Anonymous wrote:

Anonymous wrote:I saw you said the housing spend was $15K per month. What is your actual cash shortfall per month if you change jobs?

Our projected annual shortfall with my hypothetical job change is about $80K/year (going up to $90K by the time the youngest kid graduates high school, assuming 2% inflation), assuming we both continue to max 401K contributions. If kids become substantially more expensive as they get older, it's possible that could change. I think our budget estimates $30K for camps, lessons, etc.

I think we'd need to find a house in the $750K range to live within earned income. Not super excited about the prospect of moving further into suburbia. Would happily live EOTP in NWDC if we had a private school option for kids, but $750K seems impossible. (And yes, I am aware of DC crime.). But I realize that these are tradeoffs and that I should perhaps keep my high-paying job if I don't want to move further out.

PP here and I think the biggest issue with your approach is that you are going to have to adjust your lifestyle when you retire. An $80K shortfall is more than just your housing it is a lot of spending you would need to cut. Even if you keep maxing retirement you won't be able to sustain this level of spending in retirement. I mean an $80K shortfall, what does that translate to in terms of annual expenses when you factor in your net from a $240K income?

Anonymous wrote:

Anonymous wrote:
You can't keep living as if you make 530 if you only make 370---Something has to give.

But fundamentally, why not? So let's say we hypothetically use all the earnings in our brokerage account to account for shortfall (but not touch the principal, at least not much). Our brokerage principal will still be $1.5 mil+, and our retirement will continue to get an annual boost of our contribution and continue to grow for 20 years. We can downsize once the kids are out and hopefully add to our savings from the home equity.

I wouldn’t be comfortable living off of savings unless I was either a) in between jobs and needed to or b) was dipping into my savings for a carefully planned one time event like a major renovation or a child’s wedding. I’m the PP with the 530k HHI (somewhat similar to yours.)

How old are you? That’s the other question. If you’re 55 and talking about retiring early, that’s one thing. I am 35 and it’s too impractical for me to give up my prime earning years.

That said, our NW is lower than yours. We have about 500k+ in retirement, probably another 800k in brokerage/investments and 800k home equity on our 1.3m dollar home that’s appreciated since we bought it for considerably less. Maybe if I had another 1.5m in the bank I’d feel differently, but I sort of doubt it. I personally feel most relaxed being able to cover our expenses each year without dipping into savings. I value private school for our kids, which grandparents are not paying for, and my husband values travel. We work to make those luxuries accessible for us. But you only go around once so do as you please.

Anonymous wrote:Good God. What’s insane is the degree to which some people—apparently including you—are wedded to the idea that one should never pay off one’s house and that low-interest-rate mortgages are some kind of manna from heaven.

Essentially you’re asking, “Should I permanently live above my means so that I can keep my low-interest mortgage?” I hope others reading this realize all of the second-order effects that come from the decision not to pay off one’s house if one has the means to do so. For me personally, the day I paid off my house was one of the best days of my life and I have not regretted it for one minute.

Ignorance is bliss. DH and I snagged a 30-year fixed rate at 1.6% in 2020 for $3.7M on our $4.5M home. We’ve transformed that $3.7M into $7.5M since then. Leverage is how smart people get wealthy.

Anonymous wrote:Huge houses are also expensive to maintain and care for. I don’t think you’re factoring that in. I could see doing this for a year, for special circumstances, but what happens after that?

The $15K includes that, at least theoretically. The mortgage alone is $11K.

Anonymous wrote:
You can't keep living as if you make 530 if you only make 370---Something has to give.

But fundamentally, why not? So let's say we hypothetically use all the earnings in our brokerage account to account for shortfall (but not touch the principal, at least not much). Our brokerage principal will still be $1.5 mil+, and our retirement will continue to get an annual boost of our contribution and continue to grow for 20 years. We can downsize once the kids are out and hopefully add to our savings from the home equity.

Huge houses are also expensive to maintain and care for. I don’t think you’re factoring that in. I could see doing this for a year, for special circumstances, but what happens after that?

Anonymous wrote:Yes our HHI is 530k (without factoring employer 401k matches). Dh makes 370 of that. I make 160. I would not quit my job to be a stay at home parent despite wanting to. Life is too expensive

Yup---or at least don't quit until you adjust your lifestyle. You can't keep living as if you make 530 if you only make 370---Something has to give.

Anonymous wrote:I saw you said the housing spend was $15K per month. What is your actual cash shortfall per month if you change jobs?

Our projected annual shortfall with my hypothetical job change is about $80K/year (going up to $90K by the time the youngest kid graduates high school, assuming 2% inflation), assuming we both continue to max 401K contributions. If kids become substantially more expensive as they get older, it's possible that could change. I think our budget estimates $30K for camps, lessons, etc.

I think we'd need to find a house in the $750K range to live within earned income. Not super excited about the prospect of moving further into suburbia. Would happily live EOTP in NWDC if we had a private school option for kids, but $750K seems impossible. (And yes, I am aware of DC crime.). But I realize that these are tradeoffs and that I should perhaps keep my high-paying job if I don't want to move further out.

