Anonymous
Post 07/24/2013 16:03     Subject: One Million Dollar house...talk me out of it.
We pay $4200 rent on a 180k salary. No daycare but two kids in Catholic school. Its been doable, but only because we are completely forgoing any other expense apart from food and contractually obligated bills. Only reason we're doing it is because it's an 18 month required rotation for my husband to get promoted and the company paid for moving expenses and deposit. If you have the down payment and moving expenses in hand I see no reason why you can't handle that payment on a larger salary.

A word of caution though. In the six months we've been here, the landlords have had to replace two major appliances, deal with tree roots in the plumbing, and remediate an infestation of carpenter ants. The house is only ten years old. The recommended savings rate for house maintenance is 1% of purchase price each year. Will you comfortably be able to save that on top of the sacrifices you will already be making?
Anonymous
Post 07/24/2013 15:58     Subject: One Million Dollar house...talk me out of it.
As another Fed, besides not getting raises, we will probably be paying more into retirement and for medical insurance, so salaries, in effect, are going down.
Anonymous
Post 07/24/2013 15:28     Subject: One Million Dollar house...talk me out of it.
I did this last year. It took almost everything we had to get into our house. This year we were house poor. It SUCKS! Can I say that again...SUCKS!

Now, going into the purchase we knew that we would only be house poor for 1 year because of DHs salary structure. But this year there has been very limited cash flow. And it SUCKS! I would not want to live like this forever. If you are really at the top of your payscale and have limited opportunity to increase your salary, I would not do it.

And houses are like children....some expense always comes up. Often they get together and offer you a package deal---the roof leaks, the hot water heater goes out and your kid goes through a growth spurt.
Anonymous
Post 07/24/2013 14:21     Subject: One Million Dollar house...talk me out of it.
OP, our monthly PITI is approximately $3250 with the same HHI and I couldn't imagine going much higher. With that payment we still have enough to save for when things break (something always breaks), to save for retirement, and to go on vacations but much more and one of those three would have to take a hit (probably vacations which would be tough because I love to travel).
Anonymous
Post 07/24/2013 14:21     Subject: One Million Dollar house...talk me out of it.
What in the world are you using $2K fun money for? Is this spreading out money over the whole year that you'll use for new computers, vacations, dinners out, etc...? If so, that's still a LOT. If not, I think if you shell out for such a huge mortgage you shouldn't be dipping into savings to pay for little things. So, it sounds like a stretch.
Anonymous
Post 07/24/2013 14:15     Subject: One Million Dollar house...talk me out of it.
No way. You are forgoing savings AND spending money just to live in a house that is probably bigger than what you really need and will cost a lot to maintain and repair. This is a no-brainer to me: you do not need to buy this house.
Anonymous
Post 07/24/2013 13:45     Subject: One Million Dollar house...talk me out of it.
Anonymous wrote:We have a very similar HHI to you - we just broke 300K this year. We also used loans from our 401(k)s to make the downpayment, and then paid ourselves back immediately after our house settled. (I think it was less than a month.)

Our mortgage is currently 4800/month and daycare is 3000/month. One car loan, no other debt, and both maxing our 401(k)s. We save a bit of money in our kids' 529s, and have some extra savings on the side. We go on one good vacation a year, lots of long weekend trips and trips with families. Shop mainly at Target/Giant/standard mall stores.

But honestly, it can be tight. We have several things working in our favor, however. We are soon coming to the end of daycare costs, and we do not have fed jobs and have gotten good raises and bonuses each year, which get funnelled into savings. We also will be able to drop our mortgage insurance in a year or so, freeing up another $500/month. You will not be getting raises, so you only have the end of daycare to help lighten the load.

Run the numbers, and make sure you are comfortable day in and day out with the implications. Because without one of you joining the private sector and making more money, you will be stuck with having those payments forever.

Ouch unless daycare is ending soon.
Anonymous
Post 07/24/2013 13:44     Subject: One Million Dollar house...talk me out of it.
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:We rented a very expensive home for several years. The unexpected costs of maintaining the more expensive home, the sprinklers we inevitably broke and replaced, the special landscaping and costs to have it done (because we didn't have time to handle it all), the more elaborate Christmas decor, special filtering system, pp mentioned better quality/more furnishing needs, on and on and on, convinced us we weren't yet in a position to buy at that level. It caused to many conversations about tight budgets and we decided it wasn't worth it.


