Going to take the Home Buying pludge

**EEinNJ** · 08-10-2009, 12:28 PM

I scanned through the other thread, and I can see here you're certainly diligent in figuring out the numbers. My sense is you're in a pretty good place financially right now, but if you go ahead with this deal you'll be house-poor for several years, and it may not get better if your taxes go up faster than your income. Westchester Co. is nice, but WOW expensive.

**disneysteve** · 08-10-2009, 12:35 PM

Originally posted by graceful View Post

Tithing/Charity $ 710
DVC Maint ($2020) will rent out $ 170

Will try to fully fund IRA's in April with bonuses.

Can always lower 401K contributions to increase income if necessary.

I think your numbers look okay. You seem to have a good handle on where everything is going and you have a surplus each month and that's without counting any bonuses or consulting fees which apparently can be substantial.

A couple of comments:

How much are DVC points going for? Is it enough to cover your cost? If so, no problem there as that zeros out (or maybe even makes a profit).

I'm concerned about the statement that you might consider lowering 401k contributions if more income was needed. What you should be saying is that you would lower your charitable giving, which is currently just over 10% of your income. If things ever get tight, that should be the first thing to go. In fact, if you aren't able to fund your IRAs in full, the tithe needs to be reduced. I know this isn't a popular opinion but you need to take care of your own needs first before you worry about anyone else's needs.

**minnie1928** · 08-10-2009, 12:44 PM

Not knowing where the OP's DVC points are, but based on what I've looked at over the past few years she should be able to rent out her points and actually make some money each year.

My points run me about $1700/year but it looks like I could easily rent them out for $3200-$3500/year.

**graceful** · 08-10-2009, 12:48 PM

Originally posted by EEinNJ View Post

I scanned through the other thread, and I can see here you're certainly diligent in figuring out the numbers. My sense is you're in a pretty good place financially right now, but if you go ahead with this deal you'll be house-poor for several years, and it may not get better if your taxes go up faster than your income. Westchester Co. is nice, but WOW expensive.

You are absolutely right about being house poor. But I think, DH and I are expecting that and the whole family is willing to make the sacrifice.

I have been spending $2000 to $10000 a year (yikes - 2 cruises a year will kill ya) on vacations. The kids know that the house will be our vacation destination. LOL. It has a beautiful pool.

Living in an apartment building in the city, I try to get away as much as possible so that the kids can swim (hotel pools) and play in the fresh air. We will be able to do this in our own home without going away.

Aside from my expensive vacations and DH's computer/electronic purchases (which we are prepared to cut cold turkey), we are pretty good savers and are pretty frugal.

DDs are lucky that I have a TON of girls in my family that pass along their really nice hand me down clothes. We just picked up 5 BOXES of clothes from a relative yesterday for my girls. Not to mention my MIL loves to buy clothes for my girls.

We been saving, saving, saving for what? In the back of our minds so that we can have our own place one day or buy a retirement home but that's soooooo far away.

Worse case scenario, if we made a mistake, sell for a loss and more back in the building. Our DP will be around 45% so we won't ever be upside down on the house.

**ActYourWage** · 08-10-2009, 12:53 PM

Someone is eaten up with the house bug and has caught house fever...

Sure you have plenty of money to purchase a house...just not this one.

**graceful** · 08-10-2009, 01:13 PM

Originally posted by disneysteve View Post

I think your numbers look okay. You seem to have a good handle on where everything is going and you have a surplus each month and that's without counting any bonuses or consulting fees which apparently can be substantial.

A couple of comments:

How much are DVC points going for? Is it enough to cover your cost? If so, no problem there as that zeros out (or maybe even makes a profit).

I'm concerned about the statement that you might consider lowering 401k contributions if more income was needed. What you should be saying is that you would lower your charitable giving, which is currently just over 10% of your income. If things ever get tight, that should be the first thing to go. In fact, if you aren't able to fund your IRAs in full, the tithe needs to be reduced. I know this isn't a popular opinion but you need to take care of your own needs first before you worry about anyone else's needs.

I don't anticipate having to lower the 401K contributions. But knowing that there is some breathing room there gives me peace of mind.

