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[quote=Anonymous]Oh you wanted me to reply to the question above...

All I meant by the $100K comment is that $3,000 a month invested in a tax advantaged account is going to throw off 6% (on average) a year, so by the time you hit year 15 you'll easily have amassed an incremental $100K (more like $200K).

I dont recall if you shared the details of your mortgages, so I assumed the following:

Home Price	 $1,250,000 
Mortage	 $1,000,000 
Equity	 $250,000 
Cost to Sell	 $57,500 
Sale Price	 $1,150,000 
Losses	 $(100,000)

If you take the haircut now, you walk away with $150K in equity - and in your first year add $36,000 to that. Your 2nd year you do the same, and so on and so forth. Each year that grows by perhaps 6%.

That leads to this:

With 6%
Year 1	 $186,000 
Year 2	 $235,320 
Year 3	 $287,599 
Year 4	 $343,015 
Year 5	 $401,756 
Year 6	 $464,021 
Year 7	 $530,023 
Year 8	 $599,984 
Year 9	 $674,143 
Year 10	 $752,752 
Year 11	 $836,077 
Year 12	 $924,401 
Year 13	 $1,018,025 
Year 14	 $1,117,267 
Year 15	 $1,222,463

And thats assuming no income growth over that period which is of course not likely. Its feasible that within 10 years you'll have assets that are GENERATING $50K of income a year, forever. Plus, if we are talking about 529 plans or 401k plans here, you've got a tax advantaged vehicle as well. In fact, I'd argue your $3,000 is understating the potential savings because you could be doing $3,000 AFTER tax (in which case thats $1.1M thats totally tax free above), whereas pre tax you could probably do $3,500 or more, but I digress.

Now you say, what about my home? Wont it also appreciate at 6%? Perhaps (although I'd argue that real estate is a much riskier investment than a diversified set of stocks and bonds as it is by definition not nearly as diversified and much more prone to long term exogenous shocks), but against that come a lot of costs - your mortgage for one, your property taxes, your maintenance, insurance, etc. And that adds up - by 2027 you'll have paid something on the order of $600K in interest alone. You'll still owe something like $700k on the loans too.

To say nothing of the property taxes and maintenance which on a $1.25M home is no small amount of cash. Also, keep in mind that in 15 years when you DO sell, anything over $250K appreciation, plus improvements will be taxable.

Its a simplified analysis to be sure cause I don't have all the data necessary to really do this properly but my basic point is that you can continue to save $0 towards retirement, bank on an undiversified real estate asset to increase, or take a hit today knowing that in 10 years or less you might have assets that could fund annual college costs in their entirety just on interest.

To me the choice is simple: stop keeping up with the joneses, go rent for a year or two to get your shit together, buy a less expensive home somewhere and move on. 
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