Author Topic: Need advice on saving for house on single income and in HCoL area (if possible)  (Read 757 times)

fruity1337

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I just turned 30 2 weeks ago and made it a goal to save up for a house when I turned this age. I graduated college late at 27. I have around 85k saved (pre market crash/coronavirus... I didn't look at it recently to save myself heartache) for retirement right now and live with my parents. Currently cash poor because I'm finishing up on paying off my debts and had poor spending habits because I spent a lot of time traveling and hobbies. I'm currently selling a lot of hobby item's I'm no longer interested in. I'm cutting all my frivolous spending as of this month. I live in San Diego make 100k, and the average house is 670k. I don't intend to do FIRE, especially in this market.

I'm fortunate to have the safety net of my parents who are wealthy and can afford to have me live at home. 2023 is when I finish the payment to my car that is currently the only debt that I have. I'm only using 2023 as a goal because that is when I'm done paying for my car and I will have no more debts. I don't think I care too much about trying to time a recession.

Breakdown of my current situation:

Category$Notes
Net Take home (Taxes/medical/401k/etc)4290Used to be much lower, but now I only do bare minimum for employer match to get more money for house
Roth IRA-500I pay (max of year)/12 ever month
Car (Standard and Principal)-520Done 03/23
Credit Card (Medical + failed business)-500Done 11/20 No Interest
Show/movie subs-19Hulu + Disney Plus
Groceries-250I also chip in for my family
Eating out-100May adjust this
Gas-100Building up endurance to bike right now
Misc Necessities (paid yearly or every 6 months)-300Amazon/Car Insurance/Car Registration/etc
Entertainment/Fun??-200Not sure what this should be yet

Misc Necessities are just lumped things I don't want to calculate right now like Amazon, Car Insurance, Car Registration, internet, surprise spending like car repairs, etc. After all of this, my real take home is currently 1801. In November, when I am done paying for the credit card debt (I had some surgeries recently... ouch), my real take home will will be ~2301, and my only debt will be the car. I do owe 6.5k in taxes this year due to an error I made, but I have enough in my emergency saving to cover that.

Amazon may or may not be a necessity, but I do use it instead of driving to stores (groceries included). I still see value in being subbed to it because I also do shopping for my family on here and I don't drive to any stores to save gas.

I live in San Diego, and the market is pretty expensive with the average house is currently at 670k. This seems expensive even at a 100k salary. Although I am also able to find decent houses at around 525-560k in the more "out of way of the main jobs areas" such as Santee, La Mesa, and Escondido. I'm making it a goal for myself to make at least 120k next year, either by getting a new job or having a side hustle. Better if I can do both!

I'm hoping that I can do all, if not most of the down payment myself by 2023, however, I'm also wondering if buying a house with a single income is a good idea. And if I intend to buy a house in a few years, should I not put any money into the market and just save in a high yield saving account? Assuming I'm just saving and not investing,with the current table, I can save around 75000 by 2023 (also counting after my credit card debt is done). That's also just a down payment... I haven't included the extra fees, mortgage, and possible repairs and stuff. I'm assuming I can be paying 3100-3300 in mortgage? I intend to have roommates to offset the cost.

I'm fortunate to have the safety net of my wealthy parents, but they've already paid for both the 20% down payment for both my brother and sister, and I don't to be an extra strain on them with down payments. They moved out in their mid 20s while I stayed :(.

TLDR: 100k salary. Average house is 670k here in San Diego. Assuming I live by this chart that I made, I can save around 75000 by 2023. I intend to make more than 100k next year. Is it worth buying a house on a single income if I do intend to live here very long term? Is it a smart choice? What would be a realistic price range for me in San Diego? If you were me, what would you do?

ixtap

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Amazon is not a necessity; that is not debatable. For the vast majority of items, you can get free shipping by waiting a few days.

Why are you taking the average new built home, rather than the overall average for SFH in SD?

