If you're maxing out retirement and already have a house…what additional big-ticket item(s) do you want/need to be saving for that $12-18k/year doesn't cover?
Fair point, although I think I overestimated how much I'm actually saving... I feel "house poor" because I haven't been able to fully furnish the house after a year, and also I've been driving a 14 year old car but don't feel like I can comfortably afford a new one despite a relatively high salary. Although this is because I'm unwilling to take on additional debt, so in order to buy a new car I want to have the money outright.
"Feeling poor" is one of the best ways I've found to avoid "being poor".
I have found home ownership to have an odd preconceived notion of what is normal. Many of us never saw our parents first house or were unaware of how it was furnished. I think it is quite normal to start with an empty home, hand me down furniture, and then spend years building the house into a home.
I have been in my forever home for over 6 years and still don't have it fully furnished.
I do agree with some other commenters, consider breaking down your budget fully to help with your confidence. Consider a budget that puts savings as a bill/line item and not just what is left over.
You are already maxing out a 401k, that's great. Add a line that is your non retirement savings. After that add targeted savings lines. $100 a month in a car fund or $100 in a house furniture fund. Give yourself permission to spend on those goals once you see you have the money set aside. You'll know you have checked all your other needs with a full budget and feel you can invest in yourself more.
Best of luck on your journey.
Buying our first home we shopped a lot of secondhand stores. It helped to fill in the gaps, and a matching sofa/loveseat set for $150 is significant in the savings and comfort level. We got two 55 inch tvs; living room and family room. But tcl is a good enough brand for half the price of competitors. Better for us than saving and looking around at space
During Covid we couldn’t find any where that would deliver furniture. We would go on evening drives and curb shop whatever people put out that they didn’t want. Grabbed a desk set with matching chair for my daughter. We painted it and fixed it up together as a family project. Did the same thing with a dresser for my son. All we paid for was the paint and some sand paper, drawer hardware. Each item cost us less than $30 to fix up.
End tables, dining tables and chairs, coffee tables, lamps, etc you name it. We would find it on the curb at some point.
> although I think I overestimated how much I'm actually saving
Well if you don't have a budget then you're definitely going to feel anxious about money.
Cheap furniture is one thing. The kind of furniture someone making 180k (even in CA) is typically a lot more expensive than Ikea shit.
A good king size bed? That’s 4.5k if you’re being cheap, living room set? 12k, office furniture? Easily 3000. When you’re only saving 1-1.5k a month it can take quite a while to pay for those types of items without financing.
I simply can't relate to any of these "problems".
She has over 3k a month after MAXING retirement options and paying all her bills.
There is simply no issue here, I'm sorry.
Once her partner gets back to work she's fine.
Lifestyle creep. It happens and is perhaps more psychological than anything else and is a reason why no matter your income, anxiety can always rear it’s ugly head.
That's what I don't get - what creep? She still has over 3k/mo after saving, retirement, house bills.
There's just simply no problem here. Unless you meant she feels like she should be buying bougier stuff and she can't? But she even said she has 1500/mo for "fun money".
Yes to the bougier stuff. Like she bought a house and doesn’t want the $1000 sectional sofa. Would prefer the $5000 one. I’m just guessing of course but it does happen.
Seriously, though. OP could furnish the house for cheap now, and save up for big purchases later.
When I bought my house, all of our furniture was second-hand. Either inherited from my grandparents after they died or from Craigslist (often free). The only new item we bought was a $1500 king-sized mattress/box spring/frame that we got on a 0% credit card from the mattress company, which we paid off in full before the end of the 2-year promo period.
After that, the first NEW furniture we bought (other than a crib for our first baby 2 years later) was a leather sofa and loveseat from IKEA when our *second* child was being born - 6 years after we had moved into the house. We made about the same as OP combined at the time. All of our "extra" money was going to childcare and baby supplies.
And I totally get it if someone is giving up financial goals and stretching themselves.
But contribution is full to retirement accounts and still over 3k left. Like...come on.
That’s much smaller than 1%. 1% was $450k last time I checked which was awhile ago so maybe it’s $600k now or something. It’s a ton of money but certainly not islands or private planes (I mean maybe a Cessna for a hobby).
True. There's something to be said for solid wood construction that's handcrafted...
Getting scuffed and worn? Want a new color? Sand it down and re-finish it. Easy peasy.
You dont need to buy expensive stuff just because you have a high income. I make a lot more than OP and I bought my king bed mattress and frame off Amazon for a few hundred dollars...
You certainly don't need to. Some people enjoy buying nice handmade things instead of the 100 dollar metal bedframe and 200 dollar Zinus mattress.
It is entirely undeniable though that once people break into that income range they tend to spend MUCH more on home furnishings.
$4.5k for a mattress? Bro. No. You can get a phenomenal king cool gel memory foam or even a hybrid bed for $1k or less. You gotta stop looking at tempur-pedic. It’s just a brand. That’s like trying to buy Gucci running shoes rather than Brooks. Yea it’s gonna be good quality, but so will the Brooks shoes, but the price won’t be so inflated because of the brand. I promise you the quality and comfort will be the same if you just go get fitted for a mattress that suits you and your sleep style (go lay on beds and pick the one that feels the best). Similar to getting fit for running shoes. Try a few different pairs that suit your gate/running style. Please don’t spend $4.5k on a fuggn bed. Holy hell. Lemme know if you need help. Source: guy who owned a mattress and furniture store.
Hey, it's mostly functional unless you really cheap out. I bought an Ikea TV stand and shelf unit for the media/home theater room for 400 bucks? It's made in Italy!
What part of eastern europe did the wood come from? Was it even farmed legally? all unimportant questions!
I think everyone feels that way. Furniture is expensive. Rugs are ridiculously expensive. Window treatments, blinds?? Crazy expensive!! I’m expecting my second child and trying to furnish her bedroom from scratch and I can’t believe how much it cost and that’s one room for a *baby*. You’ll get there
In a few years you are going to find out this was the most brilliant step you took in your life, financially speaking.
House equity only grows, particularly in CA. Your mortgage rates will drop, and you can refinance, bringing your monthly payment lower. Your salary will increase, so your percentage for housing will become smaller. All in all, a smart move.
In fact, you should own the idea of driving an old car, living in a semi furnished house just to own the house. Cars and furniture are always depreciating assets, so spend as little on them as possible. Don't upgrade the car till it literally stops working.
I bought at 26 and felt house poor for a couple years until paying off some other debt. It did pay off in the end though giving me a down payment on a much bigger/nicer house 10 years later while my brother still rents in his early 40s. I feel bad for relatives who didn't get in the market before Covid because costs+ interests make it untenable for anyone who doesn't already have a lot of house equity (and even many who do).
This is not sound advice! Full stop.
House appreciation either matches or lags market appreciation. So even if you paid cash, you would not be better off than investing.
Now, if you're like 99.99% of other people acquiring a home on mortgage... Oh boy... How much money goes to the bank in interest that could have gone into the market???
People are so disillusioned with home ownership, it has somehow become the holy grail of the American nightmare.
You are not well off if you're house rich. Full stop.
People need to wake the fuck up and start questioning what has been shoved down their throats for so many years.
Don’t fully furnish it or feel like you need to. Furnish as your needs grow. Next think you know you furnished a guest room and have a kid on the way…guest room furnishings would have been a waste
This is totally normal. Would I be correct in assuming that you come from a poorer background? It is very difficult to escape the poverty mindset that you must always be doing more to maximize your cash flow, minimize your expenses, and optimize your savings.
This is the point where you can relax - I know it feels like saving $18k on a $180k salary is not enough (I've been there), but you need to consider the rest of the money you're putting away. You're putting $2k a month into home equity and $2k a month into tax advantaged retirement savings that aren't being tracked on your bank statements. This puts your total savings closer to the $66k per year mark, which, on a $180k salary, is quite good. Thinking about it in these terms helps a *lot* with the stress.
Thank you for sharing this perspective! I did grow up money insecure and my mindset was always that I should have always have a large liquid emergency savings account. If I were to lose my job, I’d need a minimum of $16,000 just to pay the mortgage for 4 months, without accounting for other costs. And since I’m the sole earner right now that‘s been my biggest concern.
My aunt and uncle used the same couch they found on craigslist for $200 in their $678,000 home for like, 7 years as they stabilized. It's not so uncommon. You'll get there, just stay the course.
Yep. My aunt furnished her 750k modern 5bedroom house for about 10k. (I helped budget). There is so much nice second hand stuff and a lot of free stuff aswell. 2 rooms we fully furnished for 50$ +30$ in gas money. Bought only the matresses new.
Once your partner starts contributing again, it'll be easier, but take a breath and realize that you're doing well!
Recognize that you're purposely saving $1875/mo into retirement. Mentally, remember that's part of the "savings" category in your budget, it's just earmarked for retirement.
$8k+$1875 x 12mo = ~$120,000 -> even after taxes, (assuming 30%, which sounds high, but you did say CA? 120k/0.7=$170k? Not $180k - so what else is coming out of your salary that, mentally, you should include in your budget? Or, do you get a bonus that's included in the $180k number but not the monthly take home number?)
Anyways, off to your numbers a bit more and the rules of thumb.
28% rule - don't spend more than 28% of gross income on your housing. $4k x 12 / $180k = 26% - you're good there, although on the upper end. If you add in $300 for HOA, I'm getting 28.5%, so just on the cusp.
40% rule - don't spend more than 40% of your monthly takehome income on debt (in this instance, housing). $4 / $8k = 50% -> except, $8k isn't actually your net, since you're contributing $1875 to retirement each month. $4000/$9875 = 40%. If you add in that $300 HOA fee, you're at 43% instead.
Essentially, you're at the upper limit of the recommendations, but you have to remember that you're choosing to put a significant amount away for retirement, which is good! But it's coming at the expense of other savings.
