Anonymous wrote:OP again. We take home about 19k (after paying into healthcare costs which are high for our firm, 401k, etc). Nanny is 3500/month. Family help is about 2k/month now but that will go up in time. We've also had to bail out the parents from a foreclosure and pick up emergency health expenses so all of those things took a toll early on and ate up money we could have saved. Also, we weren't as disciplined about savings until the last few years (paid for our own modest wedding etc). Student loans from college are 1k/month. Hoping we find a house eventually that has room for an au pair so we can cut way down on childcare costs. For those who have incomes similar to ours, thanks so much for posting your budgets. We know we can cut down in some areas but there aren't huge areas of excess (lavish vacations, jewelry, fancy clothes, cars, etc).
I'd like to put together a larger downpayment (wait until we can save enough) rather than raising our monthly cost if possible. It just seems excessive to spend more than 4500/month. We realize our HHI income is high now so it worries me to take on even more monthly expense.

19000
-3500 Nanny
-2000 Family
-1000 Student loans
-4500 Mortgage
= 8000

Where are those $8K going?

You have to get out of the mindset that you need a certain type of home for your happiness. If you've ever lived in NYC, you know that not every child needs his/her own bedroom (although I do find having more than one toilet available very, very nice when you have children!); you also know that having more rooms in a house does not equal more happiness. The dining room table doubles as our "office" when we need to work from home--we don't need a separate room for an office. Guests can use the pull out sofa for a bed, or stay in a hotel nearby--we don't need a dedicated guest room.

Before you think about buying another home, I would take a hard look at your own parents, whom you are supporting, and ask if you want your children to be placed in the same boat. Do not take on additional debt, especially a mortgage, if you already feel uncomfortable with your current expenses.

9:42, how long did it take you to save your downpayment?

OP, we are in a similar situation to you. We are under contract to buy a $900K home. We are currently in a sh*tty school district, area w/ higher crime than we feel comfortable with, etc. It feels ridiculous to us, too, given our HHI, but it is a stretch for us to buy the $900K home. HHI is $340K. That will go up to $400K next month when the one of us who is not currently employed starts working. Nanny is $50K/yr. Pre-school $15K. We are paying off law and grad school debt, have 1 car note at $350/mo, pay for life insurance, disability insurance, college savings, retirement savings, emergency savings, etc. We take a modest 1 wk. vacation (maybe $2-3K) every 2-3 yrs. We are putting down $180K, and with closing costs added, that's $210K. We saved 3/4 of this, but I am taking a loan from my 401K to fund the balance. A loan means no tax penalty--it has a 4% rate and I'll pay it off from paycheck deducts over 2 years. To us, it was the right thing to do, b/c our children are almost school age so the school issue is looming, the interest rate we are getting on our new mortgage (3.875% on first trust, 4.25% on 2nd) is historically unprecedented and makes our monthly payment $3,600ish, with insurance and taxes added, $4600ish. That's definitely doable on our take home, but after paying for life and disability insurace, college savings, retirement savings that are not as great as I'd like them to be, etc., there is very little left. This is a very expensive area to live in, espec. if you want to be in the better school districts.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, why is it important for you to have that $1 Mil home?
I know some families that live in an ordinary house in an ordinary neighborhood, have a holiday house, own some forest etc. Their net worth is easily $1Mil and above, but have no desire to take that and put it into a fancy house

$1 million isn't a "fancy" house in these parts.

Usually a desire for a $1 million home is strongly correlated with school quality. It's not a vanity thing.

true but just because you don't buy the $1mil home with the highest ranking school it doesn'tmean your kid is going to end up at the worste school possible. There are lots of great school that aren't in the richest neighborhood. If you can afford the expensive home in the best school district then fine, but going into debt, borrowing agains a 401k and so forth to get that is not the wisest decission.

My in-laws owned a gorgeous home in a top school district, put all theri money into their kids (private tennis lessons, expensive camps and so forth), know where it got them....living with and being supported by their daughter, because they lived above their means for many years and didn't save enough for emergencies like my FIL losing his job late in life. Obviously extreme and I nkow people wil say "that won't happen to me." but I am sure they never thought it would happen to them either.

on the flip side their commitment to their kids was well appreciated and their children are gladly helping them out later in life...

Anonymous wrote:Should I withdraw money from my 401K to pay my nanny?

definitely because your kids deserve nothing but the absolute best. Yes same can be said for people who go into debt just to be in the big name schools.

