How did you afford your $1M plus home?

[Anonymous]

OP, what rates are your student loans at and how much is left? I'd knock those out ASAP if possible (unless you managed to consolidate them when rates were silly low). We timed the payoff of DH's law school loans with the start of our nanny, so we didn't much notice the hit on our budget!

Right now we have an HHI of $320k. DH is working and I'm home with 3 kids. We saved as much as we could while I was working and feel like we're on this uphill battle to get to where were used to be with our two incomes! Monthly mortgage is $2500, we max out DH's 401k, are contributing to 529 plans for each of the kids and have one preschool tuition this year. DS is in DCPS and the baby is my human shadow -- oh, I do have a $55/wk babysitting bill for sanity.

We directly deposit into savings about $2800/mo to get a bigger house. I make it hard to access it! Also have small house savings account for things that come up around this plan. DH packs lunch 3x per wk, we order out once/mo and we splurge on one babysitter/date night per month. I shop for the kids at Value Village (except shoes) and haven't bought much new for myself in years. Thank goodness for hand me down maternity clothes!

With the equity we have in this house (30% down, valued around $810k) plus our savings, we could do a $1.1 house with a 400k mortgage. Problem is, theyre too small for us! We're probably another year or two away from $1.2.

[Anonymous]

By the time you can afford 1.2, you will have lesser offerings than you want.

[Anonymous]

401k is a bunch of crap we put in the minimum for company match. We probably made 1% since the 2000 crash, that's 12 years and definetly long term. The minute we have 250k we will dump it to buy another house and rent out our current place, our goal for retirement is to own multiple rentals. After the last 2 recent crashes and disconnect of stock prices with actual company performance (its all speculattion and big hedge firms manipulating prices) I don't trust investments unless they are tangible but that's just me.

[Anonymous]

Anonymous wrote:OP, our HHI is a little higher than yours ($480K total plus bonuses - last year probably had another $30K in bonsues) and we just bought a $1M house last year without selling our previous home (we currently rent it out at about cost each month).

We also have an expensive nanny (pay her $50k/year), and even own a boat (monthly payments on it, plus expenses, is about $1K/month). I feel like we want for very little as well. Admittedly, having an extra $100K on top of your income helps pay for things like the boat, but I'm having a hard time understanding why you can't afford a $!M mortgage or can't save the money for a downpayment (we paid 15% in cash plus closing costs out of our savings - since we didn't sell our other house, we didn't use our equity in that home to pay for our new house).

I guess we don't spend lavishly on things like clothes, jewelry, vacations, cars, etc., but I don't feel like we want for much either. We still save pretty well - maybe not as much as I'd like, but well over 10% of our salary each year (in addition to 401K).

How much exactly are you spending each month supporting family? How expensive is your nanny? Can you look into an au pair or live in instead (especially if you move to a larger house)? I feel like $400K HHI should be enough to afford a $6K/month mortgage (this is at least what ours is on our $1M house). Even assuming you only net 65% of your salary, you'd still bring in over $21K a MONTH off a $400K salary. So, where is the $$$ going?

You are pretty ignorant to have a 50k a year nanny when the market is 35k

[Anonymous]

Not if they're paying her on the books, which is what it sounds like to me. We paid $14/hr for 55 hours a week and with taxes we were paying over $50k a year.

[Anonymous]

OP we make about half your HHI. I am home with kids. DH is very handy with his hands so we started investing in real estate from when we were about 20 years old. We lived in absolutely shitty conditions. We both come from humble backgrounds. We put ourselves through school and graduated without any debts. We kept rolling our real estates until we were able to put down 40% on our current mortgage 3 years ago. We will pay it off in 5 years after some other real estate properties have matured. We have absolutely no debt except the mortgage and our kids. The best thing I ever did was to join forces at 19 with a completely anal about finances handyman (can fix just about anything plus have an accountant degree). Income potential will put us in your bracket in 5-10 years or sooner if he wanted to change course. But from about 19 until about 34 our finances were very rigid. But at the end of the day it doesn't matter how much water you pour in a bucket, if there is a hole in the bottom.

[Anonymous]

Anonymous wrote:
It is "moronic" because retirement is not savings. Retirement is retirement. You would withdraw >50% of your retirement savings to use for the downpayment.
You should be able to afford such a house on your income, assuming that you save for a downpayment. But you have not so saved. Instead, you intend to raid most of your retirement account. Not savings, retirement.
You have $50K for a downpayment. Not $170K. Therefore you cannot afford the house.
How old are you? $80K isn't much to have in a retirement account, whether you are 31 or 39.

