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

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So a person making over 150k can't even afford an old house in the dmv with good schools? What about the singles making 50 to 80k? What can they afford? A shack or tent in the woods here?

They have roommates or live in affordable housing. https://housing.arlingtonva.us/income-rent-limits/

This is not true. The singles making 50-80k can afford a condo, and a person making 150k can afford a house with good schools. You just might not like the commute to DC - like it might be out in Fairfax where I live and not a super updated gorgeous magazine-worthy house. But you can do it. I find people on here are often a little dramatic about their prospects.

I'm the PP who said people in this range have roommates or are in affordable housing. I moved here in 2009 with a $50K salary and lived in a 2 bedroom apartment with 3 other roommates. This allowed me to pay my student loans aggressively. There is no way I could have purchased a condo.

Well you could have, you just had student loans and chose to pay them off aggressively. I was speaking in general terms about what someone can afford in the DC suburbs. I was making around $70k when I bought a condo for 3% down not even 5 years ago. There are still plenty of those available in the suburbs for those making regular incomes.

1) By aggressively I meant an extra $100 or so a month. 2) IF there are 0% down loans, I wasn't aware of them (I'm still not, frankly). I had NO money for a DP when I left school. I had debt. Sure my extra $100 a month would have been bee $1.2K a year. After 5 years that would have been $6, or 3% of a $200K town house or condo. I've never seen a condo for this price in DMV. 3) Your $70 gives you twenty thousand more reasons a years that you could save a DP. Good for you.

[Anonymous]

Anonymous wrote:

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.

Stock market fell 90 percent in the 1920s.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

Stock market fell 90 percent in the 1920s.

Of course, we've come a long way in managing the economy since the 1920s...

And even so...the portfolio is half stocks (SP500 index funds), half bonds ($75,000 each). So even if there is a once a century event where stocks fall 90%, my bonds will presumably not lose much. I'll still have a solid nest egg.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Stock market fell 90 percent in the 1920s.

Of course, we've come a long way in managing the economy since the 1920s...

And even so...the portfolio is half stocks (SP500 index funds), half bonds ($75,000 each). So even if there is a once a century event where stocks fall 90%, my bonds will presumably not lose much. I'll still have a solid nest egg.

Look, you are doing ok. Coming to this message board is one of the worst things you could have done for your mental health. Apparently everyone here makes 1M and buys a $400K house, but somehow is still paying it off after 20 years. People ain't right. Even if you wanted to back out and sell, the transactions costs would be near ruinous and set you back for years. Say another 5-8% or $50-60K depending on transaction costs. Do you really want to blow $50-60K right now?

Now if you aren't used to only spending 7K/month after retirement and housing, you may need to cut down a bit; but nothing crazy (i.e. no first class tickets to paris...). You may have spent a tad too much on housing, but it isn't nuts.

[Anonymous]

Look, you are doing ok. Coming to this message board is one of the worst things you could have done for your mental health. Apparently everyone here makes 1M and buys a $400K house, but somehow is still paying it off after 20 years. People ain't right. Even if you wanted to back out and sell, the transactions costs would be near ruinous and set you back for years. Say another 5-8% or $50-60K depending on transaction costs. Do you really want to blow $50-60K right now?

Now if you aren't used to only spending 7K/month after retirement and housing, you may need to cut down a bit; but nothing crazy (i.e. no first class tickets to paris...). You may have spent a tad too much on housing, but it isn't nuts.


Seriously, this board is so skewed when it comes to money and debt.

[Anonymous]

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.

I didn't say I *had* to buy an 800K house, obviously I chose to. All I said was that that 200K for a house is not a reasonable budget around here if you want a SFH - that was the number PP mentioned. OP obviously could have bought a <500K house, plenty of those around in decent shape.

Like I said, I know at the time DCUM would have told us we were crazy. We knew we were stretching a bit and we were willing to risk it. Unemployment was low, we are both in high demand fields, and I just wasn't worried about a situation where we were both suddenly unemployed for many months at the same time. We are also very frugal in our daily lives, so we never felt house poor.

[Anonymous]

Anonymous wrote:

Look, you are doing ok. Coming to this message board is one of the worst things you could have done for your mental health. Apparently everyone here makes 1M and buys a $400K house, but somehow is still paying it off after 20 years. People ain't right. Even if you wanted to back out and sell, the transactions costs would be near ruinous and set you back for years. Say another 5-8% or $50-60K depending on transaction costs. Do you really want to blow $50-60K right now?

