Reply to What is it like to be “house poor”?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Simple answer
NO EXTRAS. ZERO. HARD BUDGET.

Figure in higher home insurance, property tax, utilities, those sneak in quick with no notice.
Would I do it ? No. [/quote]

This thread all seems very subjective.  Interesting topic we've been thinking about...  Wouldn't it be more helpful to consider it in terms of percentage of after-tax income, or something like that, for some perspective?

We currently live in a house that's worth about $1.1M and do private for two kids...  The place is perfectly fine, but for our forever home we have a number of "wants" (one is good public schools) and it would be about $2.3-$2.5.  Our current mortgage is about 20% of monthly net income of $21k; the more expensive place would be ~40% (w/current interest rates)...  only other monthly expenses are 529s.  We have a sizable TSP and IRA but otherwise stopped saving for retirement due to a generous defined benefit retirement plan.  Risky?  Thoughts?  We are very  thankful for this first world problem FWIW.

[/quote]

We have pretty much the same take home (plus very stable jobs with generous pensions) and live in a 1.4mil house with a 1mil mortgage (5200 PITI). We paid for the location mostly, but I am wondering every day whether it was a smart move. The mortgage is one thing, but you also need to remember that every single thing in a more expensive house will cost you more. Contractors will assume you are loaded and mark up accordingly, updating a 48 inch Wolf range will cost you way more than the generic 30 inch range you could have put into a cheaper house, you will need more furniture and probably higher end furniture, your taxes will be more expensive, etc.. Are you truly financially ready for this? What will you do if one of you loses their job, gets sick or dies?  Think through all of this before buying the house. The bank will most likely approve you, but that does not mean it is a smart thing to do. [/quote]

PP here.  Thank you for sharing this perspective; very realistic concerns we hadn't fully considered...  I think we're struggling with how far to push the budget...  Our jobs are also stable.  One GS-15 and one O-6 about 3-6 years away from retirement, at which point our HHI will go up significantly (marketable professional + retirement)...  We waited to have kids until after our careers were established.  We've moved/deployed about a dozen times and now have a specialty and seniority that can stay here permanently.  Oldest is mid-elementary.  Question we're struggling with is should we push the budget to get into a forever house we'd love now (the 40% of net income I mentioned earlier) in a neighborhood our kids could grow up in, or wait (or stay put)...  We could afford 80% LTV at about the $2M mark.  First world problem, I realize, and we are thankful for the opportunities we've had.

I know anything can happen, but risks are always out there...  I'm struggling with how to quantify that risk.  I mean, wouldn't term life insurance mitigate the fear of cancer or death...

It's interesting because I grew up like the other poster -- parents living beyond their means and now can't really effectively retire...  so I don't have a good frame of reference for how conservative to be.  And this thread really hit home with me.  [/quote]

Honestly, that seems like a stretch to me.  You have other monthly expenses that you are not thinking about.  Our monthly net is almost twice yours, our kids are older and in private school but otherwise we are in a fairly similar place and we capped our budget at $1.5M.[/quote]

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