Living in Bellevue (Seattle, Tacoma, Renton: rent, house, buying)

[MattFromGA]

That low interest rate helps. God forbid the feds start bringing their rates up. It would seem to crush the market. With my type of lifestyle, I'm not sure I'd feel comfortable with a 2850 mortgage payment given a take home of about 5500. I'd say the take home would need to be closer to 8k a month for me to be ok with that payment. Otherwise, you'd be broke.

Is a half million dollar Bellevue home also implying a new car with $600 a month car payment (maybe also a 2nd car payment of $300), fancy cell phones for husband/wife at $180 a month, and satellite tv for $100+ a month? Couple that with $80 a month gym fees (2 adults) and $6 pints of beer at the pub? Guess you'll be telling junior to fund their own collage costs when the time comes.

[Ira500]

Originally Posted by MattFromGA

That low interest rate helps. God forbid the feds start bringing their rates up. It would seem to crush the market. With my type of lifestyle, I'm not sure I'd feel comfortable with a 2850 mortgage payment given a take home of about 5500. I'd say the take home would need to be closer to 8k a month for me to be ok with that payment. Otherwise, you'd be broke.

Is a half million dollar Bellevue home also implying a new car with $600 a month car payment (maybe also a 2nd car payment of $300), fancy cell phones for husband/wife at $180 a month, and satellite tv for $100+ a month? Couple that with $80 a month gym fees (2 adults) and $6 pints of beer at the pub? Guess you'll be telling junior to fund their own collage costs when the time comes.

That's why there are plenty of Microsoft employees living in 300,000 dollar townhomes. Or in less expensive cities.

[MattFromGA]

Dont get me wrong with these posts. I'm not getting down on Seattle, just trying to figure out the math. I think everyone's lifestyle choices are their own.

Its just a bit depressing to see how much cost of living has gone up over the last 15 years while salaries havent really budged (unless you work for the government of course).

I still remember how I scored $12 an hour as a "word processor/typist" when I was just 18 years old in Portland Maine, which was 24 years ago. Granted that was a "temp job" (no benefits), but I just checked craigslist and see that "administrative assistants" are getting paid about $15 an hour plus benefits.

I dont mean to go off topic here, but it does relate a little to the OP in relationship to cost of living. Sorry if I'm too off topic here.

[Inkpoe]

Originally Posted by MattFromGA

Let me do some basic math to understand things. If you work at Microsoft and earn around 90k a year, your gross would be 7500 a month. Thanks to income taxes, SS and Medicare, you can kiss 30% or so of that away to get to net (not counting 401k contributions and whatnot). That means you'll take home about 5250 a month. Thats not anywhere near enough to be buying a half million dollar home.

Please, Tell me where I am getting that math wrong on this!

WA doesn't have income taxes.

[MattFromGA]

WA doesn't have income taxes.

But you still have to pay fed income tax.

[Capo]

Just to add my 2 cents to the conversation, let's not forget that the 2800~ in the example above does not cover the entire cost of ownership. If you add in Mortage, Interest, Taxes, HOI, PMI, potential HOA fees, contributions to home upkeep fund, etc., the cost get's even larger.

And on top of that, only those with the highest credit scores are going to get around a 4.5 rate. Many will land in the 5.0 to 5.5 range.

So in this scenario, 90k gross salary is definitely not enough to own a 500k home. Heck, even a 350k home is cutting it extremely tight, if not breaking it entirely.

You always hear "buy no more than 30% of your gross monthly income," but IMHO, that number should include your total cost. If you simply calculate that 30% off of your mortgage payment, you'll end up north of 40% very quickly. Even doing mortgage + escrow will still leave you with residual costs of ownership you need to cover.

Simply put, owning a home is great, but not if it becomes your prison.

[Capo]

Originally Posted by Inkpoe

WA doesn't have income taxes.

