Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Let's say I make $500K annually. After tax thats about 290K which = 24,000/month
Let say I buy a $2 million a home
$2 million home with 20% down = About $8,000 + 2,000 Property Tax + Utilities/Insurance = $11,000/month
Let's say I have only 2 kids and I want to put them in a private school.
$25,000 a year X 2 = $60,000 a year = $5,000/month. That's over 20% of my take home salary! Sure, in this scenario I make more than the president, but I'm handing out 20% of my monthly take home pay for school. You bet I'll look for Public Schools in the area that will give my kids ample opportunity.
Yet, the private schools in San Diego (many of which cost significantly less than what you're estimating, by the way) almost all have waiting lists.
Also, slightly off topic, but if your goal is long term asset growth, and you are just well off but not mega-wealthy, is buying the most expensive home you can afford really the best way to go?
Wouldn't it make more sense to buy a less expensive home in a still nice neighborhood (with good schools, natch) and then invest the savings in your mortgage payments into more liquid assets that you have more control over rather than sinking everything into the ever-fluctuating real estate market?
I'm wondering if that might be a better investment strategy if you aren't mega-wealthy. You'd still have investment growth in your home, but also be growing other assets. And, perhaps you'd have less risk because your "assets" would be more diversified and more available for other purposes.
Obviously, if you are mega-wealthy, you can have it all --- most expensive home and substantial investments in other assets too. But for those of us who are not mega-wealthy, is it better to sink everything into your home, or build a combination of assets and investments?
Yes! If you follow some of my other posts you know I'm often on my soapbox about a primary residence not being a true "investment" and about living below one's means. This is represented in my option 3. I think self-made/entrepreneur types are the most geared to analytically look at the cost of a top private school and compare it to the other top alternatives and the expected outcomes of each.
The $400K I would spend on child 1 for LJCDS for K-12 or on an expensive house in a good district would (if instead invested) probably be at least $650K and could well be $1mm when he/she turns 18. So I'd be asking myself which would benefit him/her most -- going to LJCDS K-12 or having undergrad and grad school paid for, plus quite possibly enough left to pay cash for a house or to start a business? The answer would depend a lot on the child, but it's definitely not clear to me that I would choose 13 years of expensive private school (or a more expensive house in a better school district).
Of course there are hybrid options such as private school for middle and/or high school if/when the child shows it makes sense.
Yes! If you follow some of my other posts you know I'm often on my soapbox about a primary residence not being a true "investment" and about living below one's means. This is represented in my option 3. I think self-made/entrepreneur types are the most geared to analytically look at the cost of a top private school and compare it to the other top alternatives and the expected outcomes of each.
The $400K I would spend on child 1 for LJCDS for K-12 or on an expensive house in a good district would (if instead invested) probably be at least $650K and could well be $1mm when he/she turns 18. So I'd be asking myself which would benefit him/her most -- going to LJCDS K-12 or having undergrad and grad school paid for, plus quite possibly enough left to pay cash for a house or to start a business? The answer would depend a lot on the child, but it's definitely not clear to me that I would choose 13 years of expensive private school (or a more expensive house in a better school district).
Of course there are hybrid options such as private school for middle and/or high school if/when the child shows it makes sense.
Here's a "devil's advocate" scenario. Let's say you have a $200,000 downpayment for a home. Your income qualifies you for an $800,000 mortgage so you can buy a $1 million home.
But, what if, instead of buying a $1 million home, you opt for a $600K home and take out a $400,000 mortgage instead of an $800,000 mortgage? The difference in purchase price alone is $400,000. And, over the life of the loan, you'd continue to "save" money in mortgage interest and property taxes every single month.
If your reasoning is "$400,000 in private school could be used better elsewhere" then shouldn't it follow that $400,000 extra for a house could also be used better elsewhere?
Now, I suppose one could argue that $1 million homes are more likely to accumulate value, but I wonder if that is really true in an area like San Diego, where there are more "middle class" (by SD standards) families needing mid-range homes than "wealthy" families needing "top end" homes.
In any case, the difference and savings between a home that costs $1 million and a home that costs $600K probably would, if you so desired, give you enough for private schools.
Or, you could still send your kids to public school and put the savings into other types of investments, such as funding college, your retirement, etc.
Here's one more thing regarding schools too.
The assumption many make is that the education in district A is worth X number of dollars more than the education in district B. But, how does anyone really know that? Having worked in, and worked with, students from a variety of schools and districts here in San Diego County, I'm not 100% convinced that the schools in particular districts are really worth spending significantly more for.
I mean, as you pointed out, parents are what really make the difference in the educational opportunities their kids have and take advantage of. These days, outside of urban areas, *most* public schools in California offer very similar curriculums and similar opportunities for students. A parent who understands this, and is going to be pro-active about their kids' education where ever the kid goes to school and is going to make sure that their kid is taking advantage of those opportunities.
