$1.2M Bought WAY Too Much House | Millennial Real Life Budget Review Ep. 23
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- čas přidán 5. 08. 2024
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Welcome to Millennial Real Life Budget Review where we review a real millennial's budget anonymously. Today we are looking at a tech power couple making a combined $280,000 and spend 50% of their income on their mortgage... yikes!
Chapters
0:00 Intro
2:00 Salary
2:40 Monthly Budget
6:00 Emergency Fund
7:45 Subscription
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High income, high cost of living! They make a shit ton of money, but Jesus is there mortgage insane
I'm from NYC. You can't find anything decent for less than $700,000. My budget was $450,000 - I had to leave NY and move to PA to stick to my budget. Biggest decision ever but I absolutely don't regret it. But everyone is different. It depends on what you want
Did you end up spending $450k in PA?
Okay, but also how do two people spend $8000 a month outside of housing? Why don't they cut down their shopping, beauty, clothing, eating out, and fun money? At the end of the day 50% mortgage isn't a huge deal when you're still surplus 8000/month-- a number that most households don't even bring in. Engel's law is the principle behind it-- essentially the more income you make the less you need to spend on necessities (technically food, but it applies to pretty much anything inelastic). It's their choice to get both luxuries (like $1300 of shopping, clothing, beauty and fun money every month) and a 50% mortgage. They can't afford to have both. Their luxury is having a 1.2m home.
This is why I started investing in the stock market because of dividends. What matters, in my opinion, is that if you invest and earn more money in addition to dividends, you will be able to live off of dividends without selling. It implies that you can pass that on to your children, giving them a head start in life. I've invested over $600k in dividend stocks over the years; I continue to buy more today and will continue to do so until the price lowers even further.
It's always inspiring to hear from a veteran investor who has weathered the storm and come out on top. When your portfolio turns from green to red, it might be unsettling, but if you have invested in great companies, you should just keep adding to them and stick with your plan.
I wholeheartedly concur, which is why I appreciate giving an investment coach the power of decision-making. Given their specialized expertise and education, as well as the fact that each and every one of their skills is centered on harnessing risk for its asymmetrical potential and controlling it as a buffer against certain unfavorable developments, it is practically impossible for them to underperform. I have made over 1.5 million dollars working with an investment coach for more than two years
How can one get in touch with these coach? I would not mind looking up the professional that helped you. I will be retiring in two years and I might need some management on my much larger portfolio. Don't want to take any chances
@strategisteleanor
THAT IS HER USER NAME
Tech jobs are shaky right now.
Life style creep is real. Having a higher income is not always the best considering it means you might have to live in a high cost area. I'd rather make less but live in a lower cost area. Not always under our control through, I get that. This couple seems to have a good plan and finances but that one decision to buy that house, darn, that is hard to recover from.
I'm surprised by their take home amount being $14k. I noticed only $1k/mo for retirement for two people? Also not maxing HSA. Not taking advantage of tax savings. Wouldn't you want to max those out instead of still contributing $500 towards the 911 fund? Have a similar income/mortgage but take home is less due to higher retirement contribution and maxing HSA.
Almost got a heart attack when i heard their mortgage!😵😵😵
$8000 a MONTH for a mortgage? Yeah, someone's math failed them thinking THAT was a good idea.
It’s not what you earn. It’s what you keep.
Loved this format. I really like the extra details like including the person's age and savings amount. I'm nosy which is why I really enjoy this series lol
First video of yours, Really enjoyed this! Caleb hammer always makes me stressed. This was such a nice mellow review of a sane persons budget! Solid advice in there!
hammer is a little more real tbh. She basically makes something so easy to figure out hard.
What i am so confused with regarding the mortgage is are people's lenders not telling them about HOA, taxes, etc? I havent bought yet but my lender includes at least estimates regarding taxes and insurance (and notes HOA) as a matter of fact, they factor that into what is affordable to me. Is this not common with lenders? It seems odd that there is such a big gap between planned and actual for the mortgage. Or is that extra $900 including an early payoff?
I fact checked it, and they got a super nice house for 1.2 million. The average cost of a home there is $595,000 which is pricey but nothing compared to most metropolitan areas. They probably got a 3,000+ square foot house for that price
Ooooh, that make me nervous. I’m blessed to have an annual income around $300k, maxing out retirement options, bought my car in cash, and I’m still hesitant to spend more than about $550k on a home. The temptation of lifestyle creep is real, but just because we can doesn’t mean we should…
My wife and I are also a power couple (both electrical engineers) with even more income. Like others have said, lifestyle creep is real. I also noticed the lack of retirement savings in this budget. We made a similar mistake, but are now contributing $75k - $100k per year to catch up. It would have been easier to contribute more earlier in life.
