What are your expenses after adding housing - seems like the house will eat 90k - 100k/yr ?

What is stability of earning 250 - 275k/yr?

I would buy something in 500k range with your current stats unless you can throw more numbers. Why do you need a 1 acre lot?
I would need to consult YNAB instance for that but can - we don’t typically spend a lot on a recurring basis.

Stability is reasonable at this moment in time. Also had job offers for similar recently.

Less on the “need” 1 acre lot but more is that you don’t find lots less than an acre. Some are multiple. Septic and not mains sewage has been used throughout that area.
No doubt the house would give great joy.

My feeling is the house wont allow you to save much. You would need to be employed and earning well for the next 30 years. You maybe making this decision at the time of peak earning and health - the risk ratio is high - your current net worth is about 300k + home equity.

Consider these factors before taking the plunge - you could wait some time to think and make the decision.

drake19
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Re: House Purchase - Sanity Check On Financials

Post by drake19 » Mon Mar 26, 2018 7:46 am

I think you've been given good advice to wait a few years and build savings. With a SAH spouse especially, I'd be more conservative. I live in a HCOL area so I am not against stretching your housing budget, but I agree with others, that you are young to be moving into your "dream home".

Some things to consider before you make a final decision. Make sure you and your spouse have plenty of life insurance (you need a ton with three young kids, high expenses vs. lower savings, and a SAH spouse), you have disability insurance, you are putting money towards college, budgeting for more expensive repair/lawn care/decorating costs, charity (PTO, church, etc.), vacations, and then finally, kids only get more expensive.

Believe it or not, your kids are super cheap right now. You are looking at years of tutoring, travel sports, camps, school/church field trips, college, etc., and the more affluent the area, the more expensive these things are (not to mention there are just more opportunities). Having a SAH spouse does not really save you money on any of this stuff once your kids are school age.

I think you are doing a great job of saving. I am 20+ years ahead of you with kids entering high school. We were conservative with our housing budget and have never regretted it for a second.

stan1
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Re: House Purchase - Sanity Check On Financials

Post by stan1 » Mon Mar 26, 2018 8:18 am

Cost of private schools for 3 kids would be very high so a good school district is important if you can stay the course on that choice. Watch out for the commute time for your current job and where a future employer might be located (since you mentioned septic tanks and DFW metroplex covers 13 counties over 9000 square miles).

I think you can do it if you want, but I'd be absolutely certain my family wouldn't be equally happy in a smaller house in an area with good schools and a short commute.

3funder
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Re: House Purchase - Sanity Check On Financials

Post by 3funder » Mon Mar 26, 2018 8:45 am

I don't think I'd go for it; however, I disagree that you are "behind" with your savings, especially given that you are a single income household. I'm 33, and I didn't have anywhere in the ballpark of $215,000 when I was 30. In fact, my personal retirement savings balance is $120,000 right now (my wife's is twice that, but shes' 37).

chevca
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Re: House Purchase - Sanity Check On Financials

Post by chevca » Mon Mar 26, 2018 8:57 am

I agree with others that this would be pushing it to the edge of affordability for the OP. But, they can probably pull it off and as long as employment is stable and assuming income will increase, things will get easier money wise. If the new home and area would really be perfect for the family, it could be worth the risk. IMO

DCChak
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Re: House Purchase - Sanity Check On Financials

Post by DCChak » Mon Mar 26, 2018 9:16 am

Lots of good advice above. Predicted stability of income, or likelihood of potential growth, is an important consideration.

I'm a little puzzled at the sticker price. OP says he is in Suburban Dallas, but then also says he is only finding houses over $750k+ w/one acre suitable.
I didn't think housing prices escalated that high in Dallas just yet. For a long time, Dallas housing prices stayed relatively flat while prices on the coasts climbed.

After doing a little Zillowing, I found that, indeed, within city limits in the North of Dallas, there are some 4 BR, 3k sqft houses, with limited lots running around $3/4 million. Those houses are in the DISD, and appear to be zoned to Hillcrest, with a Great Schools ranking of 3, so I doubt that is an option for OP. Looking in Richardson and Plano, however, there seem to be several reasonable family housing options in the $400-600k range, that appear to feed the Plano East HS, which gets a Great Schools ranking of 8, or Plano Senior, with a 9 ranking, which seems more acceptable. Are you moving from this area?

All of this leads me to believe that the 1 acre lot must be a big driver in your selling/purchasing decision. Is that right? What's not apparent to me at this stage is why that might be. Or are there other key drivers that you wish to share?

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Pajamas
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Re: House Purchase - Sanity Check On Financials

Post by Pajamas » Mon Mar 26, 2018 9:27 am

stan1 wrote:
Mon Mar 26, 2018 8:18 am

I think you can do it if you want, but I'd be absolutely certain my family wouldn't be equally happy in a smaller house in an area with good schools and a short commute.
That is my thought as well, with the additional information regarding one spouse working and the current level of income being recent. Based on all off the off-topic comments on various threads on Bogleheads encouraging people to move to Texas because housing is so inexpensive, I find it hard to believe that it isn't possible to find a suitable house for a family of five in a good school district in the DFW area for significantly less than $800k.