Now if you aren't used to only spending 7K/month after retirement and housing, you may need to cut down a bit; but nothing crazy (i.e. no first class tickets to paris...). You may have spent a tad too much on housing, but it isn't nuts.


Seriously, this board is so skewed when it comes to money and debt.

Every time there's a "how much do you make" thread, the "millionaires" seem to disappear.

[Anonymous]

Considering the average house price/income ratio is about 4.1 in the us, and above 5 in the DC metro, your are similar to the norm. So lots of your neighbors are doing what you are, and considering you have no debt then you are likely a little better off than most.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So a person making over 150k can't even afford an old house in the dmv with good schools? What about the singles making 50 to 80k? What can they afford? A shack or tent in the woods here?

They have roommates or live in affordable housing. https://housing.arlingtonva.us/income-rent-limits/

This is not true. The singles making 50-80k can afford a condo, and a person making 150k can afford a house with good schools. You just might not like the commute to DC - like it might be out in Fairfax where I live and not a super updated gorgeous magazine-worthy house. But you can do it. I find people on here are often a little dramatic about their prospects.

I'm the PP who said people in this range have roommates or are in affordable housing. I moved here in 2009 with a $50K salary and lived in a 2 bedroom apartment with 3 other roommates. This allowed me to pay my student loans aggressively. There is no way I could have purchased a condo.

Well you could have, you just had student loans and chose to pay them off aggressively. I was speaking in general terms about what someone can afford in the DC suburbs. I was making around $70k when I bought a condo for 3% down not even 5 years ago. There are still plenty of those available in the suburbs for those making regular incomes.

1) By aggressively I meant an extra $100 or so a month. 2) IF there are 0% down loans, I wasn't aware of them (I'm still not, frankly). I had NO money for a DP when I left school. I had debt. Sure my extra $100 a month would have been bee $1.2K a year. After 5 years that would have been $6, or 3% of a $200K town house or condo. I've never seen a condo for this price in DMV. 3) Your $70 gives you twenty thousand more reasons a years that you could save a DP. Good for you.

I am not going to quibble with you over your situation, but you are completely wrong that condos don’t exist in the DMV for $200,000 and that people who are making $50-80k cannot afford them as a rule. Your particular situation with student loan debt may not have enabled you to do so, or you didn’t make it a priority. However, it is possible.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So a person making over 150k can't even afford an old house in the dmv with good schools? What about the singles making 50 to 80k? What can they afford? A shack or tent in the woods here?

They have roommates or live in affordable housing. https://housing.arlingtonva.us/income-rent-limits/

This is not true. The singles making 50-80k can afford a condo, and a person making 150k can afford a house with good schools. You just might not like the commute to DC - like it might be out in Fairfax where I live and not a super updated gorgeous magazine-worthy house. But you can do it. I find people on here are often a little dramatic about their prospects.

I'm the PP who said people in this range have roommates or are in affordable housing. I moved here in 2009 with a $50K salary and lived in a 2 bedroom apartment with 3 other roommates. This allowed me to pay my student loans aggressively. There is no way I could have purchased a condo.

Well you could have, you just had student loans and chose to pay them off aggressively. I was speaking in general terms about what someone can afford in the DC suburbs. I was making around $70k when I bought a condo for 3% down not even 5 years ago. There are still plenty of those available in the suburbs for those making regular incomes.

1) By aggressively I meant an extra $100 or so a month. 2) IF there are 0% down loans, I wasn't aware of them (I'm still not, frankly). I had NO money for a DP when I left school. I had debt. Sure my extra $100 a month would have been bee $1.2K a year. After 5 years that would have been $6, or 3% of a $200K town house or condo. I've never seen a condo for this price in DMV. 3) Your $70 gives you twenty thousand more reasons a years that you could save a DP. Good for you.

I am not going to quibble with you over your situation, but you are completely wrong that condos don’t exist in the DMV for $200,000 and that people who are making $50-80k cannot afford them as a rule. Your particular situation with student loan debt may not have enabled you to do so, or you didn’t make it a priority. However, it is possible.

Where are these magical places with 200K condos that also don't have $$$ HOA fees?

