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How much do you/should you spend on food (US)?

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  • PackerjohnPackerjohn Posts: 4,859Member Member Posts: 4,859Member Member
    nooshi713 wrote: »
    Gamliela wrote: »
    nooshi713 wrote: »
    Aaron_K123 wrote: »
    nooshi713 wrote: »
    There was no way for me to save a year's mortgage plus down payment in California. They were taking too much tax when I had no write off and rent was sky high. I am grateful to be in a house now.

    If you were able to save up enough for a downpayment then wouldn't continuing to wait longer and continuing to save allow you to save up enough to have both a downpayment and a financial cushion in case of job loss? I'm not saying you can't buy a house as soon as you have enough for a downpayment, obviously you can. I'm also not saying that you couldn't save money with a home over rental, obviously you can although unlikely at least until the mortgage is paid down. I'm just saying it isn't that financially prudent to purchase a house if the result is to completely empty out your bank account because that is extremely risky. It is hard to recover from defaulting on a mortgage and job loss or economic crashes can come with little warning (2008 anyone?). Buying a house without a safety net is gambling, it is a gamble that very well might pay off...but it is gambling. I'm just an advocate for prudence over basically betting that you won't lose your job in order to save a few extra thousand a year in the short-term.

    I ended up taking out a loan on my 401K to get the money for the down payment. That was the only way I could do it. I was renting a modest 1 bedroom apartment and driving a paid off used car. Even now, with my write off I only see about 60% of my income in take home pay. That is how bad the tax situation is here. There was no way I could save up the money before.

    wow, things have changed, I didn't know getting loans for a downpayment was even possible! I think you are doing very well to see 60% take home pay. well done!

    edit for spelling

    Thanks but I feel like as hard as I work that I deserve to take home more than 60% of what I earn.

    Do you get state and federal tax refunds? If so, you have too much withheld from each paycheck. If you you're not getting a large refund you must have a very high income.
  • beachbody4lbeachbody4l Posts: 40Member Member Posts: 40Member Member
    My husband and I spend about $250 a month on groceries (That includes the household goods we buy at the same time and our pet food/litter). I frequently buy energy drinks while on campus (not cheap but I figure it's the price I pay for good grades and cramming 15 credit hours in a semester), and we eat drive-through fairly often because I am always at school or he is working. I'd say overall we spend about $350 a month. We could save more by not eating out or me not drinking diet soda/energy drinks but...nah lol.
  • Aaron_K123Aaron_K123 Posts: 7,060Member Member Posts: 7,060Member Member
    Laces918 wrote: »
    I need to learn from some people on here.. it’s just me and I spend a minimum of $700 a month for food and rarely eat out..

    Not saying there wouldn't be ways to improve your budget but also not everyone on here is a large muscular man either. My guess is your calories are double a lot of other people who are posting.
  • nooshi713nooshi713 Posts: 3,024Member Member Posts: 3,024Member Member
    Packerjohn wrote: »
    nooshi713 wrote: »
    Gamliela wrote: »
    nooshi713 wrote: »
    Aaron_K123 wrote: »
    nooshi713 wrote: »
    There was no way for me to save a year's mortgage plus down payment in California. They were taking too much tax when I had no write off and rent was sky high. I am grateful to be in a house now.

    If you were able to save up enough for a downpayment then wouldn't continuing to wait longer and continuing to save allow you to save up enough to have both a downpayment and a financial cushion in case of job loss? I'm not saying you can't buy a house as soon as you have enough for a downpayment, obviously you can. I'm also not saying that you couldn't save money with a home over rental, obviously you can although unlikely at least until the mortgage is paid down. I'm just saying it isn't that financially prudent to purchase a house if the result is to completely empty out your bank account because that is extremely risky. It is hard to recover from defaulting on a mortgage and job loss or economic crashes can come with little warning (2008 anyone?). Buying a house without a safety net is gambling, it is a gamble that very well might pay off...but it is gambling. I'm just an advocate for prudence over basically betting that you won't lose your job in order to save a few extra thousand a year in the short-term.

    I ended up taking out a loan on my 401K to get the money for the down payment. That was the only way I could do it. I was renting a modest 1 bedroom apartment and driving a paid off used car. Even now, with my write off I only see about 60% of my income in take home pay. That is how bad the tax situation is here. There was no way I could save up the money before.

    wow, things have changed, I didn't know getting loans for a downpayment was even possible! I think you are doing very well to see 60% take home pay. well done!

    edit for spelling

    Thanks but I feel like as hard as I work that I deserve to take home more than 60% of what I earn.

    Do you get state and federal tax refunds? If so, you have too much withheld from each paycheck. If you you're not getting a large refund you must have a very high income.