Looking at houses in that price range in that area on real estate websites leads me to believe that it would probably be a bloated McMansion, expensive to cool during the summer and incurring significant expenses for upkeep, not just for the house, but for the swanky lifestyle that goes with it. The biggest potential problem with this is that the three children will incorporate warped perspectives and values growing up in such a place. Is there a "Real Housewives of Dallas" television series? Like that.

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Watty
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Re: House Purchase - Sanity Check On Financials

Post by Watty » Mon Mar 26, 2018 9:32 am

DCChak wrote:
Mon Mar 26, 2018 9:16 am
Predicted stability of income, or likelihood of potential growth, is an important consideration.
+1

If he or she is a doctor that just started making more money that is one thing but given the OP's username of MindTheGAAP I would assume that he or she is some sort of accountant which might not be as stable.

It they work for one of the accounting big firms they could be in a "Move up or out" situation where they could be in a bind if they don't make the leap to to the next level.

MindTheGAAP
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Re: House Purchase - Sanity Check On Financials

Post by MindTheGAAP » Mon Mar 26, 2018 9:33 am

DCChak wrote:
Mon Mar 26, 2018 9:16 am
Lots of good advice above. Predicted stability of income, or likelihood of potential growth, is an important consideration.

I'm a little puzzled at the sticker price. OP says he is in Suburban Dallas, but then also says he is only finding houses over $750k+ w/one acre suitable.
I didn't think housing prices escalated that high in Dallas just yet. For a long time, Dallas housing prices stayed relatively flat while prices on the coasts climbed.

After doing a little Zillowing, I found that, indeed, within city limits in the North of Dallas, there are some 4 BR, 3k sqft houses, with limited lots running around $3/4 million. Those houses are in the DISD, and appear to be zoned to Hillcrest, with a Great Schools ranking of 3, so I doubt that is an option for OP. Looking in Richardson and Plano, however, there seem to be several reasonable family housing options in the $400-600k range, that appear to feed the Plano East HS, which gets a Great Schools ranking of 8, or Plano Senior, with a 9 ranking, which seems more acceptable. Are you moving from this area?

All of this leads me to believe that the 1 acre lot must be a big driver in your selling/purchasing decision. Is that right? What's not apparent to me at this stage is why that might be. Or are there other key drivers that you wish to share?
We'd be moving from Allen (great rating on paper) to Lovejoy ISD (looking in Fairview/Lucas). My wife is a former teacher is fairly precise about the schools she likes and we both have concerns about AHS and the sheer size of it (it's bigger than many smaller Universities). Lovejoy has great schools and is much smaller - but obviously comes at a price. The acre isn't the draw (though a positive) but more of a requirement for the most part if we want to be in the ISD.

And yes - thanks to Toyota and co, the curve for house prices here has gotten steep over the last few years. Something like a 47% pop since 2014.
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

Nate79
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Re: House Purchase - Sanity Check On Financials

Post by Nate79 » Mon Mar 26, 2018 9:52 am

Dave Ramsey type advice (which is conservative):
Are you debt free except your current home?
Can you buy the new home on a 15 year fixed where it is no more than 1/4th of your take home pay while still saving for retirement and maintaining 3-6 months of emergency fund?

Cyp011
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Re: House Purchase - Sanity Check On Financials

Post by Cyp011 » Mon Mar 26, 2018 3:44 pm

Seems expensive given single income and your wife being an ex-teacher. In the event things go south you would be pretty limited financially.

MindTheGAAP
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Re: House Purchase - Sanity Check On Financials

Post by MindTheGAAP » Mon Mar 26, 2018 4:40 pm

Let me just add that the goal isn't to spend that much. We have both agreed that something in the $600k-650k ballpark would be much more comfortable and allow us to save more significantly on an ongoing basis. Hell, if we could find something in the area that we're looking for $500k that we could update as we go but had enough space (for people, not acreage) then we'd be fine with that. We'd even considered buying a piece of land and sticking a couple of tiny houses on it as a make shift for the time being so we are definitely not trying to spend $800k. It would be FABULOUS if we came in well, well below that. This isn't a "let's find our dream home because we're impatient millennials" but more just trying to evaluate our best option going forward for long-term.
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

lvrpl
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Re: House Purchase - Sanity Check On Financials

Post by lvrpl » Mon Mar 26, 2018 5:26 pm

I am a little surprised with the majority saying this can't be afforded. It certainly is pushing it, but OP is still talking about a mortgage that would be ~2.5x his gross income. I realize many here like that number to be closer to 2.0x income, but this isn't that crazy, is it?

