24 Days Close, 52 Days Until Move In: Buying a House While Pregnant During COVID is… uh… something else.

My emotions in the last 24 hours have ranged from extreme self satisfaction (I did it — I saved my ass off and bought a mudda f*cking house) to literally crying from the sheer stress of trying to do all the normal crazy things one has to do during closing on a new house–while 5 months pregnant — in the middle of a global pandemic — and wildfire air — and… and… and…

This is really hard folks. I know I can be a bit of a drama queen, but I think this would be hard for anyone.

My husband is my rock. My logic sounding board. Many great things. But I’m the CFO of the household. I’m the one who has saved enough to buy this home. He’s the one who has been there for me long enough to keep me semi sane and make it possible. We’ve both earned this.

That doesn’t make this any easier.

For starters, I want to ensure the home is SAFE when we move in.

Being that we bought in the Bay Area, we went in no contingencies and we (uh) gleefully dropped off a $50k escrow payment and said buh buh $50,000. We can still drop out of the deal for the next 24 days until close, but that $50k… we’re not getting it back.

The seller’s inspection report was rather light. There was a separate pest and roof report which noted repairs needed. I understand nothing of how serious things are and what is really required to fix them.

Seller wanted a 30 day rent back (in Bay Area a “rent back” basically means they get to stay for 30 days for free while we pay their mortgage) so I tried to negotiate credits for the major repairs. That somehow ended up being them giving us $5k towards the closing costs and us basically agreeing to $5k more over the life of the loan. I guess that’s a better deal than paying the $5k up front. But then we’re losing $7k on not being able to actually move in. Numbers, numbers.

So the sellers will fix the roof (out of the credit) before they move out, and supposedly will schedule tenting the week after they move out, or something. I don’t know.

We have other work we want to do. The most important is any safety stuff. There’s some electrical things that need to be fixed. That’s my #1 concern. We need a new electrical panel and some wiring.

My next concern is that the report mentioned that the chimney is separating from the house. Or maybe my next concern is the standing water in the crawl space. Hmm. Both seem concerning. But what to do about them? How urgent are they? Will a chimney fall on my son? We aren’t going to use the chimney… but the bricks are scary.

Other than that, the house seems… maybe ok to live in for a while?

We want to put in AC by next summer. It probably makes to do this before we move in. So we are looking into this option. I have a not-going-to-happen dream about getting a bathtub in the hall bath so I have a tub (which is important to me I’m a big bath person and my son also takes baths.)

But it’s a nightmare trying to get access to the house to get contractors in to quote…

Our initial plan was/is to bring contractors into the house over the next month (they are supposed give us access within 24 hours) and get quotes… but the sellers still live there so that’s proving rather difficult. They’re giving us one Saturday and my realtor has to be there and she’s only available for 3 hours or so. Initially we were trying to do this on a Sunday but I discovered all the contractors are off on Sundays. So now we’re aiming for next Saturday. And scheduling all these folks is a nightmare… plus they need to sign COVID forms to get in the house and we have limitations how many people can be inside at once and anyway it’s not fun.

We SHOULD probably just wait until we move in. But…

All construction work we do before moving in, ideally. Between normal construction dust and COVID and everything else, it seemed reasonable to say we’re going to select contractors now and then start work as soon as we have access to the house in November. We might pay 1-2 more months of rent in our apartment (about $3k per month) PLUS the $7k per month mortgage (yes, that’s $10k per month – forking A) just to get things done without us being in the house.

Outside of the whole $10k a month issue… let me remind all of you (because I certainly have not forgotten) that I’m super preggo and I shall be popping out one new baby sometime in January. Hopefully in January. God willing, January. I am not in the mood to be either living in a house with tons of construction going on in the last month of my pregnancy. But it’s extra complicated because…

We now live about 45 minutes from my in-laws and 30 minutes from my hospital.  That’s not a huge deal except when I go into labor, we need at least one of them to watch our son. Neither live in places where he can stay. Ah, but we have a house! And — isn’t grandpa supposed to be living with you?

Well, yes–this is all true.

If grandpa moves in Jan 1 (and I deliver close to my due date) then we can leave my son at home with him. We still would like to get my mother-in-law there, somehow… but I’m not quite sure how that will happen as my husband will need to drive me to the hospital then drive her back to the house then drive back to the hospital (that’s like 2 and a half hours total — he very well may miss the entire show.) Or… grandpa lives with us, my son stays there, I give birth, after that husband drives grandma to our house and then comes back. Or… I don’t know. I’m still not seeing how this works. And I’d like grandpa not to move in with us until Feb 1. so I can have access to the bathroom tub which is actually an amazingly nice tub (assuming it works) that has jacuzzi jets and everything. I’m not a fancy tub person (I just like deep soaking tubs) but I’m sure being super preggo it will feel good to be in the jacuzzi. Unfortunately the master bedroom doesn’t have a door separating its bathroom from the rest of the house. Bummer. So if he’s living with us, I can’t use that bathroom. I can’t use a bath at all. $7k a month, and I don’t even get a bath. Woe me and my first world problems.

So it probably makes the most sense for us to move in Dec 1 and grandpa to move in Jan 1 and all work to be done to be done between Nov 4 and Nov 30. Which is not a lot of time given thanksgiving is in there and from my understanding contractors can be booked up months out in advance. I’m not sure WHAT we’ll be able to get done by Nov 30. Sounds like prob roof and pest stuff. I’m hoping electrical. Everything else might have to wait.

Waiting– is also complicated. When grandpa moves in, and infant moves in, I don’t think any of us are going to feel good about having contractors in and out of the house for a while. This means that remodeling the bathroom will prob have to wait. AC work… if not done up front… may not happen in time for next summer (my husband is making it a priority to get that done now, and I do think electrical and AC are the 2 things that we should try to get done up front if we can.)

