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

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - I posted something similar a while back ($850K home on $300K income) and let me tell ya, I got HAMMERED here and it made me very anxious/stressed out. After the initial panic, I calmed down and re-ran the numbers. My very detailed spreadsheet didn't lie.

6 months later, we're doing just fine...

Plan for the worst. Have a back/up plan. Live your life!

Same here. We bought 1M on 250K income a couple years ago. I should've just trusted my stupid little excel spreadsheet, but I needed external validation. So I posted here. MISTAKE. While this place is great entertainment when your kid's soccer practice is running long; it isn't great financial advice.

2 years later; our income are slightly higher, but not that much (inflation + couple percent). But our financial situation is way better. We bought a house we liked; we locked in payments and started making longer term plans. Heck, we even refinanced; knocking 600/mo off our payments. We kept the course in terms of retirement and college. I get the sense that folks that post here don't fully understand how interest rates work and that the 3x rules they used, were meant for an era with 10% interest rates.

Do you think that the OP will be able to refinance to a lower rate in a few years? It's unlikely. We already know that relative to inflation she will be making less in the future since she is a GS-15.

A 15 makes between 144 and 172, which means he makes between 14k and 42k. OP is obviously trolling.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP - I posted something similar a while back ($850K home on $300K income) and let me tell ya, I got HAMMERED here and it made me very anxious/stressed out. After the initial panic, I calmed down and re-ran the numbers. My very detailed spreadsheet didn't lie.

6 months later, we're doing just fine...

Plan for the worst. Have a back/up plan. Live your life!

This is not even close to the same thing. OP makes about half what you do- $186k.

The previous poster was just saying that even making double what the OP was making, people on here still told them they couldn't afford that mortgage, so take all the nay sayers with a grain of salt.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - I posted something similar a while back ($850K home on $300K income) and let me tell ya, I got HAMMERED here and it made me very anxious/stressed out. After the initial panic, I calmed down and re-ran the numbers. My very detailed spreadsheet didn't lie.

6 months later, we're doing just fine...

Plan for the worst. Have a back/up plan. Live your life!

This is not even close to the same thing. OP makes about half what you do- $186k.

The previous poster was just saying that even making double what the OP was making, people on here still told them they couldn't afford that mortgage, so take all the nay sayers with a grain of salt.

Yes. But then by that logic, someone who makes $50k a year should ignore people that tell him not to buy a $1 million dollar house as long as they trust their own spreadsheet? (The OP doesn't have a spreadsheet, by the way, which is one of the problems.)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It amazes me how many people on this board must be terrible with money and waste money on who knows what. If you are one of those people, then you shouldn't buy that much house with your income. If you are good with money and don't go crazy spending money you will be fine. Our HHI is 170K with 2 kids and we just bought a 700K house (550K mortgage, 2,900 PITI). It is about $500 more per month than our last house, so we are comfortable we can afford it.

I totally agree. What do people need so much money to spend on? Our combined gross income is only $150000; we purchased a house for $800000 5 years ago which is paid off now. We sold our previous house and put a downpayment of $650000. We have 1 child that goes to public school. We are careful with money and don't spend it on frivolous things like going to Starbucks, nail salons etc.

Hilarious.

Not for nothing, but if you'd put down 20% on the house and invested the $490,000, you'd be doing a lot better now. Bad choice.

But the outcome of that choice was not known in advance. DCUMers love to post about much smarter they were than others for investing in stocks rather than paying their mortgage. But they're not smart enough to realize that they weren't smart at all. No one could have known the outcome. The past ten years were a bull run. A better guaranteed return from stocks going forward is not guaranteed. It doesn't mean it's a bad choice. Just recognize it's uncertain and you were not smarter than anyone else for making that choice.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

How much do you save for retirement? I don't see any line items for property taxes or home and life insurance.

-We max out the 401k for one earner (whatever the latest figure is) plus a 50% match from the employer. Then we do the $6000 each for IRAs as listed above. So something like $40K per year total.
-Property taxes and home insurance are included in the mortgage figure.
-Life insurance is maybe $200/year plus we have some from my husband's work which is taken out before that $7850 figure above.
-We also have an umbrella policy which is included in the car ins. line because I was trying to simplify the budget here.

A life insurance policy that costs 200/year plus some from work is probably not going to be enough to help the surviving spouse stay in the house. Also there was a poster on this thread who talked about being disabled. You need disability insurance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It amazes me how many people on this board must be terrible with money and waste money on who knows what. If you are one of those people, then you shouldn't buy that much house with your income. If you are good with money and don't go crazy spending money you will be fine. Our HHI is 170K with 2 kids and we just bought a 700K house (550K mortgage, 2,900 PITI). It is about $500 more per month than our last house, so we are comfortable we can afford it.

I totally agree. What do people need so much money to spend on? Our combined gross income is only $150000; we purchased a house for $800000 5 years ago which is paid off now. We sold our previous house and put a downpayment of $650000. We have 1 child that goes to public school. We are careful with money and don't spend it on frivolous things like going to Starbucks, nail salons etc.

