Anonymous
08/11/2015 17:04
Subject: Am I home free or kidding myself?
Anonymous wrote:Why are people automatically saying "no shot"?
As I understand -- OP would live mortgage free bc she has the cash to build her home. Her DH's pension would bring in 4k and expenses are around 2-2.5k factoring in military healthcare. There would be an "extra" 1.5k/month to say for retirement and/or college, and some months they could forego that saving for a vacation or a home repair.
Why the automatic NOs?
You are not factoring in taxes, social security, annuity, property taxes, if they are not living near a military base being on Tricare standard which is very different than what they use now, etc. So, at best, maybe $2800.
Anonymous
08/11/2015 17:01
Subject: Am I home free or kidding myself?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:You are proposing to live on 48k per year. Do people do it? Sure. But it's tough, and I bet the vast majority of them would say they would like more income. They are, and you would be, a few financial emergencies away from real trouble.
Since your only reason boils down to, "I don't wanna work anymore!" (Join the club, sister), I'd forget this extraordinarily selfish plan and continue working until you hit a realistic number.
But the difference is she's proposing to live on 48k/yr essentially as a retiree -- no mortgage, paying military retiree healthcare rates. That's what makes it doable.
OP -- where in NC? Why build a 750k house? You can get a whole lot of house in most of NC for like 300-350k. If you spend just 300k on a house and invest the rest, it'll grow over decades; I mean your kid is young -- you have over 10 yrs until you have to finance college, so why not make the money work for you.
Is there ANYTHING you or DH would want to do? Even part time or seasonal or a hobby job? I think the numbers do work, but at only 40, I'd feel a bit safer if there was some income coming in -- even if it was just part time retail which paid for my utilities and food. Then once you get started living this way and it works out, you could quit that job.
My husbands parents and bro and sister in law live in Charlotte. His bro has a son the same age as my DS. Since we are one and one I want him to be raised close to his cousin so he has a sense of family. Charlotte is also one direct flight away from my parents and by brother, sister in law, and nephew. We want to build a really nice house that is ranch style (so we can age in place) on an acre and also have a really nice pool and back yard set up so that it is a "destination" that our family and DC friends could also come and visit with their kids. After years of working, moving, and military life, it's pretty much my definition of happiness to build a custom home that is designed around kids, family, and friends. To get the school district we want, I'm projecting 150k for the land and $500 to build. I'm not opposed to working (as part of this dream) at retail at a store I loved or teaching online or something, just to keep a little cash rolling in, but I so badly want to get off the 9-5 treadmill.
I forget but the annuity is at least $100 a month, plus 1/3 for taxes, plus, real estate taxes, house insurance, gas/electric/water/phone/cable/internet, cars, car insurance, and you'll need dental insurance or Tricare retiree is over $100 a month. If you are not near an active base, you will have steep co-pays on standard. Most retirees have a second career. Reasonable to move and build a house but one or both of you need to work at least part time. Its not $48000 a year when all is taken out. Even if it is 1/4 taxes - that brings you to $3,000 a month, minus the annuity - maybe another $100, maybe more, I'd have to look at our statement, plus $50-150 or more for tricare prime - assume more as your husband must be an officer, minus $100 a month per dental insurance. And then the rest.... it will put you very tight at best.
Yes I really need to nail down the health care costs but great news, a new VA health center is opening in Chatlotte down the road from our desired area!
You must not be military. They need a active duty base to access tricare prime for the entire family. Once you retire, you continue tricare prime. VA is for the veterans only - as a retiree one can use it but cost wise, its not worth it and it does not serve the spouse or child.
Anonymous
08/11/2015 16:59
Subject: Am I home free or kidding myself?
Anonymous wrote:Anonymous wrote:Do you really never want to go on vacation again? How would you replenish the emergency fund when something breaks in your dream house or car?
+1
People usually think "I don't spend that much on food/gas/utilities... so I can live on $3K/mo" -- ha, ha, ha! You would be surprised to add up all the unusual expenses that happen every month. We tend to tell ourselves they only happen once in awhile, but there seems to be one or two or more every month.
Car maintenance -- $2500 (oil gasket leak or something)
Other car maintenance $600 (new brakes plus other things)
Home repairs/maintenance (faucet needs fixin', A/C unit needs new copper coil$$, powerwashing house and windows, new water heater, add insulation to the garage ceiling, etc., etc)
Travel/vacation -- $1000 for that trip to the beach, $1500 for flights to see _____, etc.
Therapy for _______ ($400/mo.)
Day Camp for summer enrichment: $$$$
Lessons/enrichment: music instrument, after school classes, rec leagues, swimming lessons, gear
Replace grill
Replace Washer Dryer
Replace Dishwasher
New mattress
New sofa
College savings
Medical bills (these are only going to get bigger as you age)
Etc, etc. These are the big expenses that bust the budget. Each one may only happen once in awhile, but there is always one or the other (or more) happening each month.