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Re: House Purchase - Sanity Check On Financials

Post by Pajamas » Mon Mar 26, 2018 5:53 pm

lvrpl wrote:
Mon Mar 26, 2018 5:26 pm
I am a little surprised with the majority saying this can't be afforded. It certainly is pushing it, but OP is still talking about a mortgage that would be ~2.5x his gross income. I realize many here like that number to be closer to 2.0x income, but this isn't that crazy, is it?
It's not the mortgage vs. income so much as value of house vs. net worth.

lvrpl
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Re: House Purchase - Sanity Check On Financials

Post by lvrpl » Mon Mar 26, 2018 8:13 pm

Pajamas wrote:
Mon Mar 26, 2018 5:53 pm
lvrpl wrote:
Mon Mar 26, 2018 5:26 pm
I am a little surprised with the majority saying this can't be afforded. It certainly is pushing it, but OP is still talking about a mortgage that would be ~2.5x his gross income. I realize many here like that number to be closer to 2.0x income, but this isn't that crazy, is it?
It's not the mortgage vs. income so much as value of house vs. net worth.
But really, why should that matter much? If the OP's net worth was $400k vs what it is now, would that make the answer different? I guess I'm just thinking that if he can afford the mortgage from a monthly perspective and overall debt load perspective, isn't the primary relevant fact whether the income is relatively stable?

wilked
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Re: House Purchase - Sanity Check On Financials

Post by wilked » Mon Mar 26, 2018 8:27 pm

lvrpl wrote:
Mon Mar 26, 2018 8:13 pm
Pajamas wrote:
Mon Mar 26, 2018 5:53 pm
lvrpl wrote:
Mon Mar 26, 2018 5:26 pm
I am a little surprised with the majority saying this can't be afforded. It certainly is pushing it, but OP is still talking about a mortgage that would be ~2.5x his gross income. I realize many here like that number to be closer to 2.0x income, but this isn't that crazy, is it?
It's not the mortgage vs. income so much as value of house vs. net worth.
But really, why should that matter much? If the OP's net worth was $400k vs what it is now, would that make the answer different? I guess I'm just thinking that if he can afford the mortgage from a monthly perspective and overall debt load perspective, isn't the primary relevant fact whether the income is relatively stable?
It makes a huge difference

OP needs to play a little “catch up” on his/her retirement savings. Hard to do that when 1/3 of your take home goes to PITI

Alternatively, if he/she had a higher jump on retirement savings it becomes less critical to max retirement funds, and easier to allocate $$ to PITI

AZAttorney11
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Re: House Purchase - Sanity Check On Financials

Post by AZAttorney11 » Mon Mar 26, 2018 8:57 pm

wilked wrote:
Mon Mar 26, 2018 8:27 pm
lvrpl wrote:
Mon Mar 26, 2018 8:13 pm
Pajamas wrote:
Mon Mar 26, 2018 5:53 pm
lvrpl wrote:
Mon Mar 26, 2018 5:26 pm
I am a little surprised with the majority saying this can't be afforded. It certainly is pushing it, but OP is still talking about a mortgage that would be ~2.5x his gross income. I realize many here like that number to be closer to 2.0x income, but this isn't that crazy, is it?
It's not the mortgage vs. income so much as value of house vs. net worth.
But really, why should that matter much? If the OP's net worth was $400k vs what it is now, would that make the answer different? I guess I'm just thinking that if he can afford the mortgage from a monthly perspective and overall debt load perspective, isn't the primary relevant fact whether the income is relatively stable?
It makes a huge difference

OP needs to play a little “catch up” on his/her retirement savings. Hard to do that when 1/3 of your take home goes to PITI

Alternatively, if he/she had a higher jump on retirement savings it becomes less critical to max retirement funds, and easier to allocate $$ to PITI
Agreed. And still no mention of the 529 accounts. Not sure how OP is going to pay for college for three kids (assuming he is going to pay). After all, school choice is very important to OP and his spouse is a teacher, so college almost certainly is going to be a thing for his kids. Perhaps his spouse will return to work and they'll dedicate that income to cash flowing college, or perhaps there are wealthy grandparents in the picture. OP is projecting 2018 income as $250k to $275k (I think he edited his original post, I believe the income for 2017 was $300k+). While it may be mathematically okay to buy a $700,000 or $800,000 house with that income, I don't think it is prudent.

ny_knicks
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Re: House Purchase - Sanity Check On Financials

Post by ny_knicks » Mon Mar 26, 2018 11:01 pm

OP is at $215K+ in retirement before the age of 30 and needs to play catchup? Only on this forum...

Don't think it has anything to do w/ ability to afford it or need to catch up on retirement savings.

I think it has everything to do with the job. Here is what gives me pause:
-1 income is more of a risk than 2 especially with a bunch of kids to support
-That 1 income recently increased significantly. Why? Did you become that much more valuable to an employer overnight? Crush performance? Acquire a new skill? Come off training? I would want to know a lot more about this new job and how stable it was before saying this is affordable. Because even if you dropped down into the $180k range which would still be a sizable bump on your previous salary you wouldn't be able to afford the home.

Everyone thinks their salary will stay the same or go up. Reality is high paying jobs are hard to come by and even harder to keep. Especially if you're in corporate America.