I like to take care of myself - nails, hair, skin, pilates, gym, barre. Looking and feeling good are not frivolous.

priorities - priorities.
I'd rather have a house I like then spend money on pilates, gym and barre. Hiking and biking is free.

PS didn't read the whole 13 pages, but I did same thing as OP - bought $785K house in my late 30s on under $200K HHI 7 years ago. It was a bit tight at the beginning with 4.5K monthly payments, but now we're fine. Income grew overtime, rates went down, initial set-up costs went away.
Everything s possible if you set your mind and stick to your goals.

+1. Why stop at an $800k house? How about 2million? Your income will increase. Just make a budget!

Yes, on this forum people will tell you the stories of how incomes went up and everything worked out. You will not hear the sad stories where things did not work out. It's a dumb idea to buy more house than you can afford currently based on the hopes that incomes will go up in the future. Bad financial planning and irresponsible if you have a family. Some people are living in a bubble or believe they are invincible. Just look at around at all of the covid-related job loss. Do you think your job is bullet proof or you will always earn as much as you do now?

I have thought about ^ many times. I feel like this forum splits into people who have boundless optimism about their financial futures - buy the house! - and those who feel like things are more precarious (I earn $500k a year but my house is a basement apartment I squat in and I only eat rice and beans).

It's a gradient and I guess most of us fall somewhere toward the middle, not at the extremes, but these sorts of threads definitely bring out the extreme points of view.

I am not suggesting someone who makes $500K or the OP on $180K live in a basement. But a less expensive house for the OP would have been a more financially sound choice.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP - I posted something similar a while back ($850K home on $300K income) and let me tell ya, I got HAMMERED here and it made me very anxious/stressed out. After the initial panic, I calmed down and re-ran the numbers. My very detailed spreadsheet didn't lie.

6 months later, we're doing just fine...

Plan for the worst. Have a back/up plan. Live your life!

Same here. We bought 1M on 250K income a couple years ago. I should've just trusted my stupid little excel spreadsheet, but I needed external validation. So I posted here. MISTAKE. While this place is great entertainment when your kid's soccer practice is running long; it isn't great financial advice.

2 years later; our income are slightly higher, but not that much (inflation + couple percent). But our financial situation is way better. We bought a house we liked; we locked in payments and started making longer term plans. Heck, we even refinanced; knocking 600/mo off our payments. We kept the course in terms of retirement and college. I get the sense that folks that post here don't fully understand how interest rates work and that the 3x rules they used, were meant for an era with 10% interest rates.

What is your take home and monthly payment for these numbers? Just curious

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - I posted something similar a while back ($850K home on $300K income) and let me tell ya, I got HAMMERED here and it made me very anxious/stressed out. After the initial panic, I calmed down and re-ran the numbers. My very detailed spreadsheet didn't lie.

6 months later, we're doing just fine...

Plan for the worst. Have a back/up plan. Live your life!

Same here. We bought 1M on 250K income a couple years ago. I should've just trusted my stupid little excel spreadsheet, but I needed external validation. So I posted here. MISTAKE. While this place is great entertainment when your kid's soccer practice is running long; it isn't great financial advice.

2 years later; our income are slightly higher, but not that much (inflation + couple percent). But our financial situation is way better. We bought a house we liked; we locked in payments and started making longer term plans. Heck, we even refinanced; knocking 600/mo off our payments. We kept the course in terms of retirement and college. I get the sense that folks that post here don't fully understand how interest rates work and that the 3x rules they used, were meant for an era with 10% interest rates.

What is your take home and monthly payment for these numbers? Just curious

I opened the spreadsheet out of curiosity. So apparently our income was 260K then (not 250) and our take home was 154K after max HSA+401K+Tax+Medical+insurance. year 1 PITI was 44K. I think 110K/year after tax is more than enough to live on. We did a nanny share that year for 30K, that did take a bite; but 80K after-childcare isn't terrible.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - I posted something similar a while back ($850K home on $300K income) and let me tell ya, I got HAMMERED here and it made me very anxious/stressed out. After the initial panic, I calmed down and re-ran the numbers. My very detailed spreadsheet didn't lie.

6 months later, we're doing just fine...

Plan for the worst. Have a back/up plan. Live your life!

Same here. We bought 1M on 250K income a couple years ago. I should've just trusted my stupid little excel spreadsheet, but I needed external validation. So I posted here. MISTAKE. While this place is great entertainment when your kid's soccer practice is running long; it isn't great financial advice.

2 years later; our income are slightly higher, but not that much (inflation + couple percent). But our financial situation is way better. We bought a house we liked; we locked in payments and started making longer term plans. Heck, we even refinanced; knocking 600/mo off our payments. We kept the course in terms of retirement and college. I get the sense that folks that post here don't fully understand how interest rates work and that the 3x rules they used, were meant for an era with 10% interest rates.

