Just bought my first house... a McMansion -- critique my justification

[Lifestyle Deflation]

I'm 30 years old, about a year into Mustachianism. Over the past year I saved more than I had combined over the other 8 years of my career.

I've been renting for my whole career, and since I am getting married and planning on starting a family I decided I needed to buy a house. My fiancee and I have always been city dwellers, but in the interest of our future kids we went looking for houses in the nicest close-in suburbs, with the top school districts in the state.

We eventually found a great house, huge and recently updated, the best school systems, etc. We pounced on it and are contracted to pay $545,000 for this house. That price may not be huge in some cities, but in the Atlanta area it is hefty.

So, definitely not a Mustachian decision. I make around ~183,000/year and my fiancee makes $80,000 so we can afford it, but it will certainly put a dent in our early retirement dreams. From my spreadsheet, my retirement went from age 40 to age 47 by buying this house instead of a more modest one.

But, if you consider education, there's some unquantifiable value in having your kids in the best public schools vs mediocre quality schools. I hope, anyway. Maybe I'm just rationalizing because I have my own McMansion.

[MDM]

I hope it works out for you as well as you envision.

From the OP it seems you have at least 7 years before your first child would enter first grade.  Much can and will happen in that time, so if you change your mind you may be able to recover some of those years to FI and get to spend them with your kids. 

There's unquantifiable value in that also.  As both are unquantifiable, it is difficult to say whether "better schools" or "more active parenting" is more beneficial - likely would depends on how good the active parenting is, and just how much better/worse the school vs. alternatives.

[iamlindoro]

Heh, OP, sort of an ironic user name given this thread.

Anyway, you're right, this is a pretty unmustachian decision.  You just nearly doubles your FIRE time in one fell single swoop. Since you mention planning on starting a family, I assume nobody is pregnant yet.  Let's assume that you and your SO got pregnant tomorrow, which means you have almost 8 years minimum until schools matter-- you would have been 2 years away from retirement, at which point you could easily home school, move somewhere with a much lower cost of living but equivalent schools, etc.  Also, correct me if I'm wrong, but there are currently two of you, right?  What's the point of the huge house?  You'll be paying for a bunch of space you're not using.  How huge are we talking here?

I'm trying to avoid critiquing lifestyle decisions rather than financial ones, but this just seems like so many financial negatives weighed against negligible (or even imagined) positives.

To give an alternative response to a similar situation, me and my SO are probably about the same amount of time away from having kids and those kids entering school-- So I'm using that as motivation to step up my game and reel FIRE in from 10 to 6-7 years.  My goal is to be done, and to be ready to do some amount of homeschooling, and schooling abroad in a variety of places.  FIRE will give me a chance to raise my kids as citizens of the whole world, and that actually makes me more excited about having them.

Anyway, I know travel, homeschooling, etc. are not for everyone-- but almost doubling my RE time to have a huge house that I don't even currently need... yikes.

[Lifestyle Deflation]

Heh, OP, sort of an ironic user name given this thread.

Anyway, you're right, this is a pretty unmustachian decision.  You just nearly doubles your FIRE time in one fell single swoop. Since you mention planning on starting a family, I assume nobody is pregnant yet.  Let's assume that you and your SO got pregnant tomorrow, which means you have almost 8 years minimum until schools matter-- you would have been 2 years away from retirement, at which point you could easily home school, move somewhere with a much lower cost of living but equivalent schools, etc.  Also, correct me if I'm wrong, but there are currently two of you, right?  What's the point of the huge house?  You'll be paying for a bunch of space you're not using.  How huge are we talking here?

I'm trying to avoid critiquing lifestyle decisions rather than financial ones, but this just seems like so many financial negatives weighed against negligible (or even imagined) positives.

To give an alternative response to a similar situation, me and my SO are probably about the same amount of time away from having kids and those kids entering school-- So I'm using that as motivation to step up my game and reel FIRE in from 10 to 6-7 years.  My goal is to be done, and to be ready to do some amount of homeschooling, and schooling abroad in a variety of places.  FIRE will give me a chance to raise my kids as citizens of the whole world, and that actually makes me more excited about having them.

Anyway, I know travel, homeschooling, etc. are not for everyone-- but almost doubling my RE time to have a huge house that I don't even currently need... yikes.

Yeah, we're going from apartment living to a 4 bedroom (really 6 bedroom-- bonus room + basement bedroom) house. It has WAY more space than we need today as a couple, but it'll fill our needs once we do have kids. I'm not looking at this house for my 2015 needs, I'm looking at it for my 2030 needs.

I was actually homeschooled for a time in my childhood. While academically and intellectually I was fine, the socialization aspects of homeschooling are not something I'd ever want my kids to have to go through. I missed out on a LOT during some key years.

Something I value a lot is having my kids go through school with the same classmates and friends from childhood to adolescence, which is why I picked the high-priced suburb.

[Taran Wanderer]

You seem to be looking for facepunches.  You are just rationalizing because you have your own McMansion.  You will soon realize that while you can afford the payment, a $400,000+ debt actually takes a long time to pay off.  Before then, you will realize that now that you have this six bedroom behemoth, you have to pay tens of thousands of dollars to furnish it.  And you're in the suburbs, so welcome to commuting.  And because you can now shop at Costco, you will need to buy a bigger SUV to haul all that stuff to your monstrosity.

