Just bought an $800,000 house on a $186,000 salary and now I'm panicking....

Anonymous
Anonymous wrote:That would absolutely terrify me. Like, not even an option.

Many on this board might say I am too conservative, though. On a home worth $1.15M I owe $396,000 on a 15 year mortgage at 2.25. I'm 45 and a single mom on an income of $380,000 ~ But its sales so can always vary. Again, I'm conservative with debt and was once house poor with small kids (because ex was a moron) and I hated it.


What kind of sales?
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:We weren’t comfortable with more than a $200k house on a HHI of $100,000/yr so that would be a big no from us. But we are resisting the two income trap and live in the Midwest.


Same, we make ~$200K a year and live in the Midwest and have a remaining mortgage of $180K-ish. We continually look at new houses, but we absolutely do not want to be house poor or work forever.


So, basically, you have no idea what it's like to live in a HCOL area or how much houses cost in the DMV, but you'd like to weigh in to share your entirely irrelevant opinion why? $200K is a studio/one-bedroom condo that's a mile walk from the metro, likely with stupid high condo fees. There are no $200K houses here. But, hey, living in the Midwest is a big no from us.


Seriously, I wish the Midwestern folks would refrain from giving advice on the RE boards like it's actually feasible here. A 200K house is not an option in the DMV unless you want to have a 4 hour round trip commute. Do a search and see what 200K gets you and where.

And this isn't a case of wanting a "new" house. An 800K house around here is not a brand new, decked out McMansion. And a move to the Midwest is not an option for all of us.

OP - don't panic. You will be fine. Do you have savings? You will be able to pay your bills but will likely not be able to save much for a few years until your income goes up.

We bought an 800K house on an HHI of about 220K, with 20% down. We had no debt but did have daycare costs for two young children. We were able to make it work just fine but not able to save as much as we wanted initially, so not maxing out our 401Ks and not contributing much to the kids' 529s. This resolved in a few years with incomes going up. However, I must note we did have a cash cushion that would have gotten us through about 6 months of living expenses if both of us were to become unemployed at the same time. Still, I'm sure DCUM would have told us we were crazy.


You can buy lower cost houses, you choose not to. We spent under $400K. We could afford to upgrade but choose not to. No way I'd risk just 6 months of living expenses.


You cannot buy a SFH in DC area for 400K period.


Exactly! Where the heck are these houses that are more than 1000 square feet in the DC area that are 400k? Never seen that unicorn. I see old homes running 600k built in 1920.
Anonymous
Anonymous wrote:OP, I'm sure you'll be fine and when you look at it from a monthly income standpoint, it looks like you can make it work. However, a 710K mortgage over 30 years even at a great rate still has you paying quite a bit in interest over the life of the loan. We made the choice when buying a house to set our budget at what we could afford with a 15 year mortgage because the principal is paid down so much faster on a 15 year loan. So much of your payment is going to interest in those first 10 years on a 30 year mortgage.


That's a different point and interest rates are so low, I''ll gladly spread it over 30 years as opposed to 15.
Anonymous
Anonymous wrote:
Anonymous wrote:That would absolutely terrify me. Like, not even an option.

Many on this board might say I am too conservative, though. On a home worth $1.15M I owe $396,000 on a 15 year mortgage at 2.25. I'm 45 and a single mom on an income of $380,000 ~ But its sales so can always vary. Again, I'm conservative with debt and was once house poor with small kids (because ex was a moron) and I hated it.


What kind of sales?


PP, in your shoes, I would not say you are being overly conservative. Especially with variability in sales and being a single mother.
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:We weren’t comfortable with more than a $200k house on a HHI of $100,000/yr so that would be a big no from us. But we are resisting the two income trap and live in the Midwest.


Same, we make ~$200K a year and live in the Midwest and have a remaining mortgage of $180K-ish. We continually look at new houses, but we absolutely do not want to be house poor or work forever.


