Anyone at $330K HHI have a mortgage that is $4900/month (37% of net pay / 17% of gross)?

[Anonymous]

We currently have a small dated home for which our mortgage is $360K – montly payment of $2300/month (17% of net and 8% of gross). We like having a low house payment, but we really don’t like our house, and have been hoping to move for about 5 years. We’ve done cosmetic touch-ups but it’s still not great for 2 adults and 3 kids. It would take a substantial investment to make it nicer, and we don't love the house enough to want to enhance it that much.

We are in the market for a bigger home. With an HHI of $330K, we are thinking of buying a home where our mortgage would be $850K – which would be 37% of net pay (and 17% of gross pay).

Our jobs are stable, assuming we do the work. One of us is a federal employee making the top amount ($157,000).

We figure that, if we buy the larger home, we would have space to host an au pair. Our child-care costs would go down by about half. (We currently pay our nanny $50,000/year.) Our youngest is entering public kindergarten in the fall.

We are willing to cut expenses (vacations, kids’ activities, and eating out) to get into a bigger house. (Maybe we wouldn’t mind hanging out in our house? As it is, we try to get out and about as much as possible.) Has anyone cut your budget a lot to afford a bigger or nicer home, and not regretted it?

Is there anyone paying 17% or gross (or 37% of net) and have 3 kids and not feel very stretched?

Thank you!

P.S. I have seen these other threads about mortgages for people earning approximately $350K

http://www.dcurbanmom.com/jforum/posts/list/219419.page

http://www.dcurbanmom.com/jforum/posts/list/422786.page#5954720

http://www.dcurbanmom.com/jforum/posts/list/30/411919.page#5960694

[Anonymous]

We pay $1600 on $300k, and are going up to $2600. That's excluding taxes (not sure if you are counting taxes?) which will bring us to $3300 or so if you include.

We also have a childcare on the order of $50k per annum. I hate going up by $1,000 a month, but figure even a modest increase in comp can cover the incremental expenses.

Your numbers would make me a bit nervous - that's just a massive increase. Frankly though, depends a lot on what you save too. We save about $30k in 401k, another $4000 a month in regular savings, have about $1.8M in assets (less mortgage) and no other debt, so $1,000 a month feels reasonable. Look at the whole picture of your finances (ages, 529 etc)

[Anonymous]

I would feelstretched. We make similar salaries without any childcare costs and our mortgage is 3,700 a month. We have no other debt such as car or student loans. We are able to save a ton, go on vacations and not have bills stress us out. If you can help it I wouldn't be house poor. The fact you're posting shows you know you know this could be a mistake.

[Anonymous]

I think that's very conservative. No issues with it at all.

[Anonymous]

What's your monthly credit card payment/debt (whether or not you carry a balance)?

What's your total of all debt including student loans, etc., to your income?

Not enough info in your OP to answer but I'd be a bit nervous with that... OTOH I never borrow to the limits that lenders will give me.

[Anonymous]

OP here. Thanks for the helpful posts so far.

Here's some additional info. We are both 44 years old. We have retirement savings of about 800K. Thanks to help from the grandparents, we haven't had to save for our 3 kids' college educations because the grandparents have chipped $175,000 for each of the 3 kids. We have a decent amount of life insurance (about $2.5 million on each of us). My DH is a federal employee and, as I understand it, upon retirement in about 23 years, will get 1 percent of his salary for each year worked (which would be $23,000/year for the 15 years he's worked there so far).

In 2013, I rejoined the work force on a full-time basis (after working part-time when the kids were younger). Part of the reason that I did go full-time was that we only have about $10,000 in non-retirement savings, and on the flip side, we have about $10,000 in credit card debt.

We don't have student loan payments or car payments.

We seems to spend an outsized amount on our nanny ($50,000) and on our kids' activities because my DH is an active type (skiing, hockey, swim team dues). I'd be happy to cut back on these if we could just have a more spacious and open home where we can enjoy time together as a family and our kids can host their friends. Perhaps our relatives would be willing to visit us, instead of us having to fly to visit them?