    I typically break even, and sometimes owe a little or get a tiny bit back.
    edited July 2018
  • Aaron_K123Aaron_K123 Posts: 7,060Member Member Posts: 7,060Member Member
    ...eh decided to just stop posting on this topic. moderator can delete this comment if they see it.
    edited July 2018
  • Leslierussell4134Leslierussell4134 Posts: 386Member, Premium Member Posts: 386Member, Premium Member
    TonyB0588 wrote: »
    Aaron_K123 wrote: »
    Aaron_K123 wrote: »
    fishgutzy wrote: »
    Also refuse to buy a home more than 2x household income(I realize that is nearly impossible in places like NY, MA, and CA)

    ...and WA, and a lot of urban areas in general. My house is 5x my household income and I have a dual professional income household and we were being frugal relative to most in our area. 2x is impossible unless you are making a huge income. 3x pretty much impossible as well, 4x would be a stretch. Not sure where you are from where houses go for only 2x of household income as an upper bound but if that rule was followed then almost no one would have a house in urban areas on the coasts at least unless their household income is $300k+

    I think more general advise would be don't purchase a house if you could rent an equivalent for less than the mortgage interest/home insurance/maintenance costs and don't purchase a house unless you have at least 2 years worth of mortgage payments in savings to provide a buffer for job loss or transitions.

    I had to giggle at this, as living in California having 2 years of mortgage in the bank doesn't really make sense to me. If I did have 2 years, that would be over 100k and better spent as a down payment on the actual morgage to avoid the costly PMI. If I did have to save 100k I'd never own a home.
    Here in Cali it's advised you have 3 to 4 months morgage on the bank, which is still a lot, as most mortgages are between 4k and 5k.

    Seattle is as expensive as Cali so I dont think that matters. If you are super confident there is no way you can lose your income for more than 3 months then okay but to me that is extremely risky. Having 1 year in mortgage saved might be enough but it isn't all that hard to have a major hit to income during tough economic times and 6-8 months without a job will wipe that out and that's assuming your mortgage is more than your other living expenses. If you default on a mortgage then say goodbye to your credit rating....is that worth getting out of rentals into a home a little earlier?

    I did have 100k in savings on top of my downpayment which was 20% to avoid PMI entirely which is why I felt it was okay to purchase at that point since 2 years mortgage for me was about 70k. Plus that level of solvency let me get an interest rate low enough that I was saving compared to rent on day one. Not sure why that is funny. If you dont have much liquidity then home ownership is a risky proposition...I'd rather rent for another couple years than risk my financial record and solvency.

    The trouble with renting is that you're paying out money every month that isn't ever going towards ownership!!

    And you are not gaining on rising cost of housing. My husband and I were going to buy in 2012 here in Southern California. The price of the home was $315,000, that's 5 years ago and that same house just sold for $674,000. Is it safe to say we should have purchased then, as the market more than doubled in 5 years.
  • rickiimarieeerickiimarieee Posts: 2,206Member Member Posts: 2,206Member Member
    I don’t eat out but my husband does at work and I spent about 300-400$ roughly a month on groceries for 4 of us. Which in my eyes is very very cheap. We went from 700 to 300$ just by cutting out a majority of junk food.
  • rickiimarieeerickiimarieee Posts: 2,206Member Member Posts: 2,206Member Member
    I’d say about 5% of my monthly salary is going to groceries
  • bpotts44bpotts44 Posts: 1,059Member Member Posts: 1,059Member Member
    We do 800-1000 per month for a family of 7. We have lived on alot less in the past.
  • Aaron_K123Aaron_K123 Posts: 7,060Member Member Posts: 7,060Member Member
    TonyB0588 wrote: »
    Aaron_K123 wrote: »
    Aaron_K123 wrote: »
    fishgutzy wrote: »
    Also refuse to buy a home more than 2x household income(I realize that is nearly impossible in places like NY, MA, and CA)

    ...and WA, and a lot of urban areas in general. My house is 5x my household income and I have a dual professional income household and we were being frugal relative to most in our area. 2x is impossible unless you are making a huge income. 3x pretty much impossible as well, 4x would be a stretch. Not sure where you are from where houses go for only 2x of household income as an upper bound but if that rule was followed then almost no one would have a house in urban areas on the coasts at least unless their household income is $300k+

    I think more general advise would be don't purchase a house if you could rent an equivalent for less than the mortgage interest/home insurance/maintenance costs and don't purchase a house unless you have at least 2 years worth of mortgage payments in savings to provide a buffer for job loss or transitions.

    I had to giggle at this, as living in California having 2 years of mortgage in the bank doesn't really make sense to me. If I did have 2 years, that would be over 100k and better spent as a down payment on the actual morgage to avoid the costly PMI. If I did have to save 100k I'd never own a home.
    Here in Cali it's advised you have 3 to 4 months morgage on the bank, which is still a lot, as most mortgages are between 4k and 5k.

    Seattle is as expensive as Cali so I dont think that matters. If you are super confident there is no way you can lose your income for more than 3 months then okay but to me that is extremely risky. Having 1 year in mortgage saved might be enough but it isn't all that hard to have a major hit to income during tough economic times and 6-8 months without a job will wipe that out and that's assuming your mortgage is more than your other living expenses. If you default on a mortgage then say goodbye to your credit rating....is that worth getting out of rentals into a home a little earlier?

