Can I afford a 1.8M house?

[Anonymous]

Actually, have her pay the children's private school tuition directly to the school, which circumvents the gift tax exclusion. She can then also give you a cash gift up to $15k each if she wants to transfer more wealth.

I'm not sure you can afford it or not. Do you track your spending? Are you saving 15-20% gross income for retirement outside of employer matches? I can't tell how old you are, but guessing late 30s-early 40s based on kids' ages. In my early 30s when I decided I wanted DD to go to PK-8 private school and we are much lower income than you guys, I created a zero-based budget and assigned every single dollar of income a job. That enabled me to see what we could afford and what we could not. I recommend this exercise because it is the only way to tell if you can afford something and that your spending aligns with your priorities. Put your spending in priority order and see where the money runs out.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Vomit. Sure you can because instead of paving your own way you're still relying on your parents.

This is ridiculous. OP can pay her own way - what she is asking about is whether she can afford to pay a house that is big enough for her family AND her mother. She probably can without her mother's contribution.

However, if I had to buy a house that could accommodate my mother - my mother would have to pay her own way and contribute to the down payment and mortgage. That's just reality. Although my mother came from nothing - she worked hard, saved and at this point in time is wealthier than I am. This is not my situation, but I could see if my father died my mother wanting to come and live with me. The only way that could happen is if I moved to a significantly larger space (and my mother's living standards at this point in her life are a lot higher than mine.) Any money transfer that makes this possible is not a disgusting wealth transfer or about my not being able to pay my way (I'm perfectly happy in my 500sqft apartment but even if I squeezed an extra bed for her that would not be good enough for a variety of reasons) but rather a retirement choice that she would be making and it is reasonable for her to use her assets to do so.

It's bizarre to me this insistence on everyone maintaining a separate household versus pooling resources as a family to meet the needs of everyone. My uncle and aunt lived with my grandparents their whole lives. Not sure how household expenses were divided but my uncle who worked in construction made improvements to the house, etc. I'm sure both my uncle and grandparents benefited from the arrangement at different times in their lives. My uncle probably benefiting more when he was younger and starting a family and my grandparents when they were older since my aunt (in law) ended up doing arrangements for in home care, etc.

Bottom line is the OP can afford it, particularly if she lives reasonably frugally. Even if she ran into hard times (loss of income, mother needing expensive care.) she has considerable savings as a cushion. It's likely she will also have a good inheritance (even if taxed) so an emergency dipping into savings (if at all needed) is unlikely to hurt her retirement at the end of the day.

I agree with all your points. The one PP who is against inheritance seems to be against any multigenerational pooling of resources, even though this is the way the vast majority of inhabitants of earth live. And it used to be that way here until relatively recently.

Such pooling in a shared residence is far more efficient and less resource intensive than each generation living on its own. I don't understand why PP is in favor of the government setting up regulatory roadblocks to this far more environmentally friendly way of living that has benefits for so many.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People all butt hurt about their mom contributing 2k but how is that any different than your parents gifting you the 15k annual exclusion, paying for grandkids college or private school, or ultimately inheriting their money when they die.

I don’t get why people frown on parents choosing to provide their adult children with money while they can enjoy. I would much rather be given money no while I’m raising a family than inherit millions when I’m already retired (assuming parents live into their 80s).

Total aside but I feel compelled to respond to this absurd comment.

I’m sure this is not any different than all of the other wealth transfer mechanisms you listed, but 1) MOST people do not receive ANY of those things, and 2) it is disgusting to me because until recently I was still laboring under the delusion that we are living in a meritocracy.

We need SERIOUS tax reform in this country. It should not be possible in the land of opportunity for this obscene family wealth hoarding to occur. If parents want to give their adult children tons of money fine, but those adult children should pay at least as high if not higher tax rate than us poor serfs who actually go out and EARN our money.

Your logic scares me. What gives you the right (entitlement) to someone else’s money? If my grandparents, parents or whoever, EARNED wealth, paid taxes on those assets, and planned according to current tax laws, what gives you the right to feel that these assets should be taxed even more. My grandparents
Were dirt poor, built a business and accumulated significant wealth through the good old American dream. So they pay for my college or kids college, help
With down payment..How is that not fair?

Stop being jealous and earn your wealth. If you want to give your kids 15k a year each, good for you! If you want to donate it to Uncle Sam, please be my guest.

DP, but lol at “scares me”.

