With The Current House Prices, How Are You Guys Giving Any Saving Advice?

[LivingAlmostLarge]

Dude no it was $2400 mortgage, $400 property taxes and $200 HOA for $3000 total PITI. It went down when I refinanced. I lived on another $5000 a month total including $3000 for mortgage PITI. $2000 a month for 2 people in HCOLA way higher than florida. No car payment, taking OUT student loans to pay for MBA, going to school part-time and full time while DH held down a full time job working. After 2 years in 2007 we added a roommate which gave us more breathing room of $700/month. We also had a slight increase in salary and bonus from 2005-2010. In 2010 DH got a promo and I finished and no longer had a graduate student stipend. So we were making the $120k again after going up with raises and bonuses increasing. I have the exact amount of tax returns saved. You can see huge jumps from 2010 to 2015 when DH seemed to flip a corner with his MBA and making more, but we also went to 1 income and 4 mouths to feed.

So $550k home, 20% Down Payment which we didn't save but flipped from our condo bought for $150k in 2002 into $550k in 2005. We also went from $40k to $120k exact same time period and our taxes changed being married. I think we laughed at the fact our federal tax rate with the mortgage write off was 2%? Or something like that. We calculated our tax break into our house so we knew how little taxes to withhold. DH started his roth in 2005 and i had $4k? He wasn't on a visa that allowed it until then. We did the paperwork for our married ourselves instead of paying a lawyer (again something other people pay for, we did it methodically and probably it took longer but we also had more time than money).

If you can't live on $120k something is seriously wrong. I know Disneysteve raised his daughter for most of her life on that salary in NJ. He didn't switch jobs for years. And they went to disneyworld. Just to pick on a FAMILY living on that. I lived on way less in Southern California as a couple and then the NE for 10 years having a family then making more but as a couple we made it on $40-120k. During this time Toyota Corolla and Ford Focus were the cars of choice. Travel was minimal to visit family, we visited off season, and used miles and our honeymoon and wedding was on pretty tight budget. But we also were super busy working and school so traveling wasn't easy for us. DH also cashed out his vacation every year for extra money for us.

Then we had more money and more time, but like DH said "OMG our first child is coming you need to finish your phd and my MBA needs to be done." It was completed 3 weeks before she was born. We went from being busy as DINKS to being busy as new parents. Our DINKS lifestyle had NEVER been DINKS with money. Rather SINKS.

We kept the same lifestyle also by not working, no daycare, I had a cooking list and I moved only $3600 month to pay all our bills from Capital one to Bank of America and paid our CC. i tracked our CC spending daily for years to stay on budget. I don't do that now and haven't since 2017. But i still have the $3600 deposited into bank of america for some reason. But now it's more like $5k/month spending above the mortgage is what I try to cap it at since DH switched jobs. Our $240k/year around including taxes about $60k living, $60k mortgage, $60k taxes, and $60k savings.

So you want to halve that for $120k? $30k living, $30k tases, $30k savings, and $30k mortgage? Do that and your budget for $120k in florida should work. $400k @ 6% = $2398/month then $3500/month living expenses, $1500/month taxes and $30k savings. I'd probably split the savings into $20k loans and $10k savings something like that. If you posted someone budget i bet people here could HACK it. But would those pharmacists want to be told you can't afford your car? You can't eat out so much. You can't afford daycare and staying at home?

So these pharmacist making $120k, what does their partner make? What is their household income total? If a pharmacists makes $120k and has $100k in loans, they have no partner? Or if they have a partner what are they making and what do they owe?

Breaking it down
1. Home - should be starter ie less than 2000 sq ft, maybe a condo, I still don't live in 2800 sq ft 4 bd / 3 ba home. That is not entry level in ANY part of the country. I'm sure florida has 3 bd under 2000 sq ft. That's entry level.
2. Car - used or new starter car - driving corolla, civic, focus, entry level - my corolla had roll down manual crank handles, no clock, no radio, i kept it for 13 years until DH thought OMG we have two kids we need a better car and bought a used hyundai sonata. You do not need more than an entry level car and many families corolla, civics, focus are their "family" car.
3. travel - camping or freebies to see family, no hotels, nothing expensive, play the mileage game with credit cards
4. budget, start with gross income, put in line item savings and DO NOT lower it
5. no shopping - we aren't clothes people, we don't shop amazon and didn't have it for years, we don't have netflix now
6. find free and cheap activities - library programs for kids are amazing
7. if you stay at home with your kids you DO NOT NEED preschool you can have it if you can afford it.

everything above are things I saw that cut into budgets. I am pretty sure Monkeymama raised her 2 kids on 1 income in CA. Many on this board raise kids on very little money. I like having money but seriously when you don't have it, you can still have kids and have a NICE life. You can raise them in a smaller home, you can drive a economy car, you can do thrift store clothes and use hand me downs. I didn't buy clothes for my kids for the first few years and got a ton of hand me downs. I also only bought used strollers and the only new thing? Carseats.