Have you considered townhomes or condos? What is it about a SFH that appeals to you? Are you aware that a rent/buy calculator in SD will tell you that renting is better?

Even if you don't intend to FIRE, the general recommendation is to put at least 15% toward retirement. Are your 401k + IRA contributions getting you to that level?


fruity1337

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Amazon is not a necessity; that is not debatable. For the vast majority of items, you can get free shipping by waiting a few days.

Why are you taking the average new built home, rather than the overall average for SFH in SD?

Have you considered townhomes or condos? What is it about a SFH that appeals to you? Are you aware that a rent/buy calculator in SD will tell you that renting is better?

Even if you don't intend to FIRE, the general recommendation is to put at least 15% toward retirement. Are your 401k + IRA contributions getting you to that level?

Thanks for the response. I've been having second thoughts about Amazon now for the past day since shipping times are insane now. I'm not opposed to getting a town home or even a condo provided that I have my own garage for a small woodworking area. I prefer an SFH since I would like to have a garden.

My 401k alone before 2 weeks ago was set to 20%. I've since dropped it down to 10% to get some extra cash hoping that I could save up for a house in the next few years. I also max out my ROTH IRA yearly.

I'm also just not sure how to approach this. I know SFH is pretty damn expensive and I want to keep it real. Is it better for me to just do a "progression" of some sort? IE: I'll start off with a townhouse, and then move to a bigger house when I make more money? Sorry for dumb questions I'm still trying to learn.

Hirondelle

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1. Why do you need an 'average' house? You're 1 person. You don't need an average house. Just get something small, either buy or rent depending on what's best.

2. You have 3 more years of car payments of $520/month. That sounds like either an incredibly expensive car or a really bad interest rate. Can you get rid of the car and get a cheap 2nd hand car (<$10k) without debt as a replacement? As you state that you're working on endurance to bike, would this be for your commute? If you can manage that, you can even ditch the car completely and go car-free for a while (that doesn't mean it's a long-term decision, but you can go car-free for several months until you need a car regularly again).

fruity1337

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1. Why do you need an 'average' house? You're 1 person. You don't need an average house. Just get something small, either buy or rent depending on what's best.

2. You have 3 more years of car payments of $520/month. That sounds like either an incredibly expensive car or a really bad interest rate. Can you get rid of the car and get a cheap 2nd hand car (<$10k) without debt as a replacement? As you state that you're working on endurance to bike, would this be for your commute? If you can manage that, you can even ditch the car completely and go car-free for a while (that doesn't mean it's a long-term decision, but you can go car-free for several months until you need a car regularly again).

1. I guess I probably don't need an 'average' house. My line of thinking is since I intend to live here basically forever, I might as well? I could possible raise a family here in the future. Maybe its a bad way of thinking. I'm not renting anything right now because my job is 15 mins away from my parent's house so I feel it would be dumb to rent.

2. It was an expensive car (~30k) and I kind of regret it and I kind of don't. At this point, I just use it to transport wood. I had bad luck with 2nd hand cars so I thought maybe I should buy new and I guess I fell for that. I am actually considering selling the car if I can get my endurance up. And yeah the bike is going to be for commuting.

Askel

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My take: It would be absolutely bonkers to spend $500k+ on a house with an income of $120k. 

But then again, I live in the midwest. We tell stories about west coast real estate prices to scare children when they are misbehaving

ixtap

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My take: It would be absolutely bonkers to spend $500k+ on a house with an income of $120k. 

But then again, I live in the midwest. We tell stories about west coast real estate prices to scare children when they are misbehaving

I live in San Diego with about twice that income and don't understand why people fall for it. But hey, it leaves a few more options for the rest of us.

fruity1337

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My take: It would be absolutely bonkers to spend $500k+ on a house with an income of $120k. 

But then again, I live in the midwest. We tell stories about west coast real estate prices to scare children when they are misbehaving

I live in San Diego with about twice that income and don't understand why people fall for it. But hey, it leaves a few more options for the rest of us.

