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Am I too rigid in maintaining my fixed costs?
44 y.o. married 3 children. 1.723 million in retirement and 209k in 529. Annual earnings 325k. Annual financial savings 90k. Debt 133k (worth 650k) 2.5% mounted mortgage ($577 month). We’re in such a greater monetary place than we had been 10 or 15 years in the past however I’m feeling a lot extra threat opposed in taking up further month-to-month obligations significantly when it comes to a costlier home + cost. We’re high-quality in our present residence however typically we have a look at pricier homes for enjoyable and I instantly rule it out as a result of we’ve got such a superb housing / cost state of affairs presently. Am I being too conservative right here?
Re: Am I too rigid in maintaining my fixed costs?
1) What’s your present annual expense?
2) Do you propose to pay in your children’ school schooling?
3) Why would you wish to spend extra on the home versus spending extra on trip? The nest will probably be empty when the youngsters transfer out.
4) Assuming taxes at 100K, your present annual expense is estimated to be 325K – 100K – 90K = 135K. You may not be spending so much on the home however you might be spending so much on non-housing expense. What are you keen to surrender for a costlier home?
KlangFool
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Re: Am I too rigid in maintaining my fixed costs?
As as to if it’s rational, so much depends upon your job safety and whether or not you’re a one-income or two-income household. And likewise how a lot of a bump-up in home price you might be contemplating.
It’s psychological tough to tackle a higher-interest mortgage, particularly when you find yourself in sight of paying off your mortgage.
And having three youngsters who you might be chargeable for is an efficient purpose to lean conservative, financially-speaking.
One factor that humbles me deeply is to see that human genius has its limits whereas human stupidity doesn’t. – Alexandre Dumas, fils
Re: Am I too rigid in maintaining my fixed costs?
TarHeel2002 wrote: ↑Mon Sep 02, 2024 3:10 pm
We’re high-quality in our present residence however typically we have a look at pricier homes for enjoyable and I instantly rule it out as a result of we’ve got such a superb housing / cost state of affairs presently. Am I being too conservative right here?
Nope, IMO you are merely realizing that the marginal acquire/way of life improve from a costlier residence is not value the associated fee to you not less than as of now.
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Re: Am I too rigid in maintaining my fixed costs?
Will you trim your bills to pay for the nicer home or reduce on financial savings? Personally, I’d first attempt to get a deal with on the place all the cash goes and trimming some fats earlier than reducing into the financial savings price.
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Re: Am I too rigid in maintaining my fixed costs?
It’s stunning to me how a lot a brand new mortgage cost might be with the mix of a a lot larger rate of interest in addition to considerably larger residence costs within the present market.
Re: Am I too rigid in maintaining my fixed costs?
TarHeel2002 wrote: ↑Mon Sep 02, 2024 4:18 pm
30-35k on journey the previous few years has been one place we’ve been splurging. Reminiscence making with the youngsters.It’s stunning to me how a lot a brand new mortgage cost might be with the mix of a a lot larger rate of interest in addition to considerably larger residence costs within the present market.
TarHeel2002,
A) It isn’t stunning sufficient so that you can cease pondering of spending extra on the home.
B) Even after taking out the 30K to 35K, you continue to have substantial non-housing expense. The place do you spend the cash? Are you keen to chop these bills?
KlangFool
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Subject Writer
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Re: Am I too rigid in maintaining my fixed costs?
Why do you wish to improve? What are you lacking in your present home that you simply wish to have within the new home? Assuming you reside within the suburbs, does your present home have 4 bedrooms, 2.5 tub, 2 automotive storage, flat yard, and is in good college district?
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Re: Am I too rigid in maintaining my fixed costs?
When you purchase a costlier home now, are you keen to:(1) delay your retirement, (2) spend much less yearly in retirement, or (3) downsize the home in retirement?
It’s all the time doable the home could respect considerably.