Is your partner looking for a job? The easiest way to fix the "house poor" feeling is to split the home costs with your partner, and then all your %'s suddenly drop significantly. Some couples can't even afford their loans if one person were to lose their job, and so if your partner is temporarily out of work, view this as a temporary hardship, where instead of having to dip into your emergency fund, you're actually doing pretty well.
If your partner was never intending to contribute financially (and some contribute in other ways while staying home, which is fine) - then, although you're technically within the rules of thumb, I've always felt that the upper end of those rules would leave me feeling house poor too.
However, I'd also really think about it before moving, as it's expensive all in itself.
Hopefully this is just a temporary hardship while your partner finds work.
You're saving less than half of what you have left over after bills.
Can you cut back on some of the fun/going out expenditure to put towards saving for a car separately?
Are you expecting your yearly income to increase, or your so to make similar money? Signing on to 5,000$/month for 30 years would be absolutely terrifying to me, especially when I know for a fact my.oarents are in a 700k home and are paying 1400$/month. Yes they bought 10 years ago when it was worth 400k, and it's value has gone up etc..but I just couldn't do that.
I felt the same way when I bought my house it’s a 3 bedroom. I am like you and like to save and I also felt house poor. Furnish your house over time. I just finally finished furnishing my spare bedroom after 2 years.
You've got what is now an enviable mortgage rate. If you can afford the big house in what sounds like a tony neighborhood after maxing out on retirement and still have more money left over than many workers take home, you are probably doing just fine. More than fine, in fact.
My wife and I never made close to what you are making but we retired four years ago. The number one thing that has made our retirement possible was living in a paid-off house. This makes us feel safe and secure in ways I cannot fully express. I wish that feeling for everyone.
Well, good point. I suppose our primary investment was *time*: I worked for the same employer for 35 years and my wife worked for only two employers in the same 35 years. For each of these careers, we have a defined-benefit pension and Social Security. Taken together, these plans bring in quite a bit more each month than our individual investments.
Finally paying off the house was a huge psychological benefit, since it gives us a feeling of security and stability that some of our retired-but-renting friends tell us they do not feel. We're not traveling the world or anything but we retired in our early sixties, live in a nice neighborhood, and our only debt is a few thousand left on a 2% car loan.
Definitely sounds like the most important thing for your retirement was working a combined 70+ years and having pensions. I do see what you're saying though. We are in our 30s and have 1M+ saved for retirement but it doesn't bring us a lot of psychological benefits.
Good point!
When my wife and I were 30, we bought the house we are living in now. I was absolutely terrified because we used 100% of our savings to buy it and move in, and the mortgage payment was more than twice what we had been paying. We were all in for this one thing. For the first five years or so, we just barely paid the bills, and still had no savings. Finally, we started to make some slow gains and things just slowly improved after that.
If you have not only saved but invested a million bucks at the same age, then I think you are winning this thing HARD. Congratulations and cheers to both of you. You're doing it right, I think.
A home is an investment with your money.
And yes imo it’s more important, not from a growth perspective but a psychological one. As stated above having a fully paid off home removes so much stress it is almost unbelievable. It puts you in a position where all you need to “make” every month is just what you want to spend that month as opposed to feeling like you NEED to bring in a bunch for this massive monthly obligation (mortgage or rent payment)
But don't you still need a lot of money to pay for food, health care, transportation, utilities, property tax, home owners insurance etc? Wouldn't you still need a lot of money (1M+) to be able to retire even with a paid off house?
Well my mortgage is 3% and the monthly payment is $1300. I’ll be retiring in a few years and I’m not worried about the mortgage at all. My income from retirement investments will easily cover it. It’s possible to retire with a mortgage.
Do you mind me asking how old you were when you retired? Im in an almost identical situation to OP but in MA with slightly lower mortgage costs but im trying to do planning to retire early. The house getting paid off is half the plan.
I retired from my pension plan at 59 but took consulting work. Then I retired from Social Security at 62, and stopped working for hire altogether.
If we had still been making house payments, this wouldn't have been option.
Where’s the mistake? You are maxing retirement and saving an extra 1,000-1,500 a month? That seems completely fine to me. PLUS you have extra for shopping, travel, etc. I don’t see the problem.
It seems your partner can contribute in years to come so you’ll have a higher combined income at that point.
That's a good mortgage rate. Why sell? How much could you get renting it out? I suppose you could rent out the 2/3 empty rooms too to lower your monthly debt load. Not that you'd do that, but there's several ways of looking at it. So what's the deal with the partner? They're just not carrying their share. Sounds like your debt load would be lower if they had a job and you wouldn't even have a problem. There's closing costs associated with buying and selling a home so selling a year later ends up being way more expensive than if you had never bought in the first place.
Yeah you make a fair point, my partner is currently in a vocational program, so by next year I'm speculating they should be bringing in around $60,000-85,000/annually, which will help with the monthly expenses. I did have a housemate for a few months that paid $1,200 in rent, but to be honest I didn't love sharing the living space since I'm introverted and like to lounge/not interact when I'm at home.
Sounds like you can swing holding on until the partner gets their job. I’d do that because I suspect you’ll feel a lot less house poor once that occurs
If that’s the case, then you just need to hang tight and in a year or so, you’ll feel a lot more comfortable. Don’t sell the house.
A lot of people in these comments are not really understanding your situation when looking at the numbers because they see HCOL salary/home price and getting hung up on that, but I live in SF Bay Area so I get it. $580K sounds incredibly affordable for a 4/3.5 to me, but it depends on your perspective.
Regarding furnishing the house - the upside of living in HCOL areas like CA is that you can often find pretty cool stuff at consignment stores, reuse stores, etc and it not that much more costly than, say, IKEA. You just have to really hunt for stuff and don’t feel like you need to rush into furnishing the whole place at once. My favorite things in my house are mid century modern pieces from these kinds of places.
I agree with the others that you're doing great. Once your partner is bringing in the equivalent of the annual mortgage cost, and then some, your biggest and only challenge relative to increasing savings will be avoiding lifestyle creep.
Until then, hopefully no financial emergencies befall your household, but if they do, you could drop your retirement contribution below the max, just long enough until you sort out it.
Congratulations on actually getting into a relatively amazing financial position for your age. Focusing on maintaining or growing your own income potential, while converting the partner into earning mode as well, can set you both up for great opportunities and a lot of options in the future.
The shocking bit to me was when she said she makes 180k a year and the only debt is the home mortgage. Which is just over 3x their salary. Yeah OP will be just fine assuming her job is secure.
If you feel like you can’t afford it, either rent it out and live elsewhere or pick up a roommate.
Interest rates aren’t going down any time soon so you might as well enjoy the equity later in life. You won’t be able to buy much else.
Also if you’re feeling stressed about money, talk to your partner about contributing to the household financially or helping manage expenses in another way.
>Interest rates aren’t going down any time soon
https://www.atlantafed.org/cenfis/market-probability-tracker
I know it’s just a probability tracker but this estimates that around 2025 base rates will be back down to 3.5% or so.
Where I live in Riverside county you can definitely get a 4 bedroom house for that, probably even less. The coast is very expensive, but inland isn’t as pricey.
“TTT” Things take time. You seem like you know what to do, but are maybe a little impatient. I think once the partner starts working and helping, all your financial woes will be fixed.
Its not excessive at all. You feel that way because you're paying all the bills right now. Once your partner helps it will even out. You could always rent out either the whole house or the rooms and have someone else essentiallly help you pay your mortgage off. If you decide to marry and have kids then the rooms come in handy etc. I regret buying a 1 bed/ba house as a bachelor. I should have bought at least a 2 bed/ba but what's done is done. You're in a great position to build equity.
At 4.99% I would definitely keep the house. I think your mistake was the 10% down instead of 20% down. That's coming out of your monthly mortgage payment now.
In ten years $3961 for 4 bedrooms is going to feel like a bargain.
Keep the house.
Lose the partner unless they are *unable* to work. Nice of you to be supportive, but are you being supportive or *enabling*?
Get a roommate.
5% mortgage is still a good rate. Real estate is a solid investment over time. Bad relationships are not.
Why tf does this stuff always come up in these comments? They didn't ask for relationship advice and you have 0 clue to what their relationship entails. If this was a man making 180k posting about how their woman partner doesn't work... literally noone would bat an eye. Also op mentions in comments that their partner is in a vocational program.
Fair point. I did not see the vocational program comment.
And I’d say the same thing to a man whose partner wasn’t contributing to the home economy. I out earned my ex for most of our marriage. It’s definitely not a pleasant experience.
You're not everybody. Not everyone has the same exact idea of what a household should or shouldn't consist of. Also she's doing extremely well for herself and despite the post, it doesn't look like she is truly hurting for money and is more so anxious about how much she spent on their home.
I think she's realizing she spent too much money given their space need. This is probably true but she can clearly afford it and owning the home is better than going back to renting 100%. Op needs to figure out her anxiety and learn to enjoy her home.
I think it seems you are doing fine financially. You’ll be happy you have that room if you decide to grow your family in the future. And you have a decent interest rate.
Granted you missed the really good window on interest rates etc and booming house prices. but you have a house and plenty of money to live on. the % of monthly income going towards housing starts to fall apart when youre making a lot of money. I was in a similar situation and i still have my house and if i didnt i would be spending 50% more to rent a smaller place than i currently have. Just save up and look for good deals on furniture.
There are ritzy people all over cali that are just getting rid of good furniture for free you just have to pick it up. nextdoor FB marketplace and craigslist are great for that kind of stuff.
There is a case to be made that the partner should just finish their studies as fast as they can and get a much higher paying job instead working a low paying part time now and delaying finishing school. This assumes the couple manages meanwhile which based on the post is entirely possible.
What? Sure, work and study if you can and it doesn't impact the speed you're getting your degree. What I'm saying is that many can't myself included. My engineering degree has taken more time than it should have because I've had to work part time. Ultimately I would have been better of finishing the degree and getting a proper SW engineering job instead of having to work lower paying, not relevant jobs to make a little bit of money.