Yes our HHI is 530k (without factoring employer 401k matches). Dh makes 370 of that. I make 160. I would not quit my job to be a stay at home parent despite wanting to. Life is too expensive

Anonymous wrote:OP, if I were you, I would downgrade my lifestyle, learn to manage in 240K income, before actually making a move to a lower income. Once you all can prove that you all can live in under 240K for atleast a year, only then let go of your job. If there are severe medical, mental health issues, then it's different

This^^^ Don't start wiping out savings to fund your monthly expenses. Figure out a plan, implement it, then change jobs

Anonymous wrote:I have a relatively high earning job (am on a reduced hour schedule and make approx. $450K) that I'd like to potentially scale back from in 2-4 years to pivot to something with far less income potential (closer to $100K). Husband makes around $140K, stable, not likely to dramatically change. We save quite a bit now, but would need to dip into savings to cover our expenses if I took the job with less income. In particular, the major expense we have now is our house -- we bought much larger than we needed to accommodate my dad, who died 9 months ago. We'd be happy to downsize, but would want to move back into DC (in NoVA now) and given our very low interest rate (2.75%!), would need the house to be substantially cheaper so as to meaningfully reduce the mortgage payment.

So the question: insane to stay in our too-expensive house and use our savings to fund our lifestyle? We have about $1 million in retirement, $2 million in savings (basically all in index funds in brokerage accounts), $300K in 529s for our two young kids, and $500K home equity.

Yes, it is not smart to take on a lifestyle with jobs that cannot support it monthly. You need to be in the Black, not the red each month. Until you figure that out, I would not quit my other job.

However, you can likely very easily manage this, you just need to decide what lifestyle changes to make and implement them

It would be helpful to know why you are pivoting to a much lower paid job even though you have reduced hours now.

I saw you said the housing spend was $15K per month. What is your actual cash shortfall per month if you change jobs?

Anonymous wrote:Going from 590k to 240k is a massive lifestyle change and you'd be doing it at a time when kids start getting more and more expensive.

Plenty of people live comfortably off 240k. Can you?

I wouldn't move back into DC unless I knew I could afford private school. People move OUT of DC to get away from DCPS. Does your grandparent know the cost of DC privates? 50+K per kid for multiple years? Many grandparents still think in terms of when an expensive private school was 10k a year! Then college is hitting 90k a year at the expensive elite schools.

There's an element of pipe dream in your planning. I agree a good step is to move to a more manageable house, but you mentioned your mother is still with you, so make sure it has a ground floor bedroom if she wants to age in place. Once you live somewhere more affordable, then you can look at your other plans.

This. You still need so many accommodations for the parent still living with you and the kids. Why make things harder for yourself? Frankly I don't think you can find anything in DC that meets all your needs and is in your new budget.

Did I see that you are currently spending $15k a month on your house? Sorry but I agree with the others that it's just not tenable on $240k even with your savings. Especially since you will not only be losing the savings but also the interest it would have generated. You're in a great spot savings and retirement-wise. It will be a lot harder to save at your new HHI. I know you said you have rich parents, but I would never bet my future on expected inheritances.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I have a relatively high earning job (am on a reduced hour schedule and make approx. $450K) that I'd like to potentially scale back from in 2-4 years to pivot to something with far less income potential (closer to $100K). Husband makes around $140K, stable, not likely to dramatically change. We save quite a bit now, but would need to dip into savings to cover our expenses if I took the job with less income. In particular, the major expense we have now is our house -- we bought much larger than we needed to accommodate my dad, who died 9 months ago. We'd be happy to downsize, but would want to move back into DC (in NoVA now) and given our very low interest rate (2.75%!), would need the house to be substantially cheaper so as to meaningfully reduce the mortgage payment.

So the question: insane to stay in our too-expensive house and use our savings to fund our lifestyle? We have about $1 million in retirement, $2 million in savings (basically all in index funds in brokerage accounts), $300K in 529s for our two young kids, and $500K home equity.

Do you really? With 180k in baseline housing costs? Somehow I doubt it.

I guess it's all relative? I'm in late 30s, seems like $3.3ish isn't terrible, but I'm sure we could have done more. We're not huge spenders, with the large exception of the house, and that decision had a lot to do with circumstances and isn't what I would consider our typical approach.

It doesn't have to be your typical approach, because it's not a one-off. It's not like you went nuts and bough DH an expensive car one time. Your housing costs are more than 50% of your take home. I don't think it's possible for you to be saving quite a bit with that information.

What you do have is a nice nest egg at a youngish age, likely from savings before you bought this massive house. Those savings could set you up to retire well and have a safety buffer in the meanwhile even if you take a paycut, so long as you leave it alone and let it compound. But instead you're thinking about cannibalizing that achievement to further retrench in support this "one atypical decision based on circumstances."