Congrats to those who have paid off (or have paid a significant portion of) their mortgage.
We have moved a little bit too many times and refinanced quite many times as well, because of a variety of reasons. We do not think we could ever pay our mortgage off. (But we have had quite a bit equity accumulated mostly due to the appreciation of the house; this is also because we did not take money out when we refinanced.)
When our income was about $100k (before tax), we paid between $1700 and $1800/month for our house (including everything – except utility and maintenance, of course.) Now that we rent out that house, I think the net (after the real estate agent takes her cut) is less than $1700/month. Our rent at the high COL area (in another city/state) is $2200/month for just a one bedroom.
$4/day for the food as it is said on the other thread? Even $20/day for the meal is just $600/month; this is not as costly as the housing cost we are paying each month.
After we retire, we will most likely have a modest fixed income (and basically living off our retirement savings.) The housing cost (and the health insurance before 65) will be our heavy burden. We have not decided what to do with the house payment. (The tenants are nice. We may just let them continue living there if they choose to do so, and we rent a smaller place instead.)
BTW, whenever I read the thread “Help! Daughter moving to NYC in two weeks!”, I feel depressed even though none of my family members lives there. It is just a pain to move into ANY major city on the coast and find a place to live.
How depressing is it to read, on the post #37 by Hunt:
“the broker told the kid that all the listings he found on his own were fake.”
And think of this: the renter needs to jump through all the hoops before he can put a roof over his head. (whether/how soon can she he find a roommate in a new city?!) 40X of the income, and 80X of the guarantor’s income, and so on.
We are mortgage free in a solar home in a low-tax ($3,000/yr, 2900 sq ft) high quality of life sunshine state. Housing is definitely not a burden, but I’m envying @VaBluebird’s thread about retiring tomorrow. We finished paying for boarding school last year and recently shipped only kiddo off to (free) college. DH and I have a year or two before hitting 59 1/2 so we can withdraw from our 401ks w/o penalty and then we’re headed for the pool…
Healthcare costs concern us. Ecuador may look good to us one day.
Our mortgage is less than the rent we were paying for a townhouse in 1998. We bought low and small in a high-COL area and never moved up. This was intentional – we knew college would be expensive and that we were at the level where COA represented serious pain because we’d not get much FA. We did not want to be house poor. It’s great that the mortgage payment is low, but I’m finding downsizing to a condo in this area will cost at least as much as what we would get for selling our house. The other downside to buying low is that houses in our neighborhood just aren’t going to appreciate beyond a certain level, so it will be a challenge to sell our house and buy a condo without having to borrow.
No- worked hard to have the income and always lived below our means. Lived in lower housing cost area and retired to another one.
Health care costs- shocking to find how higher income means huge costs in the Medicare system- even for retired physicians. H has few expenses but now is subsidizing many others… But, I’d much rather be in our position than getting the subsidies.
I spent my first three decades being on a strict budget- perhaps one reason I tend to spend less than many. I don’t get the people who live with high mortgages and other loans to have luxuries instead of middle of the road places and things. I do not envy those of you in high cost areas who get so much less for the money.
One of the first things we decided to do when we figured out that we were sticking around in Michigan for at least the next 5+ years was to buy a house. It was a very good market for a buyer, a very low COL area, and we probably bought more house than we need, but considering it was my later-childhood house and I loved it, we were willing to bite the bullet on it. Plus, it was cheaper to buy the 3 bedroom house with a yard outside of Ann Arbor than it was to rent a one bedroom apartment in Ann Arbor. I’ll let you know in a few years whether or not it comes back to bite me…
It is by far our biggest expense but we’re in a fortunate position where we have very few other bills, no health insurance bills, and kids are nowhere near the picture yet. The hope is to stick around here post-PhD and we’re centrally located to several universities in a low COL area. However, if that doesn’t happen then we’ll sell it or rent it out. It’s a very desirable area for people working in several different cities.
I had a very housing-unstable childhood. I moved 10+ times until we landed in my current house. My partner had the same type of upbringing. We’re both absolutely committed to never putting ourselves and our future kid(s) through that if at all possible.
Fwiw, we’re now in a fortunate position where we can afford to pay down the house, student loans, and still have some savings. We’re not spenders and my income alone covers all of our bills (and then some). Mr. R’s is all extra and we split it between savings and spending down the mortgage and student loans. We make all of our decisions with the knowledge that I am the only one with a stable job. He works in education which is certainly not stable. So anything he’s bringing in is gravy. We both are used to having absolutely nothing so the fact that we’ve had a decent income for the last few years has just left us flush. We haven’t adjusted our spending habits to reflect the increased income and still live like we’re making 1/3 or less of what we now make. So far, so good…
In New York, yes. And on the other side of the country, San Francisco. Maybe not so much in other major cities.
People in my family have recent experience finding apartments in Chicago, Los Angeles, and Washington, DC. It was not unreasonably difficult in any of these cities.
NYC area here. Definitely. Under 2000 sq ft will cost 900k minimum in this school district. Property taxes alone are 19k. That is over $1500 a month…more than a mortgage is most of the country. So the big cities on either coast are hyper inflationary!
No worries on the mortgage here. Our interest rate is also only 2.5. We started making a lot more money after we moved here so we used the extra to save for the kids college.
The key is to live below your means and get beyond paycheck to paycheck. If you go above 25 to 30 % of take home pay you won’t have enough money for other expenses, emergencies and savings.
No mortgage worries here either. Like many on this thread, we’re still in our “starter home” (although we did just remodel the kitchen - yay). 2000 square foot home, good school district, fun neighborhood - come to the Midwest, the housing prices are great!
I live in a relatively high cost bubble in an area with low salaries and feel that housing is a burden. Our property taxes are low but our homeowners insurance in this coastal area is ridiculously high. It’s one of the reasons H and I have decided to downsize. We’re remodeling and moving into H’s former “bachelor pad” that we were previously renting out. Lower mortgage and a lot less house to insure and maintain. Our plan is to pay off that mortgage quickly and scale back our jobs. Have to say that despite the salary/housing imbalance, I love living in this area.
I also worry about health care costs. Our health care is costing us @18K a year and rising at an alarming rate.
We feel like we are saving by renting. All of our utilities, except electricity, are included in our rent. We don’t have to pay property taxes. And, neither of us is very handy when it comes to even minor plumbing and electrical issues. We don’t have to worry about finding and hiring a handy man to do repairs, we just call the rental office.
My daughter didn’t feel that way. When she lived in DC (her first three years out of college), she spent one of her two monthly paychecks on rent. The other paycheck paid for everything else. It worked out fine.
Around here, a house is not an investment. All property values are down over any number of time frames. Real estate taxes are outrageous. I saw a .8 acre LOT for sale yesterday with a $13,000 tax bill! Housing is a burden.
I live in a high-cost area, but bought many years ago so the house has been paid off for awhile. It was purchased pre-prop 13 in California which means the property taxes are ridiculously low. I feel extremely lucky that living slightly below our means for most of our lives will allow for a comfortable retirement.
I do fear that my kid, despite a good job and great savings habits will never be able to afford to buy anything in her current high-cost area without significant down payment help from me.
But when you’re ready to retire your housing cost will be the same, if not higher. Whereas ours are a fraction of what they were when we were working. We also have a nice asset to leave to our children. Or sell and buy down and have money for luxuries. And you ARE paying property taxes. It’s just included in your rent.