Anonymous wrote:

Anonymous wrote:OP, why is it important for you to have that $1 Mil home?
I know some families that live in an ordinary house in an ordinary neighborhood, have a holiday house, own some forest etc. Their net worth is easily $1Mil and above, but have no desire to take that and put it into a fancy house

$1 million isn't a "fancy" house in these parts.

Usually a desire for a $1 million home is strongly correlated with school quality. It's not a vanity thing.

true but just because you don't buy the $1mil home with the highest ranking school it doesn'tmean your kid is going to end up at the worste school possible. There are lots of great school that aren't in the richest neighborhood. If you can afford the expensive home in the best school district then fine, but going into debt, borrowing agains a 401k and so forth to get that is not the wisest decission.

My in-laws owned a gorgeous home in a top school district, put all theri money into their kids (private tennis lessons, expensive camps and so forth), know where it got them....living with and being supported by their daughter, because they lived above their means for many years and didn't save enough for emergencies like my FIL losing his job late in life. Obviously extreme and I nkow people wil say "that won't happen to me." but I am sure they never thought it would happen to them either.

Anonymous wrote:OP, why is it important for you to have that $1 Mil home?
I know some families that live in an ordinary house in an ordinary neighborhood, have a holiday house, own some forest etc. Their net worth is easily $1Mil and above, but have no desire to take that and put it into a fancy house

$1 million isn't a "fancy" house in these parts.

Usually a desire for a $1 million home is strongly correlated with school quality. It's not a vanity thing.

OP, why is it important for you to have that $1 Mil home?
I know some families that live in an ordinary house in an ordinary neighborhood, have a holiday house, own some forest etc. Their net worth is easily $1Mil and above, but have no desire to take that and put it into a fancy house

Anonymous wrote:Should I withdraw money from my 401K to pay my nanny?

Definitely. It is the only sensible thing to do.

Anonymous wrote:PP is right. Everyone I know in NYC has an illegal nanny that they pay in cash. It is ridiculous. Many of these people make a ton of money and could easily afford to pay the nanny legally too.

I would call the IRS on everyone I knew that did that. This is ridiculous.

We were first time home buyers who bought a 1 million dollar home. The way we afforded it was we rented for the first 6 years of our marriage, and saved a huge down payment that made the mortgage just a little more than what we were paying for our rental. We had no family help whatsoever.

Should I withdraw money from my 401K to pay my nanny?

PP is right. Everyone I know in NYC has an illegal nanny that they pay in cash. It is ridiculous. Many of these people make a ton of money and could easily afford to pay the nanny legally too.

Anonymous wrote:

Anonymous wrote:Not if they're paying her on the books, which is what it sounds like to me. We paid $14/hr for 55 hours a week and with taxes we were paying over $50k a year.

who would pay a nanny off the books? only a tax cheat and a leech on society.

Totally off topic, but...
Are you serious? Almost everyone in NYC pays off the books. Ditto other big cities. Most nannies in other makets won't take an on the books job. I'm new here and learning that DC is a different market, but something like 95% of NYC families with a nanny don't pay on the books. We were the only people we knew paying on the books.

Anonymous wrote:OP again. We take home about 19k (after paying into healthcare costs which are high for our firm, 401k, etc). Nanny is 3500/month. Family help is about 2k/month now but that will go up in time. We've also had to bail out the parents from a foreclosure and pick up emergency health expenses so all of those things took a toll early on and ate up money we could have saved. Also, we weren't as disciplined about savings until the last few years (paid for our own modest wedding etc). Student loans from college are 1k/month. Hoping we find a house eventually that has room for an au pair so we can cut way down on childcare costs. For those who have incomes similar to ours, thanks so much for posting your budgets. We know we can cut down in some areas but there aren't huge areas of excess (lavish vacations, jewelry, fancy clothes, cars, etc).
I'd like to put together a larger downpayment (wait until we can save enough) rather than raising our monthly cost if possible. It just seems excessive to spend more than 4500/month. We realize our HHI income is high now so it worries me to take on even more monthly expense.

The big thing is financial discipline. My husband and I are big savers - we both put ourselves through undergrad and grad school with a bunch of loans. But paid them off and saved. Like you, we paid for our own wedding. But because we had significant financial discipline before getting married, we each had a townhouse that we took into the marraige. I also think that we may have had more years of saving (not sure how old you are, but the fact that you still have $1k a month of student loans it sounds like you are a few years our junior). So the bottom line, it is a series of things that come together that enabled us to buy our house.