Haha it's a small nightmare for me. I've even just considered maybe I should just live with my parents forever. I don't think the rental life is for me yet since... well I live close to work and they don't bother me... But it would be nice to have my own place... At this point I don't know what to do with my money if I'm not saving for a house. I guess I could invest? And retire early while living with parents? Not sure if that's ideal. I'm probably just lost right now

ixtap

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My take: It would be absolutely bonkers to spend $500k+ on a house with an income of $120k. 

But then again, I live in the midwest. We tell stories about west coast real estate prices to scare children when they are misbehaving

I live in San Diego with about twice that income and don't understand why people fall for it. But hey, it leaves a few more options for the rest of us.

Haha it's a small nightmare for me. I've even just considered maybe I should just live with my parents forever. I don't think the rental life is for me yet since... well I live close to work and they don't bother me... But it would be nice to have my own place... At this point I don't know what to do with my money if I'm not saving for a house. I guess I could invest? And retire early while living with parents? Not sure if that's ideal. I'm probably just lost right now

When we first got to the point where we were earning more than we were spending, we grasped at any straw to justify saving it. We were going to add an amazing back yard swimming pool to DH's house (the only way he could convince me to give up my condo), then we were going to buy a brand new 40+ sailboat. In the end, we moved to SD, bought an old sailboat, lived on it for several years, and started dreaming about when we would get to sail it around the world.

BTW, if you can handle the commute, living on a boat is a great option in SD!

If you are happy living with your parents, up your 401k contributions and look into mega backdoor Roth. Leave your money sit while you contemplate your options. That is what being a person of independent means really buys you: options. Maybe that will end up being a SFH in Southern California, or maybe it will be something you haven't even contemplated yet.

fruity1337

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My take: It would be absolutely bonkers to spend $500k+ on a house with an income of $120k. 

But then again, I live in the midwest. We tell stories about west coast real estate prices to scare children when they are misbehaving

I live in San Diego with about twice that income and don't understand why people fall for it. But hey, it leaves a few more options for the rest of us.

Haha it's a small nightmare for me. I've even just considered maybe I should just live with my parents forever. I don't think the rental life is for me yet since... well I live close to work and they don't bother me... But it would be nice to have my own place... At this point I don't know what to do with my money if I'm not saving for a house. I guess I could invest? And retire early while living with parents? Not sure if that's ideal. I'm probably just lost right now

When we first got to the point where we were earning more than we were spending, we grasped at any straw to justify saving it. We were going to add an amazing back yard swimming pool to DH's house (the only way he could convince me to give up my condo), then we were going to buy a brand new 40+ sailboat. In the end, we moved to SD, bought an old sailboat, lived on it for several years, and started dreaming about when we would get to sail it around the world.

BTW, if you can handle the commute, living on a boat is a great option in SD!

If you are happy living with your parents, up your 401k contributions and look into mega backdoor Roth. Leave your money sit while you contemplate your options. That is what being a person of independent means really buys you: options. Maybe that will end up being a SFH in Southern California, or maybe it will be something you haven't even contemplated yet.

I'll have to look at that mega backdoor Roth. But yeah this is my main issue, and why I've spent frivolously the past couple years. The house goal seemed impossible so I might as well just spend without care. But now that I care, I don't know what to save up for (other than retirement) other than a house. And that seems tough in this market. What I do know is that I intend to stay in San Diego for a very long time.

I'll be researching other options. I've been maxing out my 401k (my contributions) and Roth IRA yearly. I stopped maxing out my 401k 2 weeks ago, but we'll see where I head. I need to do more research.

Askel

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Haha it's a small nightmare for me. I've even just considered maybe I should just live with my parents forever. I don't think the rental life is for me yet since... well I live close to work and they don't bother me... But it would be nice to have my own place... At this point I don't know what to do with my money if I'm not saving for a house. I guess I could invest? And retire early while living with parents? Not sure if that's ideal. I'm probably just lost right now

Are you willing to move? 

