Can i afford a $650k house

Contributed 18% of my salary since I started working. Very generous company match + profit sharing. I started working in 2006 so I started contributing when the market was bottoming out.

Since March 2009 to August 2019 the S&P 500 has returned ~291% with divs reinvested. That # is combined with my wife’s also.

For all the hype of low cost index investing a great active manager has killed it since 2009. I stuck with Active and I think I’ve done well.

Not hard. A couple could have $1M in 401k if they maxed and had decent matching during that period.

Yea, but who wants to live in Boston?

You can afford it, but my wife and I make 320,000 per year combined, are 35/34, have no kids, and our upper limit is about 700k.

We tend to move around for work, so we’d be willing to pay more if we were certain we’d be in the city for 10+ years.

Depending on home costs and locational preferences, I’d probably come down 100k to 550 and try to keep both homes (using one for income). But you guys would be fine if you got the home.

Hmmmmmmm wrote:

Both of us are 35

Me: $100k +25% bonus + some other long term incentives that aren’t consistent but could be between $10k and $30k annually

Wife: $85k

No CC debt - pay off monthly

$200k in current home equity

$12k car loan - 2 years remaining

No other debt

800+ credit score

$750k in 401k combined

$120k in mutual funds/stock

$25k in cash

Any other questions I’ll answer.

Can I do it?

New house has annual property taxes of $7,500

Yes, you can afford it.

This is in a Boston suburb inside of 128.

Thank you, now feel like total sh$$ to and that my life is worthless at 33. I’m trying just trying to pay rent, build an emergency fund and save enough money to buy a car. Along with my 401k contribution .If your making that much money, why on earth do you need this site to tell you that as you could easily hire someone .

No you can’t afford this house. Why? Because you are an idiot who had to ask a question you clearly already knew the answer to. Is 58.01 fast for the 1/2 marathon? Lame. Lame. Lame.

Hmmmmmmm wrote:

Both of us are 35

Me: $100k +25% bonus + some other long term incentives that aren’t consistent but could be between $10k and $30k annually

Wife: $85k

No CC debt - pay off monthly

$200k in current home equity

$12k car loan - 2 years remaining

No other debt

800+ credit score

$750k in 401k combined

$120k in mutual funds/stock

$25k in cash

Any other questions I’ll answer.

Can I do it?

New house has annual property taxes of $7,500

This is in a Boston suburb inside of 128.

Dude, if you can afford this what drugs you spending your money on? I have a house of similar value with a salary of 110k and my wife stays at home with the kids. We live within our means, cook at home, stream Hulu rather than have cable, etc. and still have enough to put money into 401k and have about 1k left monthly after bills.

Yes, you can do it but you aint getting that boat.

You absolutely can afford it. Our financial situation five years ago was almost identical; income, debt (home excluded basically none-paid off credit card every month), current home equity.

The ONLY thing i would do different is really check the state of the house. Fixer-upper or turnkey ready. Assume anywhere between $5-10k in additional costs for upkeep regardless-new HVAC, remodeling, landscaping, new roof, tree trimming (we live in a wooded area), etc.

But if you like the house and nabe go for it! You won't regret it.

Calling BS on 401K. Nobody with those salaries could have that much in 401K at that age.

Can you explain why you think you might possibly not be able to afford it? It appears that even the most obnoxiously conservative financial advisor types would put this in your affordable range.

LOL yes easily, except you need to save up a bigger down payment.

With 200k in equity, im assuming that you are talking about a 450k loan. A starter home around me is about 300k. Plenty of people making 50k per year looking at buying a home in that range, with no money down, a higher interest rate and PMI. Your situation doesnt even look like it would be tight with a 450k mortgage

Yes, you can afford it.

But not sure that is the real question.

I am not sure what MA looks like but if you bought that house in New Jersey or New York or IL, it might be worth the same it 10 years. The housing market is already starting to crater in many states that have high earners and high tax loads.

And you are potentially in a tax bracket that will see further tax increases to fund pensions, make up the shortfall for all those leaving for FL or TX so your monthly discretionary income is at risk as well.

Finally, how long will you stay there? Is there potential for moving in next few years? Or losing one of your household positions? Or need to bring in an elderly parent? Real estate transaction costs will eat into any kind of economic scenario more than most people realize.

So perhaps look into renting an equivalent house and keep some liquidity and flexibility.

Or, if you love the house, and dont care about the return on risk adjusted numbers, buy it!

What town inside 95 is this? I'm guessing the schools are crap at this $

Agreed, I am surprised at how many say go for it. It seems like $400-450k would be a more appropriate price range for you to look at given your current income. Just because you can get the loan does not mean that you should.

I calculated $720k at max IRS limit each year plus 5% matching. A 5th grader can do the math.

Sliding Scale wrote:

Agreed, I am surprised at how many say go for it. It seems like $400-450k would be a more appropriate price range for you to look at given your current income. Just because you can get the loan does not mean that you should.

Problem is that there is almost nothing in the greater Boston area at that price range.

(Seriously. Go on Zillow and look.)

I'm curious about Financial Wiz's location, because stuff is expensive in the Northeast (and not just housing prices). My family has $120K/yr income and our $450K house is dragging us down ($10K property tax, insane heating oil bills: $370/month all year round, etc.). We barely break even (or are in the red) most months. And this is living pretty frugally (no car loans, rarely eat out, etc.). Much of New England/New York is just an expensive place to live.

Math wizzer wrote:

I calculated $720k at max IRS limit each year plus 5% matching. A 5th grader can do the math.

Yeah if you assume either a 15% rate of return every year or if OP started at like age 16.