So, maybe the decision to pay an extra $400K for the $1 million dollar home instead of a $600K home ultimately also has to do with something else besides schools. Maybe it's not the schools so much as the "lifestyle" spending that extra $400K seems to buy?
Opt for a slightly different lifestyle in this scenario, and maybe your kids can attend one of the "best" schools here, like Francis Parker or Bishops Or, have more options for college because money won't be an issue. Or, you can put the savings into other investments.
I don't know the answer; I'm just talking out loud.
Obviously, every family is different, and values different things.
But, maybe that's the point. What's "best" for one family may not be universally "best" for every other family, as we often seem to imply here.
I think I haven't been very clear in my writing. IMO, in order of "bestness"
1) Don't spend the extra $400K on either a home or private school and invest it instead. At the end of 18-20 years, that $400K will be worth several times as much and could be used to pay for undergrad, grad school and still have leftover. Maybe some of the $400K is "spent" on the parents having more free time/energy to teach the child both academic and life lessons. Maybe some is used to live abroad for a summer or a year.
1b) At least not right away. If child turns out to be a genius and/or not likely to be subject to some of the downsides to high-end private schools and/or exceeding whatever the local schools can provide, you can always send them later. A lot harder to start sending them off the bat and then "take it away"
2) Spend the $400K to get into a better district and they go to those good public schools. After they graduate from HS, you could always move to a cheaper area with worse schools or move out of SD altogether and pocket a large amount of cash that could pay for undergrad, grad school, starting a business.
3) Start the child in private school ($400K) from the get-go.
4) Spend the $400K on blow and hookers. Okay, maybe not that, but you get the idea
If I look back at this, I think I'm arguing for maintaining as much flexibility as possible.
You raise several good questions which we could go on about forever. Is there a correlation between educational quality and cost? IMO probably in general but on a diminishing returns curve and with outliers going both ways (i.e., high cost + low quality and also low cost + high quality). I also think each student has a different ultimate "academic capacity" which interacts with the quality v. cost curve.
There are infinite combinations out there and one cannot know up front which set of choices will be best. Not only that, it's no trivial task to determine even after the fact if the best choices were made. That is why my original post was essentially to stick up for someone who might want to spend more on housing and send kids to public schools, even though personally my choice would be something else.
Quote:
Originally Posted by RosieSD
Here's a "devil's advocate" scenario. Let's say you have a $200,000 downpayment for a home. Your income qualifies you for an $800,000 mortgage so you can buy a $1 million home.
But, what if, instead of buying a $1 million home, you opt for a $600K home and take out a $400,000 mortgage instead of an $800,000 mortgage? The difference in purchase price alone is $400,000. And, over the life of the loan, you'd continue to "save" money in mortgage interest and property taxes every single month.
If your reasoning is "$400,000 in private school could be used better elsewhere" then shouldn't it follow that $400,000 extra for a house could also be used better elsewhere?
Now, I suppose one could argue that $1 million homes are more likely to accumulate value, but I wonder if that is really true in an area like San Diego, where there are more "middle class" (by SD standards) families needing mid-range homes than "wealthy" families needing "top end" homes.
In any case, the difference and savings between a home that costs $1 million and a home that costs $600K probably would, if you so desired, give you enough for private schools.
Or, you could still send your kids to public school and put the savings into other types of investments, such as funding college, your retirement, etc.
Here's one more thing regarding schools too.
The assumption many make is that the education in district A is worth X number of dollars more than the education in district B. But, how does anyone really know that? Having worked in, and worked with, students from a variety of schools and districts here in San Diego County, I'm not 100% convinced that the schools in particular districts are really worth spending significantly more for.
I mean, as you pointed out, parents are what really make the difference in the educational opportunities their kids have and take advantage of. These days, outside of urban areas, *most* public schools in California offer very similar curriculums and similar opportunities for students. A parent who understands this, and is going to be pro-active about their kids' education where ever the kid goes to school and is going to make sure that their kid is taking advantage of those opportunities.
So, maybe the decision to pay an extra $400K for the $1 million dollar home instead of a $600K home ultimately also has to do with something else besides schools. Maybe it's not the schools so much as the "lifestyle" spending that extra $400K seems to buy?
Opt for a slightly different lifestyle in this scenario, and maybe your kids can attend one of the "best" schools here, like Francis Parker or Bishops Or, have more options for college because money won't be an issue. Or, you can put the savings into other investments.
I don't know the answer; I'm just talking out loud.
Obviously, every family is different, and values different things.
But, maybe that's the point. What's "best" for one family may not be universally "best" for every other family, as we often seem to imply here.
