Is this a reasonable home purchase?

[Jluke]

Sounds like you are really trying to keep up... but with who?

has your additional spending/luxuries contributed to your promotions or is there no connection?

other than the current mortgage what other debt do you have?

A fool and his money soon part ways... don't be the fool.

[rennigade]

It's about a 20min drive from school and a little too small to have friends over. We'd like to move closer to school (there's no bus) and trying to decide how much of an upgrade to make.

20 minute drive is nothing...you're practically next door.

And your house isnt too small to have friends over. I always cringe when I hear that statement. How often do you have friends over? Every couple hours each day? Do you have parties of 20+ over each night for dinner? Are you trying to ballroom dance in your living room?

I put that line of thought in the same category as when people say "we could use an extra bedroom for when people visit." Again...how often do people visit? Each night or 10 times a year? You're just trying to give yourself a reason as to why you want a bigger home...not why you need a bigger home.

[Fishindude77]

With your income level, I'd wait till I could put about 50% down payment on the house, then have a very manageable mortgage to deal with. Get the spending under control and save some more money first.

[bigdaddybus]

I am really liking the recommendation to take a look at your spending before buying the house. I make a base salary around yours and manage to save 18% gross of that. Then I make a boatload on top of that in bonuses and a military pension. I used to spend all of it. Now I live off less than the base salary. If I never get another bonus, I can afford to live comfortably and save enough to retire at 60 (I'm 50 now).

By not planning on the bonus and saving all of my military retirement, I am living way below my means. But at bonus time, I have a lot of options. This year, I decided to overfund my taxable retirement account by $84k. I also replaced my 8 year old truck with an Acura TLX and paid cash. I also fully funded my daughter's college and beefed up my EF. I did splurge and funded a month in Europe for my wife and daughter before she starts college. But none of this impacted the base plan.

This approach has proven to be very liberating. While it is unlikely I will stop getting a bonus, it sure is fun to have $200k in an account with no real purpose each year.

So what does all this diatribe mean? Even with my high income, I would not buy an $850k house. My current mortgage is $3k / month and that fits my budget just fine. I could afford a million dollar house, but then I would be house poor and would not be able to retire early.

So, I wouldn't buy that house if I were you. Not until you get your expenses under control.

Tom

I agree with this post 100%. Its been impressive to read Toms post over the last year.

For reference: My family has a household income of 230K and I am currently building a 450K house. Putting 20% down. We have 790K in retirement accounts at age 42. We have seen a rapid increase in our salaries the last 5-8 years and we have to fight the urge to get ahead of ourselves daily.

[bjl584]

I'm going to recommend that you put the brakes on this house idea and regroup.

Your income is impressive, but your spending is through the roof.

Your portfolio is impressive, but when compared to your income, not so much.

Do you NEED this house, or is this a pure want?

I think that you should trim some spending, bulk up the portfolio, then rethink the house idea.

[snafu]

Welcome to SA I'm a contrarian who advocates for the new, larger home if you and wife are willing to carry out a couple of advance actions. 1st, the limited information you've provided makes it clear that you would benefit from a budget that you both sincerely, whole heartedly commit to following. I hope you are open to checking out the program called YNAB. Mint.com is free and tracks spending since your brief outline suggests you don't know where all the money goes.

I hope you'll give details requested as these guys are brilliant at offering better ways of reaching goals.

Many of us are somewhere in the process of de-cluttering our homes based Marie Kondo, 's popular book/audio 'The Life-Changing Magic of Tidying Up.' As a part of preparing your home for re-sale, I ask that you identify/tag every item in your home that has not been used and needed in the past 12 months with a small stationary dot. Broken/worn out items trashed, outdated electronic/cord/parts to Staples [or similar] recycle, remainder sold, re-gifted or donated unless honored in 'sentimental' category. As an accountant, I suspect if you lead, you'll find the Japanese system of organizing by categories to be efficient and practical.

I see the government wants to increase interest rates but is being thwarted by world issues. This window of low rates suggests you action your plan by readying your home to list for best possible price. Hire the best realtor who has experience and connections asking for a written, marketing plan, identifying target market and understanding your role. BTW, their rates are negotiable. In this market it's very popular to 'stage' our homes for best price.