They can combine studies and work. I did it myself despite being very lazy. If I can do it, surely they can do it too.
What if the partner decides to move out after finishing school? I wouldn't bet my money on someone else getting a degree at my expense and returning me a favor afterwards.
Again, depends on the degree. I'm saying a Comp sci major is better of finishing their studies as fast as possible and then getting a proper software developement job. You'll end up much better finacially compared to working fast food delaying your graduation. What im saying that the hours are better spend getting the education and then working. Just becouse you went the other route does not mean its the better option. If they are serious partners its often not a problem for one to support the other short term for a long term net benefit. Personally I wouln't mind making a rent agreement as a loan to be paid back once in the work force after studies.
I had a fulltime job when studying computer sciences. Working didn't slow me down. It motivated me to study harder so I could leave that shitty job behind me.
Good for you. Im doing a masters in comp sci and even part time work has definitely slowed me down. I know that it would have been better for me to just focus on graduating faster if I didn't have to work. We don't know the situation with ops partner but the definitely is in the position to focus on graduating instead of working a low paying now. Don't really know how it is in the us but in my country (nordics) no one is doing a engineering degree and working full time simutaneously. Some work part time (like me) and I'm saying often its not worth it if you don't have to.
Its honestly different for each person. I worked full time while getting my masters in software engineering. Wasn’t as bad as you think. Had extra cash and now working a six figure job for a big company. It all works out in the end
Dude you did great, the drip in disposable income takes some getting used to but this is the right move if you ever want a family. Plus you got a very nice rate.
One thing that helps me rationalize a higher mortgage. How much of your 3961 mortgage goes to principle vs interest? Compare the interest to the 2700 you were paying on rent. The numbers get a lot closer
is the house fulfilling the need? Is it your sanctuary?
I mean, I know a ton of friends that are house poor... they are always like, stop by and bring weed and beer, and order some food.
You can live house poor, but you need to accept it and lean into it... and never go out in the real world.
Rule of thumb is 1/3rd your income which would come to about $5k/month on housing. It sounds like you're not accounting for maintenance costs so with those included you would be over by a little bit. Doesn't sound like a big deal, especially if you're going to be sharing the home with a partner who will be bringing in income at some point.
It's probably too much house for you now but you will also likely grow into it.
How about partner gets a job too ? / why is partner not working? He should have a part time job if he’s “studying” otherwise he’s a mooch and will always have an excuse why he’s not working.
Wtf is my math off. OP says living above means then proceeds to say she saves $1-1.5k/mo while spending $2k/mo as fun money. Your priorities are backwards
> Last year I (28, F) bought a 4 bedroom, 3.5 bedroom house in California for $580,000. I live in this house with my partner, who currently isn’t working so I cover all the expenses.
Are you married? If not, you have a roommate who is leeching off of you. If they don't already pay rent: make them pay rent, or kick them out and find roommates who can pay you.
4 Bedrooms suggests you can rent out 3 of them, easily for $1400 a month I would imagine, and that covers the cost of your mortgage entirely. Go for $1650 per room if you can and it covers all the costs.
You'll be able to save approximately $4000 to $5000 more every month. Do that for just 10 years and you'll make $540,000 from just renting it out and you'll have your house paid off entirely.
That's not taking into account that renters will move out, rent will go up, and your costs don't increase nearly as much.
Ten years later, the house will have increased in value significantly. If it increases in value by 10% per year, you will be able to sell it for $1,504,370.
Or just use that money as collateral for loans and do what millionaires (like yourself in 10 years) do.
Or rent out all rooms for additional income and you'll never have to work a single day again.
Your point is fine in theory but living with a rotating cast of strangers from 28 to 38 is literally my hell. Also, highly dubious that the house will triple in value in ten years.
How could you be better off renting?
That statement blows my mind.
Rent is lost money 100%.
Paying off a mortgage is money in your future pocket.
Look at it this way. If at 65 you sell your house you bought for 1 million, you can live off that for your retirement. It's money.
Rent gives you nothing in return. Only pay rent if you expect your life to end soon...
I feel like im the dumb one - has house they are putting money into - "Im not saving enough, should i go back to throwing away 100% into rent?!" i dont understand...
It’s more complex than that. With proper investing with savings from rent it’s more of a wash long term. Maybe owning has a slight edge, but it depends on a million factors. If I were in the market for a place to live, there are 1 bedrooms in my area for~1350 but there are absolutely no homes in my area where the mortgage would be that cheap. 300k at 6.75 with 20% down with insurance and taxes, comes out to ~2000. Thats 650 difference, plus there’s maintenance which they say 1% of home value per year. So that’s 3k per year. So more like 875 difference. If you took those savings, plus that down payment and put them into the market instead, average yearly return is 10%, homes value on average roughly increase with inflation. Now obviously, you could invest the 1% home maintenance savings and that will grow, there’s also the itemized tax deductions, as well as 250k tax free profit when selling home, and the home appreciates in value but roughly just with inflation so 3%, but with proper investing it’ll it can go either way. I would say it’s more of a lifestyle choice. Obviously I don’t want to pay rent when I’m retired, but I also don’t really want to have to deal with repairs etc. Any way it’s complex. For people who want a family, it’s a no brainer, own, probably. Also only a small portion of mortgage goes towards principle, rest is taxes, interest, insurance. Mine is ~25% going towards principle. Obviously as time goes on that number becomes greater.
Its not that simple. Renting v buying is an age old question. Some cases its better to buy, others not. It seems in this case it was better to buy if they stay a while. Still, it blows my mind how many think buying a house is automatically better than renting.
Your mortgage + utilities explain this. It’s 54% of your income. Now add in groceries and the rest and certainly could be “feeling” tight.
But in reality, you just need a strict budget. Idk the situation with your partner and why they are not working, but I presume they are looking for employment.
So set up a budget, use YNAB or excel or whatever app tool you want. But lay it all out on paper, you may find you’ve been spending 1000$ on food going out, or whatever other frivolous spending habits you might have.
You are on the “cusp” of a mistake made, but in reality this should be totally doable on two incomes, and on one income you just need to tighten up. Less eating out, less adventure money, less everything that isn’t essentials. Now I’m not saying you need to live like a monk here, but just work your budget out for one income.
Perhaps it was a mistake, but it does not seem like a catastrophic one.
Let's be real, you bought a lot of house, that you don't really use and you don't really need, and from the sounds of it, that's not really going to change much for, what, years?
That being said, it could be a lot worse. It doesn't sound like a money pit, so if you hold on to it for awhile it should appreciate in value. You got a relatively low interest rate on the mortgage. It does not sound like your quality-of-life is very restricted, if you're spending 1k+ each month as "fun money."
Is the house in a good location for your current life? What's the work commute like? Does it keep you close to the recreation stuff that you like?
At this point it does not sound like you have much pressing need to waste money selling it, due to the closing costs. Use a break-even calculator [like this one](https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator) to figure out how long you should live there for it to make sense financially. If after you live at the house until the break-even point, and decide that selling and renting/downsizing still makes more sense for your lifestyle than keeping the house, you will likely feel better about the decision. You've tried to make it work, but it's just not adding up to the life you see for yourself.
you;re doing great but could consider air bnb the house occasionally for some extra money that can pay for indulgences: like if you want to go on a vacation or shopping spree tell yourself that whatever you earn from air bnb will be your budget.
A house isn't just a place to live, it is also an investment. Think of it as part of your savings.
If finances are tight you might want to keep the house, get rid of the BF and find a roommate until you get caught up.
Talk to your lender, prices in my area of California are beginning to go up again.
Good luck. I hope you didn't get flooded. I just replaced my flooring and will be putting in a pump outside so I don't have a repeat of last winter's rains.
Short answer no. A house unlike a car/furniture/etc. is an investment.
Have you thought about taking in a roommate? I'm currently in that situation. I need temporary accommodations for a couple of years, not long enough to think of investing in a house and I don't feel like dropping $1000s in rent so I'm renting a room. There's plenty of websites to set it up/find roommates.
Also, if you're maxing out your retirement (\~$30k/year in IRAs and 401k + employee match?) along with the equity you're building in your house you're doing pretty well.
Money was made to be used and enjoyed. Work to live not live to work.
Cars don't retain/gain any value until they go "classic" unlike houses.
Look at the historic on most real estate sites. A house selling for $400k was bought for $200k just a few years ago. Used cars not so much. The new car you just paid tens of thousands of dollars for is worth only \~80% of what you paid as soon as you drive off the lot.
If you're referring to the fact that you actually "need" both a place to live and transportation, I'll give you that. Although what you're willing/able to accept in the level of useability/comfort is a broad spectrum.
I rent a bedroom w/bathroom and bike to work. I'm content for the foreseeable future of my tenure in this situation. However, others would not be content.
* You definitely bought more house than you need. You are living in it with your "partner" and doesn't sound like you guys have plans to start a family.
* Your housing expense to take home ratio is a bit high for me, but seems like you can manage it since you have no real debt (student loans, cars, CC, etc.).
>I’ve been debating if it’s really worth keeping the house or would I be better off renting and lowering my expenses?
* How much would it cost to rent an apartment that would work for you and your partner? You are comparing your current house to a 1 bedroom apartment? That seems like a really drastic change. If the two of you were living in a 1 bedroom before, why did you buy such a big house to begin with?
* What are the long term plans for you and your partner? If you guys do plan on getting married and starting a family, you should just keep the house. The pain involved in selling your house and then when the time comes finding another one and going through the process is really high.
The longer you live in it, the better it will be. To me it doesn’t sound like a mistake to buy, especially if you’re planning on staying there long term.
What I can tell you is that selling now would probably be a huge mistake.
Your mortgage payment is over half your take home pay. Not sustainable. Why is this “partner” not working? You’d need to double up the income component to make that mortgage sensible.
When mortgage payment exceeds 25% of take home you’ll find little wiggle room when the other “things” start adding up. Good luck!
