Insane to live off savings?

[Anonymous]

I have a relatively high earning job (am on a reduced hour schedule and make approx. $450K) that I'd like to potentially scale back from in 2-4 years to pivot to something with far less income potential (closer to $100K). Husband makes around $140K, stable, not likely to dramatically change. We save quite a bit now, but would need to dip into savings to cover our expenses if I took the job with less income. In particular, the major expense we have now is our house -- we bought much larger than we needed to accommodate my dad, who died 9 months ago. We'd be happy to downsize, but would want to move back into DC (in NoVA now) and given our very low interest rate (2.75%!), would need the house to be substantially cheaper so as to meaningfully reduce the mortgage payment.

So the question: insane to stay in our too-expensive house and use our savings to fund our lifestyle? We have about $1 million in retirement, $2 million in savings (basically all in index funds in brokerage accounts), $300K in 529s for our two young kids, and $500K home equity.

[Anonymous]

How much rent can you charge for your house? Where will your children go to school?

[Anonymous]

Exactly how expensive is the house monthly? Does it have a separated area you could rent out? I think 240k should be a more than liveable income, and it's not great to tie yourself to a long term lifestyle costing a lot more and paid out of savings. But maybe there are other options.

[Anonymous]

OP here. We would need $15K to come out even (mortgage, property tax, insurance, minimal upkeep) on housing if we rented. That's about our monthly cost. Oldest kid is in public elementary and is happy, younger not old enough yet for school. Grandparent have suggested covering private school as part of her estate planning strategy, so that's an option should we want/need.

[Anonymous]

I mean, yes, I think using savings to pay for a mortgage on what I'm assuming must be a huge, expensive house, while downgrading from a 590k HHI to a 240k HHI. I would never do that, especially given the otherwise incredibly secure financial position you are in.

I would suck it up and move, into a house I could afford with the 240k HHI. Given that you have 500k in home equity, I would seek to augment that with the savings you are currently thinking of spending to stay in your house, in order to find a house with a payment that would fit your new income.

My guess is either you don't want to downsize into a home at that level, and that you are hoping that if you can just squeak by in your current home, rates will eventually come down and then you can refinance or move with the new rates? I just think that's an irresponsible approach, and needless. If you want to cut your income, as the higher earner, by that much, you need to get used to the idea that it will impact your lifestyle at least a bit.

[Anonymous]

This is fine short term, but you need a long term plan.

[Anonymous]

How much do you need to pay off your mortgage?

[Anonymous]

This must be the OP https://www.dcurbanmom.com/jforum/posts/list/1196596.page

[Anonymous]

You want to cut your income from about 590k a year to about 240k a year. I don’t think you can expect to do this long term without changing your lifestyle. Your kids are young, too. You have many many years of cost ahead of you. Counting on a grandparent to indefinitely fund private school for 24 years is foolish. In my opinion? Sell your house that you agree is too large and expensive for you, and move to a house you can afford on your income, including school costs. Plenty of families live on that salary and you don’t have to save much money anymore if you don’t want to, since your savings are ok if you don’t plan on retiring early. If you don’t like what that looks like for your family, then taking a job that makes a quarter of what you make now isn’t a good plan for you.

[Anonymous]

Never mind the interest rate you are losing. This must be a castle. Why would anyone pay that much space for four people.
Move to DC, get the younger one to DCPS prk3-prk4.
Rent a lovely no upkeep safe home. Re-evaluate private school for middle school.

[Anonymous]

OP here. Definitely not that other OP -- not even sure what disconnecting direct deposit means!

It's a huge house. We needed to accommodate my dad (non-negotiable for me), finding a house with no steps was difficult, lost multiple offers, and we wanted to move before the school year so made a stressful, perhaps wrong, call. My mom still lives with us so having the additional space is not totally wasted -- but agree, bigger than we need, even with my mom who I don't expect to develop significant mobility problems, certainly not in the next 10 years.

[Anonymous]

Good God. What’s insane is the degree to which some people—apparently including you—are wedded to the idea that one should never pay off one’s house and that low-interest-rate mortgages are some kind of manna from heaven.

Essentially you’re asking, “Should I permanently live above my means so that I can keep my low-interest mortgage?” I hope others reading this realize all of the second-order effects that come from the decision not to pay off one’s house if one has the means to do so. For me personally, the day I paid off my house was one of the best days of my life and I have not regretted it for one minute.

[Anonymous]

OP, if I were you, I would downgrade my lifestyle, learn to manage in 240K income, before actually making a move to a lower income. Once you all can prove that you all can live in under 240K for atleast a year, only then let go of your job. If there are severe medical, mental health issues, then it's different

[Anonymous]

Anonymous wrote:Good God. What’s insane is the degree to which some people—apparently including you—are wedded to the idea that one should never pay off one’s house and that low-interest-rate mortgages are some kind of manna from heaven.

Essentially you’re asking, “Should I permanently live above my means so that I can keep my low-interest mortgage?” I hope others reading this realize all of the second-order effects that come from the decision not to pay off one’s house if one has the means to do so. For me personally, the day I paid off my house was one of the best days of my life and I have not regretted it for one minute.

Would it better to pay the house off? We could do that in a couple years if we depleted our savings aside from retirement/529s. But the returns aren't bad in the brokerage funds and returns on $2 million would likely easily cover the shortfall (anticipated to be about $50K based on several years of tracking spending) if I move to the $100K job. I know there's always a risk with returns, but based on historical data.

[Anonymous]

Anonymous wrote:OP, if I were you, I would downgrade my lifestyle, learn to manage in 240K income, before actually making a move to a lower income. Once you all can prove that you all can live in under 240K for atleast a year, only then let go of your job. If there are severe medical, mental health issues, then it's different

I think I'll be at a pivot point in 2-4 years (internal politics make this hard to totally pin down) where I would need either to leave or to accept a promotion. The promotion would be more money, but way more stress/work and I'm currently not feeling that ambitious. I'm open to changing my mind, especially as my kids grow, but my current plan is to pivot to more personally meaningful work.