How Much Would You Spend on a House?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:my god, it's surprising how people are having a hard time figuring out why it makes sense to carry low-interest debt.

if you owe 40 grand in student loans at 2%, it simply makes financial sense to throw (or leave) the 40 grand in the market, which you can expect to yield returns of 6-8%. using the money to pay a loan that is essentially free money doesn't make sense.

Everyone understands this. It's more the principal of the matter - its debt. It isn't deductible and you are having to pay someone to borrow this money. You could also borrow through a heloc at a low rate and invest, but do you?

I realize some people don't mind carrying debt. I do. I wouldn't want to hang onto student loans just to earn a few extra thousand of dollars a year in interest. It makes even less sense to me since I earn enough money that the spread is an insignificant amount of money. I personally don't want any debt besides a mortgage. We make too much money to have a bunch of liabilities over our head because we can cheaply borrow money.

I am not sure that the principal really cares.

Ha. You get my point.

[Anonymous]

Anonymous wrote:my god, it's surprising how people are having a hard time figuring out why it makes sense to carry low-interest debt.

if you owe 40 grand in student loans at 2%, it simply makes financial sense to throw (or leave) the 40 grand in the market, which you can expect to yield returns of 6-8%. using the money to pay a loan that is essentially free money doesn't make sense.

Makes no sense to me. We're at 750k/yr and the only loans we have are our home and investment properties. Paying off student debt was the stroke of a check. Who wants to deal with that? If i really was so hard up to make 8% on 40k vs 2% in interest, i'd do the smart thing and open a no interest credit card and play that game at 0%, but carrying around 2% in debt for a measly 40k in student loans srems like a waste of my time.

[Anonymous]

Anonymous wrote:

Anonymous wrote:my god, it's surprising how people are having a hard time figuring out why it makes sense to carry low-interest debt.

if you owe 40 grand in student loans at 2%, it simply makes financial sense to throw (or leave) the 40 grand in the market, which you can expect to yield returns of 6-8%. using the money to pay a loan that is essentially free money doesn't make sense.

Makes no sense to me. We're at 750k/yr and the only loans we have are our home and investment properties. Paying off student debt was the stroke of a check. Who wants to deal with that? If i really was so hard up to make 8% on 40k vs 2% in interest, i'd do the smart thing and open a no interest credit card and play that game at 0%, but carrying around 2% in debt for a measly 40k in student loans srems like a waste of my time.

Ehh. It is on auto deduct. I don't even know who services it and would have to track that down to pay it off. Just not a big deal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:my god, it's surprising how people are having a hard time figuring out why it makes sense to carry low-interest debt.

if you owe 40 grand in student loans at 2%, it simply makes financial sense to throw (or leave) the 40 grand in the market, which you can expect to yield returns of 6-8%. using the money to pay a loan that is essentially free money doesn't make sense.

Makes no sense to me. We're at 750k/yr and the only loans we have are our home and investment properties. Paying off student debt was the stroke of a check. Who wants to deal with that? If i really was so hard up to make 8% on 40k vs 2% in interest, i'd do the smart thing and open a no interest credit card and play that game at 0%, but carrying around 2% in debt for a measly 40k in student loans srems like a waste of my time.

+1.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:my god, it's surprising how people are having a hard time figuring out why it makes sense to carry low-interest debt.

if you owe 40 grand in student loans at 2%, it simply makes financial sense to throw (or leave) the 40 grand in the market, which you can expect to yield returns of 6-8%. using the money to pay a loan that is essentially free money doesn't make sense.

Makes no sense to me. We're at 750k/yr and the only loans we have are our home and investment properties. Paying off student debt was the stroke of a check. Who wants to deal with that? If i really was so hard up to make 8% on 40k vs 2% in interest, i'd do the smart thing and open a no interest credit card and play that game at 0%, but carrying around 2% in debt for a measly 40k in student loans srems like a waste of my time.

Ehh. It is on auto deduct. I don't even know who services it and would have to track that down to pay it off. Just not a big deal.

I love reading about people who think having student loans is a good thing or no big deal. Next you're going to be telling me you took out a huge mortgage for the interest deduction.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:my god, it's surprising how people are having a hard time figuring out why it makes sense to carry low-interest debt.

if you owe 40 grand in student loans at 2%, it simply makes financial sense to throw (or leave) the 40 grand in the market, which you can expect to yield returns of 6-8%. using the money to pay a loan that is essentially free money doesn't make sense.

Makes no sense to me. We're at 750k/yr and the only loans we have are our home and investment properties. Paying off student debt was the stroke of a check. Who wants to deal with that? If i really was so hard up to make 8% on 40k vs 2% in interest, i'd do the smart thing and open a no interest credit card and play that game at 0%, but carrying around 2% in debt for a measly 40k in student loans srems like a waste of my time.

Ehh. It is on auto deduct. I don't even know who services it and would have to track that down to pay it off. Just not a big deal.