Even setting egalitarianism aside for a moment, what you describe is an incredibly inefficient use of resources. Wealth hoarding hurts all of society by limiting education and advancement opportunities for the vast majority of people so that the very wealthy can feel marginally more secure or comfortable. OP is basically debating between a 1.3m house and a 1.8m house. Her children’s (fully private) education is paid for. She has an enormous safety net in her savings. And you are upset about the idea that she might be made to pay taxes on massive lump sums of cash from her mom? It “scares” you? Does it also scare you that those taxes could be used to pay for other people’s kids to get educations and become functional, contributing members of society who ALSO pay taxes? Is that terrifying? A functional, interdependent society in which we all benefit from one another’s success and have a vested interest in helping one another? That frightens you?

I personally am more afraid of the current system where a small percentage of the population sits on giant piles of cash and watches the rest of the world burn.

Why do other people’s choices have anything to do with you? OP’s parents didn’t steal that money, they earned it.

Anyway, I’m a dp and not the least “scared” of you, I feel bad for people that are so envious of others. But our system is not going to radically change. Not ona country where the carried interest exemption has existed for decades.

Sure. And they can keep it if they like. But when they earn income on it, that income is taxed. And when they transfer it, it is taxed in virtually all situations. And this can't be said enough, when OP's parents give her money, i is a transfer. So why should it get preferential tax treatment?

For one, it is an incentive to save and invest, and work hard. You say you want a meritocracy, but than you want to double tax the most successful.

I know this is a common talking point, but there is no double tax. The money was taxed - once - when the parent acquired it. It is taxed again when it changes hands. Why should it matter if it goes to a child? And if you're the poster blathering on about natural law, spare me. That's not a sound basis for tax policy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People all butt hurt about their mom contributing 2k but how is that any different than your parents gifting you the 15k annual exclusion, paying for grandkids college or private school, or ultimately inheriting their money when they die.

I don’t get why people frown on parents choosing to provide their adult children with money while they can enjoy. I would much rather be given money no while I’m raising a family than inherit millions when I’m already retired (assuming parents live into their 80s).

Total aside but I feel compelled to respond to this absurd comment.

I’m sure this is not any different than all of the other wealth transfer mechanisms you listed, but 1) MOST people do not receive ANY of those things, and 2) it is disgusting to me because until recently I was still laboring under the delusion that we are living in a meritocracy.

We need SERIOUS tax reform in this country. It should not be possible in the land of opportunity for this obscene family wealth hoarding to occur. If parents want to give their adult children tons of money fine, but those adult children should pay at least as high if not higher tax rate than us poor serfs who actually go out and EARN our money.

Your logic scares me. What gives you the right (entitlement) to someone else’s money? If my grandparents, parents or whoever, EARNED wealth, paid taxes on those assets, and planned according to current tax laws, what gives you the right to feel that these assets should be taxed even more. My grandparents
Were dirt poor, built a business and accumulated significant wealth through the good old American dream. So they pay for my college or kids college, help
With down payment..How is that not fair?

Stop being jealous and earn your wealth. If you want to give your kids 15k a year each, good for you! If you want to donate it to Uncle Sam, please be my guest.

DP, but lol at “scares me”.

Even setting egalitarianism aside for a moment, what you describe is an incredibly inefficient use of resources. Wealth hoarding hurts all of society by limiting education and advancement opportunities for the vast majority of people so that the very wealthy can feel marginally more secure or comfortable. OP is basically debating between a 1.3m house and a 1.8m house. Her children’s (fully private) education is paid for. She has an enormous safety net in her savings. And you are upset about the idea that she might be made to pay taxes on massive lump sums of cash from her mom? It “scares” you? Does it also scare you that those taxes could be used to pay for other people’s kids to get educations and become functional, contributing members of society who ALSO pay taxes? Is that terrifying? A functional, interdependent society in which we all benefit from one another’s success and have a vested interest in helping one another? That frightens you?

I personally am more afraid of the current system where a small percentage of the population sits on giant piles of cash and watches the rest of the world burn.

Why do other people’s choices have anything to do with you? OP’s parents didn’t steal that money, they earned it.

Anyway, I’m a dp and not the least “scared” of you, I feel bad for people that are so envious of others. But our system is not going to radically change. Not ona country where the carried interest exemption has existed for decades.

Sure. And they can keep it if they like. But when they earn income on it, that income is taxed. And when they transfer it, it is taxed in virtually all situations. And this can't be said enough, when OP's parents give her money, i is a transfer. So why should it get preferential tax treatment?

