Just bought an $800,000 house on a $186,000 salary and now I'm panicking....

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:That's a lot - we bought $650 on a $200K combined income.

This comparison is useless.

I'm sure your answer was much more helpful.

Yes, my answer was separate to this, and yes, it was more informative than PP's response.

We bought our house for $550k and recently paid it off. At one point we had a $400k mortgage

[Anonymous]

We make HHI $150k and rent an apartment in Arlington.

[Anonymous]

So a person making over 150k can't even afford an old house in the dmv with good schools? What about the singles making 50 to 80k? What can they afford? A shack or tent in the woods here?

[Anonymous]

Wow. This is nuts. Sorry, but, yeah. We are at 350k and our mortgage is 640k (of which we owe 560k) and we still worry it is too high but COL here is high. We max out 19.5k retirement each, one of us has a potential pension, we save for college, and we're still paying off student loans. Making real strides on the latter now that kids are out of daycare. Still...no way I would have done this. When we earned what you do we had a 200k mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is your income after a 401k contribution, and if so how much?

And how much emergency fund do you have?

And are any of your kids in paid child care or private school?

OP again - yes, income is after 401k contributions (we each contribute 5%, and get a 5% match), and DW is a fed who will qualify for a pension.
We are done with paid child care, kids are in public school, and will attend in-state public college.

do they know this?

They can tell their children that they will pay for the equivalent of in-state public college. Kids can then make the decision if they would like to pay for / take loans out for any remaining tuition as a result of making a different choice. I have a similar agreement with my children.

I bet you haven’t had to cross that bridge yet. It’s not that easy. It’s not that simple.

I don't understand this comment. I have two children who are in college right now, and one who is a junior in hs in the college search process. We told them all when they started looking at colleges - we will contribute $35k per year toward your college education (which is a little more than what our state flagship costs)...if you want to go to a college that costs more than that, scholarships and/or loans. Then they selected colleges to apply to based on that criteria. One ended up at UMD, and one is at a midwestern private college (loyola in Chicago) on a merit scholarship that brought the cost down to $37k per year. It was very simple -- what am I missing?

Sure it can work out. But as a teenager I would have literally signed a loan for any amount to go to my dream private college and get out of my hometown.

Nowadays that would be $300k debt. I was lucky I got merit aid. So you would have been okay with one of your kids choosing $100ks of debt?

[Anonymous]

Anonymous wrote:So a person making over 150k can't even afford an old house in the dmv with good schools? What about the singles making 50 to 80k? What can they afford? A shack or tent in the woods here?

Prince William. Prince George’s. Charles Count. Calvert County. Baltimore County. I work near the Naval Yard, and my coworkers ALL commute from these places.

[Anonymous]

Anonymous wrote:

Anonymous wrote:So a person making over 150k can't even afford an old house in the dmv with good schools? What about the singles making 50 to 80k? What can they afford? A shack or tent in the woods here?

Prince William. Prince George’s. Charles Count. Calvert County. Baltimore County. I work near the Naval Yard, and my coworkers ALL commute from these places.

oh and Anne Arundal, Howard, and Loudoun.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is your income after a 401k contribution, and if so how much?

And how much emergency fund do you have?

And are any of your kids in paid child care or private school?

OP again - yes, income is after 401k contributions (we each contribute 5%, and get a 5% match), and DW is a fed who will qualify for a pension.
We are done with paid child care, kids are in public school, and will attend in-state public college.

do they know this?

They can tell their children that they will pay for the equivalent of in-state public college. Kids can then make the decision if they would like to pay for / take loans out for any remaining tuition as a result of making a different choice. I have a similar agreement with my children.

I bet you haven’t had to cross that bridge yet. It’s not that easy. It’s not that simple.

I don't understand this comment. I have two children who are in college right now, and one who is a junior in hs in the college search process. We told them all when they started looking at colleges - we will contribute $35k per year toward your college education (which is a little more than what our state flagship costs)...if you want to go to a college that costs more than that, scholarships and/or loans. Then they selected colleges to apply to based on that criteria. One ended up at UMD, and one is at a midwestern private college (loyola in Chicago) on a merit scholarship that brought the cost down to $37k per year. It was very simple -- what am I missing?

Sure it can work out. But as a teenager I would have literally signed a loan for any amount to go to my dream private college and get out of my hometown.

Nowadays that would be $300k debt. I was lucky I got merit aid. So you would have been okay with one of your kids choosing $100ks of debt?

NP, but what does this even mean? They know the terms if the agreement, and if they choose to go into massive debt anyway, while obviously that’s not what I would want for them... that’s their choice. I have a similar agreement with my own kids, and quite frankly even if we could pay for their “dream school” I would most likely not since I believe in cost/benefit analysis of major financial decisions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is your income after a 401k contribution, and if so how much?

And how much emergency fund do you have?

And are any of your kids in paid child care or private school?

OP again - yes, income is after 401k contributions (we each contribute 5%, and get a 5% match), and DW is a fed who will qualify for a pension.
We are done with paid child care, kids are in public school, and will attend in-state public college.

do they know this?

They can tell their children that they will pay for the equivalent of in-state public college. Kids can then make the decision if they would like to pay for / take loans out for any remaining tuition as a result of making a different choice. I have a similar agreement with my children.