I confess that if things are tight, I will cut back on the tithing temporarily but I always make it up. If the money isn't there, it isn't there. But God is good to us and there has never been a time where there wasn't enough for tithing and everything else. We based our tithing and charitable contributions on the abundance we receive. We shouldn't spend more than we receive or earn.

So we will calculate what we can spend on our net income AFTER tithing and cut out what we can't afford after that. It's a personal commitment and in no way mandatory.

Obviously, if our income drops, our tithing will decrease. If we can't tithe or give to charity and NOT go into debt because of unforseen circumstances in the future, I have no ethical problems with suspending our tithing.

BUT when things improve, I will "make it all up" and then some before I spend the money on other things like vacations, etc. That is just something we feel strongly about and in no way would we expect everyone to agree with.

Originally posted by minnie1928 View Post

Not knowing where the OP's DVC points are, but based on what I've looked at over the past few years she should be able to rent out her points and actually make some money each year.

My points run me about $1700/year but it looks like I could easily rent them out for $3200-$3500/year.

420 points spread over BWV, OKW and SSR. So, I would break even at $5/point. But I wouldn't rent them out so low. MY personal comfort level would be $10/point.

I would either try to rent ALL out at $10/pt and net $2130 or around 200 points and break even or none at all and pay the $2070 maintenance.

Whatever I don't use, I would transfer and "lend" to my aunt who is a fellow DVCer. She is in a constant state of borrowing and can ALWAYS use more points.

In the future, she will be happy to book trips for me if necessary using her points. She has borrowed points from me in the past for big trips. When I bought my contracts they had a surplus of banked points or developer points that I couldn't use up so quickly.

She "helped" me use them up and when I had a BIG family reunion planned the following year, she helped me by making some of my needed reservations for me.

**graceful** · 08-10-2009, 01:19 PM

Originally posted by ActYourWage View Post

Someone is eaten up with the house bug and has caught house fever...

Sure you have plenty of money to purchase a house...just not this one.

You are right about the bug!! Wow is it powerful.

Just wondering which house you think would work?

Obviously, we can wait until we retire and move out of this HCOL (I learned a new acronym!) area but it wouldn't solve our need to get our kids into a good school district (legally).

**LivingAlmostLarge** · 08-11-2009, 10:27 AM

Sounds good to me with sacrifices made.

**TBH** · 08-12-2009, 08:48 AM

I think you can do it. Great job finding a house you love for less money than you thought you'd have to spend.

If money is too tight, I strongly encourage you to start paying yourself a higher salary from the family business. If you're not getting free rent any more, you really should find out what other property managers make and pay yourself that. It sounds like the business could absorb the extra expense and your parents would probably be supportive.

A 45% down payment, wow! That's great.

As I said, I think you can do this, and if it's too difficult it sounds like you have options and family support.

Good luck, and congratulations. I am sitting in my dream house right now. We just bought it in May. I LOVE IT. I am so glad I took the leap, even though it means tighter finances for a while. There is nothing like feeling joyful every time you come home.

**Taxplanr** · 08-13-2009, 08:50 PM

It looks like you can afford the house. I didn't see it mentioned anywhere but if you are a first time homebuyer (ie have not owned a home for 3 years) there is an $8k tax credit available.

**graceful** · 08-14-2009, 07:02 AM

Originally posted by LivingAlmostLarge View Post

Sounds good to me with sacrifices made.

Originally posted by TBH View Post

I think you can do it. Great job finding a house you love for less money than you thought you'd have to spend.

If money is too tight, I strongly encourage you to start paying yourself a higher salary from the family business. If you're not getting free rent any more, you really should find out what other property managers make and pay yourself that. It sounds like the business could absorb the extra expense and your parents would probably be supportive.

A 45% down payment, wow! That's great.

As I said, I think you can do this, and if it's too difficult it sounds like you have options and family support.

Good luck, and congratulations. I am sitting in my dream house right now. We just bought it in May. I LOVE IT. I am so glad I took the leap, even though it means tighter finances for a while. There is nothing like feeling joyful every time you come home.