For one, it is an incentive to save and invest, and work hard. You say you want a meritocracy, but than you want to double tax the most successful.

I know this is a common talking point, but there is no double tax. The money was taxed - once - when the parent acquired it. It is taxed again when it changes hands. Why should it matter if it goes to a child? And if you're the poster blathering on about natural law, spare me. That's not a sound basis for tax policy.

Nope, because the ability to pass on to the next generation is the incentive. You seem clueless about that.

I any case, this is a moot argument, the amount of the estate tax exemption changes from time to time, but it isn’t going anywhere because most Americans are in favor of it, and more generally, capitalism.

[Anonymous]

PP against inheritances: human nature and natural law are not the same thing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People all butt hurt about their mom contributing 2k but how is that any different than your parents gifting you the 15k annual exclusion, paying for grandkids college or private school, or ultimately inheriting their money when they die.

I don’t get why people frown on parents choosing to provide their adult children with money while they can enjoy. I would much rather be given money no while I’m raising a family than inherit millions when I’m already retired (assuming parents live into their 80s).

Total aside but I feel compelled to respond to this absurd comment.

I’m sure this is not any different than all of the other wealth transfer mechanisms you listed, but 1) MOST people do not receive ANY of those things, and 2) it is disgusting to me because until recently I was still laboring under the delusion that we are living in a meritocracy.

We need SERIOUS tax reform in this country. It should not be possible in the land of opportunity for this obscene family wealth hoarding to occur. If parents want to give their adult children tons of money fine, but those adult children should pay at least as high if not higher tax rate than us poor serfs who actually go out and EARN our money.

Your logic scares me. What gives you the right (entitlement) to someone else’s money? If my grandparents, parents or whoever, EARNED wealth, paid taxes on those assets, and planned according to current tax laws, what gives you the right to feel that these assets should be taxed even more. My grandparents
Were dirt poor, built a business and accumulated significant wealth through the good old American dream. So they pay for my college or kids college, help
With down payment..How is that not fair?

Stop being jealous and earn your wealth. If you want to give your kids 15k a year each, good for you! If you want to donate it to Uncle Sam, please be my guest.

DP, but lol at “scares me”.

Even setting egalitarianism aside for a moment, what you describe is an incredibly inefficient use of resources. Wealth hoarding hurts all of society by limiting education and advancement opportunities for the vast majority of people so that the very wealthy can feel marginally more secure or comfortable. OP is basically debating between a 1.3m house and a 1.8m house. Her children’s (fully private) education is paid for. She has an enormous safety net in her savings. And you are upset about the idea that she might be made to pay taxes on massive lump sums of cash from her mom? It “scares” you? Does it also scare you that those taxes could be used to pay for other people’s kids to get educations and become functional, contributing members of society who ALSO pay taxes? Is that terrifying? A functional, interdependent society in which we all benefit from one another’s success and have a vested interest in helping one another? That frightens you?

I personally am more afraid of the current system where a small percentage of the population sits on giant piles of cash and watches the rest of the world burn.

Why do other people’s choices have anything to do with you? OP’s parents didn’t steal that money, they earned it.

Anyway, I’m a dp and not the least “scared” of you, I feel bad for people that are so envious of others. But our system is not going to radically change. Not ona country where the carried interest exemption has existed for decades.

Sure. And they can keep it if they like. But when they earn income on it, that income is taxed. And when they transfer it, it is taxed in virtually all situations. And this can't be said enough, when OP's parents give her money, i is a transfer. So why should it get preferential tax treatment?

For one, it is an incentive to save and invest, and work hard. You say you want a meritocracy, but than you want to double tax the most successful.

I know this is a common talking point, but there is no double tax. The money was taxed - once - when the parent acquired it. It is taxed again when it changes hands. Why should it matter if it goes to a child? And if you're the poster blathering on about natural law, spare me. That's not a sound basis for tax policy.

Nope, because the ability to pass on to the next generation is the incentive. You seem clueless about that.

I any case, this is a moot argument, the amount of the estate tax exemption changes from time to time, but it isn’t going anywhere because most Americans are in favor of it, and more generally, capitalism.

Our tax code shouldn't subsidize/incentivize passing wealth to then next generation.

Most people are in favor of capitalism, but the are also in favor of infinite stimulus checks, if you know what I mean.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People all butt hurt about their mom contributing 2k but how is that any different than your parents gifting you the 15k annual exclusion, paying for grandkids college or private school, or ultimately inheriting their money when they die.

