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How much did you spend on your "forever" home in relation to your income

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  • #31
    “should I feel guilt free in increasing the spending.”
    No!
    Should you feel guilty being fabulously wealthy is to choose to make your make investments either?
    Tough decision.

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    • #32
      “Forever house, my ass”.
      Luckily I didn’t actually say that to my wife. We did actually buy the 2.6M house she wanted.
      I doubt it will be our house forever.
      Colour me skeptical.
      I do believe in the happy wife happy life idea, to a certain point.

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      • #33
        0.6x

        Lots of financial advantages to an average house in low cost of living area.

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        • #34
          I guess I paid infinity for my new house.  I recently retired.  My last house was my forever house which I lived in for 26 years.  The new house was a cash purchase.  The old house was about 1.8X income at the time of purchase.  My income rapidly increased but I stayed put.  I decided to move because I did not anticipate developing knee problems and needing a downstairs master.

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          • #35




            I guess I paid infinity for my new house.  I recently retired.  My last house was my forever house which I lived in for 26 years.  The new house was a cash purchase.  The old house was about 1.8X income at the time of purchase.  My income rapidly increased but I stayed put.  I decided to move because I did not anticipate developing knee problems and needing a downstairs master.
            Click to expand...


            I have some of the same motivations working on me at the moment. We have an average suburban house that is today 1X but ~1.5X when we bought it. Nothing wrong with it though it is probably more house than we need with the kids launched. But we have recently been having the conversation about moving to a place with: 1) MBR on the main floor; 2) location we can get the kids to bring the grandkids to visit (e.g., by the beach); 3) fun place for us to semi-retire to. Right now still paralyzed by work considerations and inertia...plus, I'm kinda cheap frugal.

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            • #36
              Pay attention to property taxes and the overall trends where you live as well.  I am in a MCOL area, but the property taxes are very high, and keep getting higher.  Real estate keeps gaining in value, and drives property taxes up accordingly.  We bought a reasonable house for my salary, and will have it paid off before our 15 year mortgage is up, but the property taxes are forever.  It makes it so that people don't move often.  Even if there were things I were dissatisfied with in my home, I wouldn't move at this point, as even an even trade of property value would increase my taxes so much, as they are based on historic sales.  The thought of a large home when my kids are young and then a small home later isn't reasonable in all areas.  We went with small, currently have a couple of teenage boys crammed into it, and know it will be perfect again in a few years time.

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              • #37
                We just purchased what I hope will be our last house.  Spent 510k.   We are around 300k a year income.  Still trying to sell our old house at the moment so we currently own around 1 million in real estate, 650k of it is mortgage debt.  It's not too bad making the payments on both, but I wouldn't want to stay in this situation forever. If I made your kind of income though, it wouldn't be a big deal at all.

                But, don't assume it's your "forever home"  We've moved 4 times since we got married 14 years ago.  This last house is a property located on the farm where my wife grew up.  So, I know we won't be selling it.

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                • #38
                  I'm not going to rationalize this, since I've done it elsewhere on this site: mortgage is ~4.5x, VHCOL (silicon valley).

                  Still happy after 8 months, cashflow is still (significantly) better than when wife was in fellowship in the Bay Area. Choices have consequences, we spend less elsewhere, but I call [B.S.] on people saying they "can't make it in the bay area" when they have (very) high salaries. Its doable, you just sacrifice elsewhere. Now, if you have a low salary its a different story...

                  My two cents from my desk over here on the west coast.

                   

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                  • #39


                    Now, if you have a low salary its a different story… My two cents from my desk over here on the west coast.
                    Click to expand...


                    I like to consider teachers as a kind of middle or the road for normal incomes and lifestyles. Not rich, but not "low income" qualifying for benefits and stuff just to get by.

                    https://www.gobankingrates.com/making-money/jobs/average-teacher-salary-by-state/#6

                    $75k is low income? Geez. I wonder why? Housing is a problem that really needs to be fixed. Mortgage at 4x for a physician is probably a little over average.