Now if nearly doubling your time to FIRE seems like a worthwhile trade for all this obligation, then congratulations.  But I give you 24 months until you realize you could have gone smaller. But good luck talking your wife or yourself into downsizing then....

[Lifestyle Deflation]

You seem to be looking for facepunches.  You are just rationalizing because you have your own McMansion.  You will soon realize that while you can afford the payment, a $400,000+ debt actually takes a long time to pay off.  Before then, you will realize that now that you have this six bedroom behemoth, you have to pay tens of thousands of dollars to furnish it.  And you're in the suburbs, so welcome to commuting.  And because you can now shop at Costco, you will need to buy a bigger SUV to haul all that stuff to your monstrosity.

Now if nearly doubling your time to FIRE seems like a worthwhile trade for all this obligation, then congratulations.  But I give you 24 months until you realize you could have gone smaller. But good luck talking your wife or yourself into downsizing then....

I am looking for facepunches... my rationalizations are:

Commuting: I work from home, so little to no impact there. My fiancee actually gets a shorter commute since her job is based in the burbs.
Costco: We've shopped at Costco for years. The idea of being able to store 5 years worth of paper towels, toilet paper, dishwasher, laundry, etc. -- That's one of the exciting reasons we're buying a house!

Doubling time to FIRE: this is the rub. I've avoided putting the value of the house into my calculations. But, if it isn't a total disaster we should be OK. The opportunity cost of a lower-priced house? Don't want to think about it, but the lower-priced places we looked at either needed a lot of work, or were in bad school districts.

Hard to justify this decision 100% financially, but hopefully itll turn out to be a net positive to our lives.

[cakie]

Why don't you rent some parts of it to others? At least until the kids are actually here? You will use *maybe* half the house (even with a big home office), but you will still have to maintain the spaces you never use. Plus, it's easy to accumulate too much stuff when there is lots of open space to be filled!

[Miss Prim]

You definitely make enough money to buy a big house, but have you thought about all the money you are paying to heat all of that space and the big tax bill and insurance bill connected to it?  Also factor in the time it takes to clean all of that space or hire someone to do it.  Lots of wasted time and/or money taking care of it. 

My husband and I built a 2250 sf house when our kids were 11 and 7.  We built it with the idea that we would not put anything in it that was wasted space or 2 story ceilings that are hard to heat.  Was it bigger than what we needed, yes.  But we did use every square inch  of the house and finished the walk out basement for another 1100 sf, but now that our kids are grown and gone, we rent out the basement apartment for more income.  If we downsized now, we would actually lose money because we also rent pole barn space for storage.  So we stay here and grow our own food (4 acres),can and raise chickens (meat and layers). 

You can justify your purchase all you want, it is ultimately you that will decide if it was wise or not.

                                                                          Miss Prim

Also, we bought in one of the highest ranked school system in Michigan.  I really don't think my kids got a better education than anywhere else.  In fact, there were more drugs and dysfunctional families here than the blue collar town we came from!

[CupcakeGuru]

I too live in the suburbs of Atlanta (North Fulton). One of the top school districts. While we are surrounded by 400-1M+ houses, there are sbudivisions with WAY cheaper houses. We live in a 4 bedroom,3 bath, bonus room and basement in a swim/tennis neighborhood with house prices from 285 to 350. There are even smaller neighborhoods in the 200 to 250 range. You can justify all you want, but you can find something way more mustacian. Another benefit, is that we dont have to deal (as much) with the lifestyle creep if we lived in a more expensive neighborhood and trying to keep up with the Joneses!

[WynnDuffy73]

All I can say is don't be afraid to change your mind and sell it.  I'm in my early forties and I'm now racing to get my mortgage paid off.  That $545,000 is a lot of money to pay off.   Have you looked at what you will pay including interest over the life of that loan?   Throw in real estate taxes and and its got to be 7 figures!

[TheNewNormal2015]

some ppl actually want to live in a nice house in a nice area (imagine that); others are into aesthetics and the environment in which they spend time (both work and home) is very important to their well being; it is of course consumption but it's no different than splurging on travel

the OP makes a pretty high income for that area so may be a professional of some sort - perhaps reputation and standing in the community is a consideration as well

lastly, for those who have children, knowing that you have done your best in providing a nurturing environment for progeny is a worthwhile end in itself

[kpd905]

If you sell the house and get a smaller place when the kids are out, does that change your time to retirement at all?  Or is that too far past the point of retiring to matter much?

I know I would grow to resent the house if I knew I was getting up early and going to work every day for 7 extra years just to live in it.

[GeorgiaCPA]

There is value in owning a home in a good school district, especially in Georgia.  However, that is only a benefit if you have kids that attend schools.  Imagine instead you purchased a home for $300,000, instead of $545,000.  The monthly carrying costs would be at least $1,000 less given lower mortgage payments, taxes, insurance and utilities.  When you do have kids, that difference should cover tuition for at least 1 child at a private school.  Since you are probably at least 7 years out from that, the opportunity cost is $84,000 that won't be contributed to your retirement fund ($105K at 6% over 7 years).

My guess is that the impact will be a bit more than 7 years once you begin to understand the true cost of ownership.  As kpd noted, is the house worth 7 additional years of unnecessary work?  Only you can answer that.

[MandyM]

Costco: We've shopped at Costco for years. The idea of being able to store 5 years worth of paper towels, toilet paper, dishwasher, laundry, etc. -- That's one of the exciting reasons we're buying a house!