Originally posted by Taxplanr View Post

It looks like you can afford the house. I didn't see it mentioned anywhere but if you are a first time homebuyer (ie have not owned a home for 3 years) there is an $8k tax credit available.

Thanks for all the encouragement!

TBH, giving myself a pay raise in the future is an option if necessary. However, I will wait until my Mom officially "retires" off the books in about a year or so. Whatever she was making will free up funds since she will no longer be getting a pay check. Congratulations on your dream house!!

Taxplanr, yes, we qualify for the $8K tax credit - definitely icing on the cake and will help pay for things like a washer/dryer, snowblower and lawn mower that will be needed. We weren't counting on it if we didn't find a house this year, we were actually planning on finding something next Spring. But this house just kind of happened and the ability to qualify for the credit is a nice treat.

**zetta** · 08-15-2009, 06:10 AM

TBH, giving myself a pay raise in the future is an option if necessary. However, I will wait until my Mom officially "retires" off the books in about a year or so. Whatever she was making will free up funds since she will no longer be getting a pay check.

It seems to me you may be placing the needs of your parents above the needs of your immediate family (spouse, self, and children.) Sure, inheritance of the assets from the family business will fund your retirement in 20 years or so, but I'm not sure that makes up for the amount your are being shortchanged now (compared to what you would earn at a fair market rate.)

**graceful** · 08-15-2009, 09:08 PM

Originally posted by zetta View Post

It seems to me you may be placing the needs of your parents above the needs of your immediate family (spouse, self, and children.) Sure, inheritance of the assets from the family business will fund your retirement in 20 years or so, but I'm not sure that makes up for the amount your are being shortchanged now (compared to what you would earn at a fair market rate.)

Perhaps some may feel that way but there is more to life and happiness than money or specifically a salary.

This was a choice I made after graduating college. My parents are part of my immediate family. DH knew exactly what he was getting into when we were dating. My parents will be a part of our immediate lives until the day they are gone. He had a choice to make before we even got serious, much less married.

My parents see my kids every single day. We all eat dinner together. Things may change a bit when we move but it will be close enough that the kids will see my parents at least once a week. My Dad may wind up watching the kids a few nights a week while I work late. We will always live either together or nearby. DH and I will be their primary caregivers if necessary in the future. That's just the way it will be and what we want and expect.

In my mind, there is really no mine and theirs. Whatever they have, I have access to. I could if I wanted to increase my salary to any amount I wanted or give myself a $50K bonus. But that is NOT me. My parents are not like that. They live frugally.

My Dad is the ultimate entrepreneur. He never spends money, he uses all the money he earns for other "projects." Mom and I are usually just along for the ride and do the grunt work. Cash flow can be hard and fast sometimes. That's why I tend to be a cash hoard when times are good.

Not only do we all live within our means, we also pay ourselves what we need and so far we really haven't needed much. I would never live beyond my means. If my job or salary or parents will prevent me from affording a house, the house will just have to wait.

I appreciate your concern but in no way do I feel short charged. Not even in regards to my salary. The company pays for health insurance for me and my kids at around $900 a month and my cell phone. I get an almost free apartment that includes cable TV, internet and utilities. You add it all up, I probably make MORE than what I would make on the fair market. Add in all the intangibles like my Dad driving the kids to swimming lessons because I'm busy, having the kids with me at work, having dinner with my parents (and having someone else cook it) and I have it even better.

If the kids didn't have to go to a better school, we would never have to move. I'll probably keep the apartment for the first years as a pied a terre and decide later one whether to keep it or not.

**zetta** · 08-15-2009, 11:34 PM

If my job or salary or parents will prevent me from affording a house, the house will just have to wait.

I get an almost free apartment that includes cable TV, internet and utilities.

You're essentially giving yourself a pay cut -- giving up the almost free apartment without making a corresponding increase in your salary, just at the time that your expenses are increasing by buying the house. At the very least you should increase your salary by the amount of rent that apartment will be generating for the business.

It's wonderful that your extended family is so close, clearly there is a lot of support going both ways. Many women have a tendency to put their own needs last -- I'm just concerned that you might be making your financial situation more difficult by not taking as much as you actually need from the family business.

Going to take the Home Buying pludge