CarmelValleyResident –

I feel your pain… If you guys are struggling with an 1800 payment I would not recommend buying. Obviously your tax guy is pointing out the benefits of the interest deduction if you purchase a home. However if you do not have a big chunk of money saved for a downpayment, and you purchase a home, you most likely will be setting yourself up for a potential problem down the road. Whatever you do, do NOT ever buy something you cannot afford. Do you have anything saved up for a downpayment? Would you consider a less expensive neighborhood then CV? Agreed with the previous post, keep your eyes open on Craigslist for a cheaper alternative with regards to renting. That preschool fee of 900 a month is the tough nut to crack. As a parent I know there are few/no alternatives there.

SD Realtor

Step 1 — get rid of that car payment, by hook or by crook. That’s $7200/year there and in your tax bracket that means you probably had to earn at least $10000 worth of salary just to make those payments. Take half of that amount, $5K and buy a used Honda. It will last you for years and you will have just given yourself a $10K/year raise.

Step 2 — start a home-based business for either yourself or your wife. What do you guys enjoy doing? Try to figure out some way to earn a little extra income out of it. It doesn’t have to be a lot, because the real reason for this is that you can deduct a portion of your rent as office space for your business. Phone bills, internet, water, electricity, etc… you can write a portion of all of them off. Don’t do anything illegal of course, but if you can come up with a legitimate business for yourself then by all means do it.

Step 3 — Look into tax-free medical and educational savings accounts.

Step 4 — are you maxxing out your 401K? If not that’s the fastest way to both improve saving for retirement and lowering your tax burden in one fell swoop.

Step 4 — save your money and wait for the inevitable collapse.

Please note that I am not a professional financial advisor — although I play one on TV. Caveat emptor. Your mileage may vary. I’m not responsible for any bad advice, etc…

lowering taxes, saving money….

Unfortunately, a lot of the great tax deductions require you to be in real estate (and it is a really good side business as well).

To offset my household’s high salary, I went into out-of-state real estate investing, but that is not something I recommend to newbies. Still, the ability to pay very low taxes is appealing.

I assume you are already taking advantage of your employer’s daycare flexible spending account? That will at least help you defray the cost of daycare (my daycare cost was $10,000 last year, haha).

I would move out of SD. If you don’t own a home now you really have nothing to lose. You can always come back. There are nice places around the country that are 1/4 the price of California real estate. You can even help your tax situation out by going to Texas, Oregon, Washington, etc. Where there are no sales tax, state income taxes, etc.

I mean if you don’t have a home you have to ask yourself, are these outrageous California prices really worth it? Quality of life in Cali is horrid if you didn’t buy a home 10 years ago. Why deal with it?

Ted Kaczinski is that you?

No its not *chuckle*

But seriously it is way cheaper to buy a few acres of land and build a custom home from scratch. The trick is to have a business or job that allows this which means a lot of travel.