So retirement savings is an improper term...
You didn't read well, or I didn't express myself well. Besides the 401K, we have two defined-benefits generous pension plans, which we won't (can't) touch. If we don't touch the 401K, it will provide just under a third of retirement income from retirement accounts (excluding SS, which obviously is minimal). So I would withdraw not one-half but one-sixth of our retirement savings to do something that we highly value: a smallish outdated affordable home that works perfectly for our school/work commute. By the way, right now I have $200K in that 401K. (By the way, a hardship withdrawal incurs the 10% tax penalty, but not the 20% withholding penalty.)
We can agree to disagree: you say that I cannot use that money, which bears my name and which I can easily access. I say I shouldn't do it if possible, but given the circumstances I will consider doing it to fulfill an important life goal. That said, I do thank you for your time providing your insight.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
It is "moronic" because retirement is not savings. Retirement is retirement. You would withdraw >50% of your retirement savings to use for the downpayment.
You should be able to afford such a house on your income, assuming that you save for a downpayment. But you have not so saved. Instead, you intend to raid most of your retirement account. Not savings, retirement.
You have $50K for a downpayment. Not $170K. Therefore you cannot afford the house.
How old are you? $80K isn't much to have in a retirement account, whether you are 31 or 39.

So retirement savings is an improper term...
You didn't read well, or I didn't express myself well. Besides the 401K, we have two defined-benefits generous pension plans, which we won't (can't) touch. If we don't touch the 401K, it will provide just under a third of retirement income from retirement accounts (excluding SS, which obviously is minimal). So I would withdraw not one-half but one-sixth of our retirement savings to do something that we highly value: a smallish outdated affordable home that works perfectly for our school/work commute. By the way, right now I have $200K in that 401K. (By the way, a hardship withdrawal incurs the 10% tax penalty, but not the 20% withholding penalty.)
We can agree to disagree: you say that I cannot use that money, which bears my name and which I can easily access. I say I shouldn't do it if possible, but given the circumstances I will consider doing it to fulfill an important life goal. That said, I do thank you for your time providing your insight.

I'm amazed by how obnoxious and judgmental some of you posters are. If PPs take money from their 401Ks, so be it. It's THEIR MONEY. They put it in there. YOU DIDNT. So why are you so angry? You do what you think is best, and they'll do what they think is best.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
It is "moronic" because retirement is not savings. Retirement is retirement. You would withdraw >50% of your retirement savings to use for the downpayment.
You should be able to afford such a house on your income, assuming that you save for a downpayment. But you have not so saved. Instead, you intend to raid most of your retirement account. Not savings, retirement.
You have $50K for a downpayment. Not $170K. Therefore you cannot afford the house.
How old are you? $80K isn't much to have in a retirement account, whether you are 31 or 39.

So retirement savings is an improper term...
You didn't read well, or I didn't express myself well. Besides the 401K, we have two defined-benefits generous pension plans, which we won't (can't) touch. If we don't touch the 401K, it will provide just under a third of retirement income from retirement accounts (excluding SS, which obviously is minimal). So I would withdraw not one-half but one-sixth of our retirement savings to do something that we highly value: a smallish outdated affordable home that works perfectly for our school/work commute. By the way, right now I have $200K in that 401K. (By the way, a hardship withdrawal incurs the 10% tax penalty, but not the 20% withholding penalty.)
We can agree to disagree: you say that I cannot use that money, which bears my name and which I can easily access. I say I shouldn't do it if possible, but given the circumstances I will consider doing it to fulfill an important life goal. That said, I do thank you for your time providing your insight.

Look, if you think it's a good idea to withdraw retirement funds, and incur a penalty in doing so, to make a down payment on a house because you cannot save for that down payment independently of retirement, ultimately that is your business. It doesn't matter whether I "agree" as it is your decision.

But you did ask here, and many of us said it is a very stupid idea. And you will not find a financial adviser anywhere who will agree with you that it is a reasonable thing to do.

But whatever, make whatever stupid decisions you want with your own money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
It is "moronic" because retirement is not savings. Retirement is retirement. You would withdraw >50% of your retirement savings to use for the downpayment.
You should be able to afford such a house on your income, assuming that you save for a downpayment. But you have not so saved. Instead, you intend to raid most of your retirement account. Not savings, retirement.
You have $50K for a downpayment. Not $170K. Therefore you cannot afford the house.
How old are you? $80K isn't much to have in a retirement account, whether you are 31 or 39.