True, but compared to most states that do, it's still made up for with the high property and sales tax. What ultimately matters is what that final bucket looks like. Many states take from one bucket and poor it in another, but ultimately, the money comes from somewhere. It just depends on how state A fairs against state B for your personal situation.

[Inkpoe]

Originally Posted by MattFromGA

Is a half million dollar Bellevue home also implying a new car with $600 a month car payment (maybe also a 2nd car payment of $300), fancy cell phones for husband/wife at $180 a month, and satellite tv for $100+ a month? Couple that with $80 a month gym fees (2 adults) and $6 pints of beer at the pub? Guess you'll be telling junior to fund their own collage costs when the time comes.

There's another thread in which it talks about the social aspect of WA. One thing that does differentiate Seattle from others is that you can be multi-millionaire, but still be driving a beat up volvo or suburban.

Obviously you should look for deals... like $80/month for gym is a lot-- I always recommend people to go on Costco.com and buy the 24HR fitness membership from there ($300 dollars for a 2 year membership, which works out to be 12.50 a month). But the rest fall on a lifestyle change adjustment. At least we're not living in SF, right?

One thing about Seattle that I'm a bit wary about is the tax income debate... it suppose to target the wealthy (if it passes). But the reality is, we can't really trust our state gov't not to keep it at this level and expanding it to include more. This puts more of a kink in the long term planning. I wish there was a Utopia example that we could expect our state to follow. But we take what we can, no?

[Capo]

Agreed with Ink.

There are ways to cut residual expenses. Honestly, most things we think we need we won't even miss after about a month. Some ideas:

1) Don't buy new cars. Buy used cars and pay cash. Also, plan ahead, if you know you need a new car in another year or two, make payments to yourself and set the money aside. Then buy it in cash or at least get a short 2/3 year loan at a low APR.

2) Don't get the huge cable packages that they try to sell you. Get internet, and then spend 8 bucks a month on a netflix account - stream all of the movies/shows you want to your TV. Use things like free calls on GMAIL for your "lan line" when needed.

3) Fancy smartphones. Unless you REALLY use the data plan a lot, why pay 60 bucks for 2 people? Even if you want a smartphone, there is wifi all over here and most people are at home or work 80%+ of the time, meaning there is always wifi around.

4) Even with beer, if you go out to the pub with friends 2 or 3 times a week, why not only do it 1 or 2 times a week and then have a poker night or two where you buy beer off the shelf?

Just some ideas, but there are ways to save and still get essentially the same thing.

[Ira500]

One thing about Seattle that I'm a bit wary about is the tax income debate... it suppose to target the wealthy (if it passes). But the reality is, we can't really trust our state gov't not to keep it at this level and expanding it to include more.


State income tax will not pass. I'd bet a beer on that. And, to tie it in with the htread, maybe Bellevue would have a higher percentage of people paying state income taxes if it passes.
But, to play devil's advocate here:
The state needs a certain amount of revenue. They get money from sales tax, property tax, gasoline tax, etc. Right now education is really lacking in the state. There's a lot of wealthy people in the state, but if I remember correctly we're in the bottom ten in public education funding. If we're going to improve education in this state, revenues need to be increased to pay for it. If you've got money, you can choose to live in a place like Bellevue and not have to deal with all those school districts that suck. But in a just world, bringing up the levels of the less good school districts would ultimately benefit everybody....So, how ya gonna do it?
Raise sales tax? Noo! They're to high already? Raise property tax? Nooo, that could kill any housing market recovery. Gas tax? I think those funds are dedicated to roads. What's left? How about an income tax on the wealthy, coupled with dropping the B&O tax on small business and dropping the property tax rate. That's what's being proposed. Most people will benefit from it, but government is seen as so untrustworthy that this thing will never pass. Plus I'd rather see them lower the sales tax if they're going to institute an income tax, so everyone, including renters, will benefit. Lowering the B&O tax is great, but not everyone owns a business. Lowering the property tax is great, but not everyone owns property. Lowering the sales tax? Everybody buys things.