    I did have 100k in savings on top of my downpayment which was 20% to avoid PMI entirely which is why I felt it was okay to purchase at that point since 2 years mortgage for me was about 70k. Plus that level of solvency let me get an interest rate low enough that I was saving compared to rent on day one. Not sure why that is funny. If you dont have much liquidity then home ownership is a risky proposition...I'd rather rent for another couple years than risk my financial record and solvency.

    The trouble with renting is that you're paying out money every month that isn't ever going towards ownership!!

    And you are not gaining on rising cost of housing. My husband and I were going to buy in 2012 here in Southern California. The price of the home was $315,000, that's 5 years ago and that same house just sold for $674,000. Is it safe to say we should have purchased then, as the market more than doubled in 5 years.

    But if you sell a house and then buy a house in the same area it is a total wash. Sure your house doubled in value, but the house you are going to buy next just doubled in cost.

    The area I am in my home value has almost doubled since I bought it but I'm not happy about that. If I sold now I'd just have to move into another house in the area which also have increased in price so I wouldn't have actually made anything off my "investment". All the increase in my home value has done is cost me more money in the form of increases to my property tax.

    Equity is only of direct value if it is an investment property, not something you are living in. If you purchased a house in an area just to have it as an investment and then that doubled in value then sure that is great...but if it is your home then not so much. The exception would be if you sold your house in an area where the market was booming and moved to an area where it was not...but that is uncommon and certainly not something to count on happening.

    edited July 2018
  • TonyB0588TonyB0588 Posts: 8,210Member Member Posts: 8,210Member Member
    It's amazing the wide range of responses on here - some seem to live on extremely little in groceries, while others spend quite high.

    As for housing, most of my family and friends have opted for owning rather than renting. Never really considered these alternative positions posted here before.

    Will continue to watch this thread with great interest!!
  • Leslierussell4134Leslierussell4134 Posts: 386Member, Premium Member Posts: 386Member, Premium Member
    Aaron_K123 wrote: »
    TonyB0588 wrote: »
    Aaron_K123 wrote: »
    Aaron_K123 wrote: »
    fishgutzy wrote: »
    Also refuse to buy a home more than 2x household income(I realize that is nearly impossible in places like NY, MA, and CA)

    ...and WA, and a lot of urban areas in general. My house is 5x my household income and I have a dual professional income household and we were being frugal relative to most in our area. 2x is impossible unless you are making a huge income. 3x pretty much impossible as well, 4x would be a stretch. Not sure where you are from where houses go for only 2x of household income as an upper bound but if that rule was followed then almost no one would have a house in urban areas on the coasts at least unless their household income is $300k+

    I think more general advise would be don't purchase a house if you could rent an equivalent for less than the mortgage interest/home insurance/maintenance costs and don't purchase a house unless you have at least 2 years worth of mortgage payments in savings to provide a buffer for job loss or transitions.

    I had to giggle at this, as living in California having 2 years of mortgage in the bank doesn't really make sense to me. If I did have 2 years, that would be over 100k and better spent as a down payment on the actual morgage to avoid the costly PMI. If I did have to save 100k I'd never own a home.
    Here in Cali it's advised you have 3 to 4 months morgage on the bank, which is still a lot, as most mortgages are between 4k and 5k.

    Seattle is as expensive as Cali so I dont think that matters. If you are super confident there is no way you can lose your income for more than 3 months then okay but to me that is extremely risky. Having 1 year in mortgage saved might be enough but it isn't all that hard to have a major hit to income during tough economic times and 6-8 months without a job will wipe that out and that's assuming your mortgage is more than your other living expenses. If you default on a mortgage then say goodbye to your credit rating....is that worth getting out of rentals into a home a little earlier?

    I did have 100k in savings on top of my downpayment which was 20% to avoid PMI entirely which is why I felt it was okay to purchase at that point since 2 years mortgage for me was about 70k. Plus that level of solvency let me get an interest rate low enough that I was saving compared to rent on day one. Not sure why that is funny. If you dont have much liquidity then home ownership is a risky proposition...I'd rather rent for another couple years than risk my financial record and solvency.

    The trouble with renting is that you're paying out money every month that isn't ever going towards ownership!!

    And you are not gaining on rising cost of housing. My husband and I were going to buy in 2012 here in Southern California. The price of the home was $315,000, that's 5 years ago and that same house just sold for $674,000. Is it safe to say we should have purchased then, as the market more than doubled in 5 years.

    But if you sell a house and then buy a house in the same area it is a total wash. Sure your house doubled in value, but the house you are going to buy next just doubled in cost.

    The area I am in my home value has almost doubled since I bought it but I'm not happy about that. If I sold now I'd just have to move into another house in the area which also have increased in price so I wouldn't have actually made anything off my "investment". All the increase in my home value has done is cost me more money in the form of increases to my property tax.

    Equity is only of direct value if it is an investment property, not something you are living in. If you purchased a house in an area just to have it as an investment and then that doubled in value then sure that is great...but if it is your home then not so much. The exception would be if you sold your house in an area where the market was booming and moved to an area where it was not...but that is uncommon and certainly not something to count on happening.

