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HCOL - Can I afford 1.75M House?

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  • #16
    to me, it depends on what that monthly 9000 spending equals. If that includes one off type spending as noted above, and gives you space for expenses like Christmas gifts, auto repairs, furniture, charity, basic trips, then I would probably go for it. But $26,000 a year is very little wiggle room. If it does not contain wiggle space for those items, I would probably only pull the trigger if I had some confidence my income would increase in the future.

    I had over $2000 in car repairs just this month. This type of stuff pops up all the time. If your house is older, remember maintenance costs may be higher.

    Also keep in mind is there any chance of your income decreasing? Or is the 460K all guaranteed salary?

    also you noted $8300 a month but only calculated $96,000 a year for your PITI. It's more like 100k. So even less than 26k. And in some areas property taxes are rising significantly.

    with grandparents in the area (free childcare) I would have a discussion with spouse about working if it were me. Depending on their field this could give you the wiggle room you need. But of course I don’t know your personal situation. When you live in these types of cities, luxuries like staying at home sometimes have to be sacrificed.

    just seems very very tight. I really do not envy those of you who live in high cost of living areas. This would be too stressful for me, but you have just enough wiggle room where if you are meticulous about your finances and have already had a discussion with your spouse about limited extra spending on things like vacations, you may be able to make it work.

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    • #17
      Originally posted by Fugue View Post
      to me, it depends on what that monthly 9000 spending equals. If that includes one off type spending as noted above, and gives you space for expenses like Christmas gifts, auto repairs, furniture, charity, basic trips, then I would probably go for it. But $26,000 a year is very little wiggle room. If it does not contain wiggle space for those items, I would probably only pull the trigger if I had some confidence my income would increase in the future.

      I had over $2000 in car repairs just this month. This type of stuff pops up all the time. If your house is older, remember maintenance costs may be higher.

      Also keep in mind is there any chance of your income decreasing? Or is the 460K all guaranteed salary?

      also you noted $8300 a month but only calculated $96,000 a year for your PITI. It's more like 100k. So even less than 26k. And in some areas property taxes are rising significantly.

      with grandparents in the area (free childcare) I would have a discussion with spouse about working if it were me. Depending on their field this could give you the wiggle room you need. But of course I don’t know your personal situation. When you live in these types of cities, luxuries like staying at home sometimes have to be sacrificed.

      just seems very very tight. I really do not envy those of you who live in high cost of living areas. This would be too stressful for me, but you have just enough wiggle room where if you are meticulous about your finances and have already had a discussion with your spouse about limited extra spending on things like vacations, you may be able to make it work.
      I agree it is a little tight. 460k is guaranteed, and spouse could go back to work on a part time basis once the kids are in school for maybe 50-75k/yr.

      9k is an over-estimate, probably closer to around 6k/month. There will be some raises, maybe 10-20k gross within the next couple years but unlikely anything bigger than that.


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      • #18
        I don't think you can afford it
        I do think it's weird for me to type that to a doctor earning 500K, but 26K is not enough wiggle room

        Has to take home insurance, property taxes, home improvements/repairs into account (probably high due to HCOL) and 529 as mentioned before (if that's a priority)
        There will inevitably be lifestyle bloat, I promise, even if your income rises
        Another child would make things too tight in my opinion
        20% savings is just a bare minimum

        You would be trading one yes (an expensive house) for a lifetime of a hundred no's (no increased savings, no private school, no ___ lessons, no lavish vacations or even frequent small ones, no 529s, no early retirement)

        no wrong choice, just your choice
        the guillotine or death by a thousand cuts

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        • #19
          Two more children will really add some expenses. Private school will be impossible. You might not be able to fund 3 college educations. How accurately are you tracking your spending? You might can swing this but you will be money stressed and risk burning out.

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          • #20
            as the saying goes, you can afford anything, but not everything

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            • #21
              Originally posted by jacoavlu View Post
              9k spending per month excluding rent and loans paid off seems like a lot.
              yes.

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              • #22
                Is there any way to optimize your spending? 9k not counting rent is not living very frugal.

                You can have anything but not everything.

                Living closer to a resident when youngish means freedom and/or living like royalty when older.

                Be careful. If you spend too much you become a slave .

                Freedom is valuable. You get it when you reach FI

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                • #23
                  You are mid 30s, a million in assets, no debt. You can go any direction from here.

                  This purchase means you are choosing a standard high earner / HCOL pathway - a high class lifestyle that you work hard to maintain. The math works out fine as long as you work a full career. It does take away most of your flexibility to do anything else.

                  Just depends on what you want out of your life / career.

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                  • #24
                    Just from eyeballing it, it seems ok.

