Against a Wall: HCOL and Those Golden Handcuffs

Driving to work in traffic the other day, I kept thinking–how am I going to do this for another 30 years? Even with splitting the cost of a $2M home with my MIL, we still end up with a very high mortgage that means I’m at best stuck working high-stress jobs that pay well and at worst burning through my savings faster than my baby lunges for my chest when he’s hungry.

There are parts of my current job that I like. My boss is actually really awesome. I know I’m always a heartbeat away from falling out of favor with her, but she’s a good person and I like to work for people who are not self-absorbed sociopaths. She’s just really good at her job and also really good at all the things I’m not — being poised, being a leader/executive, managing lots of things at once, staying cool under pressure, et al. Luckily, she also respects my skillsets–despite surely wishing I was better at being a “professional” my value add is, well, valued. It feels good to be valued. I wish I could be a perfect employee, but I’m far from it, and after this chapter is over it may be my yet-again downfall… but at the least I’ll walk from this one knowing I’ve done some good.

Yet at the end of the day, I know this isn’t sustainable. I’m in survival mode… and we all are, because that’s how business is run these days. Maybe in government jobs things go slow… but we don’t have time to stop and think and be super strategic we just have to go go go. For all my shortcomings, I can take some pride in my ability to be flexible in these types of environments. I know not everyone can perform when every day is another day of fighting fires and not enough time to get things done. But somehow I do get things done. It’s usually the last minute–which I want to be better at–but they get done.

I can do this for a few more years at best, but with one kid and hopefully with another one or two in my future, this can’t be my life–at least, not forever. And the hardest reality to face is that even WITH this being my life, I still cannot safely afford a house here… not even a townhouse or a condo within 45 minutes of work (or at least I think I can’t afford one… it’s so hard to gauge what’s affordable because it all depends on making a crazy amount of money via bonus and stock. Sure, my next few years, if I can keep this job, will be quite lucrative – but that doesn’t mean 30 years of such high pay.)

My husband is pretty adamant about not moving into a condo or townhouse… he wants a house. He wants to pay $2000 a month for the mortgage from his income, wants his dad to pay $2000 a month, wants his mom to put down $1M in cash (possible) and wants me to make up the rest… which will be anywhere from $3000-$6000 a month for a house that we all live in together. But, houses cost more than the mortgage and taxes. There’s fixing up and fixing in general. Running the numbers, the picture looks so unpretty.

I’m sitting in my 1 bedroom apartment thinking– how long can we last here? It’s certainly the safest way to live right now. In our $2500/mo 1 bedroom, I’m saving a lot of money. Worst case, we rent forever. Best case, the money I’m saving and investing in the stock market goes up to the point I have enough for a sizable downpayment on our own place without needing his parents to buy with us. But then there’s the whole matter of him WANTING to live with his parents. Ugh. Is this why marriage is so tough? I’ve spent my whole life trying to obtain independence and I know it’s nice to have grandparents nearby but I’m not so sure I want them literally in our backyard…

My realtor has pretty much disowned me at this point. I feel bad because she spent so much time with us taking us around and showing us houses but at the end of the day I can’t buy a $1.7M home that needs a lot of work. I can’t buy a $1.2M condo that’s a 2 bedroom and needs little work because it’s a 2 bedroom and why would I buy a 2 bedroom condo when we want more kids and will want more room?

But we’re stuck. We can’t leave… well, I can’t leave because my husband refuses to leave and I don’t really want to and we have, at least for now, free childcare here so why would we leave? And our friends and his family are here. And there’s no where else we want to go. And my job and my 10,000 recruiter emails are here (there have definitely been an uptick in recruiter emails lately- mostly from San Francisco-based companies.) So. Even if I won’t always make $250k+ a year, I still will likely be able to get jobs here making $150k+. But that’s NOT ENOUGH to live here when your. husband makes $90k 1099 and especially when you’re prone to losing your job for a few months every few years.

It’s just super depressing and I feel like a spoiled brat every time I talk about how depressing it is… I’m so lucky… I need to learn to be grateful and get over it, right? But it is suffocating–the way we work. The way we’re expected to work all the time and because I can’t do that effectively right now even if I wanted to because I have a young child then I feel like I’m letting everyone down because I can’t get through all my work at the office (and I’m half asleep all the time to add to that.) I could try harder. Be more organized. More focused. Drink more coffee. Wake up earlier. I don’t know. Again, I’m in pure survival mode… but that’s not living. That’s hoping and holding your breath that you’ll make it three more months to vest another stock grant. Another chance at maybe being able to have a future here.

But what is that number anyway? The “number” — net worth number– is probably far to large to ever be possible. My husband and I have a joint net worth now of $925k (about $800k of that is my savings.) That’s SO MUCH MORE than I ever thought was possible to save. We’re close to hitting $1M! That’s insane. So why do I feel so broke? Maybe I should take more risks. Buy a house and figure prices will go up… that inflation will make $9000 a month in mortgage seem sane in a few years down the road? With my mental health situation and now with a kid, I just can’t take those kind of risks. Not with $1M in the bank. Maybe with $2M in the bank… or $3M. I’m not sure how many million but definitely more than $1M. Ideally enough to buy a $2M house outright with $1M in retirement savings, so $3M seems about right.

So if I (we) add $50,000 a year cash to our investments, assuming $800k is invested now, in 16 years at 5% YoY interest we’ll have $3M. Of course by then houses will cost a lot more than $2M. That doesn’t work. If we add $100,000 a year, then we have just 12 years to wait… but then in 12 years if a $2M house increases in value 4% YoY the house will cost $3.2M… nope, that doesn’t work either.

