A year into home ownership

**ZZZ** · 11-21-2013, 08:41 AM

Sounds like you have had an exciting last few years! Congrats on the house/kids! My condolences for getting married.

I'd recommend increasing your savings just a little bit. I am estimating a monthly living expense of 5-6 thousand. With your current savings that would last for roughly 3 months.

I recommend a six month emergency fund.

Also, are you currently maxing 401k/IRA's between the two of you?

Other than that, it sounds like you are in a good position!

**ua_guy** · 11-21-2013, 10:04 AM

It sounds like you guys are on a good track now. It's a good reminder for anyone wanting to purchase a home. There are really 6 associated costs, and it's never advisable to enter into the deal with nothing, or have nothing on the other side of the deal (i.e. don't go broke buying a house).

The costs are:

1. The down payment and fees, inspections.
2. The cost of moving.
2. Monthly PITI
3. Furnishing the home for the first time, or to suit a new home with existing furniture.
4. Remediating any undiscovered issues during inspections, or those that you agreed to remediate on your own.
5. Ongoing regular maintenance costs
6. Remodel costs of things about older homes that need service or that you don't like.

That said, the first couple years can be extremely tough, especially when dealing with random factors like sickness and medical costs, changing jobs, or more planned things like becoming parents.

I'm glad you guys are making it through and are onward and upward towards financial stability. The hope is that it gets easier from here!

**SeanH** · 11-21-2013, 10:44 AM

Enlightening. When you are renting its very easy to play the "home ownership is so much cheaper" game.

**edg126** · 02-28-2014, 10:27 AM

I thought this would be a good time to post some updates to this since it's 4 months later. We reached one of my big goals, and are now debt free except for our mortgage! Our tax return was much higher than anticipated due to childcare deductions. We received 4000 when I estimated 1000. So we pushed up our exemptions and paid off the car loan.

Since that was paid off, I bumped my 401k contributions up to 15%, and now my next goals are to build 20% equity into our house, and raise our emergency fund. I'll be doing both simultaneously, adding $450 a month to the principle of the mortgage, and anything left over to the emergency fund. If I can stick with the $450 then I'll reach 20% in August 2015. We are at 13% now. Then if I kept rolling that forward we can have our mortgage paid off 10 years early.

I'll have a better idea after a few months how long it'll take to get our emergency fund to where I want it to be, but my hopes are to have it funded to 60K by the time my twins are 5.

Combined Salary : $141,500 (2500 raise + 5000 bonus)
401K : $55,000 (15% + 4.5% company match) I haven't checked my wife's balance since last post, I'd guess she has about 25K now. We are both on track to have 1x our salary by 35, but we'll become ahead of those milestones for 40, 50 etc.
ESPP : $7,700 - I'll be using this to buy a 'new' used car for my wife in July.
Debt : $295,030 out of a $339,000 mortgage @3.875% interest
Savings: $16,000.

**Eagle** · 03-07-2014, 04:16 AM

Originally posted by edg126 View Post

I thought this would be a good time to post some updates to this since it's 4 months later. We reached one of my big goals, and are now debt free except for our mortgage! Our tax return was much higher than anticipated due to childcare deductions. We received 4000 when I estimated 1000. So we pushed up our exemptions and paid off the car loan.

Since that was paid off, I bumped my 401k contributions up to 15%, and now my next goals are to build 20% equity into our house, and raise our emergency fund. I'll be doing both simultaneously, adding $450 a month to the principle of the mortgage, and anything left over to the emergency fund. If I can stick with the $450 then I'll reach 20% in August 2015. We are at 13% now. Then if I kept rolling that forward we can have our mortgage paid off 10 years early.

I'll have a better idea after a few months how long it'll take to get our emergency fund to where I want it to be, but my hopes are to have it funded to 60K by the time my twins are 5.

Combined Salary : $141,500 (2500 raise + 5000 bonus)
401K : $55,000 (15% + 4.5% company match) I haven't checked my wife's balance since last post, I'd guess she has about 25K now. We are both on track to have 1x our salary by 35, but we'll become ahead of those milestones for 40, 50 etc.
ESPP : $7,700 - I'll be using this to buy a 'new' used car for my wife in July.
Debt : $295,030 out of a $339,000 mortgage @3.875% interest
Savings: $16,000.

Congrats on paying off your vehicle and being debt free except your mortgage!

Good call to increase your mortgage payment and beef up your e-fund.

60k by the time the kids are 5 sounds attainable. Keep up the good work!

**snafu** · 03-07-2014, 05:23 AM

Another voice to congratulate you and DW for doing so well getting debt paid off. Have you checked the details of your specific mortgage to end mortgage insurance premiums as soon as you reach 20% equity? I wonder what your long term plan is for holding a $ 60K Emergency Fund. If planning on a replacement car, have you begun research for best buy, least repair options? Would you buy private or choose dealer certified used vehicle?

**edg126** · 11-05-2014, 06:20 PM

Here's some updates from my last post, now a little over 2 years into home ownership.