    Our intention is not to sell once we buy, I'm 31, so a home will be the place I raise my kids, a good 10 to 15 years. Equity adds to net worth, so by buying earlier, you get have a higher net worth when you do sell for retirement, downsizing what have you.
    I don't know where you live, but here in California property tax isn't reassessed based on increasing value, only if you modify your home or refinance. So taxes wouldn't have increased for us, and we could now rent the property for a lot more than the morgage, even if we included the high cost of water in California. It would have been a win win, waiting to buy costs money. Time is always money.
    edited July 2018
  • Aaron_K123Aaron_K123 Posts: 7,060Member Member Posts: 7,060Member Member
    Aaron_K123 wrote: »
    TonyB0588 wrote: »
    Aaron_K123 wrote: »
    Aaron_K123 wrote: »
    fishgutzy wrote: »
    Also refuse to buy a home more than 2x household income(I realize that is nearly impossible in places like NY, MA, and CA)

    ...and WA, and a lot of urban areas in general. My house is 5x my household income and I have a dual professional income household and we were being frugal relative to most in our area. 2x is impossible unless you are making a huge income. 3x pretty much impossible as well, 4x would be a stretch. Not sure where you are from where houses go for only 2x of household income as an upper bound but if that rule was followed then almost no one would have a house in urban areas on the coasts at least unless their household income is $300k+

    I think more general advise would be don't purchase a house if you could rent an equivalent for less than the mortgage interest/home insurance/maintenance costs and don't purchase a house unless you have at least 2 years worth of mortgage payments in savings to provide a buffer for job loss or transitions.

    I had to giggle at this, as living in California having 2 years of mortgage in the bank doesn't really make sense to me. If I did have 2 years, that would be over 100k and better spent as a down payment on the actual morgage to avoid the costly PMI. If I did have to save 100k I'd never own a home.
    Here in Cali it's advised you have 3 to 4 months morgage on the bank, which is still a lot, as most mortgages are between 4k and 5k.

    Seattle is as expensive as Cali so I dont think that matters. If you are super confident there is no way you can lose your income for more than 3 months then okay but to me that is extremely risky. Having 1 year in mortgage saved might be enough but it isn't all that hard to have a major hit to income during tough economic times and 6-8 months without a job will wipe that out and that's assuming your mortgage is more than your other living expenses. If you default on a mortgage then say goodbye to your credit rating....is that worth getting out of rentals into a home a little earlier?

    I did have 100k in savings on top of my downpayment which was 20% to avoid PMI entirely which is why I felt it was okay to purchase at that point since 2 years mortgage for me was about 70k. Plus that level of solvency let me get an interest rate low enough that I was saving compared to rent on day one. Not sure why that is funny. If you dont have much liquidity then home ownership is a risky proposition...I'd rather rent for another couple years than risk my financial record and solvency.

    The trouble with renting is that you're paying out money every month that isn't ever going towards ownership!!

    And you are not gaining on rising cost of housing. My husband and I were going to buy in 2012 here in Southern California. The price of the home was $315,000, that's 5 years ago and that same house just sold for $674,000. Is it safe to say we should have purchased then, as the market more than doubled in 5 years.

    But if you sell a house and then buy a house in the same area it is a total wash. Sure your house doubled in value, but the house you are going to buy next just doubled in cost.

    The area I am in my home value has almost doubled since I bought it but I'm not happy about that. If I sold now I'd just have to move into another house in the area which also have increased in price so I wouldn't have actually made anything off my "investment". All the increase in my home value has done is cost me more money in the form of increases to my property tax.

    Equity is only of direct value if it is an investment property, not something you are living in. If you purchased a house in an area just to have it as an investment and then that doubled in value then sure that is great...but if it is your home then not so much. The exception would be if you sold your house in an area where the market was booming and moved to an area where it was not...but that is uncommon and certainly not something to count on happening.

    Our intention is not to sell once we buy, I'm 31, so a home will be the place I raise my kids, a good 10 to 15 years. Equity adds to net worth, so by buying earlier, you get have a higher net worth when you do sell for retirement, downsizing what have you.
    I don't know where you live, but here in California property tax isn't reassessed based on increasing value, only if you modify your home or refinance. So taxes wouldn't have increased for us, and we could now rent the property for a lot more than the morgage, even if we included the high cost of water in California. It would have been a win win, waiting to buy costs money. Time is always money.

    I live in Seattle. California property tax is 1% of assessed value....during ownership the rate of increase is just capped at 2% annual or the rate of inflation. So yeah that cap does make a difference, but your property tax will be increasing. In comparison though in Seattle property taxes rose on average about 17% this year.

    http://www.lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx

    "Taxes Based on Property Value
    The 1 Percent Rate. The largest component of most property owners’ annual property tax bill is the 1 percent rate—often called the 1 percent general tax levy or countywide rate. The Constitution limits this rate to 1 percent of assessed value. As shown on our sample property tax bill, the owner of a property assessed at $350,000 owes $3,500 under the 1 percent rate. The 1 percent rate is a general tax, meaning that local governments may use its revenue for any public purpose."