Awww, that is so sad But it is true if you are the count every penny kind of person those extra expenses do add up. A lot.


And if you are shitty at tracking your personal finances, what? It's magically free?

Yes, didn't you know that? close eyes, pay bills.
Anonymous
Post 07/24/2013 13:41     Subject: Re:One Million Dollar house...talk me out of it.
Anonymous wrote:
Anonymous wrote:What about your monthly credit card bill? Was that included?



No credit card bills, we pay it off every month


So you have monthly credit card bills.

Anonymous
Post 07/24/2013 13:08     Subject: One Million Dollar house...talk me out of it.
We have a very similar HHI to you - we just broke 300K this year. We also used loans from our 401(k)s to make the downpayment, and then paid ourselves back immediately after our house settled. (I think it was less than a month.)

Our mortgage is currently 4800/month and daycare is 3000/month. One car loan, no other debt, and both maxing our 401(k)s. We save a bit of money in our kids' 529s, and have some extra savings on the side. We go on one good vacation a year, lots of long weekend trips and trips with families. Shop mainly at Target/Giant/standard mall stores.

But honestly, it can be tight. We have several things working in our favor, however. We are soon coming to the end of daycare costs, and we do not have fed jobs and have gotten good raises and bonuses each year, which get funnelled into savings. We also will be able to drop our mortgage insurance in a year or so, freeing up another $500/month. You will not be getting raises, so you only have the end of daycare to help lighten the load.

Run the numbers, and make sure you are comfortable day in and day out with the implications. Because without one of you joining the private sector and making more money, you will be stuck with having those payments forever.
AroundTheBlock
Post 07/24/2013 13:04     Subject: One Million Dollar house...talk me out of it.
Anonymous wrote:My husband and I are falling in love with a home in a very nice neighborhood and a better school district for my sons (1 month and 2 years). While our HHI is 300K, I did the math and it appears that we will still be ok but it'll wipe out our savings and what we normally put into savings every month. Not living paycheck to paycheck but very close. I guess I am trying to convince myself out of love with it so that I can just move on and accept what we have.


"One Million Dollar house...talk me out of it."

The above title of your thread says it all. If you need anonymous people from the internet to give you serious financial advice...then you already know the answer to your question.
Anonymous
Post 07/24/2013 12:59     Subject: One Million Dollar house...talk me out of it.
Anonymous wrote:
Anonymous wrote:We rented a very expensive home for several years. The unexpected costs of maintaining the more expensive home, the sprinklers we inevitably broke and replaced, the special landscaping and costs to have it done (because we didn't have time to handle it all), the more elaborate Christmas decor, special filtering system, pp mentioned better quality/more furnishing needs, on and on and on, convinced us we weren't yet in a position to buy at that level. It caused to many conversations about tight budgets and we decided it wasn't worth it.


Awww, that is so sad But it is true if you are the count every penny kind of person those extra expenses do add up. A lot.


And if you are shitty at tracking your personal finances, what? It's magically free?
Anonymous
Post 07/24/2013 12:55     Subject: One Million Dollar house...talk me out of it.
We have similar income, also Feds. Looking at houses closer to 700,000. We still need to save for retirement and college, want to be able to travel, and want the option of private school if public does not work out. I think this house puts all your eggs in one, probably really gorgeous, basket. I would not do it.
Anonymous
Post 07/24/2013 12:35     Subject: One Million Dollar house...talk me out of it.
Anonymous wrote:We rented a very expensive home for several years. The unexpected costs of maintaining the more expensive home, the sprinklers we inevitably broke and replaced, the special landscaping and costs to have it done (because we didn't have time to handle it all), the more elaborate Christmas decor, special filtering system, pp mentioned better quality/more furnishing needs, on and on and on, convinced us we weren't yet in a position to buy at that level. It caused to many conversations about tight budgets and we decided it wasn't worth it.


Awww, that is so sad But it is true if you are the count every penny kind of person those extra expenses do add up. A lot.
Anonymous
Post 07/24/2013 11:53     Subject: One Million Dollar house...talk me out of it.
Anonymous wrote:Two feds making 300K are already at the top of the federal pay scale. There will be no meaningful raises for the rest of their working lives, unless they're in jobs that command big money in the private sector - those are the exception, not the rule.

Wiping out savings AND eliminating the ability to save, as OP indicated, will put this household in a very precarious position. Freedom from worry is worth more to me than a dream house.


Yes, this. You aren't getting any raises, like, forever. Don't do it.