I’m trying to go into this house open minded. My husband gets so mad at me when I change my mind all the time. It’s not that I really have changed my mind, it’s just I have two ways of looking at this…

  1. Our mortgage is $7k a month, which is insane, and having his father live with us to pay $2k a month for a while really helps. This makes our cost more like $6k (mortgage minus deductions plus fixes) which is comparable to what it costs to rent a house, or maybe more by like $12k a year, which I can stomach. My frugal side says woohoo, I’ve bought a $1.6M 3 bedroom, 2 bath home for 2.625% 30 year fixed with 20% down and outside of semi minor repair work, it seems totally livable for a while. The master bedroom, which has a ridiculously large master bathroom (designed not to my taste but that can be fixed eventually and whatever, it’s still nice) will be all ours in prob 2-5 years when my FIL moves out. It is OUR house and I like the neighborhood overall (I think) and I like the schools and I think my kids will enjoy growing up there and maybe I can make friends and I got such a large lot and this will be good. This house isn’t near perfect but it has a lot of things I wanted and I will feel good pulling up to it and knowing it’s my house!
  2. I put $320,000 down and we’re paying $5k-$6k+ a month for this house. As the breadwinner, this is a lot of pressure on me to keep my job. While I feel better about my job stability at the moment than I have in the past, I know I could lose my job at any time. I also now am going to have to deal with a long commute if/when I go back to the office. I do LIKE this house… we looked at a ton of houses and this one checked most of the boxes. It’s missing a 4th bedroom, AC, and a bathroom I can use when FIL is living there, but otherwise, it’s good. It’s like… it’s fine. It’s nice. I knew to get something I really liked I would have to spend at least $2M. So I know this is $400k less than that. It feels like about $400k less than what I would really like. — BUT — man, I worked so hard to save up for this house and for the next 2-5 years of my life, including through the rest of this pregnancy, my healing, and probably one more pregnancy (though we may remodel some by then) I will be basically living in a 2 bedroom, 1 bath house with an in-law unit. It’s a nice house, don’t get me wrong, but the bedrooms (other than the master) are tiny. My husband and I will both be WFH for a while. The house is big but feels small because so much square footage is in the master bedroom. One day I’ll be able to enjoy that. You know, if the stress of home ownership doesn’t kill me before then.

That’s why I’m conflicted. And stressed. And freaking out. All the things. I’m grateful I’m off work this week. I couldn’t handle this stress while working FT. My realtor is SO ready to be done with me. She is always nice and responsive–at this point I know she’s just thinking how she has to grin and bear it for a few more weeks and hopefully we will write her some really nice reviews and she will feel like the last 6 months of putting up with us was worth it.

In the future, though, I’m going with a more experienced realtor. I mean, I’m sure there’s pros and cons to a noob vs someone who prob would have gotten tired of us a while back… but I realize how hard the final negotiations and contract part is, and I wish I had someone who just had more experience with all the ways it could go, and where we could really push back, etc. I’m sure no matter what there is some blindness that comes with the situation (you don’t know what the other offers are) so maybe this all went as well as it could have. We ended up buying for just a little over list, which is pretty much unheard of here, unless the house sucks, and I don’t think it sucks. It has issues, but the location is good, and nothing is unfixable.

Anyway. I’m going nutso. I think I just have to start packing to get my mind off of this insanity. And we’ll do one day at the house with contractors and see what we learn and then just wait until we can get in on Nov 4. Day of reckoning. We’ll be emotionally hungover from election night and certainly the drama that will come with Trump claiming Biden cheated even if Trump wins — seems like as good of day as any to move into a $1.6M house. Right? A democrat with a $1.6M house and no SALT deductions. Yea, that’s me.

I Think We Just Bought a House. OMFG.

It was bound to happen. After 2 years of on-and-off and very on and very off and very on again looking for a house to buy, we put an offer in and won. Or, at least I think we did. Our sellers supposedly picked us, and they’re signing their counter offer that we signed in the morning.

This is a huge deal. I’m so tired of the entire process that it just feels like a huge relief to be “done” with it (even though our home ownership journey is just beginning.) In order to not totally get in over our head in Bay Area real estate (which is so easy to do) I made some simple rules about buying…

  • NO crazy bidding wars or unethical negotiations
  • Keep mortgage to under ~$7000 / month with space for FIL (who also will contribute to mortgage for a few years)
  • Buy in a neighborhood I can see us living in for many years
  • Buy a big enough lot to be able to expand the house if we want to stay
  • Buy in an area that, if not super close to current job, is close to a strong job market with future options
  • Buy a house that isn’t a fixer upper (ie nothing clearly falling apart, everything generally livable for 5 years without changes)

I think we got most of the above. I feel like we have been dealing with HUMAN sellers, which is nice. They apparently picked our offer over a higher bid because they really liked the heartfelt letter I wrote. I had heard of people winning house buying bids with letters but I wasn’t sure that was a real thing. Apparently, they liked us, because we’re real people, who want a real house to raise our family in. I guess that struck a chord with them. Or maybe my realtor is lying to us. In any case, I feel like while we’re paying A FUDGE TON for this house — both buyer and seller are winners here.

The risk I’m taking is that I am placing a bet on being able to sustain my current job for 15 more months, which includes 5 months of maternity leave (I can get laid off during maternity leave but it’s less likely than if I were working and at risk due to any performance issues — which isn’t a problem right now anyway as I’m finally kicking ass and taking names at work.) So that’s basically 10 working months to vest all my stock. I’ll sell it on vest, which will help me hit my other goals for next year:

  • superfund 2 529 accounts $75k each ($140k total)
  • max out pre-tax 401k, husband’s solo 401k, AND my after-tax account (~94k towards retirement)
  • max out ESPP plan (~$21k)

By doing this, I also can move towards my continuous goal to fix my portfolio diversification — the retirement funds are getting a lot of bond funds and international funds to move away from being too heavy in large cap US stocks. It will take a few years to balance that out, but I’m getting there. Avoiding selling my large caps because they are like 75% cap gains right now and my cap gains rate at the moment is close to 35% with state and fed.