... The opportunity cost of a lower-priced house? Don't want to think about it, but the lower-priced places we looked at either needed a lot of work, or were in bad school districts.

First off, I'm not sure what you are looking for here. You have already made you decision, you really only need to justify it to yourself and your fiance.

To comment on what you wrote above - really? one of the justifications you think is worthwhile is the ability to store 5 years of paper goods and cleaning supplies? I realize there may be some savings in bulk, timed buying, but buying a house to fill a bedroom or too with Costco purchases is silly. I realize this isn't your primary motivator, but when you list this type of thing you sound like you are grasping at straws.

Lastly, your "don't want to think about" opportunity costs comment is your most telling of all. You are trying to justify a financial decision and yet you refuse to weigh any of the financial aspects. Maybe there is unquantifiable value that you are using to justify it all, but what things have you quantified? I can think of a dozen things that I would be considering before I shelled out that kind of money for a monster house like that. 

[odput]

Having done something like this in the past, I can offer you one big piece of advice regarding the quote below:

Plus, it's easy to accumulate too much stuff when there is lots of open space to be filled!

If you are truly here for your future children, keep the extra bedrooms completely empty and keep the doors closed at all times.  Enter them maybe once a month to sweep up and dust, and resist the urge to say "this would look nice in here."  Ditto for the basement/bonus room.  Find which parts of the house you use regularly, and keep the rest empty for your children to fill, otherwise, when they come, you will wind up saying something like "there's not enough room for us here."

Also, we ended up selling our too big house before we had children due to a job opportunity that had us moving across the state, so I guess grain of salt disclaimer goes with that advice, but keep in mind a lot of unexpected things can happen when you are buying a house with a 20 year time horizon.  Hope it works out for you.

[libertarian4321]

But, if you consider education, there's some unquantifiable value in having your kids in the best public schools vs mediocre quality schools. I hope, anyway. Maybe I'm just rationalizing because I have my own McMansion.

I think this is a bit of a canard.

Sure, you don't want your kids going to some dangerous ghetto school where they have to worry more about survival than learning, but you don't need to buy a home in an "upscale" area to avoid that.  The reason average kids who go to "upscale" schools, on average, do better than average kids in a more middle class neighborhood is because they self select for higher performance.  The top kids at that "middle class" school will do far better than most of the kids at the upscale school.

Plus, you aren't even married yet, and future kids (if you ever have them) won't be needing school for years.  What's the rush to go "good school searching" at this point?

Aside from the initial costs, you'll find that owning a large home also costs a heck of a lot more in maintenance, utilities, and taxes.  To say nothing of having to buy stuff to fill up all those rooms.

You may find, in a few years, that you wish you had bought "less house," because home ownership can be a PITA.

[Yankuba]

Let's say he could have gotten something less opulent for $350k. So he spent an extra $200k which is about $6k in extra interest payments per year after tax. Maybe an additional $2k in property taxes. So this luxury home costs about $10k more per year than something more reasonable. Their income is $260k which means they are probably saving six figures per year. I don't think this purchase is unreasonable - nor do I think it is that detrimental to FIRE based on what they are earning/saving. My two bedroom co-op is worth $450k - I would love to be able to buy this McMansion for $550k!

[ender]

I at least hope you have a big enough down payment that you have some equity. It would be rather heartbreaking if for whatever reason you want to move/sell it and can't because you bought it with 0-5% down and suddenly are underwater on your mortgage.

Given a $550k purchase value, this doesn't take much swing in the market either...

[marketnonsenses]

Let's say he could have gotten something less opulent for $350k. So he spent an extra $200k which is about $6k in extra interest payments per year after tax. Maybe an additional $2k in property taxes. So this luxury home costs about $10k more per year than something more reasonable. Their income is $260k which means they are probably saving six figures per year. I don't think this purchase is unreasonable - nor do I think it is that detrimental to FIRE based on what they are earning/saving. My two bedroom co-op is worth $450k - I would love to be able to buy this McMansion for $550k!

I came to say the same thing. Also, nice homes are important to some people. I view homes and other material things very different. Having a nice house in a area I like brings me more value than most things. Ive tried both approaches and nice house in a nice area brings a quality of life that is worth a couple years of working, for me.

[KBecks2]

Congrats on your great savings and your new home purchase. 

You have a  high income and that is awesome.  I will assume you have no other debt than your mortgage?   That is good.

Don't get crazy with the cars and furniture and such and you will probably do fine.   Be careful about your spending on things like you know, curtains, and all the stuff that goes with a house. 

Make a plan to pay off your home early (or keep your savings rate high).  Also beware of spendy neighbors, the Jonses you do not want to keep up with.

Enjoy your home. 

P.S.  I hope you mow your own lawn, and not with an schmany riding lawnmower!

[Sid888]

I'm 30 years old, about a year into Mustachianism. Over the past year I saved more than I had combined over the other 8 years of my career.

I've been renting for my whole career, and since I am getting married and planning on starting a family I decided I needed to buy a house. My fiancee and I have always been city dwellers, but in the interest of our future kids we went looking for houses in the nicest close-in suburbs, with the top school districts in the state.

We eventually found a great house, huge and recently updated, the best school systems, etc. We pounced on it and are contracted to pay $545,000 for this house. That price may not be huge in some cities, but in the Atlanta area it is hefty.