So retirement savings is an improper term...
You didn't read well, or I didn't express myself well. Besides the 401K, we have two defined-benefits generous pension plans, which we won't (can't) touch. If we don't touch the 401K, it will provide just under a third of retirement income from retirement accounts (excluding SS, which obviously is minimal). So I would withdraw not one-half but one-sixth of our retirement savings to do something that we highly value: a smallish outdated affordable home that works perfectly for our school/work commute. By the way, right now I have $200K in that 401K. (By the way, a hardship withdrawal incurs the 10% tax penalty, but not the 20% withholding penalty.)
We can agree to disagree: you say that I cannot use that money, which bears my name and which I can easily access. I say I shouldn't do it if possible, but given the circumstances I will consider doing it to fulfill an important life goal. That said, I do thank you for your time providing your insight.

Methinks thou doth protest too much.

[Anonymous]

Anonymous wrote:OP, what rates are your student loans at and how much is left? I'd knock those out ASAP if possible (unless you managed to consolidate them when rates were silly low). We timed the payoff of DH's law school loans with the start of our nanny, so we didn't much notice the hit on our budget!

Right now we have an HHI of $320k. DH is working and I'm home with 3 kids. We saved as much as we could while I was working and feel like we're on this uphill battle to get to where were used to be with our two incomes! Monthly mortgage is $2500, we max out DH's 401k, are contributing to 529 plans for each of the kids and have one preschool tuition this year. DS is in DCPS and the baby is my human shadow -- oh, I do have a $55/wk babysitting bill for sanity.

We directly deposit into savings about $2800/mo to get a bigger house. I make it hard to access it! Also have small house savings account for things that come up around this plan. DH packs lunch 3x per wk, we order out once/mo and we splurge on one babysitter/date night per month. I shop for the kids at Value Village (except shoes) and haven't bought much new for myself in years. Thank goodness for hand me down maternity clothes!

With the equity we have in this house (30% down, valued around $810k) plus our savings, we could do a $1.1 house with a 400k mortgage. Problem is, theyre too small for us! We're probably another year or two away from $1.2.

I'll never understand posters like you. Your income is in the top 2% of the nation and estimating a 25% tax rate (reasonable given your deductions) you make $240K/year. Minus current mortgage of $30k/year you have $210k/year to live on. Minus the additional $33,600/year you are saving for a new house you have $176,000/year. That is $15K/month. Now you say that after you deduct retirement and college savings from that $15K you have nothing but a bare bones, thrift shop, one-meal-out-per-month lifestyle similar to that of a graduate student. And yet your take home pay is 3-4 three times the national average. WHERE DOES YOUR MONEY GO? I just don't get it. Are you sure your husband isn't supporting another family on the side? That's the only explanation I can think of. Really, it just doesn't make any, ANY sense.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
It is "moronic" because retirement is not savings. Retirement is retirement. You would withdraw >50% of your retirement savings to use for the downpayment.
You should be able to afford such a house on your income, assuming that you save for a downpayment. But you have not so saved. Instead, you intend to raid most of your retirement account. Not savings, retirement.
You have $50K for a downpayment. Not $170K. Therefore you cannot afford the house.
How old are you? $80K isn't much to have in a retirement account, whether you are 31 or 39.

So retirement savings is an improper term...
You didn't read well, or I didn't express myself well. Besides the 401K, we have two defined-benefits generous pension plans, which we won't (can't) touch. If we don't touch the 401K, it will provide just under a third of retirement income from retirement accounts (excluding SS, which obviously is minimal). So I would withdraw not one-half but one-sixth of our retirement savings to do something that we highly value: a smallish outdated affordable home that works perfectly for our school/work commute. By the way, right now I have $200K in that 401K. (By the way, a hardship withdrawal incurs the 10% tax penalty, but not the 20% withholding penalty.)
We can agree to disagree: you say that I cannot use that money, which bears my name and which I can easily access. I say I shouldn't do it if possible, but given the circumstances I will consider doing it to fulfill an important life goal. That said, I do thank you for your time providing your insight.

Look, if you think it's a good idea to withdraw retirement funds, and incur a penalty in doing so, to make a down payment on a house because you cannot save for that down payment independently of retirement, ultimately that is your business. It doesn't matter whether I "agree" as it is your decision.

But you did ask here, and many of us said it is a very stupid idea. And you will not find a financial adviser anywhere who will agree with you that it is a reasonable thing to do.