[Anonymous]

Midwest poster back. Argue with me all you want but I stand by what I said. There are other choices to be made. And I understand the housing market in DMV just fine...which is why we now live in the Midwest.

[Anonymous]

Anonymous wrote:Midwest poster back. Argue with me all you want but I stand by what I said. There are other choices to be made. And I understand the housing market in DMV just fine...which is why we now live in the Midwest.

No one is arguing with you. We just said your advice doesn't apply because something that worked for your jobs and family may not work for others. For one, there are no SFH in this area that are within the budget you named. And again, moving is not a simple option for everyone. Many of us have established careers here that may not all that portable (I'm a cleared federal govt contractor, for example). Many of us also have extensive family support here. Giving that up and moving someplace where we know no one isn't an easy a decision. So which part are you standing by, exactly?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Midwest poster back. Argue with me all you want but I stand by what I said. There are other choices to be made. And I understand the housing market in DMV just fine...which is why we now live in the Midwest.

No one is arguing with you. We just said your advice doesn't apply because something that worked for your jobs and family may not work for others. For one, there are no SFH in this area that are within the budget you named. And again, moving is not a simple option for everyone. Many of us have established careers here that may not all that portable (I'm a cleared federal govt contractor, for example). Many of us also have extensive family support here. Giving that up and moving someplace where we know no one isn't an easy a decision. So which part are you standing by, exactly?

Midwest poster never gave advice, just described her situation. You are projecting.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So a person making over 150k can't even afford an old house in the dmv with good schools? What about the singles making 50 to 80k? What can they afford? A shack or tent in the woods here?

They have roommates or live in affordable housing. https://housing.arlingtonva.us/income-rent-limits/

This is not true. The singles making 50-80k can afford a condo, and a person making 150k can afford a house with good schools. You just might not like the commute to DC - like it might be out in Fairfax where I live and not a super updated gorgeous magazine-worthy house. But you can do it. I find people on here are often a little dramatic about their prospects.

I'm the PP who said people in this range have roommates or are in affordable housing. I moved here in 2009 with a $50K salary and lived in a 2 bedroom apartment with 3 other roommates. This allowed me to pay my student loans aggressively. There is no way I could have purchased a condo.

Well you could have, you just had student loans and chose to pay them off aggressively. I was speaking in general terms about what someone can afford in the DC suburbs. I was making around $70k when I bought a condo for 3% down not even 5 years ago. There are still plenty of those available in the suburbs for those making regular incomes.

1) By aggressively I meant an extra $100 or so a month. 2) IF there are 0% down loans, I wasn't aware of them (I'm still not, frankly). I had NO money for a DP when I left school. I had debt. Sure my extra $100 a month would have been bee $1.2K a year. After 5 years that would have been $6, or 3% of a $200K town house or condo. I've never seen a condo for this price in DMV. 3) Your $70 gives you twenty thousand more reasons a years that you could save a DP. Good for you.

I am not going to quibble with you over your situation, but you are completely wrong that condos don’t exist in the DMV for $200,000 and that people who are making $50-80k cannot afford them as a rule. Your particular situation with student loan debt may not have enabled you to do so, or you didn’t make it a priority. However, it is possible.

Where are these magical places with 200K condos that also don't have $$$ HOA fees?

Quick look online will yield you many, and I only looked at Fairfax County. An example: https://www.realtor.com/realestateandhomes-detail/3908-Penderview-Dr-Apt-627_Fairfax_VA_22033_M69892-12054

Anyway, this is getting off-topic to OP’s post but I hate when people here make assumptions that affordable real estate doesn’t exist in the DMV. The idea that a $200k condo is somehow mythical is silly. You won’t be in NWDC, but that’s what you get.

[Anonymous]

OP these are the weaknesses in your situation:

You and spouse only save 18,000 per year for retirement and that includes the employer contribution. That seems really, really low. What are your current retirement savings?

You are late 30s with a 30 year mortgage. This house will likely mean you can't retire until your mortgage is paid. But the average retirement age is 61 and most people at that age retire involuntarily. Do you have a plan for how to pay your mortgage if you have to quit your job for health reasons?

She's already a GS 15 so unless she becomes SES, her salary will not keep pace with inflation, so her expensive mortgage will likely never "feel" cheaper due to salary increases.

OP, make a plan to mitigate these issues and you will be fine.