You don't need a new fancy car for a new baby. You can make do. I've had friends who had kids in 1 bd apartment for their first child. They lived there until he was 3. It can be done. I see families living in RVs now. Lots of people make choices and sacrifices. Think outside the box. What about no car because you live so close to work? What about a 2 bedroom apartment rental until your oldest is 5 and starting school?

I think you are giving advice that is tailored when it should be generalized so anyone can do it with sacrifice.

[LivingAlmostLarge]

My bad, I thought interest was 6.3% but its 4.8% due to the arm.

Still, that leaves 600 dollars left for her budget and we haven't included the student loan payment yet. Utility plus student loans would put the monthly spend at least to 3600, tho I doubt she is paying 200 to 300 a month toward SL if she finished it by 2010. 300 would just barely cover interest.

Actually I paid nothing. I had everything deferred while I was in school and his were subsidized as well. We paid his off in 6/2010 with us using savings we had been building for it, and then in 2010 i started 0% CC arbitage with mine and we paid it off by 12/2014 finally 12 years after accruing them. We basically wiped our our EF to pay off his student loans before interest hit. Mine we used a CC and started the game. By 2010 though he was making more though I stopped working and he made up the difference. Then finishing the MBA his income really started taking off in 2010 at 32 years old i will admit i think it doubled by 2012/2013, Then doubled again by 2017 and again by 2019. I'll have to check our tax returns but it was like we went to making ridiculous money on one income. That is 10 years after college he and I lived like grad students that we were.

[Singuy]

If you need to work many hours beyond 40 to get by on 120K income, you're doing something seriously wrong.

Yeah, by picking a profession like a pharmacist with 180k worth of student loan debt. If this person ever wish to save up for a down payment, I'm sorry but OT is needed.

Also most of the people I teach are single, so their spouse doesn't exist.

[Singuy]

Dude no it was $2400 mortgage, $400 property taxes and $200 HOA for $3000 total PITI. It went down when I refinanced. I lived on another $5000 a month total including $3000 for mortgage PITI. $2000 a month for 2 people in HCOLA way higher than florida. No car payment, taking OUT student loans to pay for MBA, going to school part-time and full time while DH held down a full time job working. After 2 years in 2007 we added a roommate which gave us more breathing room of $700/month. We also had a slight increase in salary and bonus from 2005-2010. In 2010 DH got a promo and I finished and no longer had a graduate student stipend. So we were making the $120k again after going up with raises and bonuses increasing. I have the exact amount of tax returns saved. You can see huge jumps from 2010 to 2015 when DH seemed to flip a corner with his MBA and making more, but we also went to 1 income and 4 mouths to feed.

So $550k home, 20% Down Payment which we didn't save but flipped from our condo bought for $150k in 2002 into $550k in 2005. We also went from $40k to $120k exact same time period and our taxes changed being married. I think we laughed at the fact our federal tax rate with the mortgage write off was 2%? Or something like that. We calculated our tax break into our house so we knew how little taxes to withhold. DH started his roth in 2005 and i had $4k? He wasn't on a visa that allowed it until then. We did the paperwork for our married ourselves instead of paying a lawyer (again something other people pay for, we did it methodically and probably it took longer but we also had more time than money).

If you can't live on $120k something is seriously wrong. I know Disneysteve raised his daughter for most of her life on that salary in NJ. He didn't switch jobs for years. And they went to disneyworld. Just to pick on a FAMILY living on that. I lived on way less in Southern California as a couple and then the NE for 10 years having a family then making more but as a couple we made it on $40-120k. During this time Toyota Corolla and Ford Focus were the cars of choice. Travel was minimal to visit family, we visited off season, and used miles and our honeymoon and wedding was on pretty tight budget. But we also were super busy working and school so traveling wasn't easy for us. DH also cashed out his vacation every year for extra money for us.

Then we had more money and more time, but like DH said "OMG our first child is coming you need to finish your phd and my MBA needs to be done." It was completed 3 weeks before she was born. We went from being busy as DINKS to being busy as new parents. Our DINKS lifestyle had NEVER been DINKS with money. Rather SINKS.

