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The OP doesn’t not have a long track record of being cautious rather he has a long track record of being overly aggressive. He was very short on cash flow while attempting to and paying off his mortgage of which his wife knew nothing about, he also took an outsized position in Tesla to the tune of 200-250k which at the time account for 50% of his hh investable assets(give or take on the %) of which his wife knew nothing about, at one point I believe he was down 50-100k on the Tesla position as well.
Fwiw in the op it says after all the iterations the mortgage would be 190k and I don’t think his income is near that, also you have to realize he had to sell 200k in taxable investments, plus use the proceeds of a fully paid off house to get to a multiple more than 1x income. Notice he is cash poor, as he was before by choice as a single earner with a wife and 3 children. It’s not the wisest choice to keep doing it over and over
Well so please tell me how was he EVER cautious?
Okay.
But he DID build up the net worth (that's greater than ours... he's younger than us).
He DID pay off the house.
He has low monthly expenses relative to income.
He could have made different choices in regard to financing the home. He could have moved out, rented and sold the house first. He could have taken less out of his taxable and take on more mortgage debt (Even if he's only making $150k he should still be fine with $300k mortgage.
Also getting nit picky.. How many Americans can only fill or partially retirement accounts, much less have a taxable with hundreds of thousands in it?
I think it's hyperbole to call a millionaire "dangerous" simply because he pulled some down payment cash out of some extra investments.
But he DID build up the net worth (that's greater than ours... he's younger than us).
He DID pay off the house.
He has low monthly expenses relative to income.
He could have made different choices in regard to financing the home. He could have moved out, rented and sold the house first. He could have taken less out of his taxable and take on more mortgage debt (Even if he's only making $150k he should still be fine with $300k mortgage.
Also getting nit picky.. How many Americans can only fill or partially retirement accounts, much less have a taxable with hundreds of thousands in it?
I think it's hyperbole to call a millionaire "dangerous" simply because he pulled some down payment cash out of some extra investments.
Getting a bigher mortgage wasn't possible. They wanted 20% down....and although i had about 40k cash, the other 160k had to come out of selling stocks...at a profit of course. All long term investments, so taxes on the profits will be only 15% come tax time.
I also plan on taking out a large HELOC (like my current untouched 400k HELOC) for added peace of mind.
Yet, I'm still torn. I think i can make it work....but I'd hate to be one disaster away from bankruptcy. The other option right now is cancel the deal at the cost of the earnest deposit (9500) and stay in current home until kids are out of elementary school. so 5 years. Homes will perhaps be more expensive then though....a million dollar home will likly increase in price (dolllars) more than a 600k home assuming same percentage.
In the 5 years, i may be able to save 150-200k cash assuming I'm cautious....but that was my plan 5 years ago....hence the current position in stocks.
Also, my "Plan" was to buy in December/January when everyone selling is desperate to sell......and then sell our current home in April/May which is arguably the best time to sell.....and i feel like an idiot because i'm essentially doing the exact opposite.... ughhh.... makes me physically sick when i think about it too much :-(
Last edited by Thinking-man; 09-20-2019 at 06:32 AM..
For what it's worth, this whole thing makes me uncomfortable even if you were a single man. There is no need to keep putting your family's future at risk. You might be able to recover from another bad bet but it might mean your kids don't go to the college they deserve. If something happens to your employment situation or health it could get ugly really fast. With your income, at your age, if you keep expenses within reason, you can safely grow your money to a large amount at a pretty reasonable clip without all the wild risk taking. You don't want to get caught needing to sell a million dollar house in a tough real estate market at the same time that some other unfortunate life event has you squeezed for cash. Just my opinion. Feel free to disregard my concerns. I wish you the best but I've seen this kind of risky behavior play out badly for others. Remember 2008?
For what it's worth, this whole thing makes me uncomfortable even if you were a single man. There is no need to keep putting your family's future at risk. You might be able to recover from another bad bet but it might mean your kids don't go to the college they deserve. If something happens to your employment situation or health it could get ugly really fast. With your income, at your age, if you keep expenses within reason, you can safely grow your money to a large amount at a pretty reasonable clip without all the wild risk taking. You don't want to get caught needing to sell a million dollar house in a tough real estate market at the same time that some other unfortunate life event has you squeezed for cash. Just my opinion. Feel free to disregard my concerns. I wish you the best but I've seen this kind of risky behavior play out badly for others. Remember 2008?
no, i appreciate your concern, and i think it's in line with my own concerns as noted above.
but what's the alternative? stay here until we're uncomfortable and then move? and let's say 2008 happens all over again. what's the worst that can happen in our situation, with a 190k mortgage paying 2300 a month? As long as the job is there, i think it'll be possible. if the job isn't there, i still have about 20k of cash laying around and another 100k in stocks that i could sell (not ideal if 2008 happens again of course). I mean....believe me, i'm scared sh*&Tless at times....but i wonder if that's just becuase i'm biting more than i can chew, or if that feeling comes with any big decision/change such as this.
I still have a month or so to walk away and lose only 10k....which i'm absolutely ok with, assuming it's for the right decision.
But he DID build up the net worth (that's greater than ours... he's younger than us).
He DID pay off the house.
He has low monthly expenses relative to income.
He did do all of those things, that’s not disputed
Quote:
He could have made different choices in regard to financing the home. He could have moved out, rented and sold the house first. He could have taken less out of his taxable and take on more mortgage debt (Even if he's only making $150k he should still be fine with $300k mortgage.
He hasn’t ever really been cautious as you had previously claimed.
Quote:
Also getting nit picky.. How many Americans can only fill or partially retirement accounts, much less have a taxable with hundreds of thousands in it?
