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  • 1.5million????

    We live in a very HCOL area and have been looking at homes for a while. Fixer uppers in bad school districts are $1mil and houses we would consider (not even super impressive) but we would totally be happy with in good school districts are $1.5mil+. We are a dual MD couple making a joint salary of $600k but likely closer to $700k in the next couple of years (but wouldn’t bank on this). This is where both our families are from (very important to us) and in a great area to raise children. Any tips or advice? How do people make it work in vHCOL areas? Thoughts?

  • #2
    Ripoff

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    • #3
      I hear you. I need reassurance because this is what we are doing. We had the chance to make double in a LCOL area 2.5hrs away but we both really prioritization family and having our elderly parents nearby. We like nice things but money is not everything to us. We want to be happy and comfortable...that is the goal.

      We are almost years out of training. We lived like residents and paid off almost $400k of Med school loans and are now debt free. We have a 6 month E-fund, fully insured (disability, term, umbrella), $250k in retirement (was more but we all know how these last few months have been), 529s started for our 2 kids. We are in our mid 30s and I know my husband is not the retire early type. We love to travel but would likely be okay retiring in 25-30 years in our 60s since we like our jobs.

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      • #4
        If you guys love what you do and expect to keep making $600k for the next 25 years, you can do whatever you want within reason. Just hope and pray you do not burn out or get disabled. I am your age and feel like I am just punching the clock most of the time.

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        • #5
          Originally posted by GasMomDoc View Post
          How do people make it work in vHCOL areas? Thoughts?
          I would move, but I'm not you.

          My parents, 5 younger sibs, and all of my nephews, nieces, and cousins (save one cousin) live in the same city where I was raised. I'm very close to my family, but at this point I just visit as often as I can, I don't live there. My parents host great family parties every time I come home.

          In my current location I earn much more and my work-life balance is much better than what I could find in my hometown. My quality of life is better here.

          Also, I was so burned out in 2001 that I left medicine. I'm happy to be back, but I never count on my current happy circumstance to endure forever. It's important to me to have a sufficient liquid net worth to be able to walk away without worries if necessary.

          If you love your jobs, and you're confident that you'll have the option to continue at them forever, and that they will always pay as well as they do now, and that local home prices will not decline in the future (e.g., Detroit), then you may want to close your eyes and jump.

          However, if all of the above is true, but the price/rent ratio is > 20-25 in your locale, then I would rent (if determined to stay).

          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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          • #6
            Do the elderly parents want to help with childcare? What are their plans for their homes?

            You haven’t listed the very high cost of living location, but from the description it sounds more like the Bay Area than NYC. 2.5 hours away still has you in California, with the same tax and regulatory burden, but with crappier weather, worse schools, and the same headaches of being in the People’s Republic of Sacramento.

            Realize that $1-1.5M could buy a very, very nice house in most of the country. Once this dread disease is under control, the difference between a $1.5M house in a very high cost of living areas and a six bedroom house in a moderate cost of living area could pay for plenty of round trip plane tickets for both sets of grandparents each and every month.

            It’s likely that you could make a good bit more and pay quite a bit less in taxes if you live in Boise or Tampa or Raleigh or... Make sure you’re okay with giving that up. The tiny expensive house in the VHCOL part of the country is a luxury good every bit as much as the Tesla Model X or multiple vacations to the south of France during the high season. Choose your luxuries and your recurring costs deliberately and consider what you’re giving up when you opt out of a higher income in a cheaper, lower cost location.

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            • #7
              Originally posted by fatlittlepig View Post
              Ripoff
              Is that your word of the day. You seem to be using it often today.