So, basically, you have no idea what it's like to live in a HCOL area or how much houses cost in the DMV, but you'd like to weigh in to share your entirely irrelevant opinion why? $200K is a studio/one-bedroom condo that's a mile walk from the metro, likely with stupid high condo fees. There are no $200K houses here. But, hey, living in the Midwest is a big no from us.


Seriously, I wish the Midwestern folks would refrain from giving advice on the RE boards like it's actually feasible here. A 200K house is not an option in the DMV unless you want to have a 4 hour round trip commute. Do a search and see what 200K gets you and where.

And this isn't a case of wanting a "new" house. An 800K house around here is not a brand new, decked out McMansion. And a move to the Midwest is not an option for all of us.

OP - don't panic. You will be fine. Do you have savings? You will be able to pay your bills but will likely not be able to save much for a few years until your income goes up.

We bought an 800K house on an HHI of about 220K, with 20% down. We had no debt but did have daycare costs for two young children. We were able to make it work just fine but not able to save as much as we wanted initially, so not maxing out our 401Ks and not contributing much to the kids' 529s. This resolved in a few years with incomes going up. However, I must note we did have a cash cushion that would have gotten us through about 6 months of living expenses if both of us were to become unemployed at the same time. Still, I'm sure DCUM would have told us we were crazy.


You can buy lower cost houses, you choose not to. We spent under $400K. We could afford to upgrade but choose not to. No way I'd risk just 6 months of living expenses.


You cannot buy a SFH in DC area for 400K period.


What?? Sure you can. Kensington (zoned for Einstein). One of those very small capes.


There's a teen hooke r there that is a bad influence on high schoolers i dont want my kid around.
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:We weren’t comfortable with more than a $200k house on a HHI of $100,000/yr so that would be a big no from us. But we are resisting the two income trap and live in the Midwest.


Same, we make ~$200K a year and live in the Midwest and have a remaining mortgage of $180K-ish. We continually look at new houses, but we absolutely do not want to be house poor or work forever.


So, basically, you have no idea what it's like to live in a HCOL area or how much houses cost in the DMV, but you'd like to weigh in to share your entirely irrelevant opinion why? $200K is a studio/one-bedroom condo that's a mile walk from the metro, likely with stupid high condo fees. There are no $200K houses here. But, hey, living in the Midwest is a big no from us.


Seriously, I wish the Midwestern folks would refrain from giving advice on the RE boards like it's actually feasible here. A 200K house is not an option in the DMV unless you want to have a 4 hour round trip commute. Do a search and see what 200K gets you and where.

And this isn't a case of wanting a "new" house. An 800K house around here is not a brand new, decked out McMansion. And a move to the Midwest is not an option for all of us.

OP - don't panic. You will be fine. Do you have savings? You will be able to pay your bills but will likely not be able to save much for a few years until your income goes up.

We bought an 800K house on an HHI of about 220K, with 20% down. We had no debt but did have daycare costs for two young children. We were able to make it work just fine but not able to save as much as we wanted initially, so not maxing out our 401Ks and not contributing much to the kids' 529s. This resolved in a few years with incomes going up. However, I must note we did have a cash cushion that would have gotten us through about 6 months of living expenses if both of us were to become unemployed at the same time. Still, I'm sure DCUM would have told us we were crazy.


You can buy lower cost houses, you choose not to. We spent under $400K. We could afford to upgrade but choose not to. No way I'd risk just 6 months of living expenses.


You cannot buy a SFH in DC area for 400K period.


Exactly! Where the heck are these houses that are more than 1000 square feet in the DC area that are 400k? Never seen that unicorn. I see old homes running 600k built in 1920.


You can get 2000 sq ft houses for $400k in Gaithersburg and Silver Spring. Probably other places too, but I’m sure about those because I own a couple.
Anonymous
This is OP, and I want to thank everyone for weighing in. It's been interesting seeing people weight in and different people's risk tolerances and approaches to spending and saving.