MindTheGAAP
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Re: House Purchase - Sanity Check On Financials

Post by MindTheGAAP » Mon Mar 26, 2018 11:27 pm

AZAttorney11 wrote:
Mon Mar 26, 2018 8:57 pm
wilked wrote:
Mon Mar 26, 2018 8:27 pm
lvrpl wrote:
Mon Mar 26, 2018 8:13 pm
Pajamas wrote:
Mon Mar 26, 2018 5:53 pm
lvrpl wrote:
Mon Mar 26, 2018 5:26 pm
I am a little surprised with the majority saying this can't be afforded. It certainly is pushing it, but OP is still talking about a mortgage that would be ~2.5x his gross income. I realize many here like that number to be closer to 2.0x income, but this isn't that crazy, is it?
It's not the mortgage vs. income so much as value of house vs. net worth.
But really, why should that matter much? If the OP's net worth was $400k vs what it is now, would that make the answer different? I guess I'm just thinking that if he can afford the mortgage from a monthly perspective and overall debt load perspective, isn't the primary relevant fact whether the income is relatively stable?
It makes a huge difference

OP needs to play a little “catch up” on his/her retirement savings. Hard to do that when 1/3 of your take home goes to PITI

Alternatively, if he/she had a higher jump on retirement savings it becomes less critical to max retirement funds, and easier to allocate $$ to PITI
Agreed. And still no mention of the 529 accounts. Not sure how OP is going to pay for college for three kids (assuming he is going to pay). After all, school choice is very important to OP and his spouse is a teacher, so college almost certainly is going to be a thing for his kids. Perhaps his spouse will return to work and they'll dedicate that income to cash flowing college, or perhaps there are wealthy grandparents in the picture. OP is projecting 2018 income as $250k to $275k (I think he edited his original post, I believe the income for 2017 was $300k+). While it may be mathematically okay to buy a $700,000 or $800,000 house with that income, I don't think it is prudent.
So on the 529 accounts - we have chosen to, at least at the moment, replace 529 plans with brokerage account to save so that the money can be used for whatever (education related - it was before the change in 529 plan use). I grew up in England and came here for University and my wife had multiple full-ride offers (brains). I am all-for alternative style further education if it fits the kid - vocational stuff is a much better option for many and would encourage it with my kids.

Income for 2017 was in excess of $300k in 2017 but I'm not including any bonuses or anything in the forecast for 2018 to be conservative. A client issued me approx. $45k in RSUs last year as a way for them to raise my rates on the project I was working for them. Income is fairly stable - it is partly the hours I work, partly the clients I bring in, and part just how the Company I assisted start-up is doing (growing, etc.).

Come on guys - are we really saying at 30, when I crossed from $140k to a higher salary last year that $200k is just so painfully low in terms of retirement savings? Feels like that's just kind of bonkers when you take a step back. Could I have saved more? Sure. But I've also been the sole income source for 6 years with 3 kids. Feels slightly unrealistic.
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

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Watty
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Re: House Purchase - Sanity Check On Financials

Post by Watty » Mon Mar 26, 2018 11:53 pm

MindTheGAAP wrote:
Mon Mar 26, 2018 11:27 pm
Income is fairly stable - it is partly the hours I work, partly the clients I bring in, and part just how the Company I assisted start-up is doing (growing, etc.).
I think the big concern is that from what you said your income has not been stable and has more than doubled over the last three years.

MindTheGAAP
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Re: House Purchase - Sanity Check On Financials

Post by MindTheGAAP » Tue Mar 27, 2018 12:14 am

Watty wrote:
Mon Mar 26, 2018 11:53 pm
MindTheGAAP wrote:
Mon Mar 26, 2018 11:27 pm
Income is fairly stable - it is partly the hours I work, partly the clients I bring in, and part just how the Company I assisted start-up is doing (growing, etc.).
I think the big concern is that from what you said your income has not been stable and has more than doubled over the last three years.
New more senior position at the firm I’m at with equity stake is the reason for it. It had also doubled the year before. I’ve gone from $49,500 in 2010 to >$300 last year.
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

gotester2000
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Re: House Purchase - Sanity Check On Financials

Post by gotester2000 » Tue Mar 27, 2018 2:04 am

MindTheGAAP wrote:
Mon Mar 26, 2018 11:27 pm
AZAttorney11 wrote:
Mon Mar 26, 2018 8:57 pm
wilked wrote:
Mon Mar 26, 2018 8:27 pm
lvrpl wrote:
Mon Mar 26, 2018 8:13 pm
Pajamas wrote:
Mon Mar 26, 2018 5:53 pm


It's not the mortgage vs. income so much as value of house vs. net worth.
But really, why should that matter much? If the OP's net worth was $400k vs what it is now, would that make the answer different? I guess I'm just thinking that if he can afford the mortgage from a monthly perspective and overall debt load perspective, isn't the primary relevant fact whether the income is relatively stable?
It makes a huge difference

OP needs to play a little “catch up” on his/her retirement savings. Hard to do that when 1/3 of your take home goes to PITI