    "Local Real Property Is Assessed at Acquisition Value and Adjusted Upward Each Year. The process that county assessors use to determine the value of real property was established by Proposition 13. Under this system, when real property is purchased, the county assessor assigns it an assessed value that is equal to its purchase price, or “acquisition value.” Each year thereafter, the property’s assessed value increases by 2 percent or the rate of inflation, whichever is lower. This process continues until the property is sold, at which point the county assessor again assigns it an assessed value equal to its most recent purchase price. In other words, a property’s assessed value resets to market value (what a willing buyer would pay for it) when it is sold. (As shown in Figure 2, voters have approved various constitutional amendments that exclude certain property transfers from triggering this reassessment.)"


    When your house triples in value over those 15 years you live in it the other houses in that area will also triple in value. When you move out when you retire to downsize to a smaller place you will be purchasing that house at the market value which has gone up by as much as your house has gone up by. Also when you move it will trigger a reassesment of the property you buy meaning even though you are moving to a smaller home your property tax is going to increase substantially because of the increased value of all homes in the area. Because of that a smaller home you just purchased might actually cost more than your large home you purchased 15 years ago and have paid off. You will also be paying realtor fees and taxes which are not unsubstantial. The concept of "net worth" is also not that meaningful. As I stated my "net worth" has gone up substantially because my house has doubled in value. But that isn't money I can access unless I either sell my house or take out a loan based on my established equity, neither of which is going to actually make me any money because I will either have to purchase a new home in the same area or I will be paying additional interest charges. Watching your net worth increase is mezmorizing and enticing for sure, but if you aren't going to sell all it means is your property tax will go up with your next assessment.

    My home purchased at $400k now being worth $725k today gets me what exactly other than a larger property tax bill. Even if I sell if all the other houses in the area have gone up equivalently and I'm not going to be moving out of the city I work in? Now if I bought my house as a speculative investment and I sold it for the cash after that period of time then sure it would have been a great investment...but I happen to live in it so that increase doesn't actually help me.

    I'm not saying home ownership is not a good idea, eventually when you pay your mortgage down significantly the amount you are putting towards equity versus interest will make it so it is a better value proposition than a rental. But I think you are way overestimating the value of a home you live in. What you are basically doing is betting that the real estate market in your area will do well enough that the return on investment you will get selling your home and moving to a smaller home over 15 years would be a larger ROI than had you put that money into the stock market. I'm not saying that is a bad investment, I'm just saying it isn't guaranteed. Getting into a house as soon as you can without a safety net of savings is not really that much of an advantage and carries a lot of risk given you are essentially loaning money from a bank to do an investment. That is just my opinion of course and you have yours and we can agree to disagree on this one. Cheers.
    edited July 2018
  • The_EnginerdThe_Enginerd Posts: 3,914Member Member Posts: 3,914Member Member
    Aaron_K123 wrote: »
    TonyB0588 wrote: »
    Aaron_K123 wrote: »
    Aaron_K123 wrote: »
    fishgutzy wrote: »
    Also refuse to buy a home more than 2x household income(I realize that is nearly impossible in places like NY, MA, and CA)

    ...and WA, and a lot of urban areas in general. My house is 5x my household income and I have a dual professional income household and we were being frugal relative to most in our area. 2x is impossible unless you are making a huge income. 3x pretty much impossible as well, 4x would be a stretch. Not sure where you are from where houses go for only 2x of household income as an upper bound but if that rule was followed then almost no one would have a house in urban areas on the coasts at least unless their household income is $300k+

    I think more general advise would be don't purchase a house if you could rent an equivalent for less than the mortgage interest/home insurance/maintenance costs and don't purchase a house unless you have at least 2 years worth of mortgage payments in savings to provide a buffer for job loss or transitions.

    I had to giggle at this, as living in California having 2 years of mortgage in the bank doesn't really make sense to me. If I did have 2 years, that would be over 100k and better spent as a down payment on the actual morgage to avoid the costly PMI. If I did have to save 100k I'd never own a home.
    Here in Cali it's advised you have 3 to 4 months morgage on the bank, which is still a lot, as most mortgages are between 4k and 5k.

    Seattle is as expensive as Cali so I dont think that matters. If you are super confident there is no way you can lose your income for more than 3 months then okay but to me that is extremely risky. Having 1 year in mortgage saved might be enough but it isn't all that hard to have a major hit to income during tough economic times and 6-8 months without a job will wipe that out and that's assuming your mortgage is more than your other living expenses. If you default on a mortgage then say goodbye to your credit rating....is that worth getting out of rentals into a home a little earlier?

    I did have 100k in savings on top of my downpayment which was 20% to avoid PMI entirely which is why I felt it was okay to purchase at that point since 2 years mortgage for me was about 70k. Plus that level of solvency let me get an interest rate low enough that I was saving compared to rent on day one. Not sure why that is funny. If you dont have much liquidity then home ownership is a risky proposition...I'd rather rent for another couple years than risk my financial record and solvency.

    The trouble with renting is that you're paying out money every month that isn't ever going towards ownership!!

