Dialing back 401k until both kids are in PK3

[Anonymous]

FWIW, I didn't mean intentional dishonesty. Poor choice of words on my part.

How much will the house cost, and what is HHI? Just curious.

[Anonymous]

House is 705k. HHI is 265/yr.

[Anonymous]

OP, is this your other post about dialing back on 529s? HHI and ages of kids are the same. If so, this is a lot of fancy footwork to buy a house, and I wouldn't do it.

http://www.dcurbanmom.com/jforum/posts/list/472770.page

[Anonymous]

OP here. Guilty as charged - that's me.

The issue really is that we had planned to buy a house in this area for 800-825 that was fully finished. 20% down from the profits from sale of our current house, PITI $3700/month.

The reality is that the houses that should be 800-825 are selling for 860-875 in the exuberant market. We saw an opportunity for something that was only going to cost us 700 that we could "make" into that 800k house with 100k/125k in work. The real difference is whether that extra money is financed or paid out of pocket. When it's financed, it's simple.

In the instance where we buy the 825k house, we're paying 165k in cash (down payment) to get mostly what we want. In the instance where we're buying the 700k house and putting in 125k in work, we're paying $195k in cash (70k down + 125k in work) to get exactly what we want. Both get us to more or less the same point in equity, but its that additional 30k outlay that is the tricky spot.

[Anonymous]

You still haven't addressed how optional the $125k in work is, and whether you could defer it or not. That does seem rather excessive, like something is fundamentally wrong with it. But if it's really expensive cosmetic improvements, surely you can do without them for a time?

[Anonymous]

It's optional from the perspective of being livable. Not from being happy. The house isn't falling apart. We each have our own bedroom. We have a living room, a dining room, and a functional (but extremely awkward) kitchen.

1) The basement has some water intrusion prevention measures that need to be undertaken. Not optional.
2) The house has wall unit ACs. We can certainly *live* with that. But we don't want to. Central AC install is first and foremost.
3) The kitchen is totally functional, with the exception of the fact it has a portable (!) dishwasher: ie, it needs to be rolled to the sink and hooked up. In our current house, we run the dishwasher daily (if not more). While this could be truly "optional" to address, it's not really in my mind.
4) The amount of living space is limited - ie: no guest room, playroom, office, etc. Finishing either the basement or attic (eventually both) will provide that extra living space to make the house enjoyable. My thinking is that I'll finish the basement in coordination with the waterproofing.

So none of these are truly REQUIRED (save waterproofing). But I'm willing to spend the cash to make the house enjoyable for the sake of the whole family's sanity.

[Anonymous]

np. Why in such an expensive neighborhood for such a nightmare of a house? Can you look somewhere else?

[Anonymous]

In the District, your options for SFHs inbounds for a good elementary that feed to the ONLY viable middle school are few and far between. We're honestly in at the bottom of that market. The only way we could look elsewhere is to get lucky in the lottery - and that didn't happen. I can't understate what a huge financial payoff you can get from a lucky school lottery draw in DC. It's basically like winning the actual lottery.

[Anonymous]

I've lived in apartments with a roll out dishwasher and it's not a big deal. I think you should hold off on everything but the water issue and then pay as you go from what you can afford.

[Anonymous]

How many square feet are the house (one or two stories?) and lot? I'd do #1-3 but not #4.

[Anonymous]

Well, if you're dead set on having this house, I would defer the work and continue to max the 401k.

[Anonymous]

house is a better investment than 401k and you can enjoy the benefits now and in the future.

[Anonymous]

Anonymous wrote:house is a better investment than 401k and you can enjoy the benefits now and in the future.

Wait, what?

[Anonymous]

Anonymous wrote:How many square feet are the house (one or two stories?) and lot? I'd do #1-3 but not #4.

Two finished stories. Attic with fixed steps up, semi-finished. Partially (small area) finished basement with a lot of unfinished space. 1600 Sq ft. 6000 sq ft lot.

[Anonymous]

Anonymous wrote:

Anonymous wrote:How many square feet are the house (one or two stories?) and lot? I'd do #1-3 but not #4.

Two finished stories. Attic with fixed steps up, semi-finished. Partially (small area) finished basement with a lot of unfinished space. 1600 Sq ft. 6000 sq ft lot.

That house seems big enough for the time being. I have older kids and a slightly smaller house, and, for me, adding finished space would not be worth backing down on the 401k.