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

[Anonymous]

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.

What a crappy generalization. My company offers $50K life insurance + $20/month for 2.5x my salary, which they reimburse me for, so essentially still free. This is part of my benefits plan. Plus $15/month for disability.

[Anonymous]

wow, the amount of nay sayers and those that comment what a terrible idea.. I don't get it!
After mortgage payments, OP still brings home over $5K. Clearly he can afford it. He has no other expenses, even if car payments and eating out, that is still a very healthy budget, with money left over for travel and savings. His wife has a fed (stable) job, and pension absolutely is not something to dismiss b/c that is part of the benefits package.

OP.. enjoy your new house which you say you love. Life is so short! Not everyone can be happy in the midwest. I, as a non-white citizen, will always pay a premium to live in diverse, culturally dense areas for many many reasons, one of them being that I don't stand out like a sore thumb in mostly white towns.

[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.

Back to finance basics school for you...yesterday,.

You appear all high and mighty. Most people posting on these forums are let’s just say upper middle class....they will feel offended if we call them well to do or some such factual label.

You cannot give advise whether someone needs term life insurance or not unless you know their NW. In most cases also factoring in future inheritances.
If someone has a NW of say $5M why would they need term life even if they are 50 and only spouse works and they have kids. In that case it’s not clear cut. You will be surprised how many people here have NW in the millions.

[Anonymous]

Np here. We make about $200k, pay about $3600 in rent, and in normal times have a kid in daycare and a kid in aftercare. I don’t think these numbers are too far off from what Op posted and it’s fine for us.

[Anonymous]

Anonymous wrote: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.

Well that's the important part. 13k-4k = 9k after tax + mortgage, OP has 8k after tax. I believe expenses are just as important as income is in budgeting.

[Anonymous]

OP, I am another who agrees you are fine. I would beef up your retirement for my own reasons, but we’ve had the same scenario for years with slight salary increases and are fine. In fact, our net worth went way up during that same time period. I am a bit lost as to how people with higher salaries and lower mortgages are freaking out, and can only assume they have massive debt, really expensive childcare, or spend money frivolously but don’t realize it. Which is their prerogative, but certainly doesn’t reflect everyone’s situation.

[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.

Yes but my point is I still got hammered for the post even though I make 1.5x more. Plus I have childcare expenses and OP doesn't so that makes up for it.

[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.

Of ffs. You are not anywhere close to house poor.

[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.

Of ffs. You are not anywhere close to house poor.

PP said she was "once" house poor.

What is up with everyone today? It's Friday and somewhat nice outside. Why is everyone so cranky?

[Anonymous]

OP, your monthly PITI+HOA should ideally be no more than 25% of your NET monthly, not gross. It definitely should not exceed 32% of your monthly NET.

[Anonymous]

Anonymous wrote:OP, your monthly PITI+HOA should ideally be no more than 25% of your NET monthly, not gross. It definitely should not exceed 32% of your monthly NET.

OP's takehome is high enough that absent super high expenses (day care, private school, high health care expenses, student loans, pricey vacations) that s/he should be fine. 7.3K/month after mortgage/insurance/etc. is considerably more than my entire net takehome and my rent is 2.6K. There's a huge difference between 34% of 11K and 34% of 4K in terms of money left to live on so applying a hard and fast rule without taking income into account does not make sense.

It's hard to image that anyone with a good budget would not be fine with that kind of income post mortgage expenses. I would even say that there is still room to put more into retirement if they choose. They have enough emergency savings to cover unexpected home repairs and should be able to save for such anyways with that income.

Enjoy the house, make a budget and stop worrying would be my recommendation.

[Anonymous]

Anonymous wrote:OP, your monthly PITI+HOA should ideally be no more than 25% of your NET monthly, not gross. It definitely should not exceed 32% of your monthly NET.

According to the most conservative financial advisors out there.

[Anonymous]

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?

If it doesn't work out, you sell the house and downsize to a smaller and more affordable place. You make it sound like people regularly overextend and then end up under a bridge.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, your monthly PITI+HOA should ideally be no more than 25% of your NET monthly, not gross. It definitely should not exceed 32% of your monthly NET.

OP's takehome is high enough that absent super high expenses (day care, private school, high health care expenses, student loans, pricey vacations) that s/he should be fine. 7.3K/month after mortgage/insurance/etc. is considerably more than my entire net takehome and my rent is 2.6K. There's a huge difference between 34% of 11K and 34% of 4K in terms of money left to live on so applying a hard and fast rule without taking income into account does not make sense.

It's hard to image that anyone with a good budget would not be fine with that kind of income post mortgage expenses. I would even say that there is still room to put more into retirement if they choose. They have enough emergency savings to cover unexpected home repairs and should be able to save for such anyways with that income.

Enjoy the house, make a budget and stop worrying would be my recommendation.

I agree with this poster completely. OP you are in a good position. Enjoy

[Anonymous]

Anonymous wrote:

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.

What a crappy generalization. My company offers $50K life insurance + $20/month for 2.5x my salary, which they reimburse me for, so essentially still free. This is part of my benefits plan. Plus $15/month for disability.

A life insurance policy worth a few hundred thousand dollars is probably not enough for income replacement. Certainly not in the OP's case if they want to continue to afford their hefty mortgage while savings for college and retirement.