    And you are not gaining on rising cost of housing. My husband and I were going to buy in 2012 here in Southern California. The price of the home was $315,000, that's 5 years ago and that same house just sold for $674,000. Is it safe to say we should have purchased then, as the market more than doubled in 5 years.

    But if you sell a house and then buy a house in the same area it is a total wash. Sure your house doubled in value, but the house you are going to buy next just doubled in cost.

    The area I am in my home value has almost doubled since I bought it but I'm not happy about that. If I sold now I'd just have to move into another house in the area which also have increased in price so I wouldn't have actually made anything off my "investment". All the increase in my home value has done is cost me more money in the form of increases to my property tax.

    Equity is only of direct value if it is an investment property, not something you are living in. If you purchased a house in an area just to have it as an investment and then that doubled in value then sure that is great...but if it is your home then not so much. The exception would be if you sold your house in an area where the market was booming and moved to an area where it was not...but that is uncommon and certainly not something to count on happening.

    Our intention is not to sell once we buy, I'm 31, so a home will be the place I raise my kids, a good 10 to 15 years. Equity adds to net worth, so by buying earlier, you get have a higher net worth when you do sell for retirement, downsizing what have you.
    I don't know where you live, but here in California property tax isn't reassessed based on increasing value, only if you modify your home or refinance. So taxes wouldn't have increased for us, and we could now rent the property for a lot more than the morgage, even if we included the high cost of water in California. It would have been a win win, waiting to buy costs money. Time is always money.

    In CA, your property tax is not reassessed if you refinance.

    The buy vs. rent decision is really driven by how long you intend to stay and the rent vs. mortgage cost. Money tied up in a house is not as liquid, and there are significant costs associated with selling a home and insurance and maintenance that are not paid if you decide to rent. Sure, looking back, you would have been better off if you bought in 2012, but there are also people who bought in 2007 are just now back to par after a decade. I had friends have to give up their houses to foreclosure or rent out their house and not be able to buy a new place when life took them elsewhere because they couldn't sell their current house. Hindsight is 20/20. In general, buying is still generally preferable financially if you plan on staying for a 10 years and can absorb the risk of losing equity should life force you to move.
  • The_EnginerdThe_Enginerd Posts: 3,914Member Member Posts: 3,914Member Member
    So I recently was doing some budget tracking, and despite eating at home a vast majority of the time except for lunch at work, I spend $500-$600 a month on groceries for a family of me myself and I... I spend an additional $200/month on eating out for lunch at work.

    I eat around 3000 calories/day to maintain my 5'11", 150 lb frame since I run a lot. I'm not even buying organic and just shopping at Ralph's/Kroger, but I do eat a LOT of fresh vegetables and fruits, including a lot of berries which tend to be fairly expensive. I could spend a lot less, but some of these foods are a "luxury" item for me where I choose to spend my money since I don't buy a lot of other stuff.
  • Aaron_K123Aaron_K123 Posts: 7,060Member Member Posts: 7,060Member Member
    Aaron_K123 wrote: »
    TonyB0588 wrote: »
    Aaron_K123 wrote: »
    Aaron_K123 wrote: »
    fishgutzy wrote: »
    Also refuse to buy a home more than 2x household income(I realize that is nearly impossible in places like NY, MA, and CA)

    ...and WA, and a lot of urban areas in general. My house is 5x my household income and I have a dual professional income household and we were being frugal relative to most in our area. 2x is impossible unless you are making a huge income. 3x pretty much impossible as well, 4x would be a stretch. Not sure where you are from where houses go for only 2x of household income as an upper bound but if that rule was followed then almost no one would have a house in urban areas on the coasts at least unless their household income is $300k+

    I think more general advise would be don't purchase a house if you could rent an equivalent for less than the mortgage interest/home insurance/maintenance costs and don't purchase a house unless you have at least 2 years worth of mortgage payments in savings to provide a buffer for job loss or transitions.

    I had to giggle at this, as living in California having 2 years of mortgage in the bank doesn't really make sense to me. If I did have 2 years, that would be over 100k and better spent as a down payment on the actual morgage to avoid the costly PMI. If I did have to save 100k I'd never own a home.
    Here in Cali it's advised you have 3 to 4 months morgage on the bank, which is still a lot, as most mortgages are between 4k and 5k.

    Seattle is as expensive as Cali so I dont think that matters. If you are super confident there is no way you can lose your income for more than 3 months then okay but to me that is extremely risky. Having 1 year in mortgage saved might be enough but it isn't all that hard to have a major hit to income during tough economic times and 6-8 months without a job will wipe that out and that's assuming your mortgage is more than your other living expenses. If you default on a mortgage then say goodbye to your credit rating....is that worth getting out of rentals into a home a little earlier?

    I did have 100k in savings on top of my downpayment which was 20% to avoid PMI entirely which is why I felt it was okay to purchase at that point since 2 years mortgage for me was about 70k. Plus that level of solvency let me get an interest rate low enough that I was saving compared to rent on day one. Not sure why that is funny. If you dont have much liquidity then home ownership is a risky proposition...I'd rather rent for another couple years than risk my financial record and solvency.