I don’t get why people frown on parents choosing to provide their adult children with money while they can enjoy. I would much rather be given money no while I’m raising a family than inherit millions when I’m already retired (assuming parents live into their 80s).

Total aside but I feel compelled to respond to this absurd comment.

I’m sure this is not any different than all of the other wealth transfer mechanisms you listed, but 1) MOST people do not receive ANY of those things, and 2) it is disgusting to me because until recently I was still laboring under the delusion that we are living in a meritocracy.

We need SERIOUS tax reform in this country. It should not be possible in the land of opportunity for this obscene family wealth hoarding to occur. If parents want to give their adult children tons of money fine, but those adult children should pay at least as high if not higher tax rate than us poor serfs who actually go out and EARN our money.

Your logic scares me. What gives you the right (entitlement) to someone else’s money? If my grandparents, parents or whoever, EARNED wealth, paid taxes on those assets, and planned according to current tax laws, what gives you the right to feel that these assets should be taxed even more. My grandparents
Were dirt poor, built a business and accumulated significant wealth through the good old American dream. So they pay for my college or kids college, help
With down payment..How is that not fair?

Stop being jealous and earn your wealth. If you want to give your kids 15k a year each, good for you! If you want to donate it to Uncle Sam, please be my guest.

DP, but lol at “scares me”.

Even setting egalitarianism aside for a moment, what you describe is an incredibly inefficient use of resources. Wealth hoarding hurts all of society by limiting education and advancement opportunities for the vast majority of people so that the very wealthy can feel marginally more secure or comfortable. OP is basically debating between a 1.3m house and a 1.8m house. Her children’s (fully private) education is paid for. She has an enormous safety net in her savings. And you are upset about the idea that she might be made to pay taxes on massive lump sums of cash from her mom? It “scares” you? Does it also scare you that those taxes could be used to pay for other people’s kids to get educations and become functional, contributing members of society who ALSO pay taxes? Is that terrifying? A functional, interdependent society in which we all benefit from one another’s success and have a vested interest in helping one another? That frightens you?

I personally am more afraid of the current system where a small percentage of the population sits on giant piles of cash and watches the rest of the world burn.

Why do other people’s choices have anything to do with you? OP’s parents didn’t steal that money, they earned it.

Anyway, I’m a dp and not the least “scared” of you, I feel bad for people that are so envious of others. But our system is not going to radically change. Not ona country where the carried interest exemption has existed for decades.

Sure. And they can keep it if they like. But when they earn income on it, that income is taxed. And when they transfer it, it is taxed in virtually all situations. And this can't be said enough, when OP's parents give her money, i is a transfer. So why should it get preferential tax treatment?

For one, it is an incentive to save and invest, and work hard. You say you want a meritocracy, but than you want to double tax the most successful.

I know this is a common talking point, but there is no double tax. The money was taxed - once - when the parent acquired it. It is taxed again when it changes hands. Why should it matter if it goes to a child? And if you're the poster blathering on about natural law, spare me. That's not a sound basis for tax policy.

Nope, because the ability to pass on to the next generation is the incentive. You seem clueless about that.

I any case, this is a moot argument, the amount of the estate tax exemption changes from time to time, but it isn’t going anywhere because most Americans are in favor of it, and more generally, capitalism.

Oh, come on. This has zero to do with "capitalism." And again - throw up all the straw men you want, I'm not suggesting we eliminate inheritance. Just that it be taxed as regular income, and not given preferential treatment.

Finally - no response to the double taxation point? I didn't expect a thoughtful one, but hope springs eternal.

[Anonymous]

I'm shocked at someone that makes 450K a year that pays 70K a year in private school tuition. What a waste of money. Just stick the $35K per year in tuition in an investment account and hand your kids each $1,000,000 or more when they graduate college instead.

[Anonymous]

Anonymous wrote:The PP who is anti-inheritance does not seem to understand human nature.

One of the main reasons people work hard and thereby contribute to productivity of the economy is to provide for their children. This may be during their lifetime or after they die. This is a deeply ingrained instinct in the human race.

If the state overly limits transfer of wealth to children (or to charity as another poster has raised), many people simply would not exert the additional effort and simply rest on their laurels once they had enough money to see themselves comfortably to death.

Stymieing the energy and productivity of these people in this way would lower the overall productivity of the economy. The extra money would not go to educate disadvantaged children or provide other government services as PP thinks because there would be no extra money.

I actually think the bolded would be an AMAZING result for society.