Home ownership can be a lot of fun and very rewarding, but I don't think it would be either paying those kinds of prices. 

Maybe live on the cheap with folks for a few years and build a good 'stache and then move someplace else?  Take a look at what $670k would buy in my neck of the woods: http://www.joshsteinland.com/search.php?featured=1&sort=1

ixtap

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Haha it's a small nightmare for me. I've even just considered maybe I should just live with my parents forever. I don't think the rental life is for me yet since... well I live close to work and they don't bother me... But it would be nice to have my own place... At this point I don't know what to do with my money if I'm not saving for a house. I guess I could invest? And retire early while living with parents? Not sure if that's ideal. I'm probably just lost right now

Are you willing to move? 

Home ownership can be a lot of fun and very rewarding, but I don't think it would be either paying those kinds of prices. 

Maybe live on the cheap with folks for a few years and build a good 'stache and then move someplace else?  Take a look at what $670k would buy in my neck of the woods: http://www.joshsteinland.com/search.php?featured=1&sort=1

There is snow on the roof of the first one in the glamour shot!

We call it the sunshine tax for a reason.

fruity1337

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Haha it's a small nightmare for me. I've even just considered maybe I should just live with my parents forever. I don't think the rental life is for me yet since... well I live close to work and they don't bother me... But it would be nice to have my own place... At this point I don't know what to do with my money if I'm not saving for a house. I guess I could invest? And retire early while living with parents? Not sure if that's ideal. I'm probably just lost right now

Are you willing to move? 

Home ownership can be a lot of fun and very rewarding, but I don't think it would be either paying those kinds of prices. 

Maybe live on the cheap with folks for a few years and build a good 'stache and then move someplace else?  Take a look at what $670k would buy in my neck of the woods: http://www.joshsteinland.com/search.php?featured=1&sort=1

I have no idea if I'm willing to move. I've had many opportunities, but chose to stay. Snow is evil to me! It has crossed my mind to save for like 10 years and then buy a house somewhere cheaper, but I don't wanna leave... ugh...

former player

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If you want to stay in San Diego, don't move away just because houses are cheaper somewhere else, it will not make you happy.

You are someone who wants a woodworking area in your home.  That suggests to me that you could start looking for something much cheaper than an average SFH in the suburbs, because you could work on it yourself.  You could even buy something completely uninhabitable because you have your parents' home to live in as needed.  So I think you need to get creative and look not at "houses" but at "property" or even "land" to try to find something offbeat that you can turn into your home.  I used to live in London, with sky-high property prices, and the most unpromising situations, such as plots 12 feet wide or houses with tenants that had the right to stay in one room for life, have been turned into homes.  Look at property listings, starting with the cheapest.  Walk round areas of the city that might be suitable and look for possible plots to build on or unpromising buildings to covert.  Hustle your desire for a home rather than buying off the shelf.

Laura33

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First:  If saving for a home is what motivates you to save, then save for a home. 

Second:  Slow down.  You say you have had a goal of owning a home by 30.  When did you come up with that idea?  22?  Then you spent the next however many years living a lifestyle that was inconsistent with that goal.  That's ok; we all do things we regret.  But the result is that you are actually further away from that goal now than you were at 22, because you borrowed from your future to pay for present consumption.*  So the first thing to do is get back to zero.  Get the CC paid off ASAP.  Pay off the car loan -- either by selling it and downsizing the vehicle, or by cutting elsewhere to speed up the payoff.  This is where you really evaluate what is the right balance for you between current lifestyle and future goals, i.e., how much are you willing to cut your lifestyle to have that house?