    The trouble with renting is that you're paying out money every month that isn't ever going towards ownership!!

    And you are not gaining on rising cost of housing. My husband and I were going to buy in 2012 here in Southern California. The price of the home was $315,000, that's 5 years ago and that same house just sold for $674,000. Is it safe to say we should have purchased then, as the market more than doubled in 5 years.

    But if you sell a house and then buy a house in the same area it is a total wash. Sure your house doubled in value, but the house you are going to buy next just doubled in cost.

    The area I am in my home value has almost doubled since I bought it but I'm not happy about that. If I sold now I'd just have to move into another house in the area which also have increased in price so I wouldn't have actually made anything off my "investment". All the increase in my home value has done is cost me more money in the form of increases to my property tax.

    Equity is only of direct value if it is an investment property, not something you are living in. If you purchased a house in an area just to have it as an investment and then that doubled in value then sure that is great...but if it is your home then not so much. The exception would be if you sold your house in an area where the market was booming and moved to an area where it was not...but that is uncommon and certainly not something to count on happening.

    Our intention is not to sell once we buy, I'm 31, so a home will be the place I raise my kids, a good 10 to 15 years. Equity adds to net worth, so by buying earlier, you get have a higher net worth when you do sell for retirement, downsizing what have you.
    I don't know where you live, but here in California property tax isn't reassessed based on increasing value, only if you modify your home or refinance. So taxes wouldn't have increased for us, and we could now rent the property for a lot more than the morgage, even if we included the high cost of water in California. It would have been a win win, waiting to buy costs money. Time is always money.

    In CA, your property tax is not reassessed if you refinance.

    The buy vs. rent decision is really driven by how long you intend to stay and the rent vs. mortgage cost. Money tied up in a house is not as liquid, and there are significant costs associated with selling a home and insurance and maintenance that are not paid if you decide to rent. Sure, looking back, you would have been better off if you bought in 2012, but there are also people who bought in 2007 are just now back to par after a decade. I had friends have to give up their houses to foreclosure or rent out their house and not be able to buy a new place when life took them elsewhere because they couldn't sell their current house. Hindsight is 20/20. In general, buying is still generally preferable financially if you plan on staying for a 10 years and can absorb the risk of losing equity should life force you to move.

    Exactly
  • Aaron_K123Aaron_K123 Posts: 7,060Member Member Posts: 7,060Member Member
    Also keep in mind that a home tripling in value over 15 years sounds like an amazing investment, but actually that is just a return of 7.5% annually and over that same 15 year period if you are looking at recent history your standard mid-cap value fund which is fairly safe has an annual return averaging about 9% a year.

    https://www.calculatorsoup.com/calculators/financial/compound-interest-calculator.php

    http://news.morningstar.com/fund-category-returns/


    So if your interest payment plus property tax plus insurance plus home maintenance is more than rent or even a little less than rent you might still actually be better off financially just putting money into a stock fund than into a home. Not only that if you are renting you would have more money with each month to put in an investment that actually has a larger return because for sure your total house payment plus upkeep is going to be more money than rent. Also with a stock investment if you lose your job you can pull money out of the stock fund to help supplement your income until you find another. With investment into real estate you live in if you lose your job and don't have a large amount of savings you are just hosed.

    Basically real estate without a lot of financial backing is just a risky investment. That is fine if that is what you want to do but don't fool yourself into thinking purchasing a home is a sure win financially, it isn't. Now with enough backing you can get your mortgage interest rate low enough that the rent versus owner proposition is more favorable and you have enough saving to weather a storm such as job lose or a financial crash then at that point it is probably a good idea.

    If you really think real estate is just the best investment ever then why not just invest in real estate by buying real estate futures? Same thing in terms of investing in something you feel will increase in value but without the risk of a mortgage and without the costs of property tax/home insurance/maintenance etc and on top of that your money remains accessible.

    Actual purchased real estate can be a great investment if you are renting it out and using that rent to help pay down the mortgage, but not so much if you are the one living in it. But there are a lot of other benefits. You can get a home that you love much more than your rental and that is yours to do with as you see fit and that provides a home for your family that feels a lot more stable and under your control. There are certainly reasons to favor ownership over rental...but not just for the sake of investment really. I just feel that people way overestimate how good of an investment home ownership is.
    edited July 2018
  • The_EnginerdThe_Enginerd Posts: 3,914Member Member Posts: 3,914Member Member
    Aaron_K123 wrote: »
    Also keep in mind that a home tripling in value over 15 years sounds like an amazing investment, but actually that is just a return of 7.5% annually and over that same 15 year period if you are looking at recent history your standard mid-cap value fund which is fairly safe has an annual return averaging about 9% a year.

    https://www.calculatorsoup.com/calculators/financial/compound-interest-calculator.php

    http://news.morningstar.com/fund-category-returns/


    So if your interest payment plus property tax plus insurance plus home maintenance is more than rent or even a little less than rent you might still actually be better off financially just putting money into a stock fund than into a home. Not only that if you are renting you would have more money with each month to put in an investment that actually has a larger return because for sure your total house payment plus upkeep is going to be more money than rent. Also with a stock investment if you lose your job you can pull money out of the stock fund to help supplement your income until you find another. With investment into real estate you live in if you lose your job and don't have a large amount of savings you are just hosed.