So, definitely not a Mustachian decision. I make around ~183,000/year and my fiancee makes $80,000 so we can afford it, but it will certainly put a dent in our early retirement dreams. From my spreadsheet, my retirement went from age 40 to age 47 by buying this house instead of a more modest one.

But, if you consider education, there's some unquantifiable value in having your kids in the best public schools vs mediocre quality schools. I hope, anyway. Maybe I'm just rationalizing because I have my own McMansion.

A few thoughts off the top of my head:

1.  If we're in a real estate bubble, you could go under water.
2.  Your utility bills will go up.
3.  You may spend more on other items if you continue to keep up with the Jones'.
4.  You and your wife are locked into maintaining your income for 30 years.
5.  Could you find a cheaper house in the same school district?

That said, I do think you can afford it.  I would recommend that you keep a larger than usual emergency fund for the first 10 years or so.  Enjoy the house and family!

[2Birds1Stone]

It is my meaningless opinion that you probably could have gotten something much cheaper and shaved a few years off the FIRE date.

That being said, this home is roughly 2 x your combined gross salaries. Not the end of the world.

[rocksinmyhead]

Yeah, we're going from apartment living to a 4 bedroom (really 6 bedroom-- bonus room + basement bedroom) house. It has WAY more space than we need today as a couple, but it'll fill our needs once we do have kids. I'm not looking at this house for my 2015 needs, I'm looking at it for my 2030 needs.

I'm confused. will such houses no longer be available in 2030? also are you going to have like 8 kids?!? (6 bedrooms?!!??!)

Something I value a lot is having my kids go through school with the same classmates and friends from childhood to adolescence, which is why I picked the high-priced suburb.

just throwing something out there... you also can't completely control/help your kids' social lives. my parents still live in the house they bought when they got married, but I never had a BFF that I'd had since kindergarten (and I always kinda wished I did). elementary school boundaries changed, I skipped a grade, blah blah blah, shit happens. adding 7 years of working time to guarantee something like this strikes me as... not a good choice because it's not realistic that this will even necessarily happen. I mean, I played with my neighbors and stuff but they were all boys so they weren't my BFFs.

But, if you consider education, there's some unquantifiable value in having your kids in the best public schools vs mediocre quality schools. I hope, anyway. Maybe I'm just rationalizing because I have my own McMansion.

I don't know what the school situation is like in Atlanta, but in my anecdotal experience in most decent-sized urban school districts there's at least one really good public high school where, if your kid is decently smart, they will have tons of options for AP/IB classes and/or magnet programs with lots of other smart kids. my cousins and friends went to St. Paul Central, my boyfriend went to Allderdice in Pittsburgh (which I guess isn't that good anymore but was in the '90s), and we have a bunch of friends here in Tulsa who went to Booker T. none of these is going to be the exact same experience as a suburban school (Booker T is in what some would consider a sketchy area, and at all of these schools your kids would go to school with black kids, which I guess if  you're white and racist would be a problem) but it's not like they're not going to get a solid education. just throwing that out there as another potential option. (I personally went to a mediocre suburban school and turned out just fine academically.)

Let's say he could have gotten something less opulent for $350k. So he spent an extra $200k which is about $6k in extra interest payments per year after tax. Maybe an additional $2k in property taxes. So this luxury home costs about $10k more per year than something more reasonable. Their income is $260k which means they are probably saving six figures per year. I don't think this purchase is unreasonable - nor do I think it is that detrimental to FIRE based on what they are earning/saving. My two bedroom co-op is worth $450k - I would love to be able to buy this McMansion for $550k!

I came to say the same thing. Also, nice homes are important to some people. I view homes and other material things very different. Having a nice house in a area I like brings me more value than most things. Ive tried both approaches and nice house in a nice area brings a quality of life that is worth a couple years of working, for me.

I get this, but I guess everyone just has different tastes. having an aesthetically pleasing and comfortable home space is actually really important to me as well, but to me that looks more like something <2000 square feet but well laid-out and decorated to my tastes. it's not like if you're not living in a McMansion, you're living in squalor. my future kids getting the best possible chance to thrive is also very important to me, but to me that looks more like spending lots of time reading, playing outside, and doing other stuff with them, and less like sending them to school with a bunch of rich kids whose parents drive luxury cars.

to each their own, but I still think it's nuts and that OP could have been happy (I would even venture to say "happier") with a significantly more modest home purchase.

also, for all those who say, "they make a fuckton of money, they can afford it" I would NEVER make a 30-year financial commitment based on a current high salary and I can't believe so many of you would either! god that stresses me out so much to even think about. a lot can change in an industry in 30 years. and what if his wife ends up wanting to stay home with the kids? (not saying it would have to be her, but she makes less money right now so that's why I assumed she would be the one to stay home) I just feel like you are losing out on A LOT of life flexibility with this choice.

[Yankuba]

Let's say he could have gotten something less opulent for $350k. So he spent an extra $200k which is about $6k in extra interest payments per year after tax. Maybe an additional $2k in property taxes. So this luxury home costs about $10k more per year than something more reasonable. Their income is $260k which means they are probably saving six figures per year. I don't think this purchase is unreasonable - nor do I think it is that detrimental to FIRE based on what they are earning/saving. My two bedroom co-op is worth $450k - I would love to be able to buy this McMansion for $550k!