We’re trying to get to $450k cash in hand for down payment, close, and emergency fund. I think after I sell off my upcoming RSU vest this month we’ll be about there.

It’s crazy to think that this is possible… going from basically $0 in 2005 to where I am now. I really don’t know how I got here (well, I do, I tracked it all on this blog) but it still feels like a dream.

Buying this house is terrifying. We are going in no contingencies, as one must do around here to win a house — and giving the owners a 30 day “rent back” (ie live free for 30 days gift.) This would not be a huge deal except I’m due in mid January, and this puts our move in date around end of November. While my husband has promised to do all the hard parts of moving and I can just sit and point to things (and despite what my friends think we don’t have THAT much stuff since we live in a 1 bedroom) it still gets a bit scary thinking of moving in late Nov/ early Dec. It’s possibly at that point something could go wrong with my pregnancy, and that will make moving very difficult for my husband — having to manage moving, kid, and me potentially in the hospital. I’ll be 32 weeks or so at that point, so hopefully it won’t be an issue. But really it’s cutting it close.

Even though owning a home is NOT an investment and is NOT a financially wise decision in a HCOL area like the Bay Area, I feel really good about this purchase. I feel good that the home isn’t perfect and it’s under $1.7M. Anywhere else in the country this sounds like a lot but here it’s really… well… it’s a lot but it’s not much in terms of what you can buy in a house. I like that I’m compromising and getting a 3 bedroom and my FIL will live in the big room and we’ll be living in the smaller 2 rooms. I like that it has room for improvement and that I will enjoy going for walks in the cute neighborhood everyday and love how the neighbors say hi to each other and how in a big sprawling city it has a similar vibe to where I grew up on the east coast. Sort of. At least enough of one where I look forward to meeting my neighbors and maybe even, gasp, making some new friends.

I could have moved to the east bay and spent even less, but that didn’t make sense for many reasons. This price point makes sense to us. I opted out of the peninsula because bidding wars were insane and — when I saw a total fixer mess that we looked at a year ago (that sold for $1.5M) listed at $2.2M with a half-decent flip job, I knew it was time to give up on that city dream. At least for now. Probably forever (I’m really into this 2.65% 30 year fixed loan so it will be hard to find a reason to leave unless rates are this low again and I am super wealthy in a few years.) This is a good, solid house. It has its quirks. The chimney may be slowly detaching from it (ok, that is something I’m worried about and need to get looked at.) But overall, it’s solid. I will feel happy coming home to it everyday. I will feel happy looking out the window at the cute house across the street that reminds me a little bit of the house I grew up in.

I’m glad we didn’t settle on the things that matter the most.

I am so fucking terrified but also excited. I’m turning 37 and buying a house and having my second kid (of maybe 3 kids?) and I’ve kept this job for 3 years as of next month and overall–for me especially–things are going pretty darned well. Sure, the world is falling apart, we have a sociopath for a president and may end up in a civil war come election season, and COVID is still lurking in every corner of air where someone might cough or laugh or breathe, but I feel strangely hopeful. Like, maybe it’s going to be alright for a little while. Like I am not just working and surviving for mere survival.

Seeing my son light up about the “green grass” in the home’s yard — “need to run! need to run in the grass!” he exclaimed — I knew this was the one. I want him to not be stuck inside a tiny one bedroom apartment all day. I want him to be able to run around the yard safely fenced in. To have a little swing set in the backyard and to one day, post COVID, have friends over. To have a house of our own. Life is so fucking short. I’m ready to start living it. For $7k a month. Or, you know, whatever it costs.

 

 

 

Buying a House in the Bay Area Even Though It’s Probably Going to Burn Down

Anyone on the west coast at the moment is dealing with some ill effects of the insane wildfires raging up and down the coast. Many of us woke up to apocalypitc orange skies earlier this week, and have been coughing through the impact of that atmospheric ash slowly raining on us all weekend. COVID is still raging as well, as is the occasional heat wave, and we’re all stuck in our various apartments and homes that do not come standard with air conditioning.

Yet, I’m still planning on buying an overpriced home here. That will likely set a wildfire to my own FIRE journey. All logical signs point to RENT but I can’t get the buying dream out of my head. At the very least–when times get tough–this will force us to find a way to earn more. This is good for me (I won’t be able to give up) and good for my husband, who hasn’t changed jobs (one part time job) in over 15 years. He has the same home ownership dream I have, so in a way it gets us on the same page regarding finances a bit. I think that will be good. It’s not like I’m just saying we need to save more for retirement (no matter how hard I try, he doesn’t get it and thinks he can live cheap and be fine on his minimal savings.) But a house — he gets that. So at least he will be on board to earn more if (when) shit hits the fan.

I see my own financial life going one of two ways:

  • I get somewhat wealthy. A few years ago, I would have said you’re bonkers if you proposed this idea to me. I had been saving for years and while I had “a lot” in my accounts, it was still no where near the amount that would allow me to ever achieve “wealth”–that is a minimum of $5M in networth. The I joined a company with actual stock (not stock options) and it went up in value a lot. And my other stocks also went up. It showed me how in 4 years, I could increase my networth by $1M. From ~$500k in 2017 to ~$1.5M at the end fo this year. Now, that was a winning lotto ticket. But there’s also no reason to think, if I were a normal person, that I couldn’t keep moving up in my career and getting similar grants for the next 30 years of my career. They may not go up as much as this one did, but at some point I would hit the $5M goal. It doesn’t seem completely impossible–and I don’t even need my husband’s money to make it happen.
  • I can’t afford the mortgage. This is the other option. I know, these are two extremes– but I really see this being how my financial life plays out going forward. If I can figure out a career where I can every 4-5 years or so go to a new job and keep moving up, I should be ok. If I can continue to obtain mid-level/senior-level roles in large companies then I should be fine. But the other–very realistic potential–is that I let my mental health issues get the best of me–I stay at this job for a while longer, then move to a different role (in order to maintain the level of stock grant you have to switch companies usually) and then I bomb, and I spend the next many years working at low-paid startups with crazy CEOs who hire me to do the impossible as a one-woman shop because I can’t get another role at a public company again. I’ll burn out on that too, because I’m no longer in my 20s. So then I don’t know what happens. My one ask to my husband is if we buy a house, after our kids are in school (and he is no longer a part time SAHD), can he get a FT job (esp if this scenario plays out.) He seems open to it, but it’s hard not knowing what that looks like. It’s hard to commit to a very expensive 30 year mortgage when who the hell knows what will happen.