When I started reading replies, I got more panicked. But then as people started asking questions, and weighing in with their situations, it made me feel more comfortable. Why?

1. We have no other debt - zero. No credit cards, no car payments, no student loans. We have zealously avoided debt for the last decade.

2. We got an early start on retirement savings, and have been consistent. We are in our late thirties, and have been putting away 10% of our income since our early 20s.

3. DW has been a Fed for almost fifteen years, so that pension is becoming somewhat significant - about $25,000 per year so far, and will keep growing as she continues to work for the Feds.

4. College is largely prefunded at this point. Figure that we have to save a total of about $1,000 per month total and we will have enough for room, board, tuition, and fees for all three kids at a public university.

5. We have an emergency fund of $150,000 in diversified mutual funds.

Add all that up, and I am feeling better about things....
Anonymous
Anonymous wrote:This is OP, and I want to thank everyone for weighing in. It's been interesting seeing people weight in and different people's risk tolerances and approaches to spending and saving.

When I started reading replies, I got more panicked. But then as people started asking questions, and weighing in with their situations, it made me feel more comfortable. Why?

1. We have no other debt - zero. No credit cards, no car payments, no student loans. We have zealously avoided debt for the last decade.

2. We got an early start on retirement savings, and have been consistent. We are in our late thirties, and have been putting away 10% of our income since our early 20s.

3. DW has been a Fed for almost fifteen years, so that pension is becoming somewhat significant - about $25,000 per year so far, and will keep growing as she continues to work for the Feds.

4. College is largely prefunded at this point. Figure that we have to save a total of about $1,000 per month total and we will have enough for room, board, tuition, and fees for all three kids at a public university.

5. We have an emergency fund of $150,000 in diversified mutual funds.

Add all that up, and I am feeling better about things....


I feel for you and your panic (I’d feel the same), but I think you’re going to be just fine. Enjoy your new house!
Anonymous
Anonymous wrote:This is OP, and I want to thank everyone for weighing in. It's been interesting seeing people weight in and different people's risk tolerances and approaches to spending and saving.

When I started reading replies, I got more panicked. But then as people started asking questions, and weighing in with their situations, it made me feel more comfortable. Why?

1. We have no other debt - zero. No credit cards, no car payments, no student loans. We have zealously avoided debt for the last decade.

2. We got an early start on retirement savings, and have been consistent. We are in our late thirties, and have been putting away 10% of our income since our early 20s.

3. DW has been a Fed for almost fifteen years, so that pension is becoming somewhat significant - about $25,000 per year so far, and will keep growing as she continues to work for the Feds.

4. College is largely prefunded at this point. Figure that we have to save a total of about $1,000 per month total and we will have enough for room, board, tuition, and fees for all three kids at a public university.

5. We have an emergency fund of $150,000 in diversified mutual funds.

Add all that up, and I am feeling better about things....


With that emergency fund, you're doing awesome. Enjoy your house, and ignore the critics.
Anonymous
Anonymous wrote:
Anonymous wrote:This is OP, and I want to thank everyone for weighing in. It's been interesting seeing people weight in and different people's risk tolerances and approaches to spending and saving.

When I started reading replies, I got more panicked. But then as people started asking questions, and weighing in with their situations, it made me feel more comfortable. Why?

1. We have no other debt - zero. No credit cards, no car payments, no student loans. We have zealously avoided debt for the last decade.

2. We got an early start on retirement savings, and have been consistent. We are in our late thirties, and have been putting away 10% of our income since our early 20s.

3. DW has been a Fed for almost fifteen years, so that pension is becoming somewhat significant - about $25,000 per year so far, and will keep growing as she continues to work for the Feds.

4. College is largely prefunded at this point. Figure that we have to save a total of about $1,000 per month total and we will have enough for room, board, tuition, and fees for all three kids at a public university.

