Can I afford it? (new house)

[Anonymous]

monthly net= $9300
we have no debt other than mortgage and want a bigger house. About $150k home equity.
Can we afford to buy a $600k house? Monthly PITI would be almost $3k, a 1/3 of our budget, but it seems to fit with our other expenses....

What do you think?

[Anonymous]

I think its too tight when you account for utilities, yard care and repairs.

[Anonymous]

Yes, you can.

[Anonymous]

If you have to ask yourself then the answer is no. you know yoru spending habits, you know how you save etc.

[Anonymous]

fine if no other debts.

[Anonymous]

I think you can.

[Anonymous]

Easily. We make less and can afford it.

[Anonymous]

The answer from those looking outside in is yes. But what outsiders can't tell you is how much extra do you need each month to feel comfortable. How much do you want to save, to use for vacations, to put away for a new car, a new roof, etc

[Anonymous]

Anonymous wrote:The answer from those looking outside in is yes. But what outsiders can't tell you is how much extra do you need each month to feel comfortable. How much do you want to save, to use for vacations, to put away for a new car, a new roof, etc

I agree. Our monthly net is slightly higher than yours, and our mortgage slightly lower, but we also have daycare, student loans, still save for retirement and college and hate pinching pennies. For example, the pp who says "we make less and can afford it," you have no idea what the rest of their financial situation is.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The answer from those looking outside in is yes. But what outsiders can't tell you is how much extra do you need each month to feel comfortable. How much do you want to save, to use for vacations, to put away for a new car, a new roof, etc

I agree. Our monthly net is slightly higher than yours, and our mortgage slightly lower, but we also have daycare, student loans, still save for retirement and college and hate pinching pennies. For example, the pp who says "we make less and can afford it," you have no idea what the rest of their financial situation is.

Agreed. We are close to your situation OP - take-home almost the same, PITI is right around $2800. We do fine with this amount and still save aggressively for retirement and college, take nice vacations, don't scrimp too much on the day to day stuff. However we have no other debt (no student loans, car loans, or CC debt), we have only one child, and our daycare years are behind us (afterschool plus summer camp averages out to around $600 per month). We also have very healthy cash reserves, so we know a big expense like a new roof won't send us scrambling. Without those caveats I'm sure we'd find it more restrictive.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The answer from those looking outside in is yes. But what outsiders can't tell you is how much extra do you need each month to feel comfortable. How much do you want to save, to use for vacations, to put away for a new car, a new roof, etc

I agree. Our monthly net is slightly higher than yours, and our mortgage slightly lower, but we also have daycare, student loans, still save for retirement and college and hate pinching pennies. For example, the pp who says "we make less and can afford it," you have no idea what the rest of their financial situation is.

Agreed. We are close to your situation OP - take-home almost the same, PITI is right around $2800. We do fine with this amount and still save aggressively for retirement and college, take nice vacations, don't scrimp too much on the day to day stuff. However we have no other debt (no student loans, car loans, or CC debt), we have only one child, and our daycare years are behind us (afterschool plus summer camp averages out to around $600 per month). We also have very healthy cash reserves, so we know a big expense like a new roof won't send us scrambling. Without those caveats I'm sure we'd find it more restrictive.

OP here. I agree, those are the details I need help analyzing so i can tell if this will make us house-poor.
We have no other debt, no student loans, but still have daycare expenses. I imagine things will be tighter during those years.
What do you consider "healthy cash reserves"? We have a 10 month emergency fund and the plan is to stop funding that account and start funneling all extra cash (on the new mortgage, will be saving $1k/month) towards retirement/college.
Good decision?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The answer from those looking outside in is yes. But what outsiders can't tell you is how much extra do you need each month to feel comfortable. How much do you want to save, to use for vacations, to put away for a new car, a new roof, etc

I agree. Our monthly net is slightly higher than yours, and our mortgage slightly lower, but we also have daycare, student loans, still save for retirement and college and hate pinching pennies. For example, the pp who says "we make less and can afford it," you have no idea what the rest of their financial situation is.

Agreed. We are close to your situation OP - take-home almost the same, PITI is right around $2800. We do fine with this amount and still save aggressively for retirement and college, take nice vacations, don't scrimp too much on the day to day stuff. However we have no other debt (no student loans, car loans, or CC debt), we have only one child, and our daycare years are behind us (afterschool plus summer camp averages out to around $600 per month). We also have very healthy cash reserves, so we know a big expense like a new roof won't send us scrambling. Without those caveats I'm sure we'd find it more restrictive.

OP here. I agree, those are the details I need help analyzing so i can tell if this will make us house-poor.
We have no other debt, no student loans, but still have daycare expenses. I imagine things will be tighter during those years.
What do you consider "healthy cash reserves"? We have a 10 month emergency fund and the plan is to stop funding that account and start funneling all extra cash (on the new mortgage, will be saving $1k/month) towards retirement/college.
Good decision?

PP here. We have a 12-month emergency fund as well as a short-term savings account that we add to regularly and tap for home repairs. Earlier in the year, that account had $10,000 in it. It now has $3,000 because we needed a new roof. I would strongly advocate having a separate fund with a decent chunk of cash (we started with $5K) that is only for the purpose of home repair. The bigger your house is, the more there is to break down.

[Anonymous]

According to the USDA study, expenses rise each year and do not drop off when you are done with daycare so don't count on that. Other considerations are future car loans, private schools, activities, tutors, and the like.

[Anonymous]

Anonymous wrote:According to the USDA study, expenses rise each year and do not drop off when you are done with daycare so don't count on that. Other considerations are future car loans, private schools, activities, tutors, and the like.

Yes, but many of the expenses that crop up once full-time childcare is no longer required are wants or preferences, not needs, so there is more flexibility in meeting them.

I definitely spend far less on my 8-year old than I did when she was 2. She doesn't go to private school, so big savings there obviously. After that, even with afterschool, summer camp, and activities like dance, soccer, guitar lessons, and swim lessons, I still spend far less on her than $1800/month. YMMV of course.

[Anonymous]

Anonymous wrote:According to the USDA study, expenses rise each year and do not drop off when you are done with daycare so don't count on that. Other considerations are future car loans, private schools, activities, tutors, and the like.

Depends so much on your personal situation and locale. A nanny might run you $3,500 to $4,000 a month in DC, NY, CA, etc while you might pay half that in TX or FL. No amount of shin guards and volleyball practices are going to come close. And those are all very much optional while leaving your 2 year old at home alone is not.