So why not rent?

I know, I know. Renting is a fine idea. We’ve looked at a few rentals. I’m the type of person who is mentally impacted by her living space. And the actual SPACE. I grew up in not only a reasonably large house with a big backyard, but also a large room. I tend to feel claustrophobic in small spaces. I understand if financially it’s the best thing to do, I can deal with tiny rooms. I can deal with a lot if we just don’t have the money to have a nicer life.

Then I look at my bank account. Between my husband and I, by the end of this year, we should be just shy of $2M, or perhaps quite shy of $2M if the markets keep dropping. I also watch as my total wealth drops $100k-$200k in a day or two, and at this point I don’t bat an eye (outside to check if I should tax loss harvest any dumb investments I’ve made before they drop further and rebalance into a better diversified portfolio.) I’ve trained myself to be ok about losing $200k in the stock market (on paper) yet I’m completely terrified of buying a $1.6M house and it being worth $1.4M after we live in it for a few years (I mean, I’m terrified of it being worth $800k after we live in it for a few years — but the stock market could also drop 50% in a few years and I’m not selling. So why NOT buy a house?)

I’ve also run the numbers. It appears with the limited tax write-offs, at some point it still makes sense to own. That $500k capital gains tax exclusion on homes helps a lot when you’re a high earner (which is dumb as I hate how most of the tax law benefits not only rich people more but people who consistently have high incomes, as it assumes if you make a lot one year you always will.) But–as a current high earner (which in CA means something different than the rest of the country, mind you) I feel like I have to take advantage of what’s left in the tax law that benefits higher earners, as long as it still exists.

Home Ownership Tax Benefits are Slim, But Still Exist

There’s Prop 13. For those of you who don’t know Prop 13, it basically locks your tax amount into the value of your home when you purchased it, plus inflation. I’m torn on how I feel about this law. On one hand, I think it’s necessary because it makes sure that people who buy homes that are affordable (to them at the time) don’t get priced out because suddenly a tech company moves in down the street and their house is worth a bazillion dollars, and their forever tax bill goes up so much they have to sell and move.

On the other hand, Prop 13 keeps people from moving when they should, making the housing inventory low. Worse, it also significantly reduces property tax, which means despite being a high tax state, public schools are chronically underfunded. It’s all pretty messed up.

Nonetheless, it is what it is. So, buying in my 30s and staying in that home for years can be quite fruitful, as long as Prop 13 stays intact. I would imagine they would probably have to grandfather current owners and phase it out over time, even if they realize it’s not sustainable — but who knows. In any case, it is the law now, which means even though we will have to be paying taxes forever, in 30 years we’d be paying taxes on a home “worth” $1.6M, even if the going market rate is $3M or more—even if our neighbors who just moved in are paying taxes on a $3M and we’re paying half what they’re paying. That makes retiring here possible.

I’ve been thinking a lot about old age lately–not because I’m old quite yet–but because I’m helping my 66 year old mother plan HER life. And that situation is a total cluster due to poor money management by my parents. My goal is to be wealthy to be able to help her out a bit (at least pay her back for college and my wedding, especially if she lives long enough to really need the money, which I hope she does.) BUT — for me, I think I want the option to stay in my home and have a live-in aide. Who the hell knows what I will want when I am 65/70/80 etc, but why not plan for that now? The worst that happens is I end up with way too much money to split between my kids and charity when I die. At the very least, that buys me options. Especially since my husband seems on the “I don’t want to think about retirement bandwagon” (I did convince him to set up a Solo 401k so we’re putting about $35k collective to that a year while we can to make up for many years of no retirement savings–but buying a house will def make that saving harder to do.)

Let’s Be Stupid and Buy a House in the Bay Area

Anyway, here we are, ready to do something maybe stupid. Maybe making the worse financial decision of my life. After looking at hundreds of houses all over the Bay Area, we’re ready to put our second offer in — and first one that’s actually AT list. I don’t know if that will get us anywhere, but I have a good feeling about this one. It’s not perfect at all, but I feel (somewhat) good about the compromises.

The major compromise is that it’s a 3 bedroom, 2.5 bath that we will be sharing with my father-in-law for TBD years. FIL will pay $2k a month towards our mortgage and help with watching our son while we work. It isn’t full time childcare coverage, but it’s still a huge help. And my husband and I both feel strongly about keeping our kids out of daycare during the whole COVID mess for many reasons.

Our initial goal was to find a 3/2 with a separate living unit. We’ve looked at all sorts of places–homes with weird in-laws, detached ADUs were the ADU was modern and beautiful and the main house was decrepit, 5 bedroom houses with a downstairs master that was beautiful that could maybe work and 4 upstairs “bedrooms” that were barely bigger than my pinky, on lots with no real private outdoor space.

The conclusion I came to — in my semi logical state of thinking right now in a complete blur as a pregnant woman who has seen a thousand too many houses so far — is we must compromise to make it work here and not totally kill us financially.