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                    • #25
                      Yes you can afford the home. The issue is all the other stuff (including options to work less/differently) that you won’t have if you buy it.

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                      • #26
                        I liked the comment of the guillotine versus death by a thousand cuts. You could buy the home, and I’m sure some lender and real estate salesperson (excuse me, “agent”) will be all but happy to get you in this home “because it’s going to go fast!”. Kudos to you for sitting back and thinking carefully about this decision.

                        I thin you can stretch to afford it, if that’s what you want. On the other hand, if you value using your hard earned money to buy more of your time back with your family (trips, SCUBA diving lessons, or whatever you and your family wants), then I would not buy the house and wait for something less expensive where you can build up serious equity fast.

                        I grew up in a VHCOLA in a very expensive part of town in a large house: upkeep is astronomical (insurance, utilities, landscaping, the works) and when things “go wrong”, they go wrong big league. Then when you go to fix the “go wrong”, you learn that your home can’t quite accommodate the repair without this, that, and the other modification that other subcontractors have to do. Why is this detour important? Because one repair on a large home can easily obliterate (and beyond) your annual $26k left over funds.

                        I sense that you worked so, so hard this far to build your nest egg: superb job! But this home (to me) is betting everything on one hand. I’d pass and ride out this insane market; something more budget friendly that actually allows you to save and enjoy time with your kids and spouse is a better fit than stretching on this home.

                        Then again, I’m just an anonymous boat stuck in a canal on a pseudoanonymous forum, so you do you…

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                        • #27
                          you can do it but just recognize what you are giving up for it. As others said, you can have anything you want on $460k but you can't have everything. I'm also optimistic you can make it work as you finished paying off your student loans within 3 years of being out of residency. Granted I don't know what the original balance was, but it seems like you have grit. The key is flexibility on not just spending (house, cars, vacations, etc) but also income. I'm not sure if it's just you speaking or has your spouse actually said they would be interested in going back to work once kids are in elementary school?

                          I also wanted to jump in just to warn you a bit about living in your area and being in a place with great public schools. Be careful of who you surround yourself with. We bought a house in a great public school area. I don't want private school for my kids and buying a bit more house so we could be in a great school area was one thing I was willing to do since I thought the trade off would be worth it for our family. By every unbiased metric, the school district is great. Maybe not 10/10 but certainly 9/10 and I'm okay with that. What I did not anticipate was being surrounded by so many people who think 10/10 must be what we have. I hear nothing about how much the public schools suck in my area despite these metrics because people here live in a bubble. I am even involved in the local area public and private schools. From an education standpoint I see no difference in terms of material covered and classes offered. Still, this sets up a psychological burden on myself a little and my spouse even more because we keep hearing how much the schools suck. Everyone wants what is best for their kid. You don't want to short-change them. I don't think we are but I would be lying if I told you hearing this all the time didn't make me feel that we might be short-changing them and private school would be better. The private schools here are $20-$30k/yr. Totally unaffordable. And there's no guarantee your kid would be better off either in a private school. Most people who sent their kids to public school think they made the right choice. Most people who sent their kids to private school think they made the right choice. It's probably parents not wanting to admit they might have been wrong. Unable to get a clear answer on whether their truly are regrets or not because so few people are introspective and honest enough with themselves as a parent to be critical.

                          I say all of this to make sure you are certain by the unbiased quantitative metrics that the district is great. If it is, ignore the noise of people who bash it just because the district isn't the holy grail for them. By buying the house you are choosing to make private school likely not be an option for your children. Are you okay with that? Remember I'm okay with that. But again, while my head says we and the children will totally be fine, the heart still is impacted by our surroundings.

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                          • #28
                            Call me a pessimist , but what if the next 10 years we go into a recession , especially in hot housing markets. And you need to sell for a loss, after sinking in $100,000 a year for 10 years with no increase equity. So then you sacrificed private school for your kids, family vacations , retirement savings, and a new Tesla to be house poor for the last 10 years.

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                            • #29
                              I'm also in the camp of "Technically you can afford it but no wiggle room and you'd be smarter to not do this.."

                              That's a boatload price of a house for someone with your asset level; you'll scrimp and struggle to make this work just as you want, and would be much wealthier down the road if you look for a cheaper living option. I wouldn't do it personally.

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                              • #30
                                Agree with those who noted it has the potential to be tight. Also worth considering as those of us with decades into a career have experienced the atmosphere can change. What is a great job for 10 years might not be a great job in year 11. What is a great school district now might not be a great school district in 10 years. The HCOL areas are a bit of a different beast but I'm not sure if that justifies this tight of a budget. No easy answers, best wishes with whatever you decide.

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