Alternatively, if he/she had a higher jump on retirement savings it becomes less critical to max retirement funds, and easier to allocate $$ to PITI
Agreed. And still no mention of the 529 accounts. Not sure how OP is going to pay for college for three kids (assuming he is going to pay). After all, school choice is very important to OP and his spouse is a teacher, so college almost certainly is going to be a thing for his kids. Perhaps his spouse will return to work and they'll dedicate that income to cash flowing college, or perhaps there are wealthy grandparents in the picture. OP is projecting 2018 income as $250k to $275k (I think he edited his original post, I believe the income for 2017 was $300k+). While it may be mathematically okay to buy a $700,000 or $800,000 house with that income, I don't think it is prudent.
Come on guys - are we really saying at 30, when I crossed from $140k to a higher salary last year that $200k is just so painfully low in terms of retirement savings? Feels like that's just kind of bonkers when you take a step back. Could I have saved more? Sure. But I've also been the sole income source for 6 years with 3 kids. Feels slightly unrealistic.
Risk is person specific - I think here are the risks as most of us see -

1. You are not transparent about your job profile making people suspect that the high income is recent and may not be sustainable.
2. The big house and associated lifestyle will not allow you to save much for retirement - that is why you should have higher in retirement savings now.
3. Single income with 3 kids - lot of funds needed for children including education.
4. You will need high income for a long time.

In Klangfool terminology you will be house poor.

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Watty
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Re: House Purchase - Sanity Check On Financials

Post by Watty » Tue Mar 27, 2018 8:06 am

From your original post.
MindTheGAAP wrote:
Sun Mar 25, 2018 9:43 pm
Wanted to post the likely move we’re going to make in the near future (within next quarter) and get a sanity check from the board.
I think that a number of opinions sort of said that buying an $800K house is stretch in your situation and at the upper limits of what is reasonable. Doing that right after your salary increased a lot is pretty risky since you would be taking out a 30 year mortgage depending on the high income continuing.

I don't see a big need to buy it now. You will only have one kid in kindergarten this year so waiting a year to buy the big house would not be a big hardship.

You mentioned the possibility of doing extensive remodeling to your current house but that would take the better part of a year to plan and do so I would take that option off the table since that would take about as long as waiting a year to buy your dream home next year. You would also need to figure out where to live while the remodeling was being done.

One option that has not been mentioned is to rent a nicer house for a year in the school district you want to live in so you might consider that.

Your level of retirement savings is important but what would concern me is more is how much you would have in your taxable account and emergency fund if you buy the home now. With one income and three kids you really need an ample emergency fund. If you might have more kids you also need to consider that there is a risk of a complicated pregnancy or that you could have a special needs kid and either of those could not only be expensive but could limit how much time you could spend at work, or travel for work, which could impact your income.

One thing to look at is how much income your disability insurance would cover since it might not cover a lot of your bonuses and incentive income.

As far as the "sanity check", I think that there are lots of ways that buying the house could work out OK so it is not a totally crazy idea, but it is a lot riskier than you may realize.

PhilosophyAndrew
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Re: House Purchase - Sanity Check On Financials

Post by PhilosophyAndrew » Tue Mar 27, 2018 8:33 am

Can you say more about why you want to move, and about the feasibility of waiting a couple of years before moving or remodeling your current home? I understand that you want to move, but is there any urgency in doing so now? As others have suggested living with the status quo would allow you to build up your net worth; this would have many significant benefits, including helping to mitigating the risk of job loss on your single-income family.

You have saved a good amount for your age and have managed your career effectively, so you have much going for you financially. You also were wise to ask for external assessment as opposed simply to talking yourself into enjoying a large lifestyle upgrade that requires assuming such a large debt.

Is it insane for you take on this debt? No. Is it prudent to do so? No, because the risk of taking on this debt in the context of a single-family income could endanger the successes your family has worked hard to achieve. So, I agree with others who have counseled toy to move with the status quo for a few years so that you can build up your net worth to an extent that would help you manage the risk of job loss.

Good luck making this difficult decision, and best wishes for many years of continued financial success!

newbie_Mo
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Re: House Purchase - Sanity Check On Financials

Post by newbie_Mo » Tue Mar 27, 2018 8:52 am

wilked wrote:
Mon Mar 26, 2018 8:27 pm
lvrpl wrote:
Mon Mar 26, 2018 8:13 pm
Pajamas wrote:
Mon Mar 26, 2018 5:53 pm
lvrpl wrote:
Mon Mar 26, 2018 5:26 pm
I am a little surprised with the majority saying this can't be afforded. It certainly is pushing it, but OP is still talking about a mortgage that would be ~2.5x his gross income. I realize many here like that number to be closer to 2.0x income, but this isn't that crazy, is it?
It's not the mortgage vs. income so much as value of house vs. net worth.
But really, why should that matter much? If the OP's net worth was $400k vs what it is now, would that make the answer different? I guess I'm just thinking that if he can afford the mortgage from a monthly perspective and overall debt load perspective, isn't the primary relevant fact whether the income is relatively stable?
It makes a huge difference

OP needs to play a little “catch up” on his/her retirement savings. Hard to do that when 1/3 of your take home goes to PITI

Alternatively, if he/she had a higher jump on retirement savings it becomes less critical to max retirement funds, and easier to allocate $$ to PITI
Because it is easier to find a 100k job than a 250k job should he loss his current job. OP's proposed new house needs a 250k job. That's why everyone is asking his job stability.