I had to throw most of the “how much can you afford” rules at the window. Few people have $1M in taxable stocks at my age also. I can’t rely on the $1M in stocks because that could drop to half that or less, but it’s a different kind of cushion. I’m not selling right now because our capital gains tax in CA is so high — but if we hit a rough patch and need to sell stock, even if it’s gone down a bit, we’ll likely have a lower earning year and have lower cap gains tax. So it’s worth it to leave the stock and not put it into a larger down payment after losing 40% of it or so by selling it all, and let it ride and have it as a safety net.

Where I want to be is at 28% or less of our pre-tax income, before bonus and RSU. I wanted to do this after-tax, but if we did that the math shows we can afford to stay in our current 1br. I decided I need to be slightly less risk-averse here. The 2-3x salary rule doesn’t work. It tells use we can buy a $750k house. That doesn’t exist here. And that doesn’t take into account bonus or RSU which I prefer to ignore for planning purposes, but still doesn’t tell the whole story.

My banker said 32% is the DTI rule he prefers. I’m aiming for 28%.

I am assuming I can make $175k a year going forward, or my husband can eventually get a full time job and make up the difference (ie if I earn $150k, he can make $25k more, which is very realistic if he got a full time job.)

His income is a lot more consistent than mine is actually — so I’m locking him in at $90k a year. I feel good that even if he has to change jobs and get a FT entry level job in a tech company (which I think he could do), he could make at least $90k.

  • That gets us to $265k a year, or $22k a month, give or take.
  • 28% of that is about $6k a month.
  • I feel pretty good about $6k a month going to our housing costs.
  • I feel better about $5k a month going to housing costs.
  • If we do my banker’s 32%, that gets us to $7k a month. I don’t like $7k a month, but I’m ok with it knowing that we probably will earn MORE than the total comp I’m including in this plan (my last two startup jobs my base was in this range and that was years ago)

So $6k a month is our target, $7k is our stretch, $5k is our happy place.

Even though my FIL’s contribution won’t go on forever (esp if we buy a home with only 3 bedrooms), it will definitely help up front when our income is likely the lowest as inflation hasn’t kicked in to increase our income while our mortgage stays flat.

In terms of rentals, we can definitely do better short term. At the moment, WFH, we can move far into the south or east bay and get a house for $4500 – $5000 a month rent with more rooms and space. That is a thought as well.

But the tax savings on the interest for the first few years seems to equate to about $1k a month between federal and state taxes. Maybe less than that. But it’s significant enough that it makes up enough of the difference between a $5k rental and $6k home.

So $6k a month it is. That’s a scary number, since we’re paying $2500 a month in rent right now for our 1 bedroom. But if I’m ever going to feel ready for it, I feel ready for it now.

  • $1.6M home = $7000 PITI
  • $1.65M home = $7250 PITI
  • $1.7M home = $7500 PITI

Based on the above figures, $1.6M should be our absolute max, with my FIL. Unfortunately — anything worth buying here (that also works with my FIL) in the area we want to live is at least that.

Buying a Home and Compromises We’re Willing to Make

Here’s what I’ve decided are non compromises:

  • Under 1 hour drive to work: (I wanted 30 minutes, I gave up — hoping WFH is something I can maintain going forward, or eventually I get a job closer to the home we buy )
  • Larger lot (7500-10000 sq ft): Lot size is interesting here. You see $3M homes on 5000 sq ft lots. Some people don’t want large lots because they aren’t outside much in their own private spaces and don’t want to deal with maintaining a yard.  I get that — growing up on the east coast a yard was expensive to maintain, but it rained so the watering bit was usually covered, with the addition of occasional sprinklers. Still, a 5000-6000 sq ft lot seems limiting. We do (/would) spend a lot of time outside in our private space. A larger lot also means we have room to build onto the house should we ever have more money and want to make it bigger without going “up.”
  • A “vacation” in my house: Decent sized master bedroom suite with existing bath. This is definitely a luxury item. But my mental health is improved by privacy, space, and access to a soaking tub. If I’m going to be “house poor” I at least want to have a space at home that feels like the vacation I won’t be able to afford because I bought a house.
  • Nice street/neighborhood. We’re homebodies. On a good day, we make it to the neighborhood park, or a restaurant around the corner. There are a few neighborhoods I like, and I’ve decided it makes sense to focus our home search there.
  • Decent schools. School rankings don’t tell the whole story (they just tell you if non-native speakers go to the school), but I still find it concerning when non-native speakers are averaging a 2 on their state tests. So I’ve made the cutoff a 5 for school rankings in the area. My kids will be going to those schools. Not only do I not believe in private school, when we buy a house here we won’t be able to afford private school! Also, resale value is also impacted by the school ranking… so buying in an area with “better” schools helps later if we decide this house isn’t right for us and we want to move, or we want to move in retirement, or whenever we decide it is time to move on.
  • Enough Space Inside (1750+ sq ft): Can we live a perfectly happy live in a cozy 1300 sq ft house? Of course. But I don’t see the point in buying something so small– for us. We don’t need 2500 sq ft either. I’ve come the conclusion that 1750-2000 sq ft is perfect, especially with the plans to live with my father-in-law. It basically ends up being that we are living in about 1300-1500 square feet for a few years, and FIL gets 200-400 sq ft. But long term, FIL will move out, and we’ll have more space. That’s important to me as we’ll have at least 2 kids and possibly a third, if the stars align.
  • Family Room AND Living Room: having two main living areas is important to me. It’s a luxury, not a necessity. And it’s rather rare here. But with 2+ kids, having two living areas will be nice when my kids have friends over, and we want to be not all in the same space. Plus, having the extra room gives us flexibility long term (we can convert a family room to a bedroom if needed, instead of having to add on.)
  • Garage: we just need a place to store things (I’m tired of having my bike in the living room) and a spot to put a treadmill for my husband etc.
  • Nice to have — Laundry Room — this is a rarity here, but with 2+ kids, I want a laundry room (not laundry in the garage, or in the bathroom, etc)
  • Nice to have — 4+ bedrooms: This was a must have until I realized I really like big rooms and in a 1750-1900 square foot house with a good master bedroom, bigger master bath, and all of the above, a 4th bedroom is hard to find.
  • General good flow: some houses here… a lot of them… have very strange additions, poorly designed and unpermitted.