I came to say the same thing. Also, nice homes are important to some people. I view homes and other material things very different. Having a nice house in a area I like brings me more value than most things. Ive tried both approaches and nice house in a nice area brings a quality of life that is worth a couple years of working, for me.

Also - the $350k home will appreciate about $10k per year while the $550k home will appreciate $16k per year. So maybe the more luxurious home costs much less than $10k per year when you factor in the appreciation. If things go south with their income they can always sell and move. But buying a home that is two times gross income is not a weapon of financial destruction by any means.

[starguru]

are you prepared for the following:

1.  You need to insure it.  You probably want increased liability insurance because you are going to get sued up the ass if someone ever gets hurt on your property.
2.  You need to heat/cool it.  Speaking of that, how is it heated/cooled?
3.  You need to tend the grounds.  How big is the lawn?  How much water will you need to keep your lawn green?  How big are the garden beds?  Are you going to do all this maintenance yourself?
4.  If its not new DW might want to upgrade every fucking room in it (oh wait, that's my problem)
5.  You probably live in a nice area with high pressure to keep up with the joneses.  What type of cars are you putting in the garages?
6.  You are going to feel silly in a few years when you realize you only use the kitchen, the den, and a bedroom, and you never spend any time in the rest of your house.  That's what happened with us, anyway. 

Are you putting 20% down? 

I think you lose your full mustache badge with that one. 

But that's ok, you guys can still save plenty if you can manage to fight all the lifestyle inflation challenges you are going to encounter. 

[HenryDavid]

The part of this blog I like best is not the retire-early, save money part. It's the consume less, waste less, be less of a resource hog part.

A McMansion is the flag-waving, trumpet-blowing, flashing-neon-sign indication that says "I am a big time resource hog."

If everyone one earth had to heat, air-condition and illuminate such a house, would the human race be better off?
No.

Your happiness, your family's happiness, and the happiness of other humans are not likely to increase as your square footage increases.
Sell it immediately and get something more reasonable.

[DragonSlayer]

I just have to wonder if you did the math on buying a much lower priced home in a lesser school district, but then sent your imaginary kids to private school, if school is truly the only reason you're buying this house. Seems like you might be able to come out better off, at least because you'd only be paying school fees for the 12 years the kids are actually in the schools instead of paying 30 years on this mortgage plus taxes, insurance, etc.

[sleepyguy]

Hope you enjoy it, everyone has their fair share of face punches.  The only "real" risk I see is your close to 200k job... you get canned and you'll be in a world of hurt with that large mortgage.

OT: I wish we could find a $550k home in a very good area here in Toronto :(

[DecD]

I can relate to some extent.  We also have a home that is well within our price range (we're still saving ~60%) but that is larger and more expensive than we really needed.  Now that we're focused on fire, we are aware that the house is holding us back:

1.  It will simply take longer to pay off.  We could easily have found a great house for a lot cheaper.
2.  More importantly, if we stay in this house longterm, our stash will have to be significantly larger to pay the higher taxes and insurance on the more-expensive house FOREVER.  It is not insignificant.
3.  Lifestyle inflation.  We really do use the whole house, and we definitely enjoy the luxury.  If we downsize, we'll miss it.  (however, we know we can happily live in a much smaller house, so I'm not really that concerned...)
4.  Friends and neighborhood- we have made awesome friends here and absolutely love the neighborhood: we don't want to leave it.  Also, now that the kids have started school, it'll be harder and harder to uproot them and move.
5.  While we are frugal with our utilities, there's no doubt cooling the larger house in the summer uses more electricity.

On the other hand,
6.  One of our requirements for a house was a large yard, but since gardening is my hobby and I love it, we don't pay more for lawn maintenance.  We do it ourselves.
7.  We have been very careful to not acquire extra stuff to fill up the house.  We are also careful not to try to keep up with the neighbors- we clearly live a less extravagant life in little ways (not eating out, paying for activities, impulse buys like DVDs every weekend or whatever.  We're building our own patio furniture instead of buying a fancy set.  Etc etc etc.)
8.  My job is in the suburb where we live- I have a 5 mile commute on back roads. 
9.  When we bought the house, it sold in a week.  It is in a very desirable spot, and we expect it to appreciate well and sell quickly if we decide to sell.

We're also in one of the best school districts in the state.  This will actually make it MORE DIFFICULT for the kids to get into the top two state schools- the top 10% or so of each high school is automatically admitted...getting into the top 10% is not going to be a trivial task in this district.

On the other hand, the elementary school the kids are in is really fantastic.  We love it.  We love our neighbors.  We love our neighborhood.

So- we will stay here another couple of years for sure.  Our FI date depends on whether we stay in the house- 5-8 years from now, realistically (could be as soon as next year for SUPER BARE BONES FI, 5 years for downsizing FI, 8 years for current house FI.)  So- it'll probably be an extra 3 years or so to stay in this house forever, given that we're already living in it.  We'll assess in a few years if it's worth it to stay.

When we bought- the idea of ER hadn't crossed our minds, so the choice was quite logical.  For crying out loud we were saving 50% anyway, pre-MMM.  But now that ER is our goal, if we were buying again, we'd have found another house in the same area for less money.  There's one in particular we almost bought that was smaller and less expensive but that would have served us well.  We'd be much closer to FI, having saved more over the last 3 years and needing to save less TOTAL.