On the house front, we had an unanticipated remodel. I found out the toilet on our first floor bathroom had been leaking for years and rotted away the flange and floor under and nearby it. I could have just had the flooring redone, but that part of the house is always super cold and non-functioning in the winter, so we did a gut of the bathroom, laundryroom, and entryway, adding in insulation, and replacing doors. We'll see how well it did, but it set us back $14,000. Paid for out of my ESPP and cash flow, since the contractor took a long time..

I am now maxing out my 401K contribution (17%, and a 4.5% company match), my ESPP at 10%, and HSA. My wife contributes 11% to her 401k with ~6% match). At some point I'll get her to raise that even higher to where we can max her's out too.

Combined Salary : $143,000 (wife received a 2% salary increase, my increase won't be until February)
Combined 401K : $110,000
ESPP : $3,000
Debt : $289,000 out of a $339,000 mortgage @3.875% interest
Savings: $15,000

I haven't been focusing on making extra payments to the house, but just trying to save some more money. Wife still needs a car replacement soon, and who knows what will need to be done next with the house. I'm also expecting to get a decent raise and bonus this year, and a promotion in the next year or two. That will certainly help us to get our savings to where I want it to be.

As to answer still relevant questions from previous posts, I think the 60K number is too high now to have a goal EF. I look back and question that high of a number. In my head I think I use my EF for big expenses (like when the roof would need replacing, or the car at some point). But I can still handle that with a 25-35K balance.

As for where we buy the car, I had a plan, but that was 8 months ago and now drawing a big blank. I'll have to start researching over again. I was leaning towards a company like carsense, through the dealer. If we are in no rush at all, i'd be willing to explore Craigslist (especially once I see the savings skipping the middleman).

**marvholly** · 11-06-2014, 12:18 AM

we have a lawyer in the family. he does home contracts & closings several times/year for clients, friends and/or family.

He swears homes have 'feelings' amd whenever they change hands homes have nervous breakdowns and ALL the appliances die, especially the expensive ones (furnace, a/c.....).

**Eagle** · 11-06-2014, 04:03 AM

Originally posted by edg126 View Post

Here's some updates from my last post, now a little over 2 years into home ownership.

On the house front, we had an unanticipated remodel. I found out the toilet on our first floor bathroom had been leaking for years and rotted away the flange and floor under and nearby it. I could have just had the flooring redone, but that part of the house is always super cold and non-functioning in the winter, so we did a gut of the bathroom, laundryroom, and entryway, adding in insulation, and replacing doors. We'll see how well it did, but it set us back $14,000. Paid for out of my ESPP and cash flow, since the contractor took a long time..

I am now maxing out my 401K contribution (17%, and a 4.5% company match), my ESPP at 10%, and HSA. My wife contributes 11% to her 401k with ~6% match). At some point I'll get her to raise that even higher to where we can max her's out too.

Combined Salary : $143,000 (wife received a 2% salary increase, my increase won't be until February)
Combined 401K : $110,000
ESPP : $3,000
Debt : $289,000 out of a $339,000 mortgage @3.875% interest
Savings: $15,000

I haven't been focusing on making extra payments to the house, but just trying to save some more money. Wife still needs a car replacement soon, and who knows what will need to be done next with the house. I'm also expecting to get a decent raise and bonus this year, and a promotion in the next year or two. That will certainly help us to get our savings to where I want it to be.

As to answer still relevant questions from previous posts, I think the 60K number is too high now to have a goal EF. I look back and question that high of a number. In my head I think I use my EF for big expenses (like when the roof would need replacing, or the car at some point). But I can still handle that with a 25-35K balance.

As for where we buy the car, I had a plan, but that was 8 months ago and now drawing a big blank. I'll have to start researching over again. I was leaning towards a company like carsense, through the dealer. If we are in no rush at all, i'd be willing to explore Craigslist (especially once I see the savings skipping the middleman).

So here's what I gathered from your thread:

*As of Date ---> | 11/21/2013 | 2/28/2014 | 11/6/2014
Income | $134,000.00 | $141,000.00 | $143,000.00

*Assets |
401k | $48,000.00 | $55,000.00 | $110,000.00
ESPP | $5,000.00 | $7,700.00 | $3,000.00
Savings | $18,000.00 | $16,000.00 | $15,000.00

*Debts
Mortgage | $300,000.00 | $295,030.00 | $289,000.00
Debt (Car) | $7,000.00 | $- | $-

*Major Expenses
House Down Payment | $54,000.00 | $- | $-
House Expenses | $30,000.00 | $- | $14,000.00
Baby/Medical Expenses | $5,000.00 | $- | $-

Net worth excluding vehicles | $(236,000.00) | $(216,330.00) | $(161,000.00)

I wonder if perhaps contributing less towards the 401k and paying cash for a vehicle is a good idea? With 2 kiddos and a wife I'd also boost that savings to 30-45k.

**edg126** · 02-27-2015, 11:09 AM

Thanks Eagle for the formatting! I updated based on my salary and raise. Here's an update of numbers:

Income: +$5000. I received a $2000 raise, and because it's a 27 pay period year, have an additional ~3000 from that. So this year will be my first $100K salary year at 33! It will be even higher if I factored in short term capital gains from my ESPP.