The house we are bidding on meets most of the requirement below.

  • $1.6M list
  • 1900 sq ft
  • 9000 sq ft lot
  • family room + living room
  • laundry room
  • giant master bedroom suite (they actually converted an existing bedroom into a bathroom, so you can imagine how giant it is. It’s a bit too big, but I can see long term changing the layout a bit and turning part of it into a home office
  • good neighborhood/street (close to restaurants and park)

What isn’t perfect about it?

  • It’s listed at $1.6M, they prob want $1.7M. I’m not sure they can get $1.7M — the neighborhood seems to go more $1.5-$1.6. A few houses are actually sitting for various reasons. That said, this house does have an oversized lot (for the area) so if anyone else has been waiting to snag a bigger lot in that general area, we may lose the house, or have to pay more for it. We are doing a preemptive offer before offers are due — which makes it hard to know if we’re over paying if they do accept the offer. What we have going for us is down the street there is a 2000 sq ft 5br/3ba listed at $1.7M that has been sitting. It’s a flip, and while it looks nice it was a poor flip job if you pay attention to the actual work done (they did it in a month — bought $1.25M and now it’s $1.7M!) But because that is sitting, I’m hoping a 3br/2ba house can go for $1.6M.
  • It has one giant master bedroom… and 2 teeny tiny bedrooms. That kind of sucks. It sucks most because our FIL will take the master bedroom for a few years, and we’ll be relegated to the two smaller bedrooms. BUT at least there’s the two living spaces. We’ve discussed putting our bed in the family room (it would be kind of like a studio apartment situation since it’s open to the kitchen and garage) and we’d put my son in one of the small rooms and my husband’s office (and possibly a guest bed–that I might occasionally sleep in) in the other small bedroom. Our baby would sleep in our room until s/he turns 1, and then baby either goes into my son’s room (they can share for a while) or my husband moves his office into the family room and we put baby in the other small bedroom. … … eventually, his dad moves out (it’s complicated but the plan is when my mother in law needs to move out of her house — which is owned by her 96 year old mother — she will buy a 3/2 near us, and my FIL will move in with her — they unmarried but friends) and we’ll get the master bedroom, my husband can probably put his office in the family room, or in the master bedroom (though I prefer he doesn’t have it in there, but there’s room if we need to make it work.)
  • While the lot is 9000 sq ft, it doesn’t actually look that large to me. I think that’s because it’s a wider yard and the houses next to it are 2 floors, so there isn’t a lot of privacy. I think we can add a little privacy, but we won’t be able to grow a tree big enough to block the neighbor from seeing into our yard. Which isn’t that big of a a deal, I just like having privacy and feeling like I’m in my own secluded little park. We can probably make it better, and at least there’s room for a swing set.

We probably won’t get this house. But we might. I’m trying to decide if it’s worth going up to $1.7M for it. If we can get it at $1.6M, I will feel good about the purchase. In the town we prefer to be in, we’ve decided not to bid on houses that have gone $1.7M. They weren’t as big or nice as this one, but if we have to pay $1.7M for a house 30 min further from my work, I start wondering if we should just go $1.8M to get something that works in the better area. But, no, I’ve run the numbers, and we really shouldn’t do more than $1.6. If we do $1.7 it’s over budget, but we can make it work.

So, what do you think we should do?

How the Hell am I Going to Pay for College?

The cost of college is, uh, fucking ridiculous.

My parents put my sister and I through college on $0 scholarships and while they prob should have made us take out loans, it was doable.

I make good money these days and I am still looking at future college costs thinking… how da fuck am I going to put 2-3 kids through college?

Now, I’m definitely in the camp that 2 years community college + 2 years public college is the way to go from a financial perspective. However, my parents never told me I couldn’t go to my dream school for an arts program, and I really want to be able to give that same gift to my children.

That’ll be $500k per child, thankyouverymuch.

Who in g-d’s earth can afford THAT?

Looking for advice? Here are 8 Tips How to Afford College

I even started investing in a 529 10 years BEFORE I had a child. This doesn’t seem to help much.

Current 529 Investments

Child 1 (16 years until college): $37,312
Child 2 (18 years until college): $30,000
Child 3 (20 years until college 🙂 ): $11,065

If I invest nothing more in these accounts, at 5% growth, they will be worth…

Child 1: $81,447.42
Child 2: $72,198.58
Child 3: $29,358.74

Let’s say I add $10,000 a year to each account. Does that help?

Child 1: $329,851.08
Child 2: $367,588.62
Child 3: $376,551.26

Well…

That’s… better. But that means putting in $30,000 a YEAR into the 529 for the next 16-20 years. That’s $2500 a MONTH.

And that still doesn’t pay for 4 years at a private school!!!

Cost of Average Private School for Each Kid

Child 1: $469k
Child 2: $520k
Child 3: $570k

Say what now?

Yes, the cost of sending 3 kids to an average private college will be $1.5M. I went to college, so I know that means $1,500,000.

Who is supposed to be able to afford this? I do not understand. This does not compute.

Public School Looks a LITTLE Better

Child 1: $206k
Child 2: $227k
Child 3: $251k

That’s only $684k. Suddenly spending over a half mil on sending 3 kids to college seems cheap. Is it cheap? Can I convince my children–including one-in-the-womb and one-yet-to-be-conceived–that state school is the way to go? Luckily California has great public school options. But that still requires getting into them. And what if my kid has their heart set on my alma mater, or any other private school with specialized programs? Then what?

I don’t want my kids to graduate with debt. But I also know my family won’t be eligible for financial aid because we will have too much saved.