Saving for a new car every 12 years (that means we need $2500-3000/year to go into that savings account-- for EACH vehicle we have -- so that's $5000 minimum PER YEAR that goes toward saving for a new car).
Property taxes -- $4000-7000/year
My DH talks about living on his military pension too.... and I say no way! It would lock us into a very tight budget. We are fortunate to have it, but it is not enough for a family of 4 to live well on.
We are retirees and my husband's pension is nothing given he was 20 year enlisted. However, there are very few medical bills as tricare covers most things. We had to pay out of pocket for about a year for speech therapy till they finally covered it. Other than that, its a $12 speech and other co-pays as we do most things on base. Even prescriptions are free. However, factor in things like the annuity which is $100+ a month if you are younger, or have young kids as that is the only way to get the pension transferred (and only a portion) to the remaining spouse and child/ren. But, it also assumes they continue to allow retirees to access tricare. Every few year congress tries to take it away or change it.
Anonymous
08/11/2015 16:53
Subject: Re:Am I home free or kidding myself?
OP, where is the 700k now? TSP? If so that's a terrible idea to cash it out. You will pay taxes and also 10% penalty. They will take half...
Anonymous
08/11/2015 16:11
Subject: Am I home free or kidding myself?
Anonymous wrote:Do you really never want to go on vacation again? How would you replenish the emergency fund when something breaks in your dream house or car?
+1
People usually think "I don't spend that much on food/gas/utilities... so I can live on $3K/mo" -- ha, ha, ha! You would be surprised to add up all the unusual expenses that happen every month. We tend to tell ourselves they only happen once in awhile, but there seems to be one or two or more every month.
Car maintenance -- $2500 (oil gasket leak or something)
Other car maintenance $600 (new brakes plus other things)
Home repairs/maintenance (faucet needs fixin', A/C unit needs new copper coil$$, powerwashing house and windows, new water heater, add insulation to the garage ceiling, etc., etc)
Travel/vacation -- $1000 for that trip to the beach, $1500 for flights to see _____, etc.
Therapy for _______ ($400/mo.)
Day Camp for summer enrichment: $$$$
Lessons/enrichment: music instrument, after school classes, rec leagues, swimming lessons, gear
Replace grill
Replace Washer Dryer
Replace Dishwasher
New mattress
New sofa
College savings
Medical bills (these are only going to get bigger as you age)
Etc, etc. These are the big expenses that bust the budget. Each one may only happen once in awhile, but there is always one or the other (or more) happening each month.
Saving for a new car every 12 years (that means we need $2500-3000/year to go into that savings account-- for EACH vehicle we have -- so that's $5000 minimum PER YEAR that goes toward saving for a new car).
Property taxes -- $4000-7000/year
My DH talks about living on his military pension too.... and I say no way! It would lock us into a very tight budget. We are fortunate to have it, but it is not enough for a family of 4 to live well on.
Anonymous
08/11/2015 15:38
Subject: Am I home free or kidding myself?
I'm just not buying that someone who wants a 700K house with a pool is also the same person who wants to scrimp and never go out or send their kid to camp, etc.
If you are in fact this person, I think the others who mentioned that you will feel "out of place" in your 700K neighborhood are right. Your son will be that odd kid who never goes anywhere with his friends.
I am not in love with my job, but am hanging in there for the sake of my son. He's in college now and if we did not contribute, he would have huge loans. Sometimes you make the sacrifice.
Anonymous
08/11/2015 15:21
Subject: Am I home free or kidding myself?
I agree that you should be thinking much smaller. If you insist on retiring big, work the additional few years to build the emergency fund.
Anonymous
08/11/2015 14:57
Subject: Am I home free or kidding myself?
Anonymous wrote:Anonymous wrote:You are proposing to live on 48k per year. Do people do it? Sure. But it's tough, and I bet the vast majority of them would say they would like more income. They are, and you would be, a few financial emergencies away from real trouble.
Since your only reason boils down to, "I don't wanna work anymore!" (Join the club, sister), I'd forget this extraordinarily selfish plan and continue working until you hit a realistic number.
But the difference is she's proposing to live on 48k/yr essentially as a retiree -- no mortgage, paying military retiree healthcare rates. That's what makes it doable.
OP -- where in NC? Why build a 750k house? You can get a whole lot of house in most of NC for like 300-350k. If you spend just 300k on a house and invest the rest, it'll grow over decades; I mean your kid is young -- you have over 10 yrs until you have to finance college, so why not make the money work for you.
Is there ANYTHING you or DH would want to do? Even part time or seasonal or a hobby job? I think the numbers do work, but at only 40, I'd feel a bit safer if there was some income coming in -- even if it was just part time retail which paid for my utilities and food. Then once you get started living this way and it works out, you could quit that job.
