DCUM and Financial Conservatism

[Anonymous]

PP, that's $10,000 a year after maxing out the 401(k)s. I consider my net income after putting that $33,000 away because it's automatically deducted from paycheck. Assume the $250,000 household would have 401(k) or TSP contributions taken out of gross also.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
We make 250 and there is no way we could afford an 800k house.

don't know your situation, but if you have a 20% or higher downpayment and an overall stable financial situation,a $250k income can comfortably support an $800k home purchase while staying *below* average housing-income expenditure ratios both nationally and in the DC area.

Not PP, but we make just abotu $250K and I agree, there is no way we could afford a $800K house. At least, we SHOULDN'T afford that much of a house!! We have two kids in daycare (about $2000 a month), drive newer cars but not luxury (Husband has a 2010 Sonata and I have a 2010 Rav4). We max out our 401K and our IRAs (while we are eligible, anyway) and save for kid's college and vacations. I think money would be extremely tight trying to carry an $800K mortgage!

How, while paying rent/daycare/student loans, can you possibly save up $160k for a downpayment???

[Anonymous]

Anonymous wrote:PP, that's $10,000 a year after maxing out the 401(k)s. I consider my net income after putting that $33,000 away because it's automatically deducted from paycheck. Assume the $250,000 household would have 401(k) or TSP contributions taken out of gross also.

OK, but the question you responded to did not include the 401(k) in net. I also think you're being a little optimistic with your math. A salary of $250,000 yields $12500 in net if you assume a 40% tax burden - federal, state, local, FICA. For you to get $12000 net a month after 201(k), you're at about a 34% total tax rate. As I said, I think that's overly optimistic.

[Anonymous]

you also have to start saving for your medical expenses. the dems and reps have agreed that medicare is too expensive and are going to make people under 55 start paying for it. so, add 200k to your retirement planning(thats per person)_

[Anonymous]

Anonymous wrote:"To further this thread- it would be interesting to hear what both frugal and more middle of the road types think how a $12k net/month (around $250k gross) "should" be spent from their perspective. On the following assumptions, only mortgage/car loan debt, two kids (under 10), two-income, mid-thirties ages.

How do you break it down, 401k/retirement, housing, car, extra savings etc."

Mortgage: $3500
Childcare: $1200
Food: $1,000
Utilities: $1,000
College Savings: $1,000
IRA: $820
Insurance: $750
Clothes: $500
Disposable income for gifts, vacations, etc: $1,830

What are you insuring for $750 a month?

[Anonymous]

Anonymous wrote:

Anonymous wrote:"To further this thread- it would be interesting to hear what both frugal and more middle of the road types think how a $12k net/month (around $250k gross) "should" be spent from their perspective. On the following assumptions, only mortgage/car loan debt, two kids (under 10), two-income, mid-thirties ages.

How do you break it down, 401k/retirement, housing, car, extra savings etc."

Mortgage: $3500
Childcare: $1200
Food: $1,000
Utilities: $1,000
College Savings: $1,000
IRA: $820
Insurance: $750
Clothes: $500
Disposable income for gifts, vacations, etc: $1,830

What are you insuring for $750 a month?

And how are your utilities $1,000/month??????

[Anonymous]

Not the PP, but my car, life, disability, and homeowners insurance easily are over $8000 each year. I could shrink that a bit by changing the type of some of the life insurance I have, but it's a good savings mechanism now.

As for utilities, if you include electric($200), gas ($40), phone ($75), cable ($150), cell phones ($150), gym ($100) and the odd monthly plan in here, you get close to $1000 each month. Better to overbudget than be caught short.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
We make 250 and there is no way we could afford an 800k house.

don't know your situation, but if you have a 20% or higher downpayment and an overall stable financial situation,a $250k income can comfortably support an $800k home purchase while staying *below* average housing-income expenditure ratios both nationally and in the DC area.

Not PP, but we make just abotu $250K and I agree, there is no way we could afford a $800K house. At least, we SHOULDN'T afford that much of a house!! We have two kids in daycare (about $2000 a month), drive newer cars but not luxury (Husband has a 2010 Sonata and I have a 2010 Rav4). We max out our 401K and our IRAs (while we are eligible, anyway) and save for kid's college and vacations. I think money would be extremely tight trying to carry an $800K mortgage!

I think childcare is also a key factor here. We make just under 250 and our house is more thank 800K. But I am a SAHM and we do not pay for childcare, and we drive less expensive cars. You also seem to think you mortgage the entire price of a house? I would hope you would not buy an 800K house and then take on a mortgage for that much! Most banks these days won't even let you do that! We put more than 20% down.