5. We have an emergency fund of $150,000 in diversified mutual funds.

Add all that up, and I am feeling better about things....


With that emergency fund, you're doing awesome. Enjoy your house, and ignore the critics.


Same. You can afford this much house and are doing well on savings and should relax and enjoy it.
Anonymous
Anonymous wrote:This is OP, and I want to thank everyone for weighing in. It's been interesting seeing people weight in and different people's risk tolerances and approaches to spending and saving.

When I started reading replies, I got more panicked. But then as people started asking questions, and weighing in with their situations, it made me feel more comfortable. Why?

1. We have no other debt - zero. No credit cards, no car payments, no student loans. We have zealously avoided debt for the last decade.

2. We got an early start on retirement savings, and have been consistent. We are in our late thirties, and have been putting away 10% of our income since our early 20s.

3. DW has been a Fed for almost fifteen years, so that pension is becoming somewhat significant - about $25,000 per year so far, and will keep growing as she continues to work for the Feds.

4. College is largely prefunded at this point. Figure that we have to save a total of about $1,000 per month total and we will have enough for room, board, tuition, and fees for all three kids at a public university.

5. We have an emergency fund of $150,000 in diversified mutual funds.

Add all that up, and I am feeling better about things....


Your numbers are less believable with every post. $186k salary was $15500/month (exactly 186/12) with $11k take-home, then when people noticed that makes no sense the story shifted to $15.5k isn't your gross, it's your gross minus some but not all of your pre-tax deductions (so . . . not $186k salary after all, contradicting your post title). Now you have an extra $150k and assiduously avoid debt but for no reason at all you only put 11% down. What do people get out of trolling like this? It's not even an exciting thread.
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:We weren’t comfortable with more than a $200k house on a HHI of $100,000/yr so that would be a big no from us. But we are resisting the two income trap and live in the Midwest.


Same, we make ~$200K a year and live in the Midwest and have a remaining mortgage of $180K-ish. We continually look at new houses, but we absolutely do not want to be house poor or work forever.


So, basically, you have no idea what it's like to live in a HCOL area or how much houses cost in the DMV, but you'd like to weigh in to share your entirely irrelevant opinion why? $200K is a studio/one-bedroom condo that's a mile walk from the metro, likely with stupid high condo fees. There are no $200K houses here. But, hey, living in the Midwest is a big no from us.


Seriously, I wish the Midwestern folks would refrain from giving advice on the RE boards like it's actually feasible here. A 200K house is not an option in the DMV unless you want to have a 4 hour round trip commute. Do a search and see what 200K gets you and where.

And this isn't a case of wanting a "new" house. An 800K house around here is not a brand new, decked out McMansion. And a move to the Midwest is not an option for all of us.

OP - don't panic. You will be fine. Do you have savings? You will be able to pay your bills but will likely not be able to save much for a few years until your income goes up.

We bought an 800K house on an HHI of about 220K, with 20% down. We had no debt but did have daycare costs for two young children. We were able to make it work just fine but not able to save as much as we wanted initially, so not maxing out our 401Ks and not contributing much to the kids' 529s. This resolved in a few years with incomes going up. However, I must note we did have a cash cushion that would have gotten us through about 6 months of living expenses if both of us were to become unemployed at the same time. Still, I'm sure DCUM would have told us we were crazy.


You can buy lower cost houses, you choose not to. We spent under $400K. We could afford to upgrade but choose not to. No way I'd risk just 6 months of living expenses.


You cannot buy a SFH in DC area for 400K period.


Exactly! Where the heck are these houses that are more than 1000 square feet in the DC area that are 400k? Never seen that unicorn. I see old homes running 600k built in 1920.