Maybe by the time my kids go to college, it will be free. Isn’t that a fun thought? It’s unlikely, though. So I guess I must focus on saving $2500 a month for the next 20 years so my kids can maybe afford college?

I did want to buy a house, but maybe we should buy a college education(s) instead.

Journey to FIRE: 2021 Networth Goals By Account Type

Quick “after tax value goals” post for Jan 1, 2022

  • Home Equity: $456k
  • Cash: $311.8k
  • Stock: $811k
  • IRA: $201.5k
  • Roth: $147.1k
  • Husband’s Retirement: $108k
  • 529 (2 kids): $138.3k

NEW TOTAL AFTER TAX NETWORTH GOAL:
$2,065,832 (age 38)

I’ll be tracking this closely as this is a significant growth in networth, as well as assuming we own a $1.6-$1.8M home… if we ever buy one.

The Bay Area Home Buying Process (Spoiler Alert: We Haven’t Bought One)

Two years into our on-and-off again (now very on again) home search, we’ve looked at hundreds of homes, put an offer on one and just decided to pass on an other we came very close to attempting to get. Despite the strain of years of home searching getting to our heads, we both realized buying a polished-up fixer was the same as buying a fixer, and due to some serious permit issues possibly WORSE than buying a fixer. And so, we’re back to square one.

Our requirements make it pretty hard to find anything that works. I feel bad for my realtor. There is also nothing on the market right now, especially the area of the Bay that we’re looking (not to mention that everything around said area is currently on fire–why are we buying here again?) Sigh. It’s hard to leave. And I think many companies will still want employees back in the office when COVID is over… eventually.

So we started out with a budget of $1.5M… maybe $1.6M for the perfect house. I thought that was a healthy budget. Not so. Not for what we want. And while we can compromise — why should we? If we were going to compromise, we’d rent. At least… on certain things we can’t change like lot size, neighborhood, street noise, distance to public transit, shops, etc.

I decided I’m ok living with my father-in-law since it gives us some more wiggle room with budget — with his contribution, we can go up to $1.8M, maybe $1.9M. I thought that’s a HUGE amount and of course we can find something for $1.9M. Right?

Nah. With my FIL, we also need to find a place with an in-law, ADU, or two master suites. The home we almost bid on did have two masters (sort of) — the original master didn’t have an en suite, but at least it could fit our California King bed. Then the owners converted their garage into a bedroom and bathroom, with lovely French Doors to the backyard. So they started a permit on the doors… they never got the garage conversion permitted (because it’s not legal to convert a garage here unless it’s into an ADU following strict rules.) Oh, they didn’t file the permit about construction on the French doors being finished either. Guess they realized the building inspector would ask them about why their permitted French doors were installed on a very un-permitted garage conversion. Plus, there was a 300 sq ft un-permitted not-well-constructed sunroom that we were told would basically have to be ripped out and rebuilt if we ever wanted to do any legal permitted work on the house. Despite the “low” price for the neighborhood, the great street, the relatively great lot — we had to pass.

So back to the drawing board.

A few months ago we DID put an offer in on a house — a 3/2 with an in law downstairs. I didn’t love it because it was in the hills and I feel like being on flat or slightly hilly ground is important for my long-term health (I love to go for walks… but know myself that I wouldn’t on very hilly streets… and I’d never drive somewhere to walk.) We bit $1.65M on a house listed $1.8M. They said no, and we refused to go up. It ended up going $1.75M. Another house we considered, without an in-law, sold for $1.7M.

It seems insane to spend that much on a house. But we want to settle down and we’re ready. But the housing market isn’t ready for us I guess.

We’re looking in other areas nearby–but really I don’t see the point in buying a house unless I can be in the area I want to be in. Otherwise we can rent in that area and hopefully one day save up enough to buy. Like, by the time I’m 80?

It also happens that all the “how much house” can you afford calculators don’t really make sense when you make $170k a year ($250k family income) BUT you have RSUs that sometimes bump your income up to $300k-$800k at random. Which, I’m not complaining about, but it’s hard to figure out what we can really afford. It’s scary without having any idea what our future income will be–especially when my particular role can be paid anywhere from $80k to $800k a year (well, usually $150k-$200k.)

With our second child due in January, I am so ready to buy a home. We may end up moving into a larger rental, but I’m just done with renting. I’m almost 37. It feels like if we don’t buy now we never will. What in the point of getting a 30 year mortgage when our kids are 10??? It’s time to buy… if only there were houses on the market that made sense to buy.

My Journey to $2,000,000 — A Quick FIRE Check-In

2020 is weird. Remember when our stocks dropped about 30%, then bounced right back? I made some not-so-wise money when the market was down, but also made a few good ones. And maybe the bad ones weren’t so bad after all.

My asset allocation is all out of whack. Still. It’s worse, because I admit I’m a wee lil addicted to individual stock buying and those individual stocks are primarily US tech stocks. I do not recommend this to anyone, this is me being dumb and seeing investing as a hobby outside of my actual diversified index fund investments. It was fun when I had about $50k in my old Sharebuilder account and I could see if I could beat the market, for kicks. Now I have about $300k in that account (moved to another broker but nonetheless), it’s getting a little, well, scary.

Right now, my networth (after tax*) looks like this:

  • Cash: $318,937 (downpayment fund + emergency fund)
  • US Large Cap: $546,150 (65.5%, target 43%)
  • US Small Cap: $31,810 (3.8%, target 5%)
  • International Developed: $183,258 (21.9%, target 27%)
  • Emerging Markets: $28,546 (3.4%, target 5%)
  • US Bonds: $0(0%, target 12%)
  • Int Bonds: $45,142 (5.4%, target 8%)

TOTAL: $1,154,954

(*why after tax? I count my networth based on after tax value, not including any penalties or fines for early withdrawals, so I have a full picture of my actual savings and asset allocation)

As you can see above, I’m wayyyy overweight in US Large Cap.