I love reading about people who think having student loans is a good thing or no big deal. Next you're going to be telling me you took out a huge mortgage for the interest deduction.

No. Why would we do that? The interest rate is much higher than the student loans. And you can only deduct it, not get a credit. And I don't think student loans are good or bad. They just are. And really, it isn't a big deal at all.

[Anonymous]

$1.5 or so? It's strange that you have so little saved with that kind of salary. Is it relatively recent?

[Anonymous]

I love how everyone who claims it is better to invest $40K instead of paying off a $40K student loan starts with the assumption that someone has $40K sitting around. For most of us, it takes time to accumulate such a sum, so it isn't a simple 2% vs 8%.

[Anonymous]

Anonymous wrote:I love how everyone who claims it is better to invest $40K instead of paying off a $40K student loan starts with the assumption that someone has $40K sitting around. For most of us, it takes time to accumulate such a sum, so it isn't a simple 2% vs 8%.

I only have a few friends who admit to having student loans. When the topic comes up they love to say how "well you can earn X in the market." However I seriously doubt that any of them actually have that amount of money available to invest. I doubt they invest outside of their retirement accounts. It's just something they say to make themselves feel better about having debt.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I love how everyone who claims it is better to invest $40K instead of paying off a $40K student loan starts with the assumption that someone has $40K sitting around. For most of us, it takes time to accumulate such a sum, so it isn't a simple 2% vs 8%.

I only have a few friends who admit to having student loans. When the topic comes up they love to say how "well you can earn X in the market." However I seriously doubt that any of them actually have that amount of money available to invest. I doubt they invest outside of their retirement accounts. It's just something they say to make themselves feel better about having debt.

Agreed. I'm a mortgage underwriter and i do a cavity search on people's finances. High earners dont carry around student loan debt. Period. I see alot of people making in the 300-400k range spending ALL their money and only having 401k as investments. And sadly, from what i see, i dont lump the 300-400k into high earners mainly because the manage their money pretty poorly. Lack of investing and carrying around silly loans like student loans and car loans.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I love how everyone who claims it is better to invest $40K instead of paying off a $40K student loan starts with the assumption that someone has $40K sitting around. For most of us, it takes time to accumulate such a sum, so it isn't a simple 2% vs 8%.

I only have a few friends who admit to having student loans. When the topic comes up they love to say how "well you can earn X in the market." However I seriously doubt that any of them actually have that amount of money available to invest. I doubt they invest outside of their retirement accounts. It's just something they say to make themselves feel better about having debt.

Agreed. I'm a mortgage underwriter and i do a cavity search on people's finances. High earners dont carry around student loan debt. Period. I see alot of people making in the 300-400k range spending ALL their money and only having 401k as investments. And sadly, from what i see, i dont lump the 300-400k into high earners mainly because the manage their money pretty poorly. Lack of investing and carrying around silly loans like student loans and car loans.

What other mistakes do you see? We fall in the 300-400k range and I feel like we also spend all of our money but we do invest around 130k a year plus in retirement (~80k in 401ks plus ~50k stock). Besides that we have a 15 year mortgage. However, the rest of our money is going to graduate school so we don't take any student loans.

[Anonymous]

Anonymous wrote:$1.5 or so? It's strange that you have so little saved with that kind of salary. Is it relatively recent?

I agree. Your savings rate is really low.

[Anonymous]

Your 529s look a little low for your income level. How much do you contribute per month? At your income level, it should be around 1500 per kid per month if fully funding private college is your goal.

[Anonymous]

Do you own a house now? What is your equity like? If this is your first house (so you don't have any equity to move) I would do 1.5 with 300,000 down. You could go higher but then you will obviously decimate your cash savings more.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I love how everyone who claims it is better to invest $40K instead of paying off a $40K student loan starts with the assumption that someone has $40K sitting around. For most of us, it takes time to accumulate such a sum, so it isn't a simple 2% vs 8%.

I only have a few friends who admit to having student loans. When the topic comes up they love to say how "well you can earn X in the market." However I seriously doubt that any of them actually have that amount of money available to invest. I doubt they invest outside of their retirement accounts. It's just something they say to make themselves feel better about having debt.

Agreed. I'm a mortgage underwriter and i do a cavity search on people's finances. High earners dont carry around student loan debt. Period. I see alot of people making in the 300-400k range spending ALL their money and only having 401k as investments. And sadly, from what i see, i dont lump the 300-400k into high earners mainly because the manage their money pretty poorly. Lack of investing and carrying around silly loans like student loans and car loans.

What other mistakes do you see? We fall in the 300-400k range and I feel like we also spend all of our money but we do invest around 130k a year plus in retirement (~80k in 401ks plus ~50k stock). Besides that we have a 15 year mortgage. However, the rest of our money is going to graduate school so we don't take any student loans.

How are you investing 80k in 401k? Max contribution is 18.5/pp.

Are YOU investing 50k in stock or are you getting RSU/stock bonuses from your company?