Here are some: https://www.redfin.com/city/26038/MD/Silver-Spring/filter/property-type=house+townhouse,max-price=400k,min-sqft=1k-sqft
And some more: https://www.redfin.com/city/10503/MD/Hyattsville/filter/property-type=house+townhouse,max-price=400k,min-sqft=1k-sqft
More: https://www.redfin.com/city/12839/DC/Washington-DC/filter/property-type=house+townhouse,max-price=400k,min-sqft=1k-sqft

They exist.
Anonymous
Anonymous wrote:
Anonymous wrote:This is OP, and I want to thank everyone for weighing in. It's been interesting seeing people weight in and different people's risk tolerances and approaches to spending and saving.

When I started reading replies, I got more panicked. But then as people started asking questions, and weighing in with their situations, it made me feel more comfortable. Why?

1. We have no other debt - zero. No credit cards, no car payments, no student loans. We have zealously avoided debt for the last decade.

2. We got an early start on retirement savings, and have been consistent. We are in our late thirties, and have been putting away 10% of our income since our early 20s.

3. DW has been a Fed for almost fifteen years, so that pension is becoming somewhat significant - about $25,000 per year so far, and will keep growing as she continues to work for the Feds.

4. College is largely prefunded at this point. Figure that we have to save a total of about $1,000 per month total and we will have enough for room, board, tuition, and fees for all three kids at a public university.

5. We have an emergency fund of $150,000 in diversified mutual funds.

Add all that up, and I am feeling better about things....


Your numbers are less believable with every post. $186k salary was $15500/month (exactly 186/12) with $11k take-home, then when people noticed that makes no sense the story shifted to $15.5k isn't your gross, it's your gross minus some but not all of your pre-tax deductions (so . . . not $186k salary after all, contradicting your post title). Now you have an extra $150k and assiduously avoid debt but for no reason at all you only put 11% down. What do people get out of trolling like this? It's not even an exciting thread.


I scratched my head at the take home pay but now I see what you are saying. And nobody keeps emergency $ in mutual funds, it doesn't make sense tax wise.
Anonymous
Yes the OP must be a realtor who knows the average salary of posters here on DCUM and want them to think they can afford this. You can't and this is a troll.
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:This is OP, and I want to thank everyone for weighing in. It's been interesting seeing people weight in and different people's risk tolerances and approaches to spending and saving.

When I started reading replies, I got more panicked. But then as people started asking questions, and weighing in with their situations, it made me feel more comfortable. Why?

1. We have no other debt - zero. No credit cards, no car payments, no student loans. We have zealously avoided debt for the last decade.

2. We got an early start on retirement savings, and have been consistent. We are in our late thirties, and have been putting away 10% of our income since our early 20s.

3. DW has been a Fed for almost fifteen years, so that pension is becoming somewhat significant - about $25,000 per year so far, and will keep growing as she continues to work for the Feds.

4. College is largely prefunded at this point. Figure that we have to save a total of about $1,000 per month total and we will have enough for room, board, tuition, and fees for all three kids at a public university.

5. We have an emergency fund of $150,000 in diversified mutual funds.

Add all that up, and I am feeling better about things....


Your numbers are less believable with every post. $186k salary was $15500/month (exactly 186/12) with $11k take-home, then when people noticed that makes no sense the story shifted to $15.5k isn't your gross, it's your gross minus some but not all of your pre-tax deductions (so . . . not $186k salary after all, contradicting your post title). Now you have an extra $150k and assiduously avoid debt but for no reason at all you only put 11% down. What do people get out of trolling like this? It's not even an exciting thread.


I scratched my head at the take home pay but now I see what you are saying. And nobody keeps emergency $ in mutual funds, it doesn't make sense tax wise.



OP here. I recognize that I have not done the best job of explaining my financial situation, confusing gross pay, gross pay after deductions for retirement and health insurance, and and net pay, but I promise I'm not a troll!

Why would I not keep my emergency fund in a Vanguard mutual fund? It's highly liquid - I can have access to that money within 24-48 hours. And I'd rather get some growth out of my emergency fund than have it earn less than 1% interest. Even if the market completely collapses, I will still have an emergency fund of $100,000.

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