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FlyAF
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Re: House Purchase - Sanity Check On Financials

Post by FlyAF » Tue Mar 27, 2018 9:22 am

Lived in Dallas for most of my life. No way on earth I'd spend 3/4 of a million or more to be that far out in the burbs. You're still talking about an hour or more (with traffic) to even get into Dallas. You obviously know that the housing market has gone off the rails, now is about the worst time to buy in the history of the metroplex. I was looking to upgrade my house 18 months ago and just ended up building a brand new custom home for less than you're talking about spending and I'm much closer to city center in a great school district (I don't have kids).

I play in a lot of golf tournaments at clubs in areas like what you're talking about and am always amazed at how many huge houses are being built so far out in the suburbs. All it will take is another big down turn in the economy and these places will be foreclosed on left, right, center, and be worth half of what someone paid to build them right now.

I'm also in the camp that thinks you're pretty young, with young kids, who just started making some real $$$, and has too little assets to make the move now. Give it a couple of years to see how things shake out. Its easy to reverse a decision to not buy a house, all you have to do is go buy one when ready. Its extremely difficult and costly to reverse the decision to buy an expensive house that you can "kind of" afford if something goes sideways in the near future. My vote would be to sit tight, save money, and see if you can go a little while w/o letting the lifestyle creep up to your new salary. It seems problematic to me that as soon as you start making some good money, the first impulse is to go out and spend 750+ k on a house. For those reading this that might note be familiar with the area, spending that kind of money on a middle class house in the burbs is a very recent phenomenon. No young family spent over 500k on a suburban home in recent decades, not even close.

zimmer0
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Re: House Purchase - Sanity Check On Financials

Post by zimmer0 » Tue Mar 27, 2018 11:33 am

FlyAF wrote:
Tue Mar 27, 2018 9:22 am
Lived in Dallas for most of my life. No way on earth I'd spend 3/4 of a million or more to be that far out in the burbs. You're still talking about an hour or more (with traffic) to even get into Dallas. You obviously know that the housing market has gone off the rails, now is about the worst time to buy in the history of the metroplex. I was looking to upgrade my house 18 months ago and just ended up building a brand new custom home for less than you're talking about spending and I'm much closer to city center in a great school district (I don't have kids).

I play in a lot of golf tournaments at clubs in areas like what you're talking about and am always amazed at how many huge houses are being built so far out in the suburbs. All it will take is another big down turn in the economy and these places will be foreclosed on left, right, center, and be worth half of what someone paid to build them right now.

I'm also in the camp that thinks you're pretty young, with young kids, who just started making some real $$$, and has too little assets to make the move now. Give it a couple of years to see how things shake out. Its easy to reverse a decision to not buy a house, all you have to do is go buy one when ready. Its extremely difficult and costly to reverse the decision to buy an expensive house that you can "kind of" afford if something goes sideways in the near future. My vote would be to sit tight, save money, and see if you can go a little while w/o letting the lifestyle creep up to your new salary. It seems problematic to me that as soon as you start making some good money, the first impulse is to go out and spend 750+ k on a house. For those reading this that might note be familiar with the area, spending that kind of money on a middle class house in the burbs is a very recent phenomenon. No young family spent over 500k on a suburban home in recent decades, not even close.
Is the metroplex now in its new "norm"? Big corps moved in, exploded the real estate market and economy in general. Being new to the metroplex and not nearly at the income level as OP i would be weary of getting into a home of that caliber on such a green income level. Even dropping down 200k in price point can still get a nice property in a desirable district, no?
Ditto on bumping retirement/taxable investing while also throwing money at a down payment fund to make the new "dream home" more do-able. Additional year or two of funding for that home can make all the difference especially with some increasing expenditures as the kids age.

Isabelle77
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Re: House Purchase - Sanity Check On Financials

Post by Isabelle77 » Tue Mar 27, 2018 11:59 am

So our HHI is about the same as yours, also single income. We're about 10yrs older than you so we have more savings and quite a bit more equity in our current house that we bought for 395K in 2008. My husband is itching to upgrade our house and we would need to spend about 800-850K (with only about a quarter of Texas property taxes) to get what we would really like. We could sell our current home for around 600-650K.

When I sit down and do the math we could definitely make it work and still save the max for retirement. What starts to hurt is the number of kids' activities, summer camps, vacations, college savings, extra investments. We only have two kids and only one is on an expensive sports team.

I'm not sure if eventually we will actually break down and buy the pricier house, maybe if my husband's RSUs go way up, but every time we look at the pros and cons it never seems to be worth it.

R. ANDERSON
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Re: House Purchase - Sanity Check On Financials

Post by R. ANDERSON » Tue Mar 27, 2018 12:08 pm

Do you have enough to live on for a couple of years if you lose your job or become disabled (even with insurance)? Can you borrow money from your parents? How likely is it your employer could replace you with someone at a much lower salary or outsource your job? Could you get a replacement well-paying job in the vicinity if you had to? Or would you have to sell and relocate?