Do you think that the OP will be able to refinance to a lower rate in a few years? It's unlikely. We already know that relative to inflation she will be making less in the future since she is a GS-15.

A 15 makes between 144 and 172, which means he makes between 14k and 42k. OP is obviously trolling.

I was going to post something like this, but didn't know the numbers.

Say she makes $144k.

OP has said that the $186k is after retirement and health insurance, and before taxes. Also, that they each contribute 5% to retirement.

So her portion of that $186 is $144-$7200(retirement)-$6000 (assume $500/month for insurance) = ~$130k. So he's making ~$59,000.

(And they're putting ~$10k into retirement each year.)

There's no way this is real.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

How much do you save for retirement? I don't see any line items for property taxes or home and life insurance.

-We max out the 401k for one earner (whatever the latest figure is) plus a 50% match from the employer. Then we do the $6000 each for IRAs as listed above. So something like $40K per year total.
-Property taxes and home insurance are included in the mortgage figure.
-Life insurance is maybe $200/year plus we have some from my husband's work which is taken out before that $7850 figure above.
-We also have an umbrella policy which is included in the car ins. line because I was trying to simplify the budget here.

You sound very underinsured. Most people are.

Term life, yesterday.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

How much do you save for retirement? I don't see any line items for property taxes or home and life insurance.

-We max out the 401k for one earner (whatever the latest figure is) plus a 50% match from the employer. Then we do the $6000 each for IRAs as listed above. So something like $40K per year total.
-Property taxes and home insurance are included in the mortgage figure.
-Life insurance is maybe $200/year plus we have some from my husband's work which is taken out before that $7850 figure above.
-We also have an umbrella policy which is included in the car ins. line because I was trying to simplify the budget here.

You sound very underinsured. Most people are.

Term life, yesterday.

We're actually good, thanks.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - I posted something similar a while back ($850K home on $300K income) and let me tell ya, I got HAMMERED here and it made me very anxious/stressed out. After the initial panic, I calmed down and re-ran the numbers. My very detailed spreadsheet didn't lie.

6 months later, we're doing just fine...

Plan for the worst. Have a back/up plan. Live your life!

Same here. We bought 1M on 250K income a couple years ago. I should've just trusted my stupid little excel spreadsheet, but I needed external validation. So I posted here. MISTAKE. While this place is great entertainment when your kid's soccer practice is running long; it isn't great financial advice.

2 years later; our income are slightly higher, but not that much (inflation + couple percent). But our financial situation is way better. We bought a house we liked; we locked in payments and started making longer term plans. Heck, we even refinanced; knocking 600/mo off our payments. We kept the course in terms of retirement and college. I get the sense that folks that post here don't fully understand how interest rates work and that the 3x rules they used, were meant for an era with 10% interest rates.

What is your take home and monthly payment for these numbers? Just curious

I opened the spreadsheet out of curiosity. So apparently our income was 260K then (not 250) and our take home was 154K after max HSA+401K+Tax+Medical+insurance. year 1 PITI was 44K. I think 110K/year after tax is more than enough to live on. We did a nanny share that year for 30K, that did take a bite; but 80K after-childcare isn't terrible.

Ah so your downpayment was more than 20% I'm assuming? I think with a 20% down on a 800k place with 2.5% rates is around 3400-3500 a month.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

How much do you save for retirement? I don't see any line items for property taxes or home and life insurance.

-We max out the 401k for one earner (whatever the latest figure is) plus a 50% match from the employer. Then we do the $6000 each for IRAs as listed above. So something like $40K per year total.
-Property taxes and home insurance are included in the mortgage figure.
-Life insurance is maybe $200/year plus we have some from my husband's work which is taken out before that $7850 figure above.
-We also have an umbrella policy which is included in the car ins. line because I was trying to simplify the budget here.

You sound very underinsured. Most people are.

Term life, yesterday.

Maybe not. I have a $500k term life policy for $200 a year. Plus double my salary ($240k) for $4/pp.

[Anonymous]

Our income is $325 and mortgage is $600Kwe are constantly freaking out that our house was too expensive for us. Our mortgage taxes is $3200 and take home after taxes is $13k per month. But we have student loans and childcare which is $4k a month.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

How much do you save for retirement? I don't see any line items for property taxes or home and life insurance.

-We max out the 401k for one earner (whatever the latest figure is) plus a 50% match from the employer. Then we do the $6000 each for IRAs as listed above. So something like $40K per year total.
-Property taxes and home insurance are included in the mortgage figure.
-Life insurance is maybe $200/year plus we have some from my husband's work which is taken out before that $7850 figure above.
-We also have an umbrella policy which is included in the car ins. line because I was trying to simplify the budget here.

You sound very underinsured. Most people are.

Term life, yesterday.

Maybe not. I have a $500k term life policy for $200 a year. Plus double my salary ($240k) for $4/pp.

yeah I pay $500/year for $1M per year, plus I get $300K from my job for free. My DH pays significantly more because he was older when he got the policy and because his dad died young.