We kept the same lifestyle also by not working, no daycare, I had a cooking list and I moved only $3600 month to pay all our bills from Capital one to Bank of America and paid our CC. i tracked our CC spending daily for years to stay on budget. I don't do that now and haven't since 2017. But i still have the $3600 deposited into bank of america for some reason. But now it's more like $5k/month spending above the mortgage is what I try to cap it at since DH switched jobs. Our $240k/year around including taxes about $60k living, $60k mortgage, $60k taxes, and $60k savings.

So you want to halve that for $120k? $30k living, $30k tases, $30k savings, and $30k mortgage? Do that and your budget for $120k in florida should work. $400k @ 6% = $2398/month then $3500/month living expenses, $1500/month taxes and $30k savings. I'd probably split the savings into $20k loans and $10k savings something like that. If you posted someone budget i bet people here could HACK it. But would those pharmacists want to be told you can't afford your car? You can't eat out so much. You can't afford daycare and staying at home?

So these pharmacist making $120k, what does their partner make? What is their household income total? If a pharmacists makes $120k and has $100k in loans, they have no partner? Or if they have a partner what are they making and what do they owe?

Breaking it down
1. Home - should be starter ie less than 2000 sq ft, maybe a condo, I still don't live in 2800 sq ft 4 bd / 3 ba home. That is not entry level in ANY part of the country. I'm sure florida has 3 bd under 2000 sq ft. That's entry level.
2. Car - used or new starter car - driving corolla, civic, focus, entry level - my corolla had roll down manual crank handles, no clock, no radio, i kept it for 13 years until DH thought OMG we have two kids we need a better car and bought a used hyundai sonata. You do not need more than an entry level car and many families corolla, civics, focus are their "family" car.
3. travel - camping or freebies to see family, no hotels, nothing expensive, play the mileage game with credit cards
4. budget, start with gross income, put in line item savings and DO NOT lower it
5. no shopping - we aren't clothes people, we don't shop amazon and didn't have it for years, we don't have netflix now
6. find free and cheap activities - library programs for kids are amazing
7. if you stay at home with your kids you DO NOT NEED preschool you can have it if you can afford it.

everything above are things I saw that cut into budgets. I am pretty sure Monkeymama raised her 2 kids on 1 income in CA. Many on this board raise kids on very little money. I like having money but seriously when you don't have it, you can still have kids and have a NICE life. You can raise them in a smaller home, you can drive a economy car, you can do thrift store clothes and use hand me downs. I didn't buy clothes for my kids for the first few years and got a ton of hand me downs. I also only bought used strollers and the only new thing? Carseats.

You don't need a new fancy car for a new baby. You can make do. I've had friends who had kids in 1 bd apartment for their first child. They lived there until he was 3. It can be done. I see families living in RVs now. Lots of people make choices and sacrifices. Think outside the box. What about no car because you live so close to work? What about a 2 bedroom apartment rental until your oldest is 5 and starting school?

I think you are giving advice that is tailored when it should be generalized so anyone can do it with sacrifice.

Sorry can you elaborate some more on your 5k/month spend with a maxed Roth/401k plus that extra 6.3% state income tax? Sounds like there was additional income from work for awhile plus a roommate? Also sounds like your first house purchase increased significantly in value which allowed you to have a 20% down for the 2nd house.

If you can just focus on this one time period when you guys were making 120k a year, 550k house, 80k worth of student loans, max out retirement, and factor in all the taxes.
Your post is like a wall of text jumping from different time periods to different time periods. At one point you talked about a 800 dollar utility bill which I'm sure doesn't apply...right?

[Singuy]

A typical student

180k worth of student loans@ 7% interest, monthly payment is 2k over 10 years.
Rent currently is 1600/month single, or 900/month with a roommate. Utilities is another 300

So if you teach them to save 15% into their 401k, then their take home is 5750/month
Assuming you can find a roommate, you have 2550 left a month before food/gas
Lets say you only spend 1500/month on food/gas/insurance/household items, that leaves 1050/month to save for a down payment.

You need 100k for a down payment+closing cost.
Sounds like you need about 10 years of frugal living with a roommate and no vacations. One shouldn't be buying a house before knocking out that student loan out first any ways.

Now it can work and that's not the point. The point is how likely will people who just years of schooling as a health care professional make it work? Hell I was the one who posted the path to a millionaire by working at MCD a few years back with much push back. I can make it work, hell I can make it work and pay off the student loans in 5 years.

Yes there's a sense of entitlement for this folks and I don't blame them. They thought they picked a white collar career just to find reality hit them to the point that they probably would be better off working at MCD since 16 and skip college all together.

[disneysteve]

Yeah, by picking a profession like a pharmacist with 180k worth of student loan debt. If this person ever wish to save up for a down payment, I'm sorry but OT is needed.