I know everyone says just take your money and move somewhere cheaper… but let’s assume that’s not an option. Then what do we do? The house we wanted for $1.7M (that would require about $400k-$500k work) is still available – hey at least I called it as being over priced. But, it will be gone soon enough. The market will get competitive again. Now is a “good time to buy.” Another house we looked at was shown one weekend and gone by the next. Most decent properties still go that fast around here. And I still don’t want to live with my husband’s parents so… my only option is figuring out how to save $300k for a downpayment AND how I can afford $5,500 a month while my husband pays $2000 a month ($7500 total.) That’s what a $1.5M house costs, give or take. $300k down and $7500 a month (at 4% interest, so it’s prob more than that depending on when you buy.)

could sell $300k (+ capital gains tax) worth of stock AND just commit to paying $5500  per month on my own for the next 30 years (and hope my husband can keep doing $2000 a month.) I need to keep saving because if I need to take unpaid leave or god forbid lose my job for a few months (which will happen, let’s be real we’re talking about me here) then… well, I need enough cash to cover $5500 a month for about a year, so $66,000 cash, not counting general emergency fund. And where does the money come from to send our kids to preschool? Or after school activities? Or summer camp?

The numbers just don’t add up.

Ok, so let’s say… probably more realistically… we buy a $1.3M condo (priced at $1.2M, but it goes for $1.3M because that’s how real estate rolls in these parts.) HOA is something like $333/mo. Some are higher, some lower, but that’s about average. It could go up. There could be a special assessment. But nonetheless… with $333 / mo HOA and a $1.3M condo/townhome… that’s $260k down and $7000 a month… so I’m still paying $5000 a month, just $500/mo less and $40k savings on the downpayment. Substantial, but then the value of the home won’t go up as much because it’s a condo.

Or, we say… you know what, we’re going to move to the east bay because houses are cheaper there. We can get a house in a decent but not great area for $900k. Phew.  Our downpayment is JUST $160,000. Yes! Doable. Our monthly payment is $5000, leaving me with JUST $3000/month to pay. This looks a lot better. But then I’m paying $6 a day for bridge toll ($120 / mo) and commuting an hour or more to work each way – maybe more, if I work in the city again one day. Still, not so bad. But, wait, then we have to add in childcare because my husband’s parents do not drive and can’t get to us. So that’s $2,000 a month, if not more. So then we’re back up to $7000 a month anyway… and that’s with just one kid (I know, this is just for a few years… but still, it’s the years the $ costs the most before inflation kicks in and makes the mortgage somewhat ok.)

How the fuck do people do this?

Maybe we should just suck it up and buy a $900k home in the east bay and pay for childcare and drive to see his parents on the weekends. That’s probably what normal people would do. Or they’d move to Denver. Or Austin. Or Boise. Or Portland. Or Raleigh. Or anywhere else things make mathematical sense to live.

Welp. That’s my rant for the day.

 

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4 comments

  1. Mr. A. says:

    You are in a great situation now: high income and low cost of living relative to income, while in a high cost of living area. Family nearby. As long as you can make it work and keep your sanity, I’d keep riding it out with apartment.
    But, in x amount of years you will need to make a transition, or sacrifice too much for sanity.
    If it were my decision, which it’s not – I’d much rather move to a lower cost of living area where your net worth alone could buy a $600-800k house that is everything you could ever want in great school and you can both work a lower than San Fran wage job and relax and be happy – have a nicer house, more free time, easier job, better hours, no more long commutes, and you can even move your mom or his parents out there with you – and even build two houses for both of you on that lot for $800-$1M. I don’t understand why his parents wouldn’t want to move to another part of the country as well? Much better quality of life.
    As for friends, well your friends may end up moving away too. You’ve got to put your self and your family first. You can make more friends, and in San Fran with all the work you must be doing, how much time do you have for friends? You may spend more time with friends virtually or by phone with a better life balance,
    The rat race will never end in San Fran if you buy a house and there’s no way to buy it much cheaper even with an hour or more commute. You’ve already got the money, wait another year or two to solidify the net worth farther, at some point the job may not last as you’ve stated.
    How much better could your life be elsewhere with a lower cost of living in a few years with even more money saved away? To me, the question is what city and how long can I survive the current life balance to know when I must go?

    1. Joy ( User Karma: 0 ) says:

      I don’t want to move but if my husband one day said let’s move to another city I wouldn’t stay here. He wants to stay here, which is frustrating because he makes so little (for this area) and doesn’t have the initiative to earn more. I know he grew up here so it’s very hard to leave, but I wish we could seriously consider it. I agree that in many other parts of the country we could have a nice house in a good school district with less commute and easier job situation etc. I’m just stuck here. I dislike the idea of buying where our mortgage will be so high for 30 years. It seems futile and pointless given neither of us are VP material and our income will remain middle class at best.

  2. Star says:

    I live in a LCOL area (midwest) and am always really interested to read about the cost of living in different parts of the U.S., so thanks for such an interesting read on that subject. I hate to be too blunt, but even though most of this post is composed of numbers, the bigger problem popping out to me seems to be the fact that your husband wants to live with his parents and you don’t…and that’s the kind of disagreement that can’t be measured in $. I really hope you can come to some kind of agreement or compromise and find a path that works for you!

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