[Anonymous]

Your DH won't get 1% of salary for each year, he'll get 1% of his high-3 yrs under current law.

I guarantee you that the federal retirement system will be changed to the detriment of future retirees before he retires so you should discount any prediction of his retirement benefit accordingly.

At a minimum they'll likely go to a high-5 formula and in the longer term who knows, it's now highly popular to try to balance the budget on the back of Feds, as unseemly as that is.

I haven't done all the math but with the college paid for by parents & a decent amount in retirement that's good.

You have WAY too little nonretirement savings, though, woefully so.

If your HHI is $330K/yr., you should have at least $60-100k (6 months takehome pay) saved as an emergency fund.

If you're not there yet, then I wouldn't go taking on a massive mortgage when you have no liquid non-retirement savings to fall back on.

[Anonymous]

The biggest issue I have is the credit card debt. It means that for quite a number of months, the OP has spent more than came in. Won't this even be worse with a much more expensive mortgage?!

I don't get overly concerned about emergency funds, especially with a government employee. If anything I'm not a fan of lots of cash sitting in accounts paying next to nothing in interest.

[Anonymous]

OP here. Thanks for the responses. With respect to DH's federal government retirement benefits, can the PP embellish a little bit more? My DH is a GS-15 (5), and as I undersatnd it, he is at the top of the pay scale at $157,100. So will it matter if it is highest 3 or highest 5? (In other words, it seems like he'll be making the same amount -- with a tiny uptick -- for the next 20 years if he remains a federal employee.)

(If we were to get into a cash bind, we would borrow from DH's TSP until we could build up a bigger cushion. Also, we have a slight bit of extra income if the grandparents decide to gift us $12,000 each for my DH and me. We don't count on it but it happens most years. This helped to allow me to work part-time for many years.)

[Anonymous]

Why do you guys have any credit card debt? What's going on? You have very generous grandparents, a really good salary - and you're still going over?

[Anonymous]

OP here. The credit card debt pre-dates my return to the full-time work force in 2013. We're still chipping away at it.

[Anonymous]

OP, you cite your DH's hobbies as the primary reason for your debt, but you say YOU'd be happy to cut back. Are you sure your DH is really willing to do that? And are you sure you're not equally as guilty of living beyond your means as he is? I don't see this working, financially or in terms of your family/marriage, unless you BOTH want it enough to cut back. I would try pretending this is your mortgage for a minimum of 6 months and see how it feels. Yeah I know you feel your dmall house makes you need to spend money, but that's just an excuse. In a bigger house you're going to have other excuses-- higher utilities, you need to furnish it, whatever. Give yourself 6 months to live like you have a $4900/month payment and put the extra toward paying off your credit cards. If you can do it and be happy, go for the bigger house. But if you can't make the cuts and be happy where you are, moving is NOT going to change anything.

[Anonymous]

We're doing it (w/o the grandparents chipping in) so I think you're fine!

[Anonymous]

no worries, it's obvious that grandparents are loaded (500k college fund gift!). they are banking on mad inheritance, otherwise why would he be treading water as a fed while she stays home and racks up debt? it's all play money to them, b/c in the end they'll be able to kick back. I'm guessing DW parents who have money, and DH reluctant to stretch now for bigger house hence she is trying to get a chorus of support that it is reasonable from DCUM.

[Anonymous]

Anonymous wrote:Your DH won't get 1% of salary for each year, he'll get 1% of his high-3 yrs under current law.

I guarantee you that the federal retirement system will be changed to the detriment of future retirees before he retires so you should discount any prediction of his retirement benefit accordingly.

At a minimum they'll likely go to a high-5 formula and in the longer term who knows, it's now highly popular to try to balance the budget on the back of Feds, as unseemly as that is.

I haven't done all the math but with the college paid for by parents & a decent amount in retirement that's good.

You have WAY too little nonretirement savings, though, woefully so.

If your HHI is $330K/yr., you should have at least $60-100k (6 months takehome pay) saved as an emergency fund.

If you're not there yet, then I wouldn't go taking on a massive mortgage when you have no liquid non-retirement savings to fall back on.

grandparents are emergency fund. no reason to tie up cash.