If your HHI is 200K, how much house would you buy?

[Anonymous]

Hello - plenty of people do public school in the District.

[Anonymous]

Anonymous wrote:Hello - plenty of people do public school in the District.

True, but I'm guessing that many DCUMers would only consider Deal and Wilson or Walls, not any of the other public middle/high schools.

[Anonymous]

Anonymous wrote:Hello - plenty of people do public school in the District.

Oh yes I know this. But I am pretty sure I can't afford to live in any of those neighborhoods.

[Anonymous]

I think saving for retirement is a big differentiator in how much mortgage you can be comfortable with. There is a big difference cash-flow wise between contributing enough to get a match and contributing the maximum allowed. And then if you are additionally saving more in an IRA, that's a lot of money. We put more money in our retirement accounts in a year than we spend on our PITI, by far. For me, I would rather live modestly and have a big retirement account than vice versa. And no, I'm not accusing those with larger mortgages of living immodestly - I understand that housing dollars do not go very far around here.

[Anonymous]

HHI is a bit lower than yours. Mortgage payment is $2415/mo. We could go higher, I'm sure of it. But I have a lot of other things I want to do, and a higher mortgage would take away from all those other things. I still have a great house with great schools and a great commute, so I don't feel like I compromised at all.

[Anonymous]

HHI is $300k, Monthly payment including PITI is $2640, we bought a 3br last fall in a close in suburb with 20% down. Obviously could have bought much bigger. Our thought was -- this gives us tons of flexibility so that we can still go on vacations, have a nanny, etc without scrimping (we were TTC, I'm now pregnant) . Plus, we save a ton. We figure we can always upgrade in 7-8 years if we really want something bigger. But we had a lot of life changes coming at us all at once and I was nervous about taking on a bigger monthly payment.

[Anonymous]

Our HHI is just over $200k. One kid in daycare. Our PITI is $2,150, but we make a $2,500 payment every month. With one kid, I think we could go as high as $3k and still feel pretty comfortable, especially once we're done with daycare. But if we had one more kid, I really wouldn't want to go higher than $2,500. I consider myself somewhat conservative and know plenty of people who are living in better/bigger houses on our income. They probably aren't going to post and get bashed here, though.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I read your article and I think a little bit of critical thinking is useful here. The article discusses someone making 40k a year saving 10% 4k a year. Your hhi is 200k a year. Do you think saving 40k a year is necessary for a reasonable retirement? Not to mention as a fed you will get a pension as well which should be significant. It can be argued housing will beat the stock market but like everything else not guaranteed. Back in 2000 the s&p was well over 1500. Dividend adjusted its 120s up about 13% since then. The housing market is up 50 to 100% since 2000. I think financial planners get paid more nased on how much is invested so I think that would be a direct conflict of interest no pun intended.
The wife and I have never had school loans so cant comment on that.

What planet are you living on? Except for Feds vested in the old civil service system, there are no defined benefit pension plans for federal government employees. Hasn't been in like 25 years.

Um, of course there is. Ever heard of FERS? Duh.[/quot

FERS is like a 401k. It has a very small defined benefit component but it is mostly a 401k. It is nothing like the old CRS pension that old Feds got. That system has not been available to any fed who started after 1983. So any college educated fed who was born after 1960 doesn't have that awesome old retirement. It is really time people stopped saying Feds have such awesome benefits. it has not been true for decades.

[Anonymous]

FERS is a 20% pension, plus allows TSP investments. 20% of my top three salary would be fabulous. I have a 0% pension.

[Anonymous]

With FERS, you get 1% for each year you work if you work a minimum of 20 years, but you do pay into this, it isn't just free money. The payment is based on your highest 3 years. You can also invest in your TSP and get up to 5% match.

[Anonymous]

HHI of just over $200k here. Two kids in daycare, no car payment. We put in the max for 401K ($16,500 each?) and that's not something we're willing to scrimp on. No student loan or other debt. Our mortgage payment is over $3,000, but we did a 15-year mortgage. But the $3,000 payment is totally do-able. House was just under $500k - small but renovated, great schools through high school. Don't feel house poor.

[Anonymous]

OP--If you're paying $2600 in rent, you could easily bump up to $3000 or more and not notice the difference if you adjust your tax withholding to account for your now much larger deductions for interest. That wouldn't even require you to tap into the amount you're currently putting into savings.

I would play around a little bit with some amortization calculators and see what kind of interest deductions you're looking at and what that means to you in terms of savings for the first few years. You may be surprised to see what the relative purchase power is compared to your rent costs. (Assuming that your assumption that your incomes will go up with time are reasonable.)

[Anonymous]

Anonymous wrote:OP--If you're paying $2600 in rent, you could easily bump up to $3000 or more and not notice the difference if you adjust your tax withholding to account for your now much larger deductions for interest. That wouldn't even require you to tap into the amount you're currently putting into savings.

I would play around a little bit with some amortization calculators and see what kind of interest deductions you're looking at and what that means to you in terms of savings for the first few years. You may be surprised to see what the relative purchase power is compared to your rent costs. (Assuming that your assumption that your incomes will go up with time are reasonable.)

But you will also need to consider the increased costs of home ownership. You will need a larger emergency fund and a larger savings account to pay for house repairs.

[Anonymous]

Really good point about the tax benefits of home ownership - between mortgage interest and property taxes, you may be able to get to a $3800/month payment that feels like $3000/month.

[Anonymous]

If $3,000 of that $3,800 was deductible interest and property taxes and you thus were able to deduct your charitable and state income taxes because you're itemizing, your total deductions might be $45,000 or so. If you are in the 28% bracket, that's a tax savings of $12,600 a year, or more than $1,000 per month.

Unless you trigger the Alternative Minimum Tax, but that's another story entirely.