Anyway, I'm not sure what you're after here.  Yes, your choice will delay FI.  No, your choice is not mustachian.  If I were in your shoes, I would not purchase a $545K home.  I'd find a gorgeous home for $350 (or heck even $450) and save like crazy so you can CHOOSE whether to take time off with the kids or not.  Think of the luxury of having zero concerns or worries about money at all.  Zero second guesses about your choices.  Zero sense of unease about the size/extravagance/energy consumption of your house.  It's hard to put a price tag on that.

[velocistar237]

This looks like a big mistake. Can you get out of your contract without much lost? Even if you lose $10K over it, it's probably better to get out now and find something better suited to your needs. This is 7 years of your life vs. space and perks you don't need.

When we were house hunting, we put an offer on a house and put down a $1000 deposit. We were excited because it was an affordable single family near a good friend. Then we realized we couldn't justify the shortcomings no matter how much wishful thinking we could muster. I still regret putting in the offer, but I've never regretted pulling out.

Who looks back on their life and wishes their house was bigger? People look back on their lives and wish they had spent more time with their loved ones.

[Clean Shaven]

I have no problem with this decision.

If you like the house, it suits your needs, and you've sorted out the numbers vs. household income, then be happy with it and enjoy.

A few years ago, my wife and I were shopping for a new house.  The last one was perfectly adequate, and we had cash saved for around a 50% down payment on the new one (plus about $100k equity from the old). By some of the standards espoused on this forum, the old house was twice as large as we needed. But, there were plenty of things we disliked and couldn't improve realistically: location, lot size, construction quality, neighbors.

I suggested we just pay off the old and stay there.  Wife put it to me as "if we do that, would you be happy living here the rest of your life?"  Answer was clearly no, in my mind.

We moved, paid a lot, got massive improvements in the house and land by doing so. Every day I think that I love living here and would never go back to the old house.

[Guesl982374]

It is my meaningless opinion that you probably could have gotten something much cheaper and shaved a few years off the FIRE date.

That being said, this home is roughly 2 x your combined gross salaries. Not the end of the world.

+1

[Davids]

Let me ask this question, what happens when you have kids? Will your wife be a SAHM, are you doing daycare right after her maternity leave ends? Plus while the school district may be great now there is no guarantee of its quality in 7 years or more. I am sure you could have found something cheaper in a still decent area. Your income is high and i hope this is your only debt.

[ohana]

The part of this blog I like best is not the retire-early, save money part. It's the consume less, waste less, be less of a resource hog part.

A McMansion is the flag-waving, trumpet-blowing, flashing-neon-sign indication that says "I am a big time resource hog."

If everyone one earth had to heat, air-condition and illuminate such a house, would the human race be better off?
No.

Your happiness, your family's happiness, and the happiness of other humans are not likely to increase as your square footage increases.
Sell it immediately and get something more reasonable.

Well said.

[2lazy2retire]

For the most part I generally treat house purchases different than stuff for reasons others have mentioned. That been said, having made choice to spend a considerable amount on a house I would still shy away from the McMansion, those houses for the most part tend to be new/newer builds ( higher taxes - around here a new build gets you a 2% prop tax as opposed to 1% for older build), oversized with lots of useless space to furnish and heat- such things as great rooms and dens, generally these newer sub divisions are never walk able to anywhere. So even after you have paid for it they will never afford you an MMM lifestlye.
They cheapest house in the best neigbourhood is usually a good rule of thumb.

[zhelud]

I have always been curious about how people decide that the home that they want to buy is in a "good school district." What does that mean?  High test scores? Choices among magnet schools?  Lots of AP classes? Good football teams?  Mostly middle class kids?

I have found that since I've actually had kids in public schools for 8 years now, I've learned some things. For example, schools vary widely within the same district. And teachers very widely within a school. It hardly matters if the school or school district is considered to be awesome if your kid is stuck with one of a few lousy teachers. And a school that serves a mostly low income or mostly ESL population can do great things if they do it right, while a school that serves a population of "one percenters" can be mediocre.  At any rate, IMHO picking your home because of your perceptions about the quality of local schools can be a real crapshoot.

[retired?]

Let me ask this question, what happens when you have kids? Will your wife be a SAHM, are you doing daycare right after her maternity leave ends? Plus while the school district may be great now there is no guarantee of its quality in 7 years or more. I am sure you could have found something cheaper in a still decent area. Your income is high and i hope this is your only debt.

Very good point.  My original response was much longer, but to keep it short, just a few comments....I lived in Atlanta when my wife and I bought our first home.  4 BR, 2.5 BA, 2400 sf.  First kid arrived three years later.

The main flaw with our thinking was that we chose based on what we'd want when our (non-existent) kids would be teenagers (oldest turned 13 today).  We lived in the house a total of four years and moved to another city when our first child was one yr old.

Point is that over about 20 years, I've learned to not make large decisions based on how "I expect things to look" over three years from now.  I have learned that I am likely wrong.  There is a likely scenario, sure, but I cannot act as though it is the scenario that will play out.

Aside from that - the caution I would convey is that you are setting yourself up for a particular lifestyle.  You will have the urge to fill the house with items at the same level/quality as the house itself.  If you have the money, which you do earn, you won't want to leave rooms empty. 

You can easily get by with $400k in ATL....big home in a nice neighborhood with good schools.  I like this one:

https://www.redfin.com/GA/Marietta/1671-Barn-Swallow-Pl-30062/home/25311862





 -

[Sibley]

Heh, OP is going to find out very quickly one of the primary reasons you don't want a huge house: you have to clean it.