She's talking about being a retiree with a young child, and all of the expenses laden into that. Also, she's tacking an additional 20+ years onto retirement, with all of the risk inherent in that. It's not the same, at all, as being a 65 yo retiree whose kids are grown.
Also, OP, it seems like you are going to expect all friends and family to come see you, in your "destination" house. That's pretty selfish.
Anonymous
08/11/2015 08:53
Subject: Am I home free or kidding myself?
^^just to add for relevance, we live in the $700k + price range and have a HHI of $130k and are the poor ones. Our neihbrors are double income lawyers, a doctor and nurse duo, a ton of tech and pharma people.
Anonymous
08/11/2015 08:49
Subject: Am I home free or kidding myself?
NC poster here.
The biggest problem I see with your plan is being in one of the nicer areas, in a nicer home (yes, for those in DC, living in an $600+ home is a higher end neighborhood) and being house poor, with a young child.
You have no money for nights out, barbecues (we just had 3 families over and spent $300), activities (your kid wants to go to the bounce house? $15 and everyone goes to lunch after, $45 outing), bikes, scooters, sports equipment, all that.
And you will be broke.
I can't imagine living in a $700k house and being that house poor, neither parent working, with a child.
Also have you thought about landscaping? With a large hard and pool, that is mulch, weeding, flowers, stones, and constant work that you won't be able to pay someone to do.
We spent about $500/year between mulch, flowers, pose washing alone is $250.
I think you need to cut your house budget way way down, into the $300's and forget the pool. All those communities have neighborhood pools.
We also thought we were going to be the destination spot and guess how many people came the first summer? 12. Second summer? 6. This summer? 0. Kids grow, people want to go to new places, and honestly people just don't want to stay at someone's house as a destination.
Good luck
The biggest problem I see with your plan is being in one of the nicer areas, in a nicer home (yes, for those in DC, living in an $600+ home is a higher end neighborhood) and being house poor, with a young child.
You have no money for nights out, barbecues (we just had 3 families over and spent $300), activities (your kid wants to go to the bounce house? $15 and everyone goes to lunch after, $45 outing), bikes, scooters, sports equipment, all that.
And you will be broke.
I can't imagine living in a $700k house and being that house poor, neither parent working, with a child.
Also have you thought about landscaping? With a large hard and pool, that is mulch, weeding, flowers, stones, and constant work that you won't be able to pay someone to do.
We spent about $500/year between mulch, flowers, pose washing alone is $250.
I think you need to cut your house budget way way down, into the $300's and forget the pool. All those communities have neighborhood pools.
We also thought we were going to be the destination spot and guess how many people came the first summer? 12. Second summer? 6. This summer? 0. Kids grow, people want to go to new places, and honestly people just don't want to stay at someone's house as a destination.
Good luck
Anonymous
08/11/2015 08:36
Subject: Am I home free or kidding myself?
Anonymous wrote:Lol yes. I love your writing style.
Thanks.
Just remember. Keep the house small, that's the key to this whole endeavor working for your family. First of all, you want the extra capital (the other half of the $750k) in productive investments, earning you dividends year after year after year to supplement your income. If you can average 6 or 7% from them, that's an extra $22k per year. Not that you can count on that EVERY year, or that you should be spending it, but it's just an extra $22k per year on average compounding in the background, out of sight. And leave it out of sight. That's almost like an entire extra pension, in addition to the one your DH's already earned.
If you were to spend the full $750k, not only do you not have that extra $22k investment income, but your property taxes will be twice as high, your energy costs will be higher, your maintenance and upkeep and renovation costs will be higher, and your neighbors will be richer so you'll always feel more pressure to spend more just to keep up.
Anonymous
08/11/2015 08:34
Subject: Am I home free or kidding myself?
Google FIRE, Mr. Mone Mustache, etc. It can be done but you will need to do it differently than you are planning now.
Anonymous
08/11/2015 08:33
Subject: Am I home free or kidding myself?
OP I am from NC and I can tell you there are plenty of people there who work very little or not at all and live frugally. Go with you dream. It's very different than the dc area
Anonymous
08/11/2015 08:31
Subject: Re:Am I home free or kidding myself?
I have a 500k house that I built (so not old) in a low cost of living area and it still aint cheap to maintain. We do all our own yard work and general maintenance but still spend quite a bit on our house yearly. Plus we are already saving for things down the road that come up before you know it...we've been here 7 years and we realize in about another 10 we could need a roof, AC, windows, etc etc. I think you are really underestimating the maintenance cost of a house that Im assuming is going to be 2500+ sqft. Doing that on a lower fixed income is a big risk. You said you want live there forever so I don't see the costs escaping you. Now a smaller 250k house where you have less sq footage and a lot more money in the bank? Thats a safer long term plan IMO.
Anonymous
08/11/2015 08:29
Subject: Am I home free or kidding myself?
Lol yes. I love your writing style.