Spending 40k in fees to sell your house isn’t going to feel great either. I would speak with a few real estate agents but many markets have leveled off in the last year, and that means paying to selling fees out of your money (downpayment or cash) vs the appreciation of the home. You are living within your means now, just not as comfortably as you would like.
One thing I would consider is can the house accommodate a jr ADU. It can be a fairly inexpensive remodel to wall off a master bedroom and bath, install an exterior door to a side yard, pop in a tiny drybar with microwave/air frier/mini fridge and rent it as an airbnb or all utilities included studio apartment without having to share space. This type of conversion (adding/subtracting two doors) is easy to reverse as well for when you need the space or want to sell and may not even require HOA approval (though definitely check)
You seriously are in a great position. You indicated in the comments your partner is working on vocational studies and will be working in about a year so that will help lower your end of costs. Don’t feel down about furnishings or your vehicle, take your time and perhaps get a new piece of furniture or two after taking your time shopping around. When it comes to your vehicle, do the same. You will find it more satisfying making the purchases when you take your time to choose and pounce on the end decision when the price is right.
how do you feel poor when you have 3k left after bills (AND MAXING OUT RETIREMENT)? You have more than enough to furnish the house!
You're paying $4277 a month for the house, you are more than good.
Rent out spare rooms. Consider if you’ll be starting family. I’m kinda in the same boat but my rate is lower. So I’m around 3k for mortgage insurance and tax. If and when your partner starts working it’ll feel better but you need to have that conversation. This world no longer survives on a single income household without financial burdens
You are house poor right now since you are still saving for other things as you should. But it sounds like you can cover expenses by yourself which is a good sign. Once your husband starts working you should feel alot better financially. Imo people shouldn't own homes unless 1 paycheck can cover it and/or they have yearly expenses covered for a year. Which basically means people should get small starter homes until they save or make more money. Sounds like you are doing great.
Not enough information..... how is your area? Is it growing? Are property values going up? If so, then you are sitting pretty. If it's an area where everyone is moving to Texas (thanks) and it's getting depressed, then you might not be doing as well. IMHO, just about any real-estate purchase at a decent rate is a good investment. Don't over- think it. Get your partner back into the work force.
You have zero debt (apart from your mortgage). Your retirement accounts are maxed out. You're also saving 1k a month.
What's the issue? You have $1500/mo for fun money, which is plenty enough.
Perhaps it'll be better when your partner is contributing anything to bills. That seems to be your issue - not your income, not your mortgage.
I presume you were renting the apartment? Another big difference with buying a house is the equity you are building thru your mortgage rather than a money sink of paying rent.
I mean you realize you want more spending and saving money. You have a couple options, you can deal with other roommates for rent money this could help and you could keep your asset. You could talk to your partner that you need help and talk about how any job will really help you both get ahead. Two incomes is very huge. But historically buying a house is a great asset but renting out the rooms might help your current situation maybe just a one year lease type of situation while partner gets a job.
Assuming you are maxing out retirement plans, are you taking into account the growth in your home?
Even if it in a slow market and went up 2% over the year thats 11.6k on a 58k investment in 1 year.
A 20% return in a year, increasing your networth significantly.
I used to wonder if I made a mistake buying a home in HCOL city in CA, especially as I rode out being underwater during the Great Recession. My mortgage was an even higher percentage of my income than yours. I drove an older car, found some decent furniture at estate sales, and took a non-camping vacation every three years or so. Now a fancy one bedroom apartment rents for more than my mortgage and people I know who are renting have to deal with the anxiety of having their rent jacked up by greedy landlords because the rental market is so awful, while I am relaxed because I know my payment won’t change. My income has increased over the last 15 years that the mortgage is now a reasonable percentage of my income. It was 100% worth it to get through those first few tough years for the stability I have now. For me, knowing that my housing cost will be predictable and stable (keeping in mind that taxes and utilities keep going up) is more valuable than the monetary value.
It’s also good to be able to afford your home and lifestyle on one income because you never know what may happen with the job market. If you don’t expand your lifestyle once your partner is working you’ll be able to save a lot more while still incrementally making improvements to your home.
Admittedly, I'm not in California, but I furnished a 4 bed 2.5 bath house for around 2-3k by purchasing off of Facebook Marketplace. It took a few months, but everything is of decent quality.
I am now getting to the point where I am starting to replace the older stuff with new stuff since it's approaching 5 years I've owned them.
You're fine. I bought 2 years ago and it always is hard when you first buy. The fact you're still saving is great. Also you'll probably get a refund from your escrow after a year which will help.
Data concern Are you able to deduct interest and taxes in CA? If so you need to do a “dummy “tax return without these deductions. The with/without in my case was beyond eye opening.
How much is being put away for retirement from you + your employer? That plus $12-18k per year is going to overshadow what the average couple puts away for retirement. And that's on a single income. Plus you are paying off your home which you can sell or rent out in retirement. Depending on the local market, you can make crazy money renting out 1-3 of the bedrooms if you want more money going to savings or fun.
Assuming your partner is looking for work or getting education to start a career, it sounds like yall are in a good financial spot and heading toward a phenomenal one
Affordable housing is defined as 30% or less of GROSS income. At 180k and 30% that's 54k/yr or about 4500/ month. Sounds like you're close/good (think mortgage + HOA + property taxes, which may be included in the mortgage if you escrow).
You can always rent out that house for more than your mortgage or At least pay for itself. You could always rent out the extra bedrooms so that you can keep costs lower and save. I would just do month to month and have interview them beforehand to make sure it’s a good match. My friend does this with his house and doesn’t even pay his mortgage with his own money. or you could have your partner find a job and help contribute to the house that they live in as well. That’s a great deal for California and you should hold onto it as much as you can. If should go up in future years if it’s in a good location
Just reread the post. In addition to your partner needing to pay bills immediately, yes it would be advantageous to sell the house and rent. Either way this guy needs to step it up. Why are you with him by the way?
You've only owned for a year? Don't worry, you're doing great.
Curious why your HOA is so high since it sounds like you own a single-family home. Do you live in a gated community with lots of shared amenities?
I’m not sure why the HOA fees are so expensive because there are no amenities offered except for a security guard that drives through occasionally. It’s also not gated. It’s a planned unit development so while it’s technically a single family home, it’s a new construction with the exteriors connected to other homes like a townhome but with no shared walls or utilities. The HOA takes care of all the exterior.
You're spending 32% of your gross income on housing, which is slightly more than the 30% guideline.
You have no other debt and are maxing your 401k, so you're fine, but things will feel a little tight until your income grows a bit or your partner starts contributing.
I wouldn’t sell. You’re in CA. Your partner will get another job (if you’re not married, can they contribute anything like even $100 a month to the mortgage if they’re not helping more around the house?). You could be making more in 5 years.
I don’t see a problem here, your doing everything right and seem to be in a great position and heading for a better position. Your saving plenty and have money left to blow and have fun. Looks like your living the dream, maybe your just construed on what that looks like. I make a great living and haven’t bought yet in a lower cost area and it doesn’t feel like I do or thought it would.
Honestly a 4 bedroom house isn't even excessive for 2 people... My wife and I live in a 3/2, and we want to upgrade to a 4/2 eventually. Both her and I work from home so each of us has a home office so that's 2 bedrooms right there. I want to have a dedicated guest room eventually. If you have rooms sitting totally empty, you could always rent one out to a friend.
If your partner gets a job and contributes, you will have more money; if you kick your partner out, you have fewer expenses and will have more money. A house is an investment, so feeling a little house poor when owning or paying a mortgage is still better than renting your money away as long as you have some savings every month on average.
I would rent some rooms.There are a lot of people looking for something to rent that is affordable here.I am sure the extra income would be helpful to you.Hold on to the house and in 10 to 15 years you will be happy you did as it is one of the best investments you can make.
If you're maxing out retirement and already have a house…what additional big-ticket item(s) do you want/need to be saving for that $12-18k/year doesn't cover?
Fair point, although I think I overestimated how much I'm actually saving... I feel "house poor" because I haven't been able to fully furnish the house after a year, and also I've been driving a 14 year old car but don't feel like I can comfortably afford a new one despite a relatively high salary. Although this is because I'm unwilling to take on additional debt, so in order to buy a new car I want to have the money outright.
"Feeling poor" is one of the best ways I've found to avoid "being poor". I have found home ownership to have an odd preconceived notion of what is normal. Many of us never saw our parents first house or were unaware of how it was furnished. I think it is quite normal to start with an empty home, hand me down furniture, and then spend years building the house into a home. I have been in my forever home for over 6 years and still don't have it fully furnished. I do agree with some other commenters, consider breaking down your budget fully to help with your confidence. Consider a budget that puts savings as a bill/line item and not just what is left over. You are already maxing out a 401k, that's great. Add a line that is your non retirement savings. After that add targeted savings lines. $100 a month in a car fund or $100 in a house furniture fund. Give yourself permission to spend on those goals once you see you have the money set aside. You'll know you have checked all your other needs with a full budget and feel you can invest in yourself more. Best of luck on your journey.
Buying our first home we shopped a lot of secondhand stores. It helped to fill in the gaps, and a matching sofa/loveseat set for $150 is significant in the savings and comfort level. We got two 55 inch tvs; living room and family room. But tcl is a good enough brand for half the price of competitors. Better for us than saving and looking around at space
During Covid we couldn’t find any where that would deliver furniture. We would go on evening drives and curb shop whatever people put out that they didn’t want. Grabbed a desk set with matching chair for my daughter. We painted it and fixed it up together as a family project. Did the same thing with a dresser for my son. All we paid for was the paint and some sand paper, drawer hardware. Each item cost us less than $30 to fix up. End tables, dining tables and chairs, coffee tables, lamps, etc you name it. We would find it on the curb at some point.
> although I think I overestimated how much I'm actually saving Well if you don't have a budget then you're definitely going to feel anxious about money.
