[Scarlett]

$130K is take-home pay under $7.5K/month after taxes and $10K in 401k, assuming generous employee match, married, 2 dependents w/ standard deduction, $0 for wifey’s IRA and employee covered insurance. Your marginal rate is 25%, but since you itemize you forfeit your standard deduction and assuming you cheat by claiming MR your “effective rent” is closer to $3.5K.
Your fixed monthly expenses are:
$3500 “effective rent”
$500 principal
$100 HOA
$300 cable, phone, misc utilities
$600 car payment (entry level sedan and minivan)
$500 food
$300 gas & car maintenance
————————
$5800
You are left with $1700/month to cover medical bills (two kids – what are the chances at least one will need braces?), landscaping, clothing, electronics, furniture for your new house, vacation, preschool/school supplies, birthday parties… you will be able to set asside few hundreds/month, if that, to recover your $130K downpayment.

I am not saying it is impossible, but it sounds very risky and the engineering types with a spouse and two kids, that you count on, are usually risk-aware and rarely accept prayer as a convincing risk mitigation plan.

BGinRB,

You really underestimate the cost of food. I did too, until recently when my financial advisor required my monthly expenses and I was forced to add up transactions on my cards saying “Vons”, “Ralphs”, “Costco”, “Trader Joe”…. For a family of 4, the food is at least $1000, could be even $1500. unless they eat only mac&cheese.
But except for that, you make a very good case.

Another issue that one may want to take into account when comparing rent vs. own: cars, gas, car maintenance and insurance. If one rents close to work/school and in walking distance from parks and grocery stores and if buying means moving further away, requiring 2 cars, driving anywhere and a significantly longer commute, that will drive up the costs of transportation a lot.

[Scarlett]

I completely agree with budgeting and watching your expenditures, but for that to be doable , the house prices have to come down enough so that saving 20% of the price would not take more than a few years…
Exmaple: if you have a family with 2 young kids, and an income of 150K (both parents with PhD,working) once you put some money away for retirement and college, you pay your rent and transportation and cars, and pay the daycare/school stuff and food and clothes there isn’t that much left to save for a downpayment…Maybe, at best, if they are really really good, 1000/month and take no vacations and no other unusual expenses like furniture or braces etc…. If they want a decent 4 bdr home with yard at ~600K, it will take them more than 10 years to save for 20% downpayment…

[Scarlett]

I completely agree with budgeting and watching your expenditures, but for that to be doable , the house prices have to come down enough so that saving 20% of the price would not take more than a few years…
Exmaple: if you have a family with 2 young kids, and an income of 150K (both parents with PhD,working) once you put some money away for retirement and college, you pay your rent and transportation and cars, and pay the daycare/school stuff and food and clothes there isn’t that much left to save for a downpayment…Maybe, at best, if they are really really good, 1000/month and take no vacations and no other unusual expenses like furniture or braces etc…. If they want a decent 4 bdr home with yard at ~600K, it will take them more than 10 years to save for 20% downpayment…

[Scarlett]

I completely agree with budgeting and watching your expenditures, but for that to be doable , the house prices have to come down enough so that saving 20% of the price would not take more than a few years…
Exmaple: if you have a family with 2 young kids, and an income of 150K (both parents with PhD,working) once you put some money away for retirement and college, you pay your rent and transportation and cars, and pay the daycare/school stuff and food and clothes there isn’t that much left to save for a downpayment…Maybe, at best, if they are really really good, 1000/month and take no vacations and no other unusual expenses like furniture or braces etc…. If they want a decent 4 bdr home with yard at ~600K, it will take them more than 10 years to save for 20% downpayment…

[Scarlett]

I completely agree with budgeting and watching your expenditures, but for that to be doable , the house prices have to come down enough so that saving 20% of the price would not take more than a few years…
Exmaple: if you have a family with 2 young kids, and an income of 150K (both parents with PhD,working) once you put some money away for retirement and college, you pay your rent and transportation and cars, and pay the daycare/school stuff and food and clothes there isn’t that much left to save for a downpayment…Maybe, at best, if they are really really good, 1000/month and take no vacations and no other unusual expenses like furniture or braces etc…. If they want a decent 4 bdr home with yard at ~600K, it will take them more than 10 years to save for 20% downpayment…

[Scarlett]

I completely agree with budgeting and watching your expenditures, but for that to be doable , the house prices have to come down enough so that saving 20% of the price would not take more than a few years…
Exmaple: if you have a family with 2 young kids, and an income of 150K (both parents with PhD,working) once you put some money away for retirement and college, you pay your rent and transportation and cars, and pay the daycare/school stuff and food and clothes there isn’t that much left to save for a downpayment…Maybe, at best, if they are really really good, 1000/month and take no vacations and no other unusual expenses like furniture or braces etc…. If they want a decent 4 bdr home with yard at ~600K, it will take them more than 10 years to save for 20% downpayment…

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