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              • #8
                Originally posted by GasMomDoc View Post
                We live in a very HCOL area and have been looking at homes for a while. Fixer uppers in bad school districts are $1mil and houses we would consider (not even super impressive) but we would totally be happy with in good school districts are $1.5mil+. We are a dual MD couple making a joint salary of $600k but likely closer to $700k in the next couple of years (but wouldn’t bank on this). This is where both our families are from (very important to us) and in a great area to raise children. Any tips or advice? How do people make it work in vHCOL areas? Thoughts?
                You are looking at only the positive side of things - family, great area to raise children ( I doubt Bay area is that). There is no certainty that your income will be what you think it might be, post COVID. But your taxes will still be high to pay for all the goodies that they are giving away for free. So will be local and state taxes to pay for all the state employees and their pensions. The furnishings and maintenance of the semi old house also has to be thought of.

                There is the negative of living far from family and not so great schools but a low or MCOL gives you the same or better salary with less expenses. But family is a priority then one has to make sacrifices. You have to go into it with eyes wide open.

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                • #9
                  Move & take the families with you. And I'm being very serious.
                  "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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                  • #10
                    Not saying it’s the wrong decision but need to recognize it for what it is, a ripoff.

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                    • #11
                      Living in a HCOLA is a luxury. You can afford it but you cannot afford everything. Sounds like you have your financial house in order. Just make sure you understand what you are giving up by putting so much into the house.

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                      • #12
                        Originally posted by Cubicle View Post
                        Move & take the families with you. And I'm being very serious.
                        I was about to say something similar but thought it might not be in good taste.

                        Why do people posting here want to be in VHCOL and state it is because one or the other have their parents living there. The parents are not paying the mortgage or helping much with child care anyway. So why should one sacrifice one's future because of parents wanting to continue to live in VHCOL are ( which was probably a LCOL when started living there).

                        Why not pick out a MCOL that one can afford and have a nicer home and still have good schools and live there. When the parents get old and retire they can sell their HCOL house at a great profit to some unwary sap for $1.5M and come and live in your area buying a nice condo with all that money with change to spare. Why should it always be the children who have to sacrifice their futures and their kid's futures for the parents, who anyway are happy where they are.

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                        • #13
                          Originally posted by fatlittlepig View Post
                          Not saying it’s the wrong decision but need to recognize it for what it is, a ripoff.
                          People value different things. It may be a ripoff to you but it likely isn't to GasMomDoc . I, personally, could never live in a VHCOLA but I understand that lots of people do. They can certainly afford it but they likely won't be retiring early and will have to continue to make good financial decisions.

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                          • #14
                            Sounds almost exactly like my situation. I’m actively looking for home in Bay Area. Similar combined salary and home price. Both sides of family in California and we see them all throughout year. Wife and I love our jobs. Both wife and I were born and raised in California. Nothing like it and we are fine paying the premium to be here. Neither of us would lose sleep over the mortgage. Tighten up the budget. Don’t expect to retire early. You can still go on vacations and spend.

                            No advice you haven’t already been given just know other people are doing the same thing and have no regrets. Sounds like you’ve done very well only one year out. You’ll be fine. Good luck!

                            FYI if you are in Bay Area. All homes I’ve had my agent follow are still selling right around list. Last one 12 offers 10% over list...Real estate is hyperlocal. Take advice here and what your read on news with a grain of salt.

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                            • #15
                              What do the numbers say?
                              $1.5m 20% downpayment is $300k =. $1.2m loan
                              2x comp means your are OK.
                              The question is are you saving 20% ($120k) for retirement?
                              Gross-taxes-retirement (20%) =Spending
                              If you wish to spend on a residence rather than travel or investments, no one should have any critical comments.

                              Could you accumulate wealth faster? Yes. That would require a change that takes you and possibly your parents out of your comfort zone.
                              Many lower cost of living areas and employment opportunities exist.
                              The numbers show you can swing it. Unless California raises taxes and you can’t reduce your spending. That’s your flag that jumping ship and moving is needed to keep the boat afloat.
                              It’s about $6,500 /mo payment.
                              https://smartasset.com/mortgage/cali...tor#M39jsSoIBp

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