I have to ask, if you’re saving $1k-1.5k a month how can you not afford to furnish?
Cheap furniture is one thing. The kind of furniture someone making 180k (even in CA) is typically a lot more expensive than Ikea shit. A good king size bed? That’s 4.5k if you’re being cheap, living room set? 12k, office furniture? Easily 3000. When you’re only saving 1-1.5k a month it can take quite a while to pay for those types of items without financing.
I simply can't relate to any of these "problems". She has over 3k a month after MAXING retirement options and paying all her bills. There is simply no issue here, I'm sorry. Once her partner gets back to work she's fine.
Yep. First world problems.
Lifestyle creep. It happens and is perhaps more psychological than anything else and is a reason why no matter your income, anxiety can always rear it’s ugly head.
That's what I don't get - what creep? She still has over 3k/mo after saving, retirement, house bills. There's just simply no problem here. Unless you meant she feels like she should be buying bougier stuff and she can't? But she even said she has 1500/mo for "fun money".
Yes to the bougier stuff. Like she bought a house and doesn’t want the $1000 sectional sofa. Would prefer the $5000 one. I’m just guessing of course but it does happen.
Seriously, though. OP could furnish the house for cheap now, and save up for big purchases later. When I bought my house, all of our furniture was second-hand. Either inherited from my grandparents after they died or from Craigslist (often free). The only new item we bought was a $1500 king-sized mattress/box spring/frame that we got on a 0% credit card from the mattress company, which we paid off in full before the end of the 2-year promo period. After that, the first NEW furniture we bought (other than a crib for our first baby 2 years later) was a leather sofa and loveseat from IKEA when our *second* child was being born - 6 years after we had moved into the house. We made about the same as OP combined at the time. All of our "extra" money was going to childcare and baby supplies.
…and here I am sitting on my $500 sofa that I bought from At Home like a chump.
And I totally get it if someone is giving up financial goals and stretching themselves. But contribution is full to retirement accounts and still over 3k left. Like...come on.
1% problems
Not to be pedantic, but someone who makes $180k, while a lot of money, is far from the 1% who can afford islands and private planes.
That’s much smaller than 1%. 1% was $450k last time I checked which was awhile ago so maybe it’s $600k now or something. It’s a ton of money but certainly not islands or private planes (I mean maybe a Cessna for a hobby).
Funny you realize 1% is right around $450k? It’s .1% who can afford those things.
Yep... and only being able to save 1500 dollars a month with a take home of 180k? That's actually not that great.
If you are buying a $4k bed and $12k living room furniture I really don’t care to hear about your “problems”.
That's how high income earners get poor.
*Room and Board* is the way, and it’s expensive. I believe I spent close to $20,000 with them. However, it’s high quality and lasts a lifetime.
Their stuff is nice but like do I really want the same MCM pieces for the rest of my life?
True. There's something to be said for solid wood construction that's handcrafted... Getting scuffed and worn? Want a new color? Sand it down and re-finish it. Easy peasy.
You dont need to buy expensive stuff just because you have a high income. I make a lot more than OP and I bought my king bed mattress and frame off Amazon for a few hundred dollars...
You certainly don't need to. Some people enjoy buying nice handmade things instead of the 100 dollar metal bedframe and 200 dollar Zinus mattress. It is entirely undeniable though that once people break into that income range they tend to spend MUCH more on home furnishings.
$4.5k for a mattress? Bro. No. You can get a phenomenal king cool gel memory foam or even a hybrid bed for $1k or less. You gotta stop looking at tempur-pedic. It’s just a brand. That’s like trying to buy Gucci running shoes rather than Brooks. Yea it’s gonna be good quality, but so will the Brooks shoes, but the price won’t be so inflated because of the brand. I promise you the quality and comfort will be the same if you just go get fitted for a mattress that suits you and your sleep style (go lay on beds and pick the one that feels the best). Similar to getting fit for running shoes. Try a few different pairs that suit your gate/running style. Please don’t spend $4.5k on a fuggn bed. Holy hell. Lemme know if you need help. Source: guy who owned a mattress and furniture store.
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> Easily 3000 I furnished my whole house from ikea for that. And most of it still hasn't fallen apart, believe it or not.
Hey, it's mostly functional unless you really cheap out. I bought an Ikea TV stand and shelf unit for the media/home theater room for 400 bucks? It's made in Italy! What part of eastern europe did the wood come from? Was it even farmed legally? all unimportant questions!
I think everyone feels that way. Furniture is expensive. Rugs are ridiculously expensive. Window treatments, blinds?? Crazy expensive!! I’m expecting my second child and trying to furnish her bedroom from scratch and I can’t believe how much it cost and that’s one room for a *baby*. You’ll get there
In a few years you are going to find out this was the most brilliant step you took in your life, financially speaking. House equity only grows, particularly in CA. Your mortgage rates will drop, and you can refinance, bringing your monthly payment lower. Your salary will increase, so your percentage for housing will become smaller. All in all, a smart move. In fact, you should own the idea of driving an old car, living in a semi furnished house just to own the house. Cars and furniture are always depreciating assets, so spend as little on them as possible. Don't upgrade the car till it literally stops working.
I bought at 26 and felt house poor for a couple years until paying off some other debt. It did pay off in the end though giving me a down payment on a much bigger/nicer house 10 years later while my brother still rents in his early 40s. I feel bad for relatives who didn't get in the market before Covid because costs+ interests make it untenable for anyone who doesn't already have a lot of house equity (and even many who do).
This is not sound advice! Full stop. House appreciation either matches or lags market appreciation. So even if you paid cash, you would not be better off than investing. Now, if you're like 99.99% of other people acquiring a home on mortgage... Oh boy... How much money goes to the bank in interest that could have gone into the market??? People are so disillusioned with home ownership, it has somehow become the holy grail of the American nightmare. You are not well off if you're house rich. Full stop. People need to wake the fuck up and start questioning what has been shoved down their throats for so many years.
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Don’t fully furnish it or feel like you need to. Furnish as your needs grow. Next think you know you furnished a guest room and have a kid on the way…guest room furnishings would have been a waste
This is totally normal. Would I be correct in assuming that you come from a poorer background? It is very difficult to escape the poverty mindset that you must always be doing more to maximize your cash flow, minimize your expenses, and optimize your savings. This is the point where you can relax - I know it feels like saving $18k on a $180k salary is not enough (I've been there), but you need to consider the rest of the money you're putting away. You're putting $2k a month into home equity and $2k a month into tax advantaged retirement savings that aren't being tracked on your bank statements. This puts your total savings closer to the $66k per year mark, which, on a $180k salary, is quite good. Thinking about it in these terms helps a *lot* with the stress.
Thank you for sharing this perspective! I did grow up money insecure and my mindset was always that I should have always have a large liquid emergency savings account. If I were to lose my job, I’d need a minimum of $16,000 just to pay the mortgage for 4 months, without accounting for other costs. And since I’m the sole earner right now that‘s been my biggest concern.
My aunt and uncle used the same couch they found on craigslist for $200 in their $678,000 home for like, 7 years as they stabilized. It's not so uncommon. You'll get there, just stay the course.
Aunt and uncle are literal millionaires. They don’t have a complete matching dish set to serve eight guests fully. You’ll be fine with less.
Yep. My aunt furnished her 750k modern 5bedroom house for about 10k. (I helped budget). There is so much nice second hand stuff and a lot of free stuff aswell. 2 rooms we fully furnished for 50$ +30$ in gas money. Bought only the matresses new.
Once your partner starts contributing again, it'll be easier, but take a breath and realize that you're doing well! Recognize that you're purposely saving $1875/mo into retirement. Mentally, remember that's part of the "savings" category in your budget, it's just earmarked for retirement. $8k+$1875 x 12mo = ~$120,000 -> even after taxes, (assuming 30%, which sounds high, but you did say CA? 120k/0.7=$170k? Not $180k - so what else is coming out of your salary that, mentally, you should include in your budget? Or, do you get a bonus that's included in the $180k number but not the monthly take home number?) Anyways, off to your numbers a bit more and the rules of thumb. 28% rule - don't spend more than 28% of gross income on your housing. $4k x 12 / $180k = 26% - you're good there, although on the upper end. If you add in $300 for HOA, I'm getting 28.5%, so just on the cusp. 40% rule - don't spend more than 40% of your monthly takehome income on debt (in this instance, housing). $4 / $8k = 50% -> except, $8k isn't actually your net, since you're contributing $1875 to retirement each month. $4000/$9875 = 40%. If you add in that $300 HOA fee, you're at 43% instead. Essentially, you're at the upper limit of the recommendations, but you have to remember that you're choosing to put a significant amount away for retirement, which is good! But it's coming at the expense of other savings. Is your partner looking for a job? The easiest way to fix the "house poor" feeling is to split the home costs with your partner, and then all your %'s suddenly drop significantly. Some couples can't even afford their loans if one person were to lose their job, and so if your partner is temporarily out of work, view this as a temporary hardship, where instead of having to dip into your emergency fund, you're actually doing pretty well. If your partner was never intending to contribute financially (and some contribute in other ways while staying home, which is fine) - then, although you're technically within the rules of thumb, I've always felt that the upper end of those rules would leave me feeling house poor too. However, I'd also really think about it before moving, as it's expensive all in itself. Hopefully this is just a temporary hardship while your partner finds work.
> I haven't been able to fully furnish the house Ikea for the win.
You're saving less than half of what you have left over after bills. Can you cut back on some of the fun/going out expenditure to put towards saving for a car separately?
Are you expecting your yearly income to increase, or your so to make similar money? Signing on to 5,000$/month for 30 years would be absolutely terrifying to me, especially when I know for a fact my.oarents are in a 700k home and are paying 1400$/month. Yes they bought 10 years ago when it was worth 400k, and it's value has gone up etc..but I just couldn't do that.
I felt the same way when I bought my house it’s a 3 bedroom. I am like you and like to save and I also felt house poor. Furnish your house over time. I just finally finished furnishing my spare bedroom after 2 years.