DMV area is expensive. It is uncommon to see this kind of situation. Not sure if the couple can see my suggestions. My family also lives in DMV with a expensive house. I have some suggestions to improve your situation. 1. You could actually deduct a lot of mortgage interest (first 750k of mortgage) for income tax. You can have a. CPA to check. In this case, don’t put more in the principal unless you try to avoid PMI. Not sure If you were paying 20% down. The rate might go down. You could refinance when rate is lower, which could save more for later. 2. Save more cash for home maintenance. Any small thing costs tons of money for home. We changed roof, and it was 23k. Trimming trees cost 3k. Any random plumber thing costs $500 to 1k . Your emergency fund is too small to cover repair in the area for the house and emergencies. 3. Daycare or preschool is very expensive in DMV. Very hard to find one below 2k. Most people I heard are paying 2500ish now. If you plan to have a kid, try to be more frugal. unless your parents are very sure that they can help out. I don’t think you can afford it now. 4. Buy life insurances if you plan to have a kid and keep the house if something bad happens 5. For the long run, house is a investment, but I think what you saved for retirement is a bit little. Overall, try to save more now. When income gets higher or when refinancing happens, things get easier.
I don’t believe this budget.
1) Cellphone- $60 for two? Questionable
2) Gas is $50 a month? That’s like one tank of gas. Even if they work from home, thats not even close to accurate.
3) Shopping is $500 but “Fun Money is $200? Doesn’t make sense
4) You have a 1.2M home but only spend $100/m on electricity? My electricity is $80 for a 750sq ft apartment. 🤔
I have a hybrid and only fill up my gas tank once every 3 weeks, so a lot of months I only pay $30 for gas. That being said, that is for just me and not a dual household worth of gas
$60 for cellphone is still too much. Get on a shared data plan, prioritize using wifi since its everywhere, download your content for the road. You should not be paying more than $30/month for cellphone.
time to sell and move further out into VA - time to be realistic.
Lower your mortgage payment a month by recasting, build a cash stash for 4-5 months, get to 50k number and ask your lender the revasting numbers. This should lower your monthly payments by 200-300 a month. I also think you have pmi, so pay off at least 20% equity before paying off orher loans, thats additional $200-300 a month.
Recasting? Do you mind elaborating on this?
@stephanielcowart6867 recasting is basically applying a chunk of money to your principle and distributing the remaining amount and taxes over the course of your remaining mortgage duration.
Ex. in their example, 1 million mortgage for a 30-year fixed rate mortgage at 6% interest means $6k monthly payment without taxes. If they were to save $50k and recast their mortgage , their new monthly payment would be $5700. Recasting with $100k lumpsum would lower monthly payment to $5400. This provides risk protection in case one of them loses their job along the way.
@kanwalshahid5082 thank you. I'm going to do not research on this and consider it
Great breakdown I’d definitely get a cheaper home it’s not realistic to try & sustain 50% of income going to housing . One small bump in the road & the house will be gone
How do 2 adults eat $1000 worth of food? We live in chicago which is HCOL and I average $300 a month for 2 adults and we eat healthy meals and have some treats too. This seems like they must buy everything at Whole Foods and have steak a few times a week.
1. Did they not put anything down for the house!? (Edit: depending on how recently they bought the house, they could've put down 20%..)
2. $14,200*12=$170,400. Over $100,000 are missing from their yearly salaries... Does it all go to taxes and withholdings...?
I’m 28 and single making 1/5 of these guys and have more than them saved 😂
Yea they definetely didn't get the best rate on their mortgage, but when they refi in a year or two and drop that payment down significantly they'll probably feel much better about it. Especially true since prices will likely continue to creep up the next few years, even more so if rates drop
How did they even get approved for that loan? Their mortgage/net income ratio is 56%. They need a much larger down payment or needed to buy a more humble home.
They couldve moved to Loundon county for the same house size at 800k only 30 mins farther
Good grief someone pays for Amazon prime? You know you can do free trials and then cancel before it charges you?
It offers unlimited photo storage. That's why I still have it. All the photos I ever took are stored in amazon photos. Their rates have got so high in the past few years though.
15000 *12=180000
Taxes 📈
Extensive rocket. Money commercial, ugh