HUGE difference between a family that can spend $1M on a typical tract-home in say, south carlsbad or encinitas, and a family that can spend $3M on a house in RSF/Del Mar/Olivenhain/La Jolla.
I live in a typical $1M tract-home in S. Carlsbad. I have 3 kids. Private school tuition x 3 isn't doable. Not to mention the geography issue. Driving my kids to LJ Country Day school would be a traffic-slogged pain every morning and for my wife every afternoon, and would impact our kids different after-school activities. So it's really not possible or feasible for us.
Plus, I just don't see the value in it comparatively. The local public schools my kids go to are excellent. All the other kids on our block go there also, same with most of the kids on their sports teams. So there is a community feel to it.
In our last neighborhood, our neighbors sent their kids to the Rhodes school. Those kids hardly knew any of the kids in our neighborhood because they didn't go to school with them. It seemed very isolating.
Every family makes their own choices, but I can tell you for families that can "only" spend $1M on a home, the quality of the local schools is very important, and probably a large reason that the houses in that district are $1M, and not $600k.
HUGE difference between a family that can spend $1M on a typical tract-home in say, south carlsbad or encinitas, and a family that can spend $3M on a house in RSF/Del Mar/Olivenhain/La Jolla.
I live in a typical $1M tract-home in S. Carlsbad. I have 3 kids. Private school tuition x 3 isn't doable. Not to mention the geography issue. Driving my kids to LJ Country Day school would be a traffic-slogged pain every morning and for my wife every afternoon, and would impact our kids different after-school activities. So it's really not possible or feasible for us.
Plus, I just don't see the value in it comparatively. The local public schools my kids go to are excellent. All the other kids on our block go there also, same with most of the kids on their sports teams. So there is a community feel to it.
In our last neighborhood, our neighbors sent their kids to the Rhodes school. Those kids hardly knew any of the kids in our neighborhood because they didn't go to school with them. It seemed very isolating.
Every family makes their own choices, but I can tell you for families that can "only" spend $1M on a home, the quality of the local schools is very important, and probably a large reason that the houses in that district are $1M, and not $600k.
100X this. A one million dollar tract house for many folks is just a normal house, not really a super luxurious place. Generally such tract homes also have good schools, but not always.
To be honest, so would I. If you've ever talked to students from or spent time on the campuses of La Jolla Country Day, Francis Parker, or Bishops, you quickly realize that even the "best" public school in the San Diego area don't offer the quality of education, teachers and facilities that some private schools here provide. (I'm just using those three as examples; there are other private schools that are excellent - and not quite as expensive - as well).
But, to each their own. That's what makes the world (and real estate prices) go round.
I'm not sure this is entirely true. I'd wager that the private schools that you mention are superior to 90% of public schools in SD. However, here in Carmel Valley, the public schools are in many ways superior to the best private schools. LJCD and Bishops are often seen as schools for kids who couldn't hack it at Torrey Pines or Canyon Crest. Though this is somewhat of an over-generalization, it does change the calculus related to the expensive home in good school district versus cheaper home and private school.
I'm not sure this is entirely true. I'd wager that the private schools that you mention are superior to 90% of public schools in SD. However, here in Carmel Valley, the public schools are in many ways superior to the best private schools. LJCD and Bishops are often seen as schools for kids who couldn't hack it at Torrey Pines or Canyon Crest. Though this is somewhat of an over-generalization, it does change the calculus related to the expensive home in good school district versus cheaper home and private school.
I can't speak to the SD-area schools like Rosie and others can. But generally, I think the best private schools have smaller class sizes and more dedicated teachers* and are just generally more flexible. This tends to most benefit students who are exceptional. And by that I include the top 5% of students in terms of academic ability/potential (as you would probably expect) but also those who are not in the middle of the curve for other reasons (learning style, etc.). At least around where I have more hands-on information, if you look at the list of colleges of matriculation for the top public schools versus the top private schools, there is no comparison. For example, in my home area (1m+ metropolis), 100% of the top private school's grads go to 4-year colleges and most years a significant chunk (roughly 25%) are top 25 schools. The top public schools aren't even close. Of course no method is air right --college rankings aren't perfect and even if they were, that's not the only measure of quality.....but good and widely-available measures are hard to come by. Also, many of the top private schools attract the best students -- but again, it's quite hard to separate out what the schooling itself was responsible for.
* Typically no unions so continued employment is based on quality/results not necessarily tenure or policies. Plus many private schools pay a lower salary (especially when considering over a career, not just starting salary) which is offset by giving free or reduced tuition to teacher's kids so the teacher has a vested interest in the school's quality.
Does not make any sense to me. If you have so much to spend on a home why are you asking about good Public schools?
I would send my kid to private with that much money in hand.
Please help me understand.
People who have that much money to spend on a house feel entitled to good public schools.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