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                    • #40




                      Essentially this is the first major purchase in my life…and hopefully the last. Up until this point I’ve been so hyper focused on college–> medical school–> residency (derm)–> well paying job–> work really hard. Make good money–> live frugally–> pay down debts and invest. By some of the metrics I’ve put in calculators (25x anticipated spending), there is a chance I could be FI late 30s to early 40s. However, I suppose there is some anxiety with making a purchase that big. Lots of people on this forum seem to be similar to me and not the physician norm hence why I feel I can talk more to this audience. As one poster stated, I don’t want to be seen as the “fancy doctor” or really inhibit my ability to save, but at the same time I won’t to be able to actually spend my money in a responsible manner. Not that 700-800k house is shabby by any means, but should I feel guilt free in increasing the spending.
                      Click to expand...


                      I would get 7-800K house and keep doing what you have been doing which is great!

                      In MCOL area, 700K house is already a very nice house when median home price is less than 400K.  You want to pay 1.2M (luxury house) just because you can afford it.  To me, it is reasonable to feel guilty.

                      You have done great job based on your post, however, your road to FI still has a long way to go.

                      You have great income now, however, good days may not last forever.

                      I would get a least expensive house that you can live comfortably for the next 10 years, not the most expensive house that you can afford based on current income.

                      House is not a good investment, when compared to stocks or CRE.

                      We spent 1.5x income for our house 17 yrs ago.  The house is now paid.  Our current housing expenses are taxes, insurances, repairs, electric and water, all together are about 3% of annual incomes.   So after we pay 33% taxes and 3% housing, we still have 64% left to spend for somethings else.

                      If you want to get a luxury house after you become FI, then you can spend 20-25% of your NW for a luxury house in the future.

                      Our house is worth 5% of NW, and I prefer to put extra 20% of NW toward investments in stocks or CRE, instead of the house.

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                      • #41
                        Bought a 3M+ dollar house.  We really enjoy it--love it actually.  Who knows how long we will live in it.  Talking in terms of multiples of your income makes sense early in your career.  After you have enough money though, you can either keep building a massive investment portfolio or have some fun with it.  YOLO baby!

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                        • #42
                          We bought "forever house" right out of training as it was LCOL city and we had low debt, positive net worth already.  Went with just under 2x my income, not taking into account my wife's as she took some time off.  We loved the house and more importantly the location.

                          I think you recalibrate no matter what direction you go.  When we first moved in I woke up every day thinking "what a great house, this is great!"  Now it's just "where's the coffee?" If we had a smaller home I would spend more money (guilt free) personalizing it, upgrading etc... I don't think I'd wake up saying "I wish I had that bigger house."  As was said, there's plenty of good investments for that extra money and you can always spend thousands on art if you want a true "luxury home."

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                          • #43


                            what are the definitions for LCOL, MCOL, HCOL, etc by the way?
                            Click to expand...


                            You can use this calculator: https://www.bestplaces.net/cost-of-living/

                            Check the overall index for your city of interest. "100" is the US average.
                            Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried (many) bags for a lovely and gracious 59 yo Cyd Charisse. (RIP) Hosted epic company parties after Friday night rehearsals.

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                            • #44


                              How much did you spend on your "forever" home in relation to your income
                              Click to expand...


                              < 0.5 for first and third houses, infinity for second (living the FIRE life at that time).
                              Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried (many) bags for a lovely and gracious 59 yo Cyd Charisse. (RIP) Hosted epic company parties after Friday night rehearsals.

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                              • #45
                                @CM,
                                “Comparison Highlights
                                - Overall, Hillsborough, California is 574.2% more expensive than Houston, Texas
                                - Median Home Cost is the biggest factor in the cost of living difference.
                                - Median Home Cost is 2200% more expensive in Hillsborough.”

                                You mean like this? $450k needs to hit $3.7mm gross excluding taxes and childcare. I wonder how Dayton, Oh lines up?
                                LCOL, MCOL, HCOL ? Nothing wrong with the houses in San Francisco. Just average for a whole lot more Benjamin’s.

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