I hope you like cleaning, because you're going to be spending a lot of time doing it. Especially with kids, then the dog I'm sure they'll get (because that's what you're supposed to do).

[retired?]

I have always been curious about how people decide that the home that they want to buy is in a "good school district." What does that mean?  High test scores? Choices among magnet schools?  Lots of AP classes? Good football teams?  Mostly middle class kids?

I have found that since I've actually had kids in public schools for 8 years now, I've learned some things. For example, schools vary widely within the same district. And teachers very widely within a school. It hardly matters if the school or school district is considered to be awesome if your kid is stuck with one of a few lousy teachers. And a school that serves a mostly low income or mostly ESL population can do great things if they do it right, while a school that serves a population of "one percenters" can be mediocre.  At any rate, IMHO picking your home because of your perceptions about the quality of local schools can be a real crapshoot.

Yes, test scores, various rankings, and the success rate for gaining admission to a quality college (that is our goal, but not everyone's).  Aside from word of mouth, I don't know that there is any way to tell if your child will have good teachers.  Our son had a crappy one last year and has good ones this year.  But, I feel confident that he will be more knowledgeable than most when he graduates.

Aside from that, this is a case where perception is reality ....at least with regard to home prices.  If the schools are perceived to be good, then the homes will hold their value better and appreciate more.

[fartface]

Well I, for one, can't judge you too much.

In 2010 we purchased a $350K McMansion (not quite on your level, but more than we needed for sure). Our kids were in the 2nd and 4th grades at that time, and attended a "Blue Ribbon" school. I live 8 miles from work and before DH FIRE'd, he was 10 miles to work.

At the end of the day, the key question is when will this beast be paid off? What are the taxes? We have $50K left on our mortgage because I want it done with before the eldest starts college. You do have a high combined income, but will your wife keep working when the baby is born?

The first home DH and I purchased (1998) cost $133K. We bought it because we knew we wanted children, so we purchased a home that we could afford on one income. We were approved by the bank for much more. I didn't see the rationale in buying a home that was so expensive, I'd never be home to enjoy it and my kid would be plopped in daycare 10+hours/day.

[2lazy2retire]

I have always been curious about how people decide that the home that they want to buy is in a "good school district." What does that mean?  High test scores? Choices among magnet schools?  Lots of AP classes? Good football teams?  Mostly middle class kids?

I have found that since I've actually had kids in public schools for 8 years now, I've learned some things. For example, schools vary widely within the same district. And teachers very widely within a school. It hardly matters if the school or school district is considered to be awesome if your kid is stuck with one of a few lousy teachers. And a school that serves a mostly low income or mostly ESL population can do great things if they do it right, while a school that serves a population of "one percenters" can be mediocre.  At any rate, IMHO picking your home because of your perceptions about the quality of local schools can be a real crapshoot.

"What does that mean?  High test scores? Choices among magnet schools?  Lots of AP classes? Good football teams?  Mostly middle class kids?"

An accurate assessment for the most part, what does come with the "a good school district" is money in the form of property taxes which affords things such as better teachers and class choices etc. I think the big difference is the expectation of sucess among the students in these districts and the general feeling of wanting to perform alongside their peers which may add a bit of drive which might be missing in a "lesser" district. The flipside of course been the extra pressure which alot of kids don't do well with. The extremes of everything are bad, somewhere in the middle should apply to school districts like everything else.
As a side story our kids went to a high achieving district. When applying to a state college one of them was wait listed ( or whatever the term is ) and had to submit senior year mid term exam results. On a college visit I had the opportunity to discuss the application with one of the entrance advisor's who agreed his/her scores were above what would generally be enough to gain admission. She then asked which school district and went Ahh - that's why we have so many kids from there with high scores and can only accept so many for each district, so in essence been in a higher achieving district was a disadvantage.
Maybe its better to be the smartest kid in a good district as opposed to be an average kid in a high achieving district.

[Alchemilla]

Let me ask this question, what happens when you have kids? Will your wife be a SAHM, are you doing daycare right after her maternity leave ends? Plus while the school district may be great now there is no guarantee of its quality in 7 years or more. I am sure you could have found something cheaper in a still decent area. Your income is high and i hope this is your only debt.

Wow. Great house. What is that in sterling?

Very good point.  My original response was much longer, but to keep it short, just a few comments....I lived in Atlanta when my wife and I bought our first home.  4 BR, 2.5 BA, 2400 sf.  First kid arrived three years later.

The main flaw with our thinking was that we chose based on what we'd want when our (non-existent) kids would be teenagers (oldest turned 13 today).  We lived in the house a total of four years and moved to another city when our first child was one yr old.

Point is that over about 20 years, I've learned to not make large decisions based on how "I expect things to look" over three years from now.  I have learned that I am likely wrong.  There is a likely scenario, sure, but I cannot act as though it is the scenario that will play out.

Aside from that - the caution I would convey is that you are setting yourself up for a particular lifestyle.  You will have the urge to fill the house with items at the same level/quality as the house itself.  If you have the money, which you do earn, you won't want to leave rooms empty. 

You can easily get by with $400k in ATL....big home in a nice neighborhood with good schools.  I like this one:

https://www.redfin.com/GA/Marietta/1671-Barn-Swallow-Pl-30062/home/25311862





 -

[bacchi]

I don't think this purchase is unreasonable - nor do I think it is that detrimental to FIRE based on what they are earning/saving.