Wife needs to understand that she will likely need to return to the workforce if the plan to pay off mortgage in 10 years goes awry. New fitting for the house needs a plan that prevents any interest or cost of credit fees. She can help by exploring 0% CC cards, 90 day plans, sell something old to pay for something desired, list repetitive sales like September of appliances etc. Will Rogers was credited with explaining...Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like

[DaveInPgh]

Would be great to retire before than, but private school and big houses aren't helping that.

This particular sentence stood out to me. You would like to retire early and know big houses won't help. I know it has already been said, but a 20 minute drive is nothing. If there are no cars on the road, my commute to work is 20 minutes. Most days it is 45 minutes to over an hour.

Perhaps I am off base, and it is not my intention to offend you in any way, but I can't help but wonder if your family is spoiled. And perhaps you are a bit spoiled as well? Again, it is not my intent to offend.

Personally, the last thing I would do is buy a house so it is big enough for company. The last thing I want is company.

Honestly, I am picturing a lifestyle like you see on the "Real Housewives" show.

[tripods68]

Perhaps I am off base, and it is not my intention to offend you in any way, but I can't help but wonder if your family is spoiled. And perhaps you are a bit spoiled as well? Again, it is not my intent to offend.

When you have say "it is not my intent to offend". It's already too late!

[scfr]

I know it has already been said, but a 20 minute drive is nothing.

No, it's not nothing. It's two round trips per day minimum (4 x 20 = 80 minutes) and perhaps 6 round trips per day (6 x 20 = 120 minutes) if one child has after school activities and the other does not. And there's zero income resulting from this driving. This is not a commute to work.

I have two jobs. One of my jobs involves an hour commute going and an average of 1-1/4 hour return. While I don't love spending that much time driving, and am very thankful that I don't have to make that drive but a couple times a week on average, I accept it as a necessary part of keeping my job and try to make the best of it. But I would feel very differently if it wasn't work-related.

I don't condone OP upgrading to a more expensive home, but I do understand the desire to stop spending up to 2 hours a day on the road shuttling the kids back and forth to school.

[DaveInPgh]

No, it's not nothing. It's two round trips per day minimum (4 x 20 = 80 minutes) and perhaps 6 round trips per day (6 x 20 = 120 minutes) if one child has after school activities and the other does not. And there's zero income resulting from this driving. This is not a commute to work.

I have two jobs. One of my jobs involves an hour commute going and an average of 1-1/4 hour return. While I don't love spending that much time driving, and am very thankful that I don't have to make that drive but a couple times a week on average, I accept it as a necessary part of keeping my job and try to make the best of it. But I would feel very differently if it wasn't work-related.

I don't condone OP upgrading to a more expensive home, but I do understand the desire to stop spending up to 2 hours a day on the road shuttling the kids back and forth to school.

You're right. It isn't "nothing." It is a minor inconvenience IMO, which is what he is seeking with a thread like this. Opinions.

I have a child that is involved in activities 6 days/week, pretty close to year round. I am grateful when the locations of those activities are 20 minutes or less.

[LivingAlmostLarge]

Wait on the house. See how the budget works out. Question as a CPA partner do you have to buy in like a lawyer? If so where is that money coming from? Please tell me you aren't going to borrow it. That's where I would put my cash instead of buying a house.

Same like most here, we saved about 30-40% of our salary when my DH worked last year. This year we just burned through a ton of money not working and still have 7 figures in the bank. He'll be making probably close to what you are, potentially more and he's 38 and we're single income too. We'll likely buy a more expensive house just because COL, but we aren't driving a lexus, private school, or country club and no intention of any of those three things. So we'll still be saving a chunk of change. Probably at least 25% if not more, depends on how bonuses shake out. We're likely to live on our income and bank everything else. at least that's how we used to live and turns out we lived on 1/3 what we made.

Let the spreadsheet balance out and see how the income comes in then move and build. I think $850k on $350k perfectly comfortable. But you should be trying to save more. And that's a big house at 4300 sq ft. Everything I saw today was around 2500-3000 sq ft and I thought it large, guess it's all relative.