When you are back at zero, now you can really start building toward the house goal.  But you need a reasonable timeframe.  If you came up with this idea at 22, you had 8 years to earn and save and prepare; it's therefore not reasonable to expect that you can get there now in 3 years, even once you get back to zero.  What is reasonable?  Well, this is where that lifestyle choice comes in.  The first thing you need to figure out is how much you are willing to pay toward a house every month -- including not just mortgage, but taxes, insurance, utilities, maintenance, etc.  You can find some estimators for properties in your area to give you a handle on some of that.  Take that total and subtract out everything but mortgage to figure out the monthly mortgage payment you can afford.  Then use some calculators to tell you how much house that will buy you.  Note:  that number is going to be much less than the average SD home!  But that's ok.  Now you do some more analysis and make some more tradeoffs.  Are you willing to live in a condo or townhouse?  If so, what do those cost?  Are you willing to save longer?  Because even if you can only afford a $100K mortgage and homes cost $600K, you can still get there if you save up $500K as a downpayment.  Start doing that work and figuring out what those tradeoffs will be. 

Example:  Maybe you decide you're willing to buy a townhouse, and the ones you like are running around $400K.  And maybe your financial analysis says that you can afford a $300K house.  So the answer is that you need to save $100K for a downpayment (plus closing costs, moving expenses, wow-the-house-doesn't-have-any-drapes fund, etc., of course).  Now you look at your current income and expenses and the lifestyle you want to lead.  How much does that leave left over for the house?  That will tell you how long it will take you to save the $100K you need to afford the house.

One note:  all of my analysis assumes that you continue to max out your 401(k).  That is non-negotiable.  You have already learned the dangers of funding current consumption by borrowing against your future earnings -- that's exactly why you're in this situation.  So you need to flip the switch on that and start prioritizing saving for future you, so that you don't have to worry about your future financial stability.  So max that 401(k) back out.  If you need to to balance your goals, drop the Roth -- you will have more money in your pocket now if you put your investments into a traditional 401(k) that gets you the immediate tax deduction.

This is really, really, really important, because the money you are putting away in that 401(k) now is the very money that is going to give you the greatest return.  If you get around a 7% average return, your money will double every decade.  That means that if you put $20K toward your retirement today in 401(k)/Roth, by the time you're 70, you'll have $40K at 40, $80K at 50, $160K at 60, and $320K at 70.  OTOH, if you save for the house first and cut the retirement savings for a decade until you have all that figured out, by the time you're 70, you'll have only half as much, because you miss an entire doubling. 

And that is why maxing retirement now gives you the most flexibility.  It may well be that if you really focus on maximizing retirement investments now and buy only the (town)house that you can afford while still maxing out your 401(k), then 10 years from now when you decide you really want that $650K house, you will have enough in retirement accounts to cover you in the future, so you can cut back on savings and take on a bigger mortgage.  OTOH, if you do it the other way and throw that money at a house now instead of putting it in your retirement accounts, you're going to need to keep your retirement contributions maxed out for a long time in the future, and the only way you'd have money to afford the upgrade to that $650K house is if the market for your @$400K townhome went crazy while the market for more expensive homes stayed flat, so that now you can upgrade for very little difference.  And that's not a good bet.

One final thought:  buy what you need, not what you think you might need at some undefined point in the future.  Bigger homes come with bigger mortgages and bigger carrying costs, all of which take away from other things you could be doing.  There's no sense buying a big house because you might get married or have kids and find you need that space 10 years in the future; even if all that happens, who's to say your spouse would even want to live in the same house, or indeed that you want the same house once you are looking through the eyes of a parent?  Don't inflate your lifestyle and expenses before you actually need to to live the kind of life you want.

*I am ignoring the retirement accounts for these purposes -- you've done well there, and I'm not trying to minimize that.  But IMO that is an untouchable area that should be ignored for purposes of figuring out the lifestyle you can afford.

fruity1337

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First:  If saving for a home is what motivates you to save, then save for a home. 

Second:  Slow down.  You say you have had a goal of owning a home by 30.  When did you come up with that idea?  22?  Then you spent the next however many years living a lifestyle that was inconsistent with that goal.  That's ok; we all do things we regret.  But the result is that you are actually further away from that goal now than you were at 22, because you borrowed from your future to pay for present consumption.*  So the first thing to do is get back to zero.  Get the CC paid off ASAP.  Pay off the car loan -- either by selling it and downsizing the vehicle, or by cutting elsewhere to speed up the payoff.  This is where you really evaluate what is the right balance for you between current lifestyle and future goals, i.e., how much are you willing to cut your lifestyle to have that house?