But whatever, make whatever stupid decisions you want with your own money.

There is a penalty but you should be able to deduct closing costs and mortgage deduction to offset it. Also note that there is no guarantee that the money you put in will be there in 10 years. Look at the stock market for the last 12 years it has actually gone down.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, what rates are your student loans at and how much is left? I'd knock those out ASAP if possible (unless you managed to consolidate them when rates were silly low). We timed the payoff of DH's law school loans with the start of our nanny, so we didn't much notice the hit on our budget!

Right now we have an HHI of $320k. DH is working and I'm home with 3 kids. We saved as much as we could while I was working and feel like we're on this uphill battle to get to where were used to be with our two incomes! Monthly mortgage is $2500, we max out DH's 401k, are contributing to 529 plans for each of the kids and have one preschool tuition this year. DS is in DCPS and the baby is my human shadow -- oh, I do have a $55/wk babysitting bill for sanity.

We directly deposit into savings about $2800/mo to get a bigger house. I make it hard to access it! Also have small house savings account for things that come up around this plan. DH packs lunch 3x per wk, we order out once/mo and we splurge on one babysitter/date night per month. I shop for the kids at Value Village (except shoes) and haven't bought much new for myself in years. Thank goodness for hand me down maternity clothes!

With the equity we have in this house (30% down, valued around $810k) plus our savings, we could do a $1.1 house with a 400k mortgage. Problem is, theyre too small for us! We're probably another year or two away from $1.2.

I'll never understand posters like you. Your income is in the top 2% of the nation and estimating a 25% tax rate (reasonable given your deductions) you make $240K/year. Minus current mortgage of $30k/year you have $210k/year to live on. Minus the additional $33,600/year you are saving for a new house you have $176,000/year. That is $15K/month. Now you say that after you deduct retirement and college savings from that $15K you have nothing but a bare bones, thrift shop, one-meal-out-per-month lifestyle similar to that of a graduate student. And yet your take home pay is 3-4 three times the national average. WHERE DOES YOUR MONEY GO? I just don't get it. Are you sure your husband isn't supporting another family on the side? That's the only explanation I can think of. Really, it just doesn't make any, ANY sense.

[Anonymous]

Anonymous wrote:Not if they're paying her on the books, which is what it sounds like to me. We paid $14/hr for 55 hours a week and with taxes we were paying over $50k a year.

who would pay a nanny off the books? only a tax cheat and a leech on society.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, what rates are your student loans at and how much is left? I'd knock those out ASAP if possible (unless you managed to consolidate them when rates were silly low). We timed the payoff of DH's law school loans with the start of our nanny, so we didn't much notice the hit on our budget!

Right now we have an HHI of $320k. DH is working and I'm home with 3 kids. We saved as much as we could while I was working and feel like we're on this uphill battle to get to where were used to be with our two incomes! Monthly mortgage is $2500, we max out DH's 401k, are contributing to 529 plans for each of the kids and have one preschool tuition this year. DS is in DCPS and the baby is my human shadow -- oh, I do have a $55/wk babysitting bill for sanity.

We directly deposit into savings about $2800/mo to get a bigger house. I make it hard to access it! Also have small house savings account for things that come up around this plan. DH packs lunch 3x per wk, we order out once/mo and we splurge on one babysitter/date night per month. I shop for the kids at Value Village (except shoes) and haven't bought much new for myself in years. Thank goodness for hand me down maternity clothes!

With the equity we have in this house (30% down, valued around $810k) plus our savings, we could do a $1.1 house with a 400k mortgage. Problem is, theyre too small for us! We're probably another year or two away from $1.2.

I'll never understand posters like you. Your income is in the top 2% of the nation and estimating a 25% tax rate (reasonable given your deductions) you make $240K/year. Minus current mortgage of $30k/year you have $210k/year to live on. Minus the additional $33,600/year you are saving for a new house you have $176,000/year. That is $15K/month. Now you say that after you deduct retirement and college savings from that $15K you have nothing but a bare bones, thrift shop, one-meal-out-per-month lifestyle similar to that of a graduate student. And yet your take home pay is 3-4 three times the national average. WHERE DOES YOUR MONEY GO? I just don't get it. Are you sure your husband isn't supporting another family on the side? That's the only explanation I can think of. Really, it just doesn't make any, ANY sense.

ITA. These people are bleeding out money somewhere for something you shouldn't be or just whining poverty when they need to STFU.