HSA: I've bought into the idea of using the HSA as a tax free growth area. Even better, since I work for the company that owns the HSA, they pick up the fees. I'll be maxing this out from now on, and investing when I reach the minimum.

Roth IRA: I sold my ESPP shares on Jan 2nd, and used that to fund my IRA, for 2014. I know my emergency fund is lacking, but I panic some that our retirement funds aren't as high as I'd like to. I aspire to retire in 21 years at age 54 (year my kids graduate college). I now put half of my paycheck that's left over into my EF, half into Roth.

I calculate my house value as the purchase price * 1.02 each year. There hasn't been any houses nearby that sold recently to give a good picture of the worth.

And I calculate car value by the low end of kbb trade in value.

As with each year, I see no big expenses this year. We aren't going on any vacation, don't have anticipated housing projects...

*As-of-Date---- | 11/21/2013 | 2/28/2014| 11/6/2014 | 2/27/2015
Income--------- |$134,000--- | $141,000 | $143,000- | $148,000

*Assets
401k----------- |$48,000---- | $55,000- | $110,000- | $125,000
IRA------------ |$0--------- | $0------- | $0------ | $8,500
ESPP----------- |$5,000----- | $7,700-- | $3,000--- | $1,700
HSA------------ |$0--------- | $0------ | $0------- | $1,600
Savings-------- |$18,000.00- | $16,000- | $15,000-- | $20,400
House---------- |$339,000--- | $345,780 | $352,700- | $352,700
2-cars--------- | ?--------- | ?------- | ?-------- | $19,600

*Debts
Mortgage------- |$300,000--- | $295,030 | $289,000- | $287,000
Debt-(Car)----- |$7,000----- | $0------ | $0------- | $0-

*Net-worth----- |?---------- | ?------- | ?-------- | ~$242,500

**snafu** · 02-28-2015, 06:00 PM

great update! terrific progress. Suggest you run the numbers on your mortgage costs. You listed payments as $ 2,200. but the sum of the outstanding mortgage has only modestly decreased [$ 13K]. So much of the payment goes to that combination of property taxes, mortgage insurance and interest. I suggest working in an extra sum, insisting it be applied directly to principal and monitoring value in your district so that there is focus on value to 20% equity. You could re-direct part of your income tax rebate that reflects the deduction for mortgage interest for example.
Eliminating that expensive mortgage insurance frees up funds for you to direct.

**edg126** · 11-04-2015, 05:24 PM

2 year update!
Based on my estimated net worth in November 2014, Our net worth grew by $66,000 in one year!

Major expenses
$1000 for a plumber to replace our hot water heater that went, and $800 for tree trimming. I've gotten much better at home repairs since I moved in, I refinished the upstairs bathroom cabinets for about $100 in supplies, took out a big chunk of drywall in the kitchen to insulate and patched it back up, rehung a window that the sash cord broke, etc. These are things that would have been hopeless 3 years ago when I bought the house.

$1700 - travel. I went to London for 5 days for a getaway in May. The first week in May the past few years has turned into a solo adventure for me. Next year -- 5 days hiking the Appalachian trail!

Misc notes
My income won't raise until March for annual reviews. I've been applying for internal promotions, and if I get one, will get about a $10-20K raise.

I really need to cash out my ESPP. $3000 of it is this half of the years accumulation, but $6000 I didn't sell immediately in the middle of July because Greeks economy was causing prices to bounce around the settlement week, and I have just been delaying since.

I'm still focused on maxing out my tax advantaged space at the risk of less of an emergency fund, and less paying off the mortgage. As snafu posted earlier, and which is obvious to see with this trending, my mortgage principal is hardly going down at all, and that's frustrating, but I'm hoping in 10 years or so with inflation that investing now is the better option.

I haven't posted much in this forum lately aside from some lurking. I'm basically on cruise control with some sanity checks like these every few months.

*As-of-Date---- | 11/21/2013 | 2/28/2014| 11/6/2014 | 2/27/2015 | 11/4/2015
Income--------- |$134,000--- | $141,000 | $143,000- | $148,000 | $148,000

*Assets
401k----------- |$48,000---- | $55,000- | $110,000- | $125,000 | $142,000
IRA------------ |$0--------- | $0-------| $0------- | $8,500----| $11,000-
ESPP----------- |$5,000----- | $7,700-- | $3,000--- | $1,700----| $9,800--
HSA------------ |$0--------- | $0------ | $0------- | $1,600----| $4,000--
Savings-------- |$18,000.00- | $16,000- | $15,000-- | $20,400---| $14,500-
House---------- |$339,000--- | $345,780 | $352,700- | $352,700--| $359,749
2-cars--------- | ?--------- | ?------- | ?-------- | $19,600---|

*Debts
Mortgage------- |$300,000--- | $295,030 | $289,000- | $287,000- | $282,300
Debt-(Car)----- |$7,000----- | $0------ | $0------- | $0------- | $0------

*Net-worth----- |?---------- | ?------- | ?-------- | ~$242,500 | $277,000

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A year into home ownership