Not if you live below your means, but you keep overlooking what all of us are saying.

I graduated with 102K in debt and my first job paid 65K. That's not all that different than making 120K and owing 180K today. My wife worked a retail job and didn't make a ton of money, probably 20K at her peak, and then stopped working when we wanted to start a family less than 2 years later, by which time we had also bought our house so added a 128K mortgage to our debt.

I'll bow out of the thread because you don't seem to want to look at actual numbers and actual experience that several of us have tried to share.

If you're telling students that 120K isn't enough to live on and they're going to have to work OT regularly, that's unfortunate. It certainly isn't true. Plenty of people do fine making a lot less than that.

[Jluke]

Can their education be had for less than 180k? That’s a huge number to overcome when just getting started.

I think some veterinarians go to school in Europe because it is cheaper. Is that an option?

[disneysteve]

You need 100k for a down payment+closing cost.

It's already been shown in this thread that there are houses in central Florida for under 300K but you seem stuck on your numbers. Heck my wife and I have been looking at a manufactured home community minutes from Disney World where houses are under 200K. Saying you need 100K for a down payment is ludicrous.

[Singuy]

It's already been shown in this thread that there are houses in central Florida for under 300K but you seem stuck on your numbers. Heck my wife and I have been looking at a manufactured home community minutes from Disney World where houses are under 200K. Saying you need 100K for a down payment is ludicrous.

It is much better to buy a real house with land of your own and actual demand for your property and then get a roommate to help with the mortgage than to look at mobile homes. Good mobile home parks are 55+, and bad ones are...bad.

[Singuy]

Can their education be had for less than 180k? That’s a huge number to overcome when just getting started.

I think some veterinarians go to school in Europe because it is cheaper. Is that an option?

Typically I advise them to stay away from this trash profession because time has changed. But so far the average amount of loans are around 150-200k. It's the living expenses plus interest that kills them. Some of these kids believe in the "work hard play hard" mentality because they are jealous at their friends partying while they are studying. Also they think it's totally fine because there's a 6 fig salary waiting for them to pay off this unknown amount of free money. The tuition itself is not even that bad, but still over 60k for 4 years (state schoo, it's 130k at our private university). But the loan burden I am getting are from state schools. I have seen fast track kids who gets in and get a degree in 5 years with under 100k worth of student loans. Those are more rare, typically these kids stay in school for 4 years + 4 years of pharmacy school. 8 years of living expenses on uncle sam's dime is what kills their life.

[disneysteve]

It is much better to buy a real house with land of your own and actual demand for your property and then get a roommate to help with the mortgage than to look at mobile homes.

Of course a stick built house is better. That’s not my point. My point is that someone like your students could buy a nice manufactured home when they’re starting out and live there for maybe 5 years. During that time with low housing expenses they could chip away at their debt and save up a down payment for a better place.

By the way, I’m not talking about a trailer park. I’m referring to a manufactured home community with streets and curbs and sidewalks and driveways and carports and a clubhouse and pool and activities. We have friends in this particular community and it’s a beautiful development.

[Singuy]

Of course a stick built house is better. That’s not my point. My point is that someone like your students could buy a nice manufactured home when they’re starting out and live there for maybe 5 years. During that time with low housing expenses they could chip away at their debt and save up a down payment for a better place.

By the way, I’m not talking about a trailer park. I’m referring to a manufactured home community with streets and curbs and sidewalks and driveways and carports and a clubhouse and pool and activities. We have friends in this particular community and it’s a beautiful development.

I have looked into those when those units were being sold for 70k. Typically they lose value, however given the housing craze we see them raise in value. However insurance for them is of different nature(think they classified as motor homes?) with different loan structure. Mortgage rates on any manufactured homes are higher and a lot of banks doesn't allow mortgages on these homes when they are on LEASED land.

I think the best option is to rent with a roommate. The point of a house is to build wealth (best inflation hedge) and I don't see manufactured homes as a wealth building vehicle, especially at 200k.

[LivingAlmostLarge]

So I made $2k and dh made $8k a month. Our mortgage was the $460k because we had a purchase price of $575k with 20% down and $25k kick back for repairs. Our down payment was courtesy of the $150k 1bedroom condo you mocked earlier bought in 2002 with $15k down. The fact we bought a condo which is not wealth building and unnecessary.

Now we were accruing student loans during 2005-2010 and we were not making payments. Second our mortgage was tax deductible along with our state income taxes property taxes and mortgage interest which made our taxable income for married filing jointly I believe 2%.

We also had no car payments, no life insurance, our car insurance was $100 a month, health insurance was $64 a month.