    Basically real estate without a lot of financial backing is just a risky investment. With enough backing you can get your mortgage interest rate low enough that the rent versus owner proposition is more favorable and you have enough saving to weather a storm such as job lose or a financial crash.

    If you really think real estate is just the best investment ever then why not just invest in real estate by buying real estate futures? Same thing in terms of investing in something you feel will increase in value but without the risk of a mortgage and without the costs of property tax/home insurance/maintenance etc.

    As an investment for money buying a home you live in is not actually all that great. But there are a lot of other benefits. You can get a home that you love much more than your rental and that is yours to do with as you see fit and that provides a home for your family that feels a lot more stable and under your control. There are certainly reasons to favor ownership over rental...but not just for the sake of investment really.

    Exactly. With all that said, I actually do own a home currently. At the time in my area (~2009), the rents for an equivalent place were equal to the principal and interest on a mortgage given the low interest rates, and the bubble had burst to the point I felt comfortable buying without a significant risk of loss beyond what I could tolerate. The $8,000 credit, plus interest tax deduction, and job situation at the time made buying financially preferable. After five years, I was ahead vs. renting if I had to sell. And I did like having the stability and control to do what I wanted with the place.
  • Aaron_K123Aaron_K123 Posts: 7,060Member Member Posts: 7,060Member Member
    Aaron_K123 wrote: »
    Also keep in mind that a home tripling in value over 15 years sounds like an amazing investment, but actually that is just a return of 7.5% annually and over that same 15 year period if you are looking at recent history your standard mid-cap value fund which is fairly safe has an annual return averaging about 9% a year.

    https://www.calculatorsoup.com/calculators/financial/compound-interest-calculator.php

    http://news.morningstar.com/fund-category-returns/


    So if your interest payment plus property tax plus insurance plus home maintenance is more than rent or even a little less than rent you might still actually be better off financially just putting money into a stock fund than into a home. Not only that if you are renting you would have more money with each month to put in an investment that actually has a larger return because for sure your total house payment plus upkeep is going to be more money than rent. Also with a stock investment if you lose your job you can pull money out of the stock fund to help supplement your income until you find another. With investment into real estate you live in if you lose your job and don't have a large amount of savings you are just hosed.

    Basically real estate without a lot of financial backing is just a risky investment. With enough backing you can get your mortgage interest rate low enough that the rent versus owner proposition is more favorable and you have enough saving to weather a storm such as job lose or a financial crash.

    If you really think real estate is just the best investment ever then why not just invest in real estate by buying real estate futures? Same thing in terms of investing in something you feel will increase in value but without the risk of a mortgage and without the costs of property tax/home insurance/maintenance etc.

    As an investment for money buying a home you live in is not actually all that great. But there are a lot of other benefits. You can get a home that you love much more than your rental and that is yours to do with as you see fit and that provides a home for your family that feels a lot more stable and under your control. There are certainly reasons to favor ownership over rental...but not just for the sake of investment really.

    Exactly. With all that said, I actually do own a home currently. At the time in my area (~2009), the rents for an equivalent place were equal to the principal and interest on a mortgage given the low interest rates, and the bubble had burst to the point I felt comfortable buying without a significant risk of loss beyond what I could tolerate. The $8,000 credit, plus interest tax deduction, and job situation at the time made buying financially preferable. After five years, I was ahead vs. renting if I had to sell. And I did like having the stability and control to do what I wanted with the place.

    Same. At the point I bought I had enough for a 20% downpayment plus several years of mortgage payments worth of savings. As a result I felt comfortable enough getting a loan and was able to get a 3% loan rate which meant that day one my mortgage interest plus insurance and property tax was actually less than my rent so it made financial sense at that point. That said I don't really view the house I live in as an investment and the fact that it has doubled in value is actually more annoying than anything else given that our property tax is adjusted based on assessed value.
    edited July 2018
  • TonyB0588TonyB0588 Posts: 8,210Member Member Posts: 8,210Member Member
    So I recently was doing some budget tracking, and despite eating at home a vast majority of the time except for lunch at work, I spend $500-$600 a month on groceries for a family of me myself and I... I spend an additional $200/month on eating out for lunch at work.

    I eat around 3000 calories/day to maintain my 5'11", 150 lb frame since I run a lot. I'm not even buying organic and just shopping at Ralph's/Kroger, but I do eat a LOT of fresh vegetables and fruits, including a lot of berries which tend to be fairly expensive. I could spend a lot less, but some of these foods are a "luxury" item for me where I choose to spend my money since I don't buy a lot of other stuff.

    From a family of 6 in 2008, down to 3 in 2018, we're spending about $1500 I think. This is only my second month of trying to track it properly, so I'm going to stick with this thread for a while and continue reporting.
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