The FIRE age went from 40 to 47, an increase of 70%. That's pretty detrimental.

[retired?]

Let me ask this question, what happens when you have kids? Will your wife be a SAHM, are you doing daycare right after her maternity leave ends? Plus while the school district may be great now there is no guarantee of its quality in 7 years or more. I am sure you could have found something cheaper in a still decent area. Your income is high and i hope this is your only debt.

Wow. Great house. What is that in sterling?

Very good point.  My original response was much longer, but to keep it short, just a few comments....I lived in Atlanta when my wife and I bought our first home.  4 BR, 2.5 BA, 2400 sf.  First kid arrived three years later.

The main flaw with our thinking was that we chose based on what we'd want when our (non-existent) kids would be teenagers (oldest turned 13 today).  We lived in the house a total of four years and moved to another city when our first child was one yr old.

Point is that over about 20 years, I've learned to not make large decisions based on how "I expect things to look" over three years from now.  I have learned that I am likely wrong.  There is a likely scenario, sure, but I cannot act as though it is the scenario that will play out.

Aside from that - the caution I would convey is that you are setting yourself up for a particular lifestyle.  You will have the urge to fill the house with items at the same level/quality as the house itself.  If you have the money, which you do earn, you won't want to leave rooms empty. 

You can easily get by with $400k in ATL....big home in a nice neighborhood with good schools.  I like this one:

https://www.redfin.com/GA/Marietta/1671-Barn-Swallow-Pl-30062/home/25311862





 -

Nope.  Greenbacks.

[mathlete]

I don't think this purchase is unreasonable - nor do I think it is that detrimental to FIRE based on what they are earning/saving.

The FIRE age went from 40 to 47, an increase of 70%. That's pretty detrimental.

Retiring at 47 is still pretty great. A full 20 years before full SS.

Besides, the shorter the working career, the more likely it is for our spreadsheet estimations to get blown up by market volatility.

I suppose it is ultimately up to what OP values. If he regularly fills the house with friends and family then the 7 extra years of working will probably seem worthwhile. If the house becomes an albatross on his balance sheet, he'll probably feel differently.

OP can afford the house on his income thank goodness. That's the most important part.

[Bob W]

Seems pricey to me but you're making bank.  Definitely lifestyle inflation though.   

I used to build homes and sell them, so I know how the thinking pattern goes.   People buy dreams but what they are really doing is creating a prison.  (houses own you,  you don't own them)

I never put updated interior light packages on my houses because they were costly and people always look at houses in the daytime.  It always seemed ironic to me that people primarily use their home as a night time abode mostly for sleeping because they are working all day to pay for their house. 

Yet at the same time they always wanted formal dinning rooms and extra bedrooms in case they ever had guests or to use for 3 hours once a year for thanksgiving dinner. 

Houses are the most consumer driven most expensive items ever marketed.   You're not alone in succumbing to this.

Mathematically at your income with a decent 50% savings rate you could have saved an additional 30K per year by foregoing the house and been retired at about the time your first child is 8 or 9.   You would have 1.5 million invested and net 60K per year.   You could still come very close to that of course with a little effort.   

[East River Guide]

we went looking for houses in the nicest close-in suburbs, with the top school districts in the state.

Would be curious where you are.   I'm in East Cobb, which I think fits that criteria too.  Actually maybe the closest time-wise given that for Dunwoody you have to come down 400.

$545k isn't crazy (and doesn't even sound very mansionish) given the lower taxes and good schools.  You obviously can spend less but the all-in can equate to a much lower purchase price elsewhere once you factor in the other costs.

[Eric]

So you already bought the house?  And just want to know what we all think of it?  Well, since you ask, it's ridiculous.  There are only two of you.  As mentioned above, it will be at least 7 years and maybe way longer before you need to even consider school districts.  It's a waste of resources.  It will cost you tons in hidden expenses like extra utilities, lawncare, cleaning, etc.  Whether you can afford it is a terrible standard.  At your income level, you can afford anything.  The question is, was this a smart purchase?  The answer is unequivocally no.

Good luck!

[fartface]

So you already bought the house?  And just want to know what we all think of it?  Well, since you ask, it's ridiculous.  There are only two of you.  As mentioned above, it will be at least 7 years and maybe way longer before you need to even consider school districts.  It's a waste of resources.  It will cost you tons in hidden expenses like extra utilities, lawncare, cleaning, etc.  Whether you can afford it is a terrible standard.  At your income level, you can afford anything.  The question is, was this a smart purchase?  The answer is unequivocally no.

Good luck!

Dude - that was brutal - but fair and succinct.

Maybe he can back out. Let 'em keep the escrow...still come out tens of thousands (if not hundreds of thousands) ahead in the long run!

[BBub]

Your house, your money, your decision, your life.  I sure as hell wouldn't have done it, but you seem like an intelligent person capable of evaluating your own situation. 

My advice is to get out of the contract.  Then go find a really cool, smaller home that you can make into a mustachian paradise.  Keep stashing until FI - then decide whether you want to ratchet up the lifestyle.  This way your options are still wide open.  Want to buy a mcmansion? Great - you can do it.  Want to FIRE?  Great, you can do that.  Locking up a 6 bedroom spread in suburbia because you think it'll suit your needs in a decade or so doesn't make much sense to me.