Also the maximum 401k was $14,000 so a little over $1000 a month. Our take home was $8000 a month? I paid no as or medicare on my $24k graduate student stipend but it was taxable. Or $7250 a month but the $800 espp we sold and used for the six

I believe dh also used espp as our short term savings and we made 10% on it selling ASAP upon six months purchase. We had a minimal $5k ef I recall.

So

$2400 mortgage
$400 property taxes
$200 month hoa
$300 a month heating balance billing
$300 a month electric balance billing
$100 a month insurance
$650 roth ira
$50 internet
$60 phone
$100 car gas - I used public transit and dh had free parking but we lived 6 miles from work.

Our basic needs are $4460 before food for a couple and we brought home something like $7000.

Then the rest we spent up to around $7000. Then mba in 2007 and we had loans.

I recall I used to budget $400 food. Then we didn't need fancy clothes, no fancy cars or trips.

We saved. So keep $3000 for a mortgage piti and that's your purchase price of house in Florida.

Our income was $106k minus $25k in deductions, then personal exemptions $8400 then MFJ brackets and it was minimal if I recall in 2005/2006.

Heyi didn't feel super deprived we ate out more than when we were students. We had two paid for cars, we bought airline tickets.

So no we were in debt accrual and not payoff. But since I was teaching medical students and I knew other grad students mostly mba students driving bmw, Lexus, Acura renting nice places and living the life they expected to lead. We poor grad students on stipends always laughed because we knew we'd be poor academics. And those other two degrees like your pharmacists were already banking on living large.

So want to know how to stretch it more? Buy a multi family and rent out half where we lived. Had we done that we'd have been even better.

Instead when dh stared mba the extra rental income helped ends meet in 2007 along with student loans. In 2005 we had no loans since we had paid off my undergrad loans by then and we're instead in me taking on some graduate loans.

[srblanco7]

A typical student

180k worth of student loans@ 7% interest, monthly payment is 2k over 10 years.
Rent currently is 1600/month single, or 900/month with a roommate. Utilities is another 300

So if you teach them to save 15% into their 401k, then their take home is 5750/month
Assuming you can find a roommate, you have 2550 left a month before food/gas
Lets say you only spend 1500/month on food/gas/insurance/household items, that leaves 1050/month to save for a down payment.

You need 100k for a down payment+closing cost.
Sounds like you need about 10 years of frugal living with a roommate and no vacations. One shouldn't be buying a house before knocking out that student loan out first any ways.

Now it can work and that's not the point. The point is how likely will people who just years of schooling as a health care professional make it work? Hell I was the one who posted the path to a millionaire by working at MCD a few years back with much push back. I can make it work, hell I can make it work and pay off the student loans in 5 years.

Yes there's a sense of entitlement for this folks and I don't blame them. They thought they picked a white collar career just to find reality hit them to the point that they probably would be better off working at MCD since 16 and skip college all together.

So the takeaway is that there is a path for these folks - though they've set themselves up (with $180k in student load debt) for a post-graduate path that will require near-term sacrifice in order to ensure long-term success. And, given current elevated real estate costs in Florida as well as inflationary pressures, the path is not as easy as it has been historically. That's the reality.

I'll add that the "sense of entitlement" you note is bothersome. Bring a "blue collar" mentality regardless of profession. And perhaps they would have been better off working at McD - presumably without the job satisfaction that their chosen profession will bring.

[Fishindude77]

I have looked into those when those units were being sold for 70k. Typically they lose value, however given the housing craze we see them raise in value. However insurance for them is of different nature(think they classified as motor homes?) with different loan structure. Mortgage rates on any manufactured homes are higher and a lot of banks doesn't allow mortgages on these homes when they are on LEASED land.

I think the best option is to rent with a roommate. The point of a house is to build wealth (best inflation hedge) and I don't see manufactured homes as a wealth building vehicle, especially at 200k.

There are all kinds of manufactured homes and some of them are equal in quality and would be hard to identify alongside an standard site built home. At the bottom end, there are also some that are pretty close to house trailers on temporary foundations with perimeter skirting, etc.. I'm sure those are not what DS is referring to and / or recommending.

Where do you get that the point of a house is to build wealth? The point of a house is to provide shelter from the elements. If you look at the true cost of a house and include everything; taxes, insurance, your improvement and upkeep costs you can almost always rent cheaper. Sure, many of us have seen our home values increase significantly over time, which gives you a bit more net worth, but soon as you sell it and cash in on those gains you're going to need to find someplace else to live which may be quite costly. Many contributors here don't even like to include their residence in their net worth for this reason. There are plenty of other ways to build wealth that you can actually use and spend without losing the roof over your head.