JStephens
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Re: House Purchase - Sanity Check On Financials

Post by JStephens » Tue Mar 27, 2018 12:31 pm

MindTheGAAP wrote:
Tue Mar 27, 2018 12:14 am
Watty wrote:
Mon Mar 26, 2018 11:53 pm
MindTheGAAP wrote:
Mon Mar 26, 2018 11:27 pm
Income is fairly stable - it is partly the hours I work, partly the clients I bring in, and part just how the Company I assisted start-up is doing (growing, etc.).
I think the big concern is that from what you said your income has not been stable and has more than doubled over the last three years.
New more senior position at the firm I’m at with equity stake is the reason for it. It had also doubled the year before. I’ve gone from $49,500 in 2010 to >$300 last year.
What's Plan B if things don't work out with the firm? My worry is that salary would be nearly impossible to replace in the DFW area. Also what area do you work? Because I couldn't commit myself to an hour+ commute everyday. There's also just so many homes in the DFW area for 400-500k.

lvrpl
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Re: House Purchase - Sanity Check On Financials

Post by lvrpl » Tue Mar 27, 2018 12:53 pm

Isabelle77 wrote:
Tue Mar 27, 2018 11:59 am
So our HHI is about the same as yours, also single income. We're about 10yrs older than you so we have more savings and quite a bit more equity in our current house that we bought for 395K in 2008. My husband is itching to upgrade our house and we would need to spend about 800-850K (with only about a quarter of Texas property taxes) to get what we would really like. We could sell our current home for around 600-650K.

When I sit down and do the math we could definitely make it work and still save the max for retirement. What starts to hurt is the number of kids' activities, summer camps, vacations, college savings, extra investments. We only have two kids and only one is on an expensive sports team.

I'm not sure if eventually we will actually break down and buy the pricier house, maybe if my husband's RSUs go way up, but every time we look at the pros and cons it never seems to be worth it.
I'm not at all advocating that you should buy a new house, but this really doesn't seem to make a lot of sense to me (the idea that it would really hurt if you were to upgrade your house as your husband wants to). So you've got a household income of ~$275k, and let's say your new house would have a mortgage of $500k based on the info you provided (could be even lower I would guess). And your property taxes are a quarter of those in Texas. By almost every conservative rule I've heard on these forums (mortgage under 2.0x income, payment under 28% gross and under 25% take-home), you'd be absolutely fine. Assuming you've got decent savings (and you say you've got more than OP), this shouldn't be a problem for you, I would think. (I see that in an earlier comment people responded that for the OP, it's the lack of net worth that is problematic, and I get that - but you're in a relatively better situation).

Now, I'm not saying one should do this just because they can. It's always better to spend less on housing whenever you can. But unless you want to retire in the next 10 or so years (which could be the case, of course), I'm surprised to see you say that this scenario would "hurt." What am I missing? (This is a sincere question.)

Isabelle77
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Re: House Purchase - Sanity Check On Financials

Post by Isabelle77 » Tue Mar 27, 2018 1:17 pm

lvrpl wrote:
Tue Mar 27, 2018 12:53 pm
Isabelle77 wrote:
Tue Mar 27, 2018 11:59 am
So our HHI is about the same as yours, also single income. We're about 10yrs older than you so we have more savings and quite a bit more equity in our current house that we bought for 395K in 2008. My husband is itching to upgrade our house and we would need to spend about 800-850K (with only about a quarter of Texas property taxes) to get what we would really like. We could sell our current home for around 600-650K.

When I sit down and do the math we could definitely make it work and still save the max for retirement. What starts to hurt is the number of kids' activities, summer camps, vacations, college savings, extra investments. We only have two kids and only one is on an expensive sports team.

I'm not sure if eventually we will actually break down and buy the pricier house, maybe if my husband's RSUs go way up, but every time we look at the pros and cons it never seems to be worth it.
I'm not at all advocating that you should buy a new house, but this really doesn't seem to make a lot of sense to me (the idea that it would really hurt if you were to upgrade your house as your husband wants to). So you've got a household income of ~$275k, and let's say your new house would have a mortgage of $500k based on the info you provided (could be even lower I would guess). And your property taxes are a quarter of those in Texas. By almost every conservative rule I've heard on these forums (mortgage under 2.0x income, payment under 28% gross and under 25% take-home), you'd be absolutely fine. Assuming you've got decent savings (and you say you've got more than OP), this shouldn't be a problem for you, I would think. (I see that in an earlier comment people responded that for the OP, it's the lack of net worth that is problematic, and I get that - but you're in a relatively better situation).

Now, I'm not saying one should do this just because they can. It's always better to spend less on housing whenever you can. But unless you want to retire in the next 10 or so years (which could be the case, of course), I'm surprised to see you say that this scenario would "hurt." What am I missing? (This is a sincere question.)
Sure, we're probably just more conservative than most people. Hurt is likely the wrong term. I should also say that this isn't me telling my husband that he can't have a new house, my first post sounded a little that way and it is actually him that always pulls the plug. Part of the issue of moving is also just the cost involved, we live in Washington state and have a 2% excise tax, add that into realtor fees, closing costs, moving costs, etc.

