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Single vs. dual matters because part of the ‘comfortable’ is psychological. I am more comfortable spending $X/month if I know that I can easily generate another $50K/year income stream.
I used 25% because that’s what it takes to get the best rate. Your tax deduction is rather conservative. Assuming $600 in principal payment and $100 insurance (and skipping the MR deductible-or-not discussion) the deduction should be ~25-30%, i.e. ~$500-600/month.
Looking around, most 4S families are either families of retired/active military officers or immigrant engineers working at major SD companies. Usually with limited medical bills (decent insurance) and no student loans (foreign educated, government paid, etc).
I am not saying what you are getting in 4S Ranch is worth the money, just that fiscally-responsible single-income $125K/year family can rather comfortable afford $500K place.[/quote]
Psychological is different for different people. Some might find it more comforting that both parents are working and it’s easier to find a job when you were recently employed vs being out of the work force for so long.
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Indeed. But between being single-income by choice and dual-income by necessity which one would you pick? And weren’t you the one who brought up the 4% unemployment rate among people with 4-year college degree? So, is it hard or not to get a job if you are well educated?
[quote=AN]How many people actually put down 25%? I don’t know the statistics, but I would assume it’s not that many. Especially people in the $400-600k range. I compute my tax deduction based on (interest + tax – standard deduction) * 25% tax bracket. You forgot the standard deduction in your calculation.
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I don’t know how many put 25% down. JimTheRealtor publishes numbers like that for few costal areas. Back in June 13% of sales were with less than 20% down and 44% put 30% or more.
Standard deduction is nice. But the deductible state tax is comparable and you forgot about it.
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Even with decent insurance where you don’t have to pay for any of the premium, you still have out of pocket stuff, dental stuff, vision stuff. They add a little or a lot, depend on how much you use/need.
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Majority of 4S people appear to be in their 30’s and 40’s. A family of four… I don’t know, should not be more than $1K/year.
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How many people don’t have student loans? Why am I hearing all the talk about student loans being a huge problem, yet you don’t think anyone in 4S have student loans?
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I did not say anyone. Get-rich-quick people that got flushed probably did have those. Or maybe not since they likely were not college educated. Looking at my cul-de-sac, there are two retired military officers, two active duty military officers, 7-8 engineering immigrants mostly in mid-level managerial positions. That’s what I see when I look around.
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I didn’t even talk about saving for rainy day yet, just retirement. Again, lets assume you’re right and those who live in 4S spend $0 on medical and student loan, how much does a family spend a month? You have $2200 to play with. How much would be a good rainy day saving? To me, comfortable would be saving $1k-2k/month for rainy day, on top of maxing out 401k and IRA. That would leave this theoretical family $200-1200 to spend on everything else.
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Your numbers are off. My first-hand experience says that a family of four can carry $400K mortgage, put $20K in 401k+IRA, travel to Europe, make several ski trips to Big Bear, own two cars, have two kids enrolled in 7 year-round activities combined, dine out at least twice/month, see a dentist twice/year, pay an extra payment or two on the mortgage, and still easily save $1K/month on $125K/year.
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I don’t consider that comfortable.
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That’s OK. Some people are fiscally conservative and some are even more fiscally conservative.
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All of this is talking about a $500k house too, how about a $600k house? If you recall, ocrenter was saying $400-600k and I said it should be more like $300-500k. Ideally, it would be $300-500k w/out HOA&MR.[/quote]
The difference between $400K and $500K today is what, maybe $400/month after taxes? I know that is a lot of money for some people, but honestly, on $125K/year and the aforementioned second income stream sitting idle $400/month is nothing. Cable + phone bill or the difference between Acura and Honda.