I think it's hyperbole to call a millionaire "dangerous" simply because he pulled some down payment cash out of some extra investments.
If you read my post you quoted you would see I didn’t call anyone dangerous because he had to pull “some” down payment cash out of “some” extra investments. He has made risky choices time and again being the single earner head of a family of 5 often times without his spouse’s knowledge. Just because you took risky and they haven’t turned out poorly doesn’t mean continuing the process will have the same results
I concur with you...
But That's the thing....this home is perfect inside and out. Model home. All bathrooms recently custom redone at about 50k cost. Sellers also including home insurance for a year.
i just did a quick rough calculation (using information in mint) to try to get the difference in overall spending from when i lived in the smaller house vs my current house. my total spending has increased by about double since then (not including big jobs and i deducted the mortgage spending for comparison because i dont have a mortgage on this house).
my upgrade was probably more dramatic than yours. its still a bit surprising to see how it impacted my family's spending.
Last edited by CaptainNJ; 09-20-2019 at 09:54 AM..
He did do all of those things, that’s not disputed
He hasn’t ever really been cautious as you had previously claimed.
If you read my post you quoted you would see I didn’t call anyone dangerous because he had to pull “some” down payment cash out of “some” extra investments. He has made risky choices time and again being the single earner head of a family of 5 often times without his spouse’s knowledge. Just because you took risky and they haven’t turned out poorly doesn’t mean continuing the process will have the same results
I always viewed having a frugal lifestyle as a way of being cautious. When your lifestyle allows you to squeak out 3x monthly expenses I think you are automatically in a different risk class than someone living paycheck to paycheck or on debt (as most people are). And when you have this lifestyle AND a huge reservoir of retirement AND additional savings I think you have yet more margin to work with.
I can recall several times in earlier years, when I was starting my side hustle, when paying off our first house, or considering international relocations that people here got pretty opinionated about that. I had to work against conventional choices.
Also, about the multiple mentioning that the wife didn't know: Clearly she doesn't want to know. And I can only imagine that this is because she has neither the interest or knowledge. In which case, he's on his own and can't be held liable for her own lack of concern.
But his more recent posts have me more convinced of your opinion. His explanation that he wouldn't be allowed to borrow more IS a red flag. We have always borrowed half or less of what we were approved.
i just did a quick rough calculation (using information in mint) to try to get the difference in overall spending from when i lived in the smaller house vs my current house. my total spending has increased 202% since then (not including big jobs and i deducted the mortgage spending for comparison because i dont have a mortgage on this house).
my upgrade was probably more dramatic than yours. its still a bit surprising to see how it impacted my family's spending.
that's huge. so you're spending twice as much as before on monthly expenses? how?
i'm planning on paying 300 more a month in taxes in the new place and 225 more a month for gas/electric. and insurance is 215 instead of 90 currently a month. aside from that, all of our other monthly expenses are anticipated to be around the same. so our expense are going to be up from 1900 to like 2500 ish.
I always viewed having a frugal lifestyle as a way of being cautious. When your lifestyle allows you to squeak out 3x monthly expenses I think you are automatically in a different risk class than someone living paycheck to paycheck or on debt (as most people are). And when you have this lifestyle AND a huge reservoir of retirement AND additional savings I think you have yet more margin to work with.
I can recall several times in earlier years, when I was starting my side hustle, when paying off our first house, or considering international relocations that people here got pretty opinionated about that. I had to work against conventional choices.
Also, about the multiple mentioning that the wife didn't know: Clearly she doesn't want to know. And I can only imagine that this is because she has neither the interest or knowledge. In which case, he's on his own and can't be held liable for her own lack of concern.
But his more recent posts have me more convinced of your opinion. His explanation that he wouldn't be allowed to borrow more IS a red flag. We have always borrowed half or less of what we were approved.
So i was pre-approved for 1,100,000 given my 150k income and no debt. our home is under 1M, and they require 20% down....so loan is around 800k. not sure how i could have borrowed "more" than that given the 20% requirement lol i couldn't say no, give me the full 1M in loans....i don't want to pay 20%....
So i was pre-approved for 1,100,000 given my 150k income and no debt. our home is under 1M, and they require 20% down....so loan is around 800k. not sure how i could have borrowed "more" than that given the 20% requirement lol i couldn't say no, give me the full 1M in loans....i don't want to pay 20%....
I totally just forgot about the other house. Yes, at this very moment you need a $800k loan... but....
We looked at a house that would have required an $800k loan. It had an attached efficiency on the bottom floor with stable renters. My mother saw pictures and got really excited about that efficiency.. talking about how WE (her and us) could "work out an arrangement".
We were not in your position of selling another house to afford another one, but if we had been, I would have bought that house. It's so lovely! We pass it infrequently to visit a coffee shop nearby sometimes and I feel a little something when we do.
I will say that I didn't expect my kids to suddenly get more expensive. Cell phone bill used to be $50 and now it's $175. A couple hundred each month for robotics and soccer.
It's mid-season in soccer. I've had time to study my kid and I think there is a very decent chance he'll make the A team next year .. A team travels to San Diego 2x and Arizona once. The B team, his team, only flies to Arizona. My other son wants to attend the national robotics competition.. in Texas. And he'll be a junior with a driver's license and an eye on college applications.
Does your plan include the increasing costs of raising kids?
It happened out of nowhere and it happened at the same time we closed on our home. I think that part has been the greatest challenge because these are things that we simply won't stop. Frugal lifestyle be damned... if my kids earn these opportunities they should take them...
So PLEASE, as a parent further along the road than you, PLEASE consider the possibilities of this happening to you too.
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