Right now we spend around 6K a year (2 kids) on overnight summer camp. We spend another 10-15K on family vacations including visiting our family on the opposite coast. Around 4K a year for our son's competitive sport including travel. About 2K for our daughter's dance team. Perhaps most importantly, we are catching up on 529s and putting in 12K a year per kid because when we were younger we didn't believe that college costs could continue to soar the way they have so we didn't save enough and now they're in middle school. We max my husband's 401k, IRAs including a SEP, and our HSA. Yes, we have decent savings and probably over-save for retirement. We've always had a 15yr mortgage and a 4K mortgage payment makes me a little faint, but so does a 30yr mortgage, I imagine that is not the case for most people. While my husband's job is pretty secure (he's been there for 10yrs) he is highly paid for his position and it would be very difficult to find a comparable one. My point to the OP is that an expensive house is doable but as your kids get older there are extras that you may want to spend on that you aren't thinking about now.

MindTheGAAP
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Re: House Purchase - Sanity Check On Financials

Post by MindTheGAAP » Tue Mar 27, 2018 1:31 pm

JStephens wrote:
Tue Mar 27, 2018 12:31 pm
MindTheGAAP wrote:
Tue Mar 27, 2018 12:14 am
Watty wrote:
Mon Mar 26, 2018 11:53 pm
MindTheGAAP wrote:
Mon Mar 26, 2018 11:27 pm
Income is fairly stable - it is partly the hours I work, partly the clients I bring in, and part just how the Company I assisted start-up is doing (growing, etc.).
I think the big concern is that from what you said your income has not been stable and has more than doubled over the last three years.
New more senior position at the firm I’m at with equity stake is the reason for it. It had also doubled the year before. I’ve gone from $49,500 in 2010 to >$300 last year.
What's Plan B if things don't work out with the firm? My worry is that salary would be nearly impossible to replace in the DFW area. Also what area do you work? Because I couldn't commit myself to an hour+ commute everyday. There's also just so many homes in the DFW area for 400-500k.
Already live in Allen so not like it would be any further than what I'm used to. Current work areas are Addison and Richardson. Client in Richardson has offered me a similar paying job to try to get me in the door there - would include some RSUs in that amount but I'd get there on money. And as I'm an equity owner in the Co., I'm not overly concerned about being replaced for a lower cost - I'm one of two owners (though minority).
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

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FlyAF
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Re: House Purchase - Sanity Check On Financials

Post by FlyAF » Tue Mar 27, 2018 1:55 pm

MindTheGAAP wrote:
Tue Mar 27, 2018 1:31 pm
Already live in Allen so not like it would be any further than what I'm used to. Current work areas are Addison and Richardson. Client in Richardson has offered me a similar paying job to try to get me in the door there - would include some RSUs in that amount but I'd get there on money. And as I'm an equity owner in the Co., I'm not overly concerned about being replaced for a lower cost - I'm one of two owners (though minority).
How long have you been doing the Allen to Addison commute? I have to think that is not a lot of fun in rush hour. Any chance you could burn out on that? I absolutely hate commuting (from my time living in LA) and when we moved back to TX, built where our commutes were less than 15 minutes and it has been one of the best things we ever did. I don't have kids or a stay at home wife, but I know myself well enough that if I was spending 2 hours a day commuting on top of being at work all day, I'd start to resent my wife as the years went by.

JStephens
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Re: House Purchase - Sanity Check On Financials

Post by JStephens » Tue Mar 27, 2018 2:02 pm

MindTheGAAP wrote:
Tue Mar 27, 2018 1:31 pm
JStephens wrote:
Tue Mar 27, 2018 12:31 pm
MindTheGAAP wrote:
Tue Mar 27, 2018 12:14 am
Watty wrote:
Mon Mar 26, 2018 11:53 pm
MindTheGAAP wrote:
Mon Mar 26, 2018 11:27 pm
Income is fairly stable - it is partly the hours I work, partly the clients I bring in, and part just how the Company I assisted start-up is doing (growing, etc.).
I think the big concern is that from what you said your income has not been stable and has more than doubled over the last three years.
New more senior position at the firm I’m at with equity stake is the reason for it. It had also doubled the year before. I’ve gone from $49,500 in 2010 to >$300 last year.
What's Plan B if things don't work out with the firm? My worry is that salary would be nearly impossible to replace in the DFW area. Also what area do you work? Because I couldn't commit myself to an hour+ commute everyday. There's also just so many homes in the DFW area for 400-500k.
Already live in Allen so not like it would be any further than what I'm used to. Current work areas are Addison and Richardson. Client in Richardson has offered me a similar paying job to try to get me in the door there - would include some RSUs in that amount but I'd get there on money. And as I'm an equity owner in the Co., I'm not overly concerned about being replaced for a lower cost - I'm one of two owners (though minority).
Sounds like you're in a good spot then. I would personally shoot for more of the Richardson/Plano area, but I'm more commute averse than you.

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