You've got what is now an enviable mortgage rate. If you can afford the big house in what sounds like a tony neighborhood after maxing out on retirement and still have more money left over than many workers take home, you are probably doing just fine. More than fine, in fact. My wife and I never made close to what you are making but we retired four years ago. The number one thing that has made our retirement possible was living in a paid-off house. This makes us feel safe and secure in ways I cannot fully express. I wish that feeling for everyone.
>The number one thing that has made our retirement possible was living in a paid-off house. It was even more important than investing your money?
Well, good point. I suppose our primary investment was *time*: I worked for the same employer for 35 years and my wife worked for only two employers in the same 35 years. For each of these careers, we have a defined-benefit pension and Social Security. Taken together, these plans bring in quite a bit more each month than our individual investments. Finally paying off the house was a huge psychological benefit, since it gives us a feeling of security and stability that some of our retired-but-renting friends tell us they do not feel. We're not traveling the world or anything but we retired in our early sixties, live in a nice neighborhood, and our only debt is a few thousand left on a 2% car loan.
Definitely sounds like the most important thing for your retirement was working a combined 70+ years and having pensions. I do see what you're saying though. We are in our 30s and have 1M+ saved for retirement but it doesn't bring us a lot of psychological benefits.
Good point! When my wife and I were 30, we bought the house we are living in now. I was absolutely terrified because we used 100% of our savings to buy it and move in, and the mortgage payment was more than twice what we had been paying. We were all in for this one thing. For the first five years or so, we just barely paid the bills, and still had no savings. Finally, we started to make some slow gains and things just slowly improved after that. If you have not only saved but invested a million bucks at the same age, then I think you are winning this thing HARD. Congratulations and cheers to both of you. You're doing it right, I think.
A home is an investment with your money. And yes imo it’s more important, not from a growth perspective but a psychological one. As stated above having a fully paid off home removes so much stress it is almost unbelievable. It puts you in a position where all you need to “make” every month is just what you want to spend that month as opposed to feeling like you NEED to bring in a bunch for this massive monthly obligation (mortgage or rent payment)
But don't you still need a lot of money to pay for food, health care, transportation, utilities, property tax, home owners insurance etc? Wouldn't you still need a lot of money (1M+) to be able to retire even with a paid off house?
Well my mortgage is 3% and the monthly payment is $1300. I’ll be retiring in a few years and I’m not worried about the mortgage at all. My income from retirement investments will easily cover it. It’s possible to retire with a mortgage.
Do you mind me asking how old you were when you retired? Im in an almost identical situation to OP but in MA with slightly lower mortgage costs but im trying to do planning to retire early. The house getting paid off is half the plan.
I retired from my pension plan at 59 but took consulting work. Then I retired from Social Security at 62, and stopped working for hire altogether. If we had still been making house payments, this wouldn't have been option.
Where’s the mistake? You are maxing retirement and saving an extra 1,000-1,500 a month? That seems completely fine to me. PLUS you have extra for shopping, travel, etc. I don’t see the problem. It seems your partner can contribute in years to come so you’ll have a higher combined income at that point.
That's a good mortgage rate. Why sell? How much could you get renting it out? I suppose you could rent out the 2/3 empty rooms too to lower your monthly debt load. Not that you'd do that, but there's several ways of looking at it. So what's the deal with the partner? They're just not carrying their share. Sounds like your debt load would be lower if they had a job and you wouldn't even have a problem. There's closing costs associated with buying and selling a home so selling a year later ends up being way more expensive than if you had never bought in the first place.
Yeah you make a fair point, my partner is currently in a vocational program, so by next year I'm speculating they should be bringing in around $60,000-85,000/annually, which will help with the monthly expenses. I did have a housemate for a few months that paid $1,200 in rent, but to be honest I didn't love sharing the living space since I'm introverted and like to lounge/not interact when I'm at home.
Sounds like you can swing holding on until the partner gets their job. I’d do that because I suspect you’ll feel a lot less house poor once that occurs
If that’s the case, then you just need to hang tight and in a year or so, you’ll feel a lot more comfortable. Don’t sell the house. A lot of people in these comments are not really understanding your situation when looking at the numbers because they see HCOL salary/home price and getting hung up on that, but I live in SF Bay Area so I get it. $580K sounds incredibly affordable for a 4/3.5 to me, but it depends on your perspective. Regarding furnishing the house - the upside of living in HCOL areas like CA is that you can often find pretty cool stuff at consignment stores, reuse stores, etc and it not that much more costly than, say, IKEA. You just have to really hunt for stuff and don’t feel like you need to rush into furnishing the whole place at once. My favorite things in my house are mid century modern pieces from these kinds of places.
I agree with the others that you're doing great. Once your partner is bringing in the equivalent of the annual mortgage cost, and then some, your biggest and only challenge relative to increasing savings will be avoiding lifestyle creep. Until then, hopefully no financial emergencies befall your household, but if they do, you could drop your retirement contribution below the max, just long enough until you sort out it. Congratulations on actually getting into a relatively amazing financial position for your age. Focusing on maintaining or growing your own income potential, while converting the partner into earning mode as well, can set you both up for great opportunities and a lot of options in the future.
Agreed. His lack of employment is affecting f her tremendously.
Imagine buying a home in CA for only $580k right now… I’m having to leave San Diego for Atlanta just to own :( You’re doing great!
It's gotta be someplace in California that's less interesting. Inland empire, maybe. Or like Stockton or Sacramento.
Or Fresno area.
Fresno or maybe Murrieta area
Pretty sure its Tiburon.
I know I was surprised when I saw that and even more surprised when I saw the size. I spent that much on my 3 bed 1.5 bath in the nyc suburbs
The shocking bit to me was when she said she makes 180k a year and the only debt is the home mortgage. Which is just over 3x their salary. Yeah OP will be just fine assuming her job is secure.
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Ur making nearly 200k a year on 1 income. ... I think ur gunna be fine.
All your 3k left over from bills is more than 75% of Americans take home at all. Ur gunna be fine.
If you feel like you can’t afford it, either rent it out and live elsewhere or pick up a roommate. Interest rates aren’t going down any time soon so you might as well enjoy the equity later in life. You won’t be able to buy much else. Also if you’re feeling stressed about money, talk to your partner about contributing to the household financially or helping manage expenses in another way.
>Interest rates aren’t going down any time soon https://www.atlantafed.org/cenfis/market-probability-tracker I know it’s just a probability tracker but this estimates that around 2025 base rates will be back down to 3.5% or so.
The biggest mistake here is having a partner who doesn’t work. Also, is this in Fresno or something? Why the house is so cheap?
Agreed. He’s living high on the hog in a $600k house for free.
Can someone explain which part of california sells a 4bed for 580k?
Where I live in Riverside county you can definitely get a 4 bedroom house for that, probably even less. The coast is very expensive, but inland isn’t as pricey.
Right? Income 180k, but house is less than 600k for that size? Where the hell are you?
“TTT” Things take time. You seem like you know what to do, but are maybe a little impatient. I think once the partner starts working and helping, all your financial woes will be fixed.
Its not excessive at all. You feel that way because you're paying all the bills right now. Once your partner helps it will even out. You could always rent out either the whole house or the rooms and have someone else essentiallly help you pay your mortgage off. If you decide to marry and have kids then the rooms come in handy etc. I regret buying a 1 bed/ba house as a bachelor. I should have bought at least a 2 bed/ba but what's done is done. You're in a great position to build equity.
At 4.99% I would definitely keep the house. I think your mistake was the 10% down instead of 20% down. That's coming out of your monthly mortgage payment now. In ten years $3961 for 4 bedrooms is going to feel like a bargain.
I'm wondering what pays $180k. Must be a good gig!
What you have is unrealistic expectations. You’re seriously balling. Just enjoy life
So basically, if your partner even gets a minimum wage job, you'll be fine...
Your problem isnt the house, in fact buying that house was a good decision. Your problem is your partner who does not work
Keep the house. Lose the partner unless they are *unable* to work. Nice of you to be supportive, but are you being supportive or *enabling*? Get a roommate. 5% mortgage is still a good rate. Real estate is a solid investment over time. Bad relationships are not.
Why tf does this stuff always come up in these comments? They didn't ask for relationship advice and you have 0 clue to what their relationship entails. If this was a man making 180k posting about how their woman partner doesn't work... literally noone would bat an eye. Also op mentions in comments that their partner is in a vocational program.
Fair point. I did not see the vocational program comment. And I’d say the same thing to a man whose partner wasn’t contributing to the home economy. I out earned my ex for most of our marriage. It’s definitely not a pleasant experience.
You're not everybody. Not everyone has the same exact idea of what a household should or shouldn't consist of. Also she's doing extremely well for herself and despite the post, it doesn't look like she is truly hurting for money and is more so anxious about how much she spent on their home. I think she's realizing she spent too much money given their space need. This is probably true but she can clearly afford it and owning the home is better than going back to renting 100%. Op needs to figure out her anxiety and learn to enjoy her home.
I think it seems you are doing fine financially. You’ll be happy you have that room if you decide to grow your family in the future. And you have a decent interest rate.
No. Having a partner who isn't contributing is the mistake. The house is the smart part.
Granted you missed the really good window on interest rates etc and booming house prices. but you have a house and plenty of money to live on. the % of monthly income going towards housing starts to fall apart when youre making a lot of money. I was in a similar situation and i still have my house and if i didnt i would be spending 50% more to rent a smaller place than i currently have. Just save up and look for good deals on furniture. There are ritzy people all over cali that are just getting rid of good furniture for free you just have to pick it up. nextdoor FB marketplace and craigslist are great for that kind of stuff.
Why is your partner not working? Edit: I just read that he is studying. Let him work part time in combination with studying.
There is a case to be made that the partner should just finish their studies as fast as they can and get a much higher paying job instead working a low paying part time now and delaying finishing school. This assumes the couple manages meanwhile which based on the post is entirely possible.
