Reply to Afford $1.8M on 300K?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]
I have posted a couple of times already - I said that we stayed in our house and fixed it up and the extra money each month gives us flexibility, etc. It sounds like you have your mind made up and this is what you want to do. I hope that your income is straight salary and not dependent on bonuses bc if you have a bad year, you won’t be able to pay all of your expenses. I also want to add that when you look at the median income for, say, McLean, it also includes all of the condo buildings (I’m assuming). Plus you have to remember that a lot of people bought their homes years ago when prices were much lower and they may retired now but they likely have a lot of assets (which is what allows them to stay in their homes which are now worth a lot of money). I think you are assuming that all of your expenses will stay the same except for your mortgage. Have you checked the property taxes? Utilities? Landscaping costs? Put all that into your budget and see how much you have left over every month. [/quote]

Op here. Good points.   some responses

- I'm not keen on fixing up and/or expanding the current house beyond what's normal in the current neighborhood. If I have a 4000 sqft house in a neighborhood of 2000 sqft houses, it will be very hard to sell 5-15 years from now.  I see neighborhoods in the midst of teardowns/rebuilds, and I'd rather not deal with those issues.  (I think) it's better to just move into a neighborhood of 4000 sqft houses instead.

- we're civil servants, so income is just salary and pretty much steady until we retire, which we don't plan to do any time soon. so no income volatility.  For those asking about college - I think there's a separate but real DCUM conversation on how much college costs should be prepaid by parents (rather than leveraging student loans ).

- our mind is certainly not made up. this arose out of a conversation where we were wondering "what do we do with the extra $6K?  venture into a bear market? buy a rental property? trade-up our house? If the third option, could we possibly afford (for example) a 4000 sqft house in a Langley pyramid neighborhood with a short commute to Tysons?

- I chose the census data area ( https://data.census.gov/cedsci/profile?g=1400000US51059460100) specifically because that area has no condos/townhouses. Certainly if you include the townhouses/condos, the median HHI goes down - but I'm just using SFH HHIs as my comparison. And that's at (or just above) $200K.

- property taxes should project proportionally with the property value/size. Utilities, on the other hand, are a tossup. We're paying $300 for gas and electricity, $100 for cell and internet, and $250 quarterly for Water. Even if those doubles, that's still doable.  But if it triples or quadruples, yeah that's a concern.   [/quote]

Do you know how much student loans students can take out as a freshman in college? I think it is around $5,500? I believe then the parents have to borrow as parent plus. I am not an expert bc my kid is fortunate not to have to take them out. I borrowed in college and grad school and it was a pain. When I went to school, it cost a fraction of what it does now. I went to my state flagship where tuition, room and board was less than 10,000 a year.  Much less. Now it is over 35,000 - in state. But you are going to have your kids leverage student loans - no problem. While they are living in a 2 million house. They will wonder why they have to take out student loans to go to a state school while they live in the most expensive suburb in the state. And not a small house that their parents moved into so they could go to a top school. No, a 4,000 square foot house and their parents make a very healthy $300,000 but needed to live in a huge house. I question your priorities but it is your money to spend how you choose. [/quote]

This.  If you were also prioritizing paying for your children’s college I would say to think about it, but you need to get your priorities in line.  And just for a point of reference, we make close to $1M in income and are on the fence about whether we should upgrade from our current $1.2 house to a $2M one (and this is while fully funding three 529’s).  No chance we would ever even consider this on less.  [/quote]

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