[Anonymous]

Anonymous wrote:I'm shocked at someone that makes 450K a year that pays 70K a year in private school tuition. What a waste of money. Just stick the $35K per year in tuition in an investment account and hand your kids each $1,000,000 or more when they graduate college instead.

Some people prioritize education. It''s their choice to make and they have their own inner algorithm about whether it is worth it or not. That wouldn't the same algorithm you would use, but that's okay.

[Anonymous]

Anonymous wrote:I'm shocked at someone that makes 450K a year that pays 70K a year in private school tuition. What a waste of money. Just stick the $35K per year in tuition in an investment account and hand your kids each $1,000,000 or more when they graduate college instead.

I agree this is an enormous waste of money and a perfect example of how government does certain things (like education) far more efficiently than rich people do in their own.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The PP who is anti-inheritance does not seem to understand human nature.

One of the main reasons people work hard and thereby contribute to productivity of the economy is to provide for their children. This may be during their lifetime or after they die. This is a deeply ingrained instinct in the human race.

If the state overly limits transfer of wealth to children (or to charity as another poster has raised), many people simply would not exert the additional effort and simply rest on their laurels once they had enough money to see themselves comfortably to death.

Stymieing the energy and productivity of these people in this way would lower the overall productivity of the economy. The extra money would not go to educate disadvantaged children or provide other government services as PP thinks because there would be no extra money.

I actually think the bolded would be an AMAZING result for society.

Why? It deprives society of the efforts of the most innovative and productive among us.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The PP who is anti-inheritance does not seem to understand human nature.

One of the main reasons people work hard and thereby contribute to productivity of the economy is to provide for their children. This may be during their lifetime or after they die. This is a deeply ingrained instinct in the human race.

If the state overly limits transfer of wealth to children (or to charity as another poster has raised), many people simply would not exert the additional effort and simply rest on their laurels once they had enough money to see themselves comfortably to death.

Stymieing the energy and productivity of these people in this way would lower the overall productivity of the economy. The extra money would not go to educate disadvantaged children or provide other government services as PP thinks because there would be no extra money.

I actually think the bolded would be an AMAZING result for society.

Why? It deprives society of the efforts of the most innovative and productive among us.

Please. Show your work. Making lots of money does not necessarily translate to being innovative or productive. Being innovative or productive does not necessarily translate to being irreplaceable.

Resources are in fact finite. Rather than monopolizing the kitchen making twenty pies for yourself and then trying to pass them under the table to your kids while everyone outside your family get crumbs, why not make your pie and then get out of the damn kitchen so others can have a turn?

[Anonymous]

Anonymous wrote:

Anonymous wrote:The PP who is anti-inheritance does not seem to understand human nature.

One of the main reasons people work hard and thereby contribute to productivity of the economy is to provide for their children. This may be during their lifetime or after they die. This is a deeply ingrained instinct in the human race.

If the state overly limits transfer of wealth to children (or to charity as another poster has raised), many people simply would not exert the additional effort and simply rest on their laurels once they had enough money to see themselves comfortably to death.

Stymieing the energy and productivity of these people in this way would lower the overall productivity of the economy. The extra money would not go to educate disadvantaged children or provide other government services as PP thinks because there would be no extra money.

I actually think the bolded would be an AMAZING result for society.

+1. I'm failing to see the common good of parents amassing millions of dollars of wealth to pass to their children. Is PP seriously arguing that trust fund babies are a good to our society?

This isn't just a hypothetical. Many of us high-earners on DCUM are actually having to make this decision. DH and I have decided our kids will not become millionaires from us. Because that is what is best for our children.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The PP who is anti-inheritance does not seem to understand human nature.

One of the main reasons people work hard and thereby contribute to productivity of the economy is to provide for their children. This may be during their lifetime or after they die. This is a deeply ingrained instinct in the human race.

If the state overly limits transfer of wealth to children (or to charity as another poster has raised), many people simply would not exert the additional effort and simply rest on their laurels once they had enough money to see themselves comfortably to death.

Stymieing the energy and productivity of these people in this way would lower the overall productivity of the economy. The extra money would not go to educate disadvantaged children or provide other government services as PP thinks because there would be no extra money.

I actually think the bolded would be an AMAZING result for society.

Why? It deprives society of the efforts of the most innovative and productive among us.

Most people begin to lose mental capabilities in their 30s. By your logic, the most innovative and productive, aren't people working late in life to amass millions to pass on to their children.