I bet you haven’t had to cross that bridge yet. It’s not that easy. It’s not that simple.

I don't understand this comment. I have two children who are in college right now, and one who is a junior in hs in the college search process. We told them all when they started looking at colleges - we will contribute $35k per year toward your college education (which is a little more than what our state flagship costs)...if you want to go to a college that costs more than that, scholarships and/or loans. Then they selected colleges to apply to based on that criteria. One ended up at UMD, and one is at a midwestern private college (loyola in Chicago) on a merit scholarship that brought the cost down to $37k per year. It was very simple -- what am I missing?

Sure it can work out. But as a teenager I would have literally signed a loan for any amount to go to my dream private college and get out of my hometown.

Nowadays that would be $300k debt. I was lucky I got merit aid. So you would have been okay with one of your kids choosing $100ks of debt?

NP, but what does this even mean? They know the terms if the agreement, and if they choose to go into massive debt anyway, while obviously that’s not what I would want for them... that’s their choice. I have a similar agreement with my own kids, and quite frankly even if we could pay for their “dream school” I would most likely not since I believe in cost/benefit analysis of major financial decisions.

Not only that but undergrads can only max out their federal loans at $5500 to $7500 a year. Over four years max borrowing would be $25k. Not $300k. That kind of borrowing would require the parent to borrow a federal parent loan or to co-sign a private one. So student loans don’t go far if you want to go to a pricey private school. Definitely will be explaining all this to my kids along with return on investment. My parents set this expectation when I was in high school so, for example, I knew I couldn’t apply to NYU or BU. And I’m so glad I didn’t. I ended up going to a great public school out of state and never held it against them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is your income after a 401k contribution, and if so how much?

And how much emergency fund do you have?

And are any of your kids in paid child care or private school?

OP again - yes, income is after 401k contributions (we each contribute 5%, and get a 5% match), and DW is a fed who will qualify for a pension.
We are done with paid child care, kids are in public school, and will attend in-state public college.

It seems like you are saving far too little for retirement (I know you didn’t ask for advice about that, but I would much rather max 401ks and live in a less expensive house for the money you’re putting out). Assuming you are under the newer system I can’t imagine your DW’s pension is substantial. But, what’s done is done and you’ll find a way to make it work.

I assume OP lives in the DMV and has 2 or 3 kids. The house was 800k and just where would she get a cheaper house? They do exist but maybe 100-150k cheaper in north potomac. The OP obviously looked at what was available and hopefully this house needs no new hvac, roof, grotty bth replcmenet, dilapidated kitchen etc.

All cash flow included the OP if no major house or car expenses could save 3500/month. Rent in sea colony west for 1 week in the summer.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This makes me panic. There is now way after taxes and retirement savings you still have 70% of your take home. You should not count on the pension or kids going to in state college. There are all unknowns until she actually retires and college is next year.

You must have posted here because you know this wasn’t a good move. Done deal?

PP, you are right, and I should have clarified....the $15,500 gross salary is gross after pre-tax deductions of retirement savings and health insurance costs. Once taxes are taken out, net is $11,000.

I don't think you're saving enough for retirement or your kids' college tuition.

One or both of you needs a raise.

Have you stopped saving for retirement? What about healthcare and taxes?

We were at your income a few years ago with a $420K mortgage. Our income has risen by 75K (we are at 250K now) and our taxes have gone up a lot with that increase. We do contribute to all pre-tax offerings at work as much as is allowed, but our net is a bit lower than yours due to the increase in taxes. A lot of tax credits phase out completely in this income range.

Something to think about. If you are going for increasing income, you'll want a 150k-200k increase.

[Anonymous]

Wow, that seems like a stretch to me. We make $320K per year, and our house was $670K. It is older, not laid out well, and had gross old bathromms (which we renovated over time). We purchased in 2012, I am sure that the market is much more difficult now. Still, and $800K house on that salary seems like it would be difficult.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Is your income after a 401k contribution, and if so how much?

And how much emergency fund do you have?

And are any of your kids in paid child care or private school?

OP again - yes, income is after 401k contributions (we each contribute 5%, and get a 5% match), and DW is a fed who will qualify for a pension.
We are done with paid child care, kids are in public school, and will attend in-state public college.

You are contributing less than half of what you could be to your 401ks. That's not ideal, and is the first thing that should be bumped up with any income increases.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This makes me panic. There is now way after taxes and retirement savings you still have 70% of your take home. You should not count on the pension or kids going to in state college. There are all unknowns until she actually retires and college is next year.

You must have posted here because you know this wasn’t a good move. Done deal?

PP, you are right, and I should have clarified....the $15,500 gross salary is gross after pre-tax deductions of retirement savings and health insurance costs. Once taxes are taken out, net is $11,000.

In your subject, you said you have a salary of $186,000. $15,500 * 12 = $186,000. But now that amount is after some, but not all, payroll deductions? Come on. Precisely no one describes their "salary" as the amount left over after having retirement and health insurance deducted.

I am starting to think you are a troll, or have absolutely no idea about your finances. I actually hope it's the former, because if not - yikes.

[Anonymous]

I would be very nervous about that any would sell ASAP.