4 months emergency account only?
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Anonymous
| We are under contract for a house that needs some upgrades (not cosmetic). After inspection we requested that the sellers make those updates and they have declined. If we did it ourselves it would seriously cut into our emergency savings (problem is that this house was the top of our budget and is a bit of a stretch anyway). There are some other minor things that the house would need that we'd need to do too. We may end up with only about 4 months worth of expenses in savings and due to the new mortage and the fact that we hope to have a second kid and a bunch of other issues, we will have a very hard time building that savings back up again (assuming we continue to save for retirement etc). WWYD? |
Anonymous
| Find another house. |
Anonymous
| Can you put a little less down and increase the mortgage a bit? Are your jobs stable? |
Anonymous
+1. Don't stretch beyond your limits for a house that needs work. |
Anonymous
I would stretch for a new house with builders warranty. |
Anonymous
| I think 4 months e-fund is fine, if your jobs are reasonably stable. |
Anonymous
| OP here--Thanks for the opinions. Our jobs are reasonably stable but are not federal jobs and are not 100% stable. We don't have great potential for raises or earning more---this house is a bit of a stretch. We do have a small stock portfolio we could tap into if necessary but would prefer not to do that. Going to get exact bids on the work to be done and decide from there. |
Anonymous
| I think 4 months for a dual income family is doable for the short term, assuming your new mortgage payment allows you to start rebuilding your savings once you're settled in the house. Since it doesn't sound like that's the case, I would be wary. |
Anonymous
| Is that four months should you both become unemployed? That seems fine to me. What are the chances you both are let go at the same time? Probably pretty slim. If you both make about the same That's like having an 8 month fund if one of you loses a job. Seems like plenty. |
Anonymous
| OP here---I make about 40% more than DH so if I was out of a job the money would go faster. Our total HHI is about 165k |
Anonymous
| NEVER spend more than twice your after tax yearly income on housing. If the house price doesn't fit this rule don't buy it. Sticking to this rule is a cornerstone of building wealth. |
Anonymous
That's ridiculous. What if you have a massive down payment? You still shouldn't buy a house that costs more than 2x your after-tax salary? Nonsense. |
Anonymous
| I would be less concerned about the 4 months' emergency fund, and more concerned that you will need a secondary fund to take care not only of the planned repair expenses, but of the currently unknown ones that will inevitably crop up in the first couple of years (and every year thereafter...) Houses are expensive to maintain and you don't want to go into ownership with depleted funds. |
Anonymous
Seriously? I make $170k and after tax even less. Where can I buy a house for that?! I think the under 30% is a better rule. |
Anonymous
I think this poster must live in one of those places on hgtv where you can buy a five bedroom house with hardwoods and granite for three hundred thou. |