If you are house poor, do you regret it?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are trying to decide whether to keep the 3,500 a month mortgage and save close to 6,000 a month after retirement

Or

Take on a 7,500 mortgage and save 2,000 a month after retirement


We can pay the 7,500 on one salary and unemployment if necessary. No other debts. One job is extremely stable with a pension.

Thing is I’m not sure what we really need the large brokerage account for. I think a lot of people are house poor for this reason...what is a large savings account going to really do for you? You can’t take it with you. Most professionals can find another similar paying job if they lose their job. Most people have to work for retirement savings and healthcare. So you might as well live in a nice house.

If you can pay the 7500 and all your other expenses on one income, my God, how much are you spending now that you can only save $6,000/mo with full employment?

We could easily live on 3,000 a month, including all bills if we had to. Of course we spend more now. But we save over 150k a year including bonuses...is that enough for you? Also, we have a 3k a month childcare bill we would not have if one spouse lost their job.

So which is it? Are you saving 6k/mo or are you saving $12,500/mo? You seem to have tripped yourself up.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are trying to decide whether to keep the 3,500 a month mortgage and save close to 6,000 a month after retirement

Or

Take on a 7,500 mortgage and save 2,000 a month after retirement


We can pay the 7,500 on one salary and unemployment if necessary. No other debts. One job is extremely stable with a pension.

Thing is I’m not sure what we really need the large brokerage account for. I think a lot of people are house poor for this reason...what is a large savings account going to really do for you? You can’t take it with you. Most professionals can find another similar paying job if they lose their job. Most people have to work for retirement savings and healthcare. So you might as well live in a nice house.

If you can pay the 7500 and all your other expenses on one income, my God, how much are you spending now that you can only save $6,000/mo with full employment?

We could easily live on 3,000 a month, including all bills if we had to. Of course we spend more now. But we save over 150k a year including bonuses...is that enough for you? Also, we have a 3k a month childcare bill we would not have if one spouse lost their job.

So which is it? Are you saving 6k/mo or are you saving $12,500/mo? You seem to have tripped yourself up.

We are saving 6k a month roughly after retirement. This doesn’t include bonuses. I don’t include bonuses because it’s not like I’d use my bonus to pay my mortgage. I’m focused on the monthly cash flow if we buy a more expensive home. My point before was that we could live off of one paycheck, including a larger mortgage , if we had to. And by had to I mean a bare bones existence.

[Anonymous]

You mentioned you could afford a townhouse with the same commute and zoned to the same target school(s), for significantly less. Seriously consider it. TH are a big generic, but generically "nice" and are as big as most small SFHs. It isn't as nice as a SFH, but you don't have to nuke our your savings and/or can have a much smaller debt burden. You can forget the yard/lawn type costs. Throw some money art or a kitchen finish.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:NP here. Years ago, we bought a smallish house on a reasonable lot in a moderately close in suburb. Our mortgage payment was a bit more than one of my paychecks; things were tight.

Fast forward 20 years.

My salary has tripled. The house payment has gone up, but by about $200 dollars (taxes). The mortgage is about 1/2 of one paycheck.

Oh, and the house has appreciated while we paid down the mortgage.

Now, we were paying nearly the same in rent when we bought the house, so for the down payment (10%) + the same cash flow, we have gone from 25K in cash (down payment) to 550K in equity.

I dont understand the point of the PP’s paragraph. Everyone builds equity over 20 years...

I believe the point may have been that house poor is a temporary thing.

If your salary triples, or increases considerably, but that's not the case for lots of people.

PP here. The point was it is temporary. As for the tripling salary, that was both career growth and inflation. While inflation was low for the last 20 years, there was some. Inflation with no career growth means a 50% increase in the last 20 years. That means (without refinancing), the effective cost of housing will drop.

And you will build up equity.

Most people do somewhat better than inflation. As an example, if you started in the gov't 20 years ago as a GS 9, you would be making about 40K. Today, you would probably be a GS 13 or 14 step 10. That puts you between 125K and 150K. If you are living is a house you could afford at 40K (or you and your spouse could afford at 80K) 20 years ago, you are comfortable today.

If you are a big-law associate, I would not want to be house poor, as there is an 80% these are your high earning years.