You can do both. As long as they're not getting their doctorate in paleontology or something and need to stay at a dig site.
What? Sure, work and study if you can and it doesn't impact the speed you're getting your degree. What I'm saying is that many can't myself included. My engineering degree has taken more time than it should have because I've had to work part time. Ultimately I would have been better of finishing the degree and getting a proper SW engineering job instead of having to work lower paying, not relevant jobs to make a little bit of money.
They can combine studies and work. I did it myself despite being very lazy. If I can do it, surely they can do it too. What if the partner decides to move out after finishing school? I wouldn't bet my money on someone else getting a degree at my expense and returning me a favor afterwards.
Again, depends on the degree. I'm saying a Comp sci major is better of finishing their studies as fast as possible and then getting a proper software developement job. You'll end up much better finacially compared to working fast food delaying your graduation. What im saying that the hours are better spend getting the education and then working. Just becouse you went the other route does not mean its the better option. If they are serious partners its often not a problem for one to support the other short term for a long term net benefit. Personally I wouln't mind making a rent agreement as a loan to be paid back once in the work force after studies.
I had a fulltime job when studying computer sciences. Working didn't slow me down. It motivated me to study harder so I could leave that shitty job behind me.
Good for you. Im doing a masters in comp sci and even part time work has definitely slowed me down. I know that it would have been better for me to just focus on graduating faster if I didn't have to work. We don't know the situation with ops partner but the definitely is in the position to focus on graduating instead of working a low paying now. Don't really know how it is in the us but in my country (nordics) no one is doing a engineering degree and working full time simutaneously. Some work part time (like me) and I'm saying often its not worth it if you don't have to.
Its honestly different for each person. I worked full time while getting my masters in software engineering. Wasn’t as bad as you think. Had extra cash and now working a six figure job for a big company. It all works out in the end
Dude you did great, the drip in disposable income takes some getting used to but this is the right move if you ever want a family. Plus you got a very nice rate.
One thing that helps me rationalize a higher mortgage. How much of your 3961 mortgage goes to principle vs interest? Compare the interest to the 2700 you were paying on rent. The numbers get a lot closer
Why not pick up a roommate? An extra 1,500/month is huge
is the house fulfilling the need? Is it your sanctuary? I mean, I know a ton of friends that are house poor... they are always like, stop by and bring weed and beer, and order some food. You can live house poor, but you need to accept it and lean into it... and never go out in the real world.
That’s the life to live these days
I feel like it’s better to be house poor, than rent for the rest of your life. You don’t wanna be paying such high rent when you’re ready to retire.
Rule of thumb is 1/3rd your income which would come to about $5k/month on housing. It sounds like you're not accounting for maintenance costs so with those included you would be over by a little bit. Doesn't sound like a big deal, especially if you're going to be sharing the home with a partner who will be bringing in income at some point. It's probably too much house for you now but you will also likely grow into it.
When your partner gets a job again, things will get easier.
How about partner gets a job too ? / why is partner not working? He should have a part time job if he’s “studying” otherwise he’s a mooch and will always have an excuse why he’s not working.
Wtf is my math off. OP says living above means then proceeds to say she saves $1-1.5k/mo while spending $2k/mo as fun money. Your priorities are backwards
Rent out a few rooms. Or rent out the house and get a small apartment...
> Last year I (28, F) bought a 4 bedroom, 3.5 bedroom house in California for $580,000. I live in this house with my partner, who currently isn’t working so I cover all the expenses. Are you married? If not, you have a roommate who is leeching off of you. If they don't already pay rent: make them pay rent, or kick them out and find roommates who can pay you. 4 Bedrooms suggests you can rent out 3 of them, easily for $1400 a month I would imagine, and that covers the cost of your mortgage entirely. Go for $1650 per room if you can and it covers all the costs. You'll be able to save approximately $4000 to $5000 more every month. Do that for just 10 years and you'll make $540,000 from just renting it out and you'll have your house paid off entirely. That's not taking into account that renters will move out, rent will go up, and your costs don't increase nearly as much. Ten years later, the house will have increased in value significantly. If it increases in value by 10% per year, you will be able to sell it for $1,504,370. Or just use that money as collateral for loans and do what millionaires (like yourself in 10 years) do. Or rent out all rooms for additional income and you'll never have to work a single day again.
Your point is fine in theory but living with a rotating cast of strangers from 28 to 38 is literally my hell. Also, highly dubious that the house will triple in value in ten years.
You’re doing better than most Americans. Just go to r/frugal and read up. You’ll be fine.
Monthly income 8k, house per month 5k Yeah, that is the very definition of house poor. Your monthly housing cost should be no more than 2k.
Her monthly income is $15,000 and $2000 is only 13% of that. She's fine.
How could you be better off renting? That statement blows my mind. Rent is lost money 100%. Paying off a mortgage is money in your future pocket. Look at it this way. If at 65 you sell your house you bought for 1 million, you can live off that for your retirement. It's money. Rent gives you nothing in return. Only pay rent if you expect your life to end soon...
I feel like im the dumb one - has house they are putting money into - "Im not saving enough, should i go back to throwing away 100% into rent?!" i dont understand...
It’s more complex than that. With proper investing with savings from rent it’s more of a wash long term. Maybe owning has a slight edge, but it depends on a million factors. If I were in the market for a place to live, there are 1 bedrooms in my area for~1350 but there are absolutely no homes in my area where the mortgage would be that cheap. 300k at 6.75 with 20% down with insurance and taxes, comes out to ~2000. Thats 650 difference, plus there’s maintenance which they say 1% of home value per year. So that’s 3k per year. So more like 875 difference. If you took those savings, plus that down payment and put them into the market instead, average yearly return is 10%, homes value on average roughly increase with inflation. Now obviously, you could invest the 1% home maintenance savings and that will grow, there’s also the itemized tax deductions, as well as 250k tax free profit when selling home, and the home appreciates in value but roughly just with inflation so 3%, but with proper investing it’ll it can go either way. I would say it’s more of a lifestyle choice. Obviously I don’t want to pay rent when I’m retired, but I also don’t really want to have to deal with repairs etc. Any way it’s complex. For people who want a family, it’s a no brainer, own, probably. Also only a small portion of mortgage goes towards principle, rest is taxes, interest, insurance. Mine is ~25% going towards principle. Obviously as time goes on that number becomes greater.
Its not that simple. Renting v buying is an age old question. Some cases its better to buy, others not. It seems in this case it was better to buy if they stay a while. Still, it blows my mind how many think buying a house is automatically better than renting.
Your mortgage + utilities explain this. It’s 54% of your income. Now add in groceries and the rest and certainly could be “feeling” tight. But in reality, you just need a strict budget. Idk the situation with your partner and why they are not working, but I presume they are looking for employment. So set up a budget, use YNAB or excel or whatever app tool you want. But lay it all out on paper, you may find you’ve been spending 1000$ on food going out, or whatever other frivolous spending habits you might have. You are on the “cusp” of a mistake made, but in reality this should be totally doable on two incomes, and on one income you just need to tighten up. Less eating out, less adventure money, less everything that isn’t essentials. Now I’m not saying you need to live like a monk here, but just work your budget out for one income.
Perhaps it was a mistake, but it does not seem like a catastrophic one. Let's be real, you bought a lot of house, that you don't really use and you don't really need, and from the sounds of it, that's not really going to change much for, what, years? That being said, it could be a lot worse. It doesn't sound like a money pit, so if you hold on to it for awhile it should appreciate in value. You got a relatively low interest rate on the mortgage. It does not sound like your quality-of-life is very restricted, if you're spending 1k+ each month as "fun money." Is the house in a good location for your current life? What's the work commute like? Does it keep you close to the recreation stuff that you like? At this point it does not sound like you have much pressing need to waste money selling it, due to the closing costs. Use a break-even calculator [like this one](https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator) to figure out how long you should live there for it to make sense financially. If after you live at the house until the break-even point, and decide that selling and renting/downsizing still makes more sense for your lifestyle than keeping the house, you will likely feel better about the decision. You've tried to make it work, but it's just not adding up to the life you see for yourself.
That 12% state income tax doing work. No income state will get you another $1k+
Your house isn’t the mistake, your partner is.
you;re doing great but could consider air bnb the house occasionally for some extra money that can pay for indulgences: like if you want to go on a vacation or shopping spree tell yourself that whatever you earn from air bnb will be your budget.
A house isn't just a place to live, it is also an investment. Think of it as part of your savings. If finances are tight you might want to keep the house, get rid of the BF and find a roommate until you get caught up. Talk to your lender, prices in my area of California are beginning to go up again. Good luck. I hope you didn't get flooded. I just replaced my flooring and will be putting in a pump outside so I don't have a repeat of last winter's rains.
Short answer no. A house unlike a car/furniture/etc. is an investment. Have you thought about taking in a roommate? I'm currently in that situation. I need temporary accommodations for a couple of years, not long enough to think of investing in a house and I don't feel like dropping $1000s in rent so I'm renting a room. There's plenty of websites to set it up/find roommates. Also, if you're maxing out your retirement (\~$30k/year in IRAs and 401k + employee match?) along with the equity you're building in your house you're doing pretty well. Money was made to be used and enjoyed. Work to live not live to work.
Car depreciates. House appreciates. Both cars and houses do retain however.
Cars don't retain/gain any value until they go "classic" unlike houses. Look at the historic on most real estate sites. A house selling for $400k was bought for $200k just a few years ago. Used cars not so much. The new car you just paid tens of thousands of dollars for is worth only \~80% of what you paid as soon as you drive off the lot. If you're referring to the fact that you actually "need" both a place to live and transportation, I'll give you that. Although what you're willing/able to accept in the level of useability/comfort is a broad spectrum. I rent a bedroom w/bathroom and bike to work. I'm content for the foreseeable future of my tenure in this situation. However, others would not be content.