When you are back at zero, now you can really start building toward the house goal.  But you need a reasonable timeframe.  If you came up with this idea at 22, you had 8 years to earn and save and prepare; it's therefore not reasonable to expect that you can get there now in 3 years, even once you get back to zero.  What is reasonable?  Well, this is where that lifestyle choice comes in.  The first thing you need to figure out is how much you are willing to pay toward a house every month -- including not just mortgage, but taxes, insurance, utilities, maintenance, etc.  You can find some estimators for properties in your area to give you a handle on some of that.  Take that total and subtract out everything but mortgage to figure out the monthly mortgage payment you can afford.  Then use some calculators to tell you how much house that will buy you.  Note:  that number is going to be much less than the average SD home!  But that's ok.  Now you do some more analysis and make some more tradeoffs.  Are you willing to live in a condo or townhouse?  If so, what do those cost?  Are you willing to save longer?  Because even if you can only afford a $100K mortgage and homes cost $600K, you can still get there if you save up $500K as a downpayment.  Start doing that work and figuring out what those tradeoffs will be. 

Example:  Maybe you decide you're willing to buy a townhouse, and the ones you like are running around $400K.  And maybe your financial analysis says that you can afford a $300K house.  So the answer is that you need to save $100K for a downpayment (plus closing costs, moving expenses, wow-the-house-doesn't-have-any-drapes fund, etc., of course).  Now you look at your current income and expenses and the lifestyle you want to lead.  How much does that leave left over for the house?  That will tell you how long it will take you to save the $100K you need to afford the house.

One note:  all of my analysis assumes that you continue to max out your 401(k).  That is non-negotiable.  You have already learned the dangers of funding current consumption by borrowing against your future earnings -- that's exactly why you're in this situation.  So you need to flip the switch on that and start prioritizing saving for future you, so that you don't have to worry about your future financial stability.  So max that 401(k) back out.  If you need to to balance your goals, drop the Roth -- you will have more money in your pocket now if you put your investments into a traditional 401(k) that gets you the immediate tax deduction.

This is really, really, really important, because the money you are putting away in that 401(k) now is the very money that is going to give you the greatest return.  If you get around a 7% average return, your money will double every decade.  That means that if you put $20K toward your retirement today in 401(k)/Roth, by the time you're 70, you'll have $40K at 40, $80K at 50, $160K at 60, and $320K at 70.  OTOH, if you save for the house first and cut the retirement savings for a decade until you have all that figured out, by the time you're 70, you'll have only half as much, because you miss an entire doubling. 

And that is why maxing retirement now gives you the most flexibility.  It may well be that if you really focus on maximizing retirement investments now and buy only the (town)house that you can afford while still maxing out your 401(k), then 10 years from now when you decide you really want that $650K house, you will have enough in retirement accounts to cover you in the future, so you can cut back on savings and take on a bigger mortgage.  OTOH, if you do it the other way and throw that money at a house now instead of putting it in your retirement accounts, you're going to need to keep your retirement contributions maxed out for a long time in the future, and the only way you'd have money to afford the upgrade to that $650K house is if the market for your @$400K townhome went crazy while the market for more expensive homes stayed flat, so that now you can upgrade for very little difference.  And that's not a good bet.

One final thought:  buy what you need, not what you think you might need at some undefined point in the future.  Bigger homes come with bigger mortgages and bigger carrying costs, all of which take away from other things you could be doing.  There's no sense buying a big house because you might get married or have kids and find you need that space 10 years in the future; even if all that happens, who's to say your spouse would even want to live in the same house, or indeed that you want the same house once you are looking through the eyes of a parent?  Don't inflate your lifestyle and expenses before you actually need to to live the kind of life you want.

