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help figuring out housing/life the bay area

Home Mortgages and Home Buying help figuring out housing/life the bay area

  • Avatar SLC OB 
    Participant
    Status: Physician
    Posts: 569
    Joined: 06/23/2018
    my monthly grocery bill is probably closer to 300

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    For just you? Or other family members too?

     

    #184754 Reply
    Avatar soundsystem 
    Participant
    Status: Physician
    Posts: 58
    Joined: 12/14/2017

    @dayman

    House was paid off in 3 yrs.
    no debt
    NW north of 6
    Yearly Spending <<100 Yearly saving>300

    yearly spending <100 is very impressive. Any kids? Private school for 3 kids is already close to 100k/year!!!

     

     

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    spending less than 100K a year is not impressive.

    it’s impressive that people spend 1500 a month on groceries. that’s impressive. my monthly grocery bill is probably closer to 300 (can’t say for sure, but i do grocery shopping and i’m estimating that’s what it is)

    Click to expand…

    Spending less than 100k is impressive if there are several kids involved and you want to send them to a good private school. As I said, depending on where you live, it’s not uncommon to pay 30k/year for private school. If you have 3 kids, that’s already 90k.

     

    Regarding groceries, the same thing. Are you talking about a single person or a family of 4 or 5? Where do you buy your groceries? Personally, food is very important, and there is no way you can buy good quality food for less than 300/month.

    #184755 Reply
    Avatar dayman 
    Participant
    Status: Physician
    Posts: 75
    Joined: 12/09/2017

    FLP, good job on the groceries. How’s your property tax and insurance bill? I’m wondering if the difference between our property taxes alone would cover my family’s annual grocery budget

    #184763 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3088
    Joined: 09/18/2018

    This simply illustrates how people treat a residence as an “investment” or a “consumption”.

    On one hand, you live in it, if you move, mostly increase in value gets rolled into the next one. Since you live there it actually costs you cash to maintain, and financed with a loan, the money GONE not available for expenses or investments. Your cost of living is the total cash flow you spend on the house. Dear old mom and dad never see a penny, it’s the house of their dreams AS LONG as they can afford it in retirement. Never cashed out.

    Retirement funds are investments , well you tell me. Hopefully investments that will be sufficient and liquid enough to pay living expenses when you no longer work for a living.

    The value of real estate in investments is as an asset class for diversification. Try to rationalize housing costs as an investment completely is kidding yourself.
    To an extent, assets allocation leveraged with a tilt to residential real estate that raises your living expenses now and in retirement that will only be available with a large change in your life (I consider selling a residence big) selling it. That is not “forever”, you have upped your consumption with less for savings or spendingh on other things. That is a personal choice, just like retirement savings or investments.

    My concern is the “if” statement of losing one job or relying on selling and moving “back home”. Selling a $1.5-$3mm house, moving, two new jobs are huge financial disruptions. A forced sale for cash flow purposes can lead to many poor decisions, necessary but expedient. The high incomes most likely have disruptions and the EF will need to be upped to accommodate the higher run rates. That EM is not really investment AA either. That delays the savings as well.

    Have you considered the “downsized house” for retirement? If not, the residence is 100% expense and all the talk of selling is meaningless. Higher cash drain at a fixed level that you might be underestimating the risk and overestimating increase home values actually benefit you.

    #184765 Reply
    fatlittlepig fatlittlepig 
    Participant
    Status: Physician
    Posts: 1200
    Joined: 01/26/2017

    @dayman

    House was paid off in 3 yrs.
    no debt
    NW north of 6
    Yearly Spending <<100 Yearly saving>300

    yearly spending <100 is very impressive. Any kids? Private school for 3 kids is already close to 100k/year!!!

     

     

    Click to expand…

    spending less than 100K a year is not impressive.

    it’s impressive that people spend 1500 a month on groceries. that’s impressive. my monthly grocery bill is probably closer to 300 (can’t say for sure, but i do grocery shopping and i’m estimating that’s what it is)

    Click to expand…

    Spending less than 100k is impressive if there are several kids involved and you want to send them to a good private school. As I said, depending on where you live, it’s not uncommon to pay 30k/year for private school. If you have 3 kids, that’s already 90k.

     

    Regarding groceries, the same thing. Are you talking about a single person or a family of 4 or 5? Where do you buy your groceries? Personally, food is very important, and there is no way you can buy good quality food for less than 300/month.

    Click to expand…

    my kids do not go to private school. Fatlittlepig is a product of public schools, no interest in private schools. anyone who pays 30K a year for private school, that’s a total joke and a rip off if there are decent public schools available.

    i estimate for family of 4, grocery bills are 300 a month, i could be wrong, but i do not think it is much higher than that. maybe including eating out, 400 a month.

    what fatlittlepig ate today:

    BF: Coffee, oatmeal with some protein powder and blueberries, a banana

    morning snack, coffee, some pistachios

    Lunch: Tri tip with rice, spinach

    Dinner: pho soup with tofu, apple, and some mandarin oranges.

    seems fairly healthy.

    exercise 1 hour.

     

    #184768 Reply
    Avatar Redpops46 
    Participant
    Status: Physician
    Posts: 6
    Joined: 01/25/2019

    I can’t believe I read the entire thread. Really interesting read and a lot of great points made. Here’s my 2 cents since you posted on a public forum and I also live in the Bay Area. Our combined family income is very similar to yours. Ours is 650k this year and with a for sure IPO will become about 900k assuming the IPO is with 20% less than projected (one of us is obviously in tech). Even with those numbers, I would be very wary of such a large purchase without a larger down than that. Just for perspective we have about 1.1milliom in assets in our mid 30s right now. Here’s why:

    The following are projected monthly costs assumes a 600k income which is higher than your current income

    29,785 post tax after 401k x 2 using an online calculator
    15,000 house mortgage plus insurance you stated
    1,825 basic costs you stated for 2 people which does not include increased disability insurance for your wife
    4,000 daycare for 2 kids (assuming future)
    1,000 Roth IRA x 2
    =7,960 left

    Costs not included here and need to be subtracted from the 7,960:
    Increase in wife’s disability insurance
    Life insurance
    Kids 529 contributions
    Kids activities, food, clothing, healthcare
    Healthcare costs
    Vacation for a family
    Cost of maintaining the house
    Cost of maintaining that 1/3 acre yard!
    Cost of car when current ones break
    Emergency fund for a family
    Savings for retirement in a VHCOL area

    And not to mention having some fun! Being frugal with stuff is one thing but not even letting your hair down one bit really should not be something to brag about. You can be frugal, but not miserly. I truly hope your increased income happens and sustains forbghe 30 year duration of your loan.

    #195897 Reply
    Liked by kdeva
    Avatar Redpops46 
    Participant
    Status: Physician
    Posts: 6
    Joined: 01/25/2019

    I really should emphasize house maintenance costs. Because the Bay Area costs so darn much, people also charge more for house maintenance costs. Whatever you read elsewhere, increase it by at least 20%!

    #195898 Reply
    Avatar Panscan 
    Participant
    Status: Resident
    Posts: 1092
    Joined: 03/18/2017

    15k/mo mortgage? how much is your house, jesus…. assuming 15 yr I guess, if 30 thats scary

    #195907 Reply

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