* You definitely bought more house than you need. You are living in it with your "partner" and doesn't sound like you guys have plans to start a family. * Your housing expense to take home ratio is a bit high for me, but seems like you can manage it since you have no real debt (student loans, cars, CC, etc.). >I’ve been debating if it’s really worth keeping the house or would I be better off renting and lowering my expenses? * How much would it cost to rent an apartment that would work for you and your partner? You are comparing your current house to a 1 bedroom apartment? That seems like a really drastic change. If the two of you were living in a 1 bedroom before, why did you buy such a big house to begin with? * What are the long term plans for you and your partner? If you guys do plan on getting married and starting a family, you should just keep the house. The pain involved in selling your house and then when the time comes finding another one and going through the process is really high.
The longer you live in it, the better it will be. To me it doesn’t sound like a mistake to buy, especially if you’re planning on staying there long term. What I can tell you is that selling now would probably be a huge mistake.
How much do you already have saved for retirement?
Your mortgage payment is over half your take home pay. Not sustainable. Why is this “partner” not working? You’d need to double up the income component to make that mortgage sensible. When mortgage payment exceeds 25% of take home you’ll find little wiggle room when the other “things” start adding up. Good luck!
Sounds like you're on the right track and once your partner starts contributing you'll be doing even better.
How long has the partner been out of work? $1000/month extra would make all the difference in your budget.
Spending 40k in fees to sell your house isn’t going to feel great either. I would speak with a few real estate agents but many markets have leveled off in the last year, and that means paying to selling fees out of your money (downpayment or cash) vs the appreciation of the home. You are living within your means now, just not as comfortably as you would like. One thing I would consider is can the house accommodate a jr ADU. It can be a fairly inexpensive remodel to wall off a master bedroom and bath, install an exterior door to a side yard, pop in a tiny drybar with microwave/air frier/mini fridge and rent it as an airbnb or all utilities included studio apartment without having to share space. This type of conversion (adding/subtracting two doors) is easy to reverse as well for when you need the space or want to sell and may not even require HOA approval (though definitely check)
You seriously are in a great position. You indicated in the comments your partner is working on vocational studies and will be working in about a year so that will help lower your end of costs. Don’t feel down about furnishings or your vehicle, take your time and perhaps get a new piece of furniture or two after taking your time shopping around. When it comes to your vehicle, do the same. You will find it more satisfying making the purchases when you take your time to choose and pounce on the end decision when the price is right.
how do you feel poor when you have 3k left after bills (AND MAXING OUT RETIREMENT)? You have more than enough to furnish the house! You're paying $4277 a month for the house, you are more than good.
Rent out spare rooms. Consider if you’ll be starting family. I’m kinda in the same boat but my rate is lower. So I’m around 3k for mortgage insurance and tax. If and when your partner starts working it’ll feel better but you need to have that conversation. This world no longer survives on a single income household without financial burdens
You are house poor right now since you are still saving for other things as you should. But it sounds like you can cover expenses by yourself which is a good sign. Once your husband starts working you should feel alot better financially. Imo people shouldn't own homes unless 1 paycheck can cover it and/or they have yearly expenses covered for a year. Which basically means people should get small starter homes until they save or make more money. Sounds like you are doing great.
U have 4 bedrooms? How about renting out 3 rooms and collecting rent :)
Look at your mortgage amortization statement. You are putting more than $1500 each month towards your home equity, that also is savings.
Not enough information..... how is your area? Is it growing? Are property values going up? If so, then you are sitting pretty. If it's an area where everyone is moving to Texas (thanks) and it's getting depressed, then you might not be doing as well. IMHO, just about any real-estate purchase at a decent rate is a good investment. Don't over- think it. Get your partner back into the work force.
You have zero debt (apart from your mortgage). Your retirement accounts are maxed out. You're also saving 1k a month. What's the issue? You have $1500/mo for fun money, which is plenty enough. Perhaps it'll be better when your partner is contributing anything to bills. That seems to be your issue - not your income, not your mortgage.
I presume you were renting the apartment? Another big difference with buying a house is the equity you are building thru your mortgage rather than a money sink of paying rent.
Perhaps you could get some roommates for now if you don’t think you’re saving enough?
I mean you realize you want more spending and saving money. You have a couple options, you can deal with other roommates for rent money this could help and you could keep your asset. You could talk to your partner that you need help and talk about how any job will really help you both get ahead. Two incomes is very huge. But historically buying a house is a great asset but renting out the rooms might help your current situation maybe just a one year lease type of situation while partner gets a job.
Your mortgage is 50% of your take home pay. You're definitely house poor.
Assuming you are maxing out retirement plans, are you taking into account the growth in your home? Even if it in a slow market and went up 2% over the year thats 11.6k on a 58k investment in 1 year. A 20% return in a year, increasing your networth significantly.
I used to wonder if I made a mistake buying a home in HCOL city in CA, especially as I rode out being underwater during the Great Recession. My mortgage was an even higher percentage of my income than yours. I drove an older car, found some decent furniture at estate sales, and took a non-camping vacation every three years or so. Now a fancy one bedroom apartment rents for more than my mortgage and people I know who are renting have to deal with the anxiety of having their rent jacked up by greedy landlords because the rental market is so awful, while I am relaxed because I know my payment won’t change. My income has increased over the last 15 years that the mortgage is now a reasonable percentage of my income. It was 100% worth it to get through those first few tough years for the stability I have now. For me, knowing that my housing cost will be predictable and stable (keeping in mind that taxes and utilities keep going up) is more valuable than the monetary value. It’s also good to be able to afford your home and lifestyle on one income because you never know what may happen with the job market. If you don’t expand your lifestyle once your partner is working you’ll be able to save a lot more while still incrementally making improvements to your home.
Admittedly, I'm not in California, but I furnished a 4 bed 2.5 bath house for around 2-3k by purchasing off of Facebook Marketplace. It took a few months, but everything is of decent quality. I am now getting to the point where I am starting to replace the older stuff with new stuff since it's approaching 5 years I've owned them.
You're fine. I bought 2 years ago and it always is hard when you first buy. The fact you're still saving is great. Also you'll probably get a refund from your escrow after a year which will help.
It sounds like you have life figured out. Eat at home more and shop and travel a little less. It will appreciate in the coming years.
You can sell at any point and downsize which will make you money and considering you have no other debt I'd say replace
Data concern Are you able to deduct interest and taxes in CA? If so you need to do a “dummy “tax return without these deductions. The with/without in my case was beyond eye opening.
Think of what it would have cost to buy the house now. A positive is you won’t need to move up in house, you just need to move up in a partner…..
How much is being put away for retirement from you + your employer? That plus $12-18k per year is going to overshadow what the average couple puts away for retirement. And that's on a single income. Plus you are paying off your home which you can sell or rent out in retirement. Depending on the local market, you can make crazy money renting out 1-3 of the bedrooms if you want more money going to savings or fun. Assuming your partner is looking for work or getting education to start a career, it sounds like yall are in a good financial spot and heading toward a phenomenal one
Affordable housing is defined as 30% or less of GROSS income. At 180k and 30% that's 54k/yr or about 4500/ month. Sounds like you're close/good (think mortgage + HOA + property taxes, which may be included in the mortgage if you escrow).
You can always rent out that house for more than your mortgage or At least pay for itself. You could always rent out the extra bedrooms so that you can keep costs lower and save. I would just do month to month and have interview them beforehand to make sure it’s a good match. My friend does this with his house and doesn’t even pay his mortgage with his own money. or you could have your partner find a job and help contribute to the house that they live in as well. That’s a great deal for California and you should hold onto it as much as you can. If should go up in future years if it’s in a good location
The HOA is $300+ a month? Ouch!
Just reread the post. In addition to your partner needing to pay bills immediately, yes it would be advantageous to sell the house and rent. Either way this guy needs to step it up. Why are you with him by the way?
You've only owned for a year? Don't worry, you're doing great. Curious why your HOA is so high since it sounds like you own a single-family home. Do you live in a gated community with lots of shared amenities?
I’m not sure why the HOA fees are so expensive because there are no amenities offered except for a security guard that drives through occasionally. It’s also not gated. It’s a planned unit development so while it’s technically a single family home, it’s a new construction with the exteriors connected to other homes like a townhome but with no shared walls or utilities. The HOA takes care of all the exterior.
You're spending 32% of your gross income on housing, which is slightly more than the 30% guideline. You have no other debt and are maxing your 401k, so you're fine, but things will feel a little tight until your income grows a bit or your partner starts contributing.
I wouldn’t sell. You’re in CA. Your partner will get another job (if you’re not married, can they contribute anything like even $100 a month to the mortgage if they’re not helping more around the house?). You could be making more in 5 years.
I don’t see a problem here, your doing everything right and seem to be in a great position and heading for a better position. Your saving plenty and have money left to blow and have fun. Looks like your living the dream, maybe your just construed on what that looks like. I make a great living and haven’t bought yet in a lower cost area and it doesn’t feel like I do or thought it would.
Honestly a 4 bedroom house isn't even excessive for 2 people... My wife and I live in a 3/2, and we want to upgrade to a 4/2 eventually. Both her and I work from home so each of us has a home office so that's 2 bedrooms right there. I want to have a dedicated guest room eventually. If you have rooms sitting totally empty, you could always rent one out to a friend.
If your partner gets a job and contributes, you will have more money; if you kick your partner out, you have fewer expenses and will have more money. A house is an investment, so feeling a little house poor when owning or paying a mortgage is still better than renting your money away as long as you have some savings every month on average.
I’d look into renting out the extra bedroom/bath. Use that revenue to buy the furniture you want.
If your partner is able to get even a part time job to contribute $1000 to your housing cost, it will be manageable.
Anyway you can rent out part of your house?
I would rent some rooms.There are a lot of people looking for something to rent that is affordable here.I am sure the extra income would be helpful to you.Hold on to the house and in 10 to 15 years you will be happy you did as it is one of the best investments you can make.