*I am ignoring the retirement accounts for these purposes -- you've done well there, and I'm not trying to minimize that.  But IMO that is an untouchable area that should be ignored for purposes of figuring out the lifestyle you can afford.

Thanks for the tips. Sorry if I was unclear about home ownership at 30, that wasn't really on my mind until now, that's more of a recent goal. As of last month I had a goal for home ownership at 2023 (so when I'm 33). I've been maxing out my retirement accounts to get the whole 401k and Roth IRA max for 3 years now and then dropped my 401k contributions in half to fund for this. I've just readjusted it back to my original plan of maxing it out at least until I can come of with some kind of strategy. You've parroted a lot of what my parent's have said last night. They told me to just keep my 401k at max especially since I'm at home.

I see what you mean about buying a bigger house though. I'm also now looking at smaller houses and will be keeping track of the market for the next few years. I've pretty much gotten exhausted of my previous lifestyle with the constant spending and moving around, so I'm willing to cut a large chunk of that lifestyle haha. I've just been working on a couple of side hustles, and that's my hobby now I guess. It occupies my time enough that I don't really go out to spend money. My woodworking has been self sustaining lately in that I can use that money to fund for tools if I need to. But I've been looking at small workshop spaces so I think a townhouse or condo could be doable with some creative layouts. According to basic calculators, with my income of $100,000, and $60,000 down, I could afford a house around $440,000. That's gonna be tough times ahead here haha. Although I have a good feeling I'll make 120,000 by next year + hope to generate income with 2 side hustles.

FatFI2025

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  • Location: California
I definitely think you can afford a home in SD on $120K salary with your current debt load. A few things to think about:

1) Your description of your cash flow/budget is a bit, uh, not-so-precise. It sounds like you're just getting your financial house in order, so using an online tool like Mint or Personal Capital could help you out.
2) It looks like you plan to put 10% down on a $650K house + closing costs. I think 10% is reasonable. But I'd definitely consider something in the range of $350K -- maybe a condo or a less desirable neighborhood. Until you're ultra high net worth, you're going to have to compromise on housing -- it's just a reality. I know from experience it can be hard stepping down from wealthy parent lifestyles, but over time you can work your way up the housing ladder from entry level and hopefully that experience will be rewarding for you.
3) Along the same line as #2, you should be maxing your 401K and saving on top for the property. You need to maintain a balanced financial plan. I'd turn back on max 401K contributions, but switch to traditional versus Roth in your case.

fruity1337

  • 5 O'Clock Shadow
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  • Posts: 8
I definitely think you can afford a home in SD on $120K salary with your current debt load. A few things to think about:

1) Your description of your cash flow/budget is a bit, uh, not-so-precise. It sounds like you're just getting your financial house in order, so using an online tool like Mint or Personal Capital could help you out.
2) It looks like you plan to put 10% down on a $650K house + closing costs. I think 10% is reasonable. But I'd definitely consider something in the range of $350K -- maybe a condo or a less desirable neighborhood. Until you're ultra high net worth, you're going to have to compromise on housing -- it's just a reality. I know from experience it can be hard stepping down from wealthy parent lifestyles, but over time you can work your way up the housing ladder from entry level and hopefully that experience will be rewarding for you.
3) Along the same line as #2, you should be maxing your 401K and saving on top for the property. You need to maintain a balanced financial plan. I'd turn back on max 401K contributions, but switch to traditional versus Roth in your case.

Yeah my cash flow isn't precise right now. Its napkin math. I'm building up a spreadsheet. I wasn't necessary looking at $650K homes, but I just wanted to mention the average in the area. I was looking more on the lines of 550K in a "lower end" area. Although after talking to many people, it seems this may not be a smart idea, and I will indeed have to go for a condo as a first house. That seems to be what most people are saying and I think I can find a decent one around that $350K price range. I've decided to max out my 401k again and will be redoing more math to get a better feel of what I can really afford and still live comfortable. I gotta find a get rich quick scheme :).