This doesn’t tell the whole picture, because:

  • it doesn’t include my husband’s savings or investments (~$200k which help the diversification but not much, total ratios look like 65/3.9/21.8/3.7/.4/5.3 %)
  • it has $0 in bonds because I sold US bonds for downpayment, and need to rebuild my bond fund
  • the above does not include my potential RSU earnings in the next 16 months, which after tax = ~ $536,896 if I can keep this job for another 16 months, which I hope I can! (total networth including 16 month RSU vested and taxed = $1,691,850)

At this point, for my goal of $2M after tax networth by 40 (solo, not including husband’s savings/investments), I think I’m making good progress. The next 16 months will be key. If the stock market crashes, given how heavily I am invested in stocks, the $2M goal could be far off. If it goes up, then I could be closer than I think.

$2M isn’t a substantial goal for me. I won’t feel good about my personal finance progress until I get to $5M. I want to do that by the time I’m 50, so I have enough money to raise a family in a very HCOL area and help my mother and sister out, so they don’t have to worry. My mother will be 76 then, and I expect that to be the age she is running out of money. When I hit $5M, I plan to pay her back for my college education and wedding (if she really needs the money before then, I will definitely help her out and I already pay for her trips to visit my family, etc.)

$5M seems like a long way off, but if I can find another company growing at anywhere near a similar rate to my current company and get an equivalent or larger RSU grant, maybe 2-3 more times, it’s somewhat possible.  I didn’t think $100k was possible just 15 years ago, so who is to say adding $3.5M in 10 years isn’t possible? With my current funds growing at 5% a year, that will add about $1M in 10 years, so I just have to makeup for $2.5M, which is saving $250k a year. That’s going to be rough, maybe impossible. It depends what kind of salary and total comp growth I see in the next 10 years. It’s probably impossible… but I always pick impossible targets, why not this one?

 

Being a Working Mom in a Pandemic + Being a Working Pregnant Mom in a Pandemic

Talking to other working mothers, it’s clear that even the most optimistic of the bunch have realized that life has changed for good… at least for a long while. I’m not sure how anyone thought the pandemic would be a 1-3 month blip in our working lives given how fast the virus spreads and without coordinated federal political leadership, but everyone is now aware this shit has gotten real. All too real.

Professional women I know are discussing quitting the workforce to take care of their kids. Women who contribute 50% of the income to their families. Women who need their jobs. Women who rely on their husbands as breadwinners but who love their careers. Who never saw themselves as stay at home mothers. All now facing the reality – my company has given me no choice but to quit (or get fired, eventually.)

I find it bizarre that my company has not addressed the issue of being a working parent in a pandemic at all. I mean, there was a brief mention, there was the generic comment about how family comes first — but no follow up. No tactical advice how we can do our jobs and be parents and all that entails. Even though schools have announced that the school year — at least the first half of it — will be remote — workplaces have the upper hand and have no reason to offer any more flexibility. We are in a recession. You are lucky to have a job. Take it or leave it. Plenty of other people out there willing to take your place.

I’m fortunate in that as the breadwinner of my household, my husband’s part time job enables him the flexibility to watch our son. I’m also pregnant and yes that was planned but we both know it will be a huge challenge in the winter when our new baby is born. At least I’ll on maternity leave for a few months. Hopefully by then there will be a vaccine or treatments. Either way, I am in a position where I can likely work from home for the long term, and we will shelter in place with my in laws who can help watch our older son while we survive the first year of parenting in a pandemic.

I’ll go back to work–because I have to. I didn’t think I’d get pregnant this quickly but I knew it was possible. I determined that I could survive through the end of this year and go into next year on maternity leave for a few months, and then return in the late spring and hope my boss offers some flexibility to get back up to speed. Unlike my first child, which I had when I was just 9 months into employment at this company, now I’ll have been here three years. I feel like I’m in a bit better place. They can certainly get rid of me, but I don’t think that is their top priority at the moment.

Long term if COVID doesn’t go away I’m not sure how this works. We’ll have two kids under 3 and bills to pay in a HCOL area. We’ll figure it out. I always tell myself I’m lucky that my kid isn’t in school – that we aren’t expected to homeschool while we work. Yet at least that would provide some structure. I worry my son is falling behind socially because he can’t see other kids. That is what hurts the most. But if we allow him to see other kids we put ourselves at risk for getting COVID (which is extra bad if you’re pregnant) and then we can’t see my in laws which means no socialization with them and no childcare. We just had to make that tough decision.

We have a year before my son turns three and I’m really hoping by then the world makes sense again. I’ve given myself mentally until then to just survive whatever is to come. So now that’s 12 months of having a child, not losing my job, and reassessing next August. I’ve committed (to myself) to stay in my current role at least until the end of next year (if I can) in order to vest my entire initial grant,  then start looking for a new role the following year. If all goes well, I’ll be in a solid financial place to start really thinking about work life balance in my career choices — and certainly to focus on finding a company that actually did something meaningful during this COVID craziness for their working parent employees. Not just lip service. Actual policy changes and support. Even if the pay isn’t the best, I’ll be at the point of my life where I want something stable with a company that actually cares about its employees.

Until then, it is just about survival.

It’s the End of My Second First Trimester

Kid #2. There is less joy in this pregnancy. More practicality. I don’t think it’s the COVID situation but I’m sure that has something to do with it. My pregnancy is not one for celebration. It is one for survival to build the family I want. I haven’t post to social media to announce the news — nor to I plan to. No need for jokes about a making a “Covidia” or outpouring of concern. Yes, this baby was planned. You can’t really plan when you have a baby. But we planned to start trying in March and, well, bam, preggo.

I am excited. Excited when I watch my nearly 2 year old develop his own hilarious personality and wonder what this new kiddo will be like. Excited that one day, even if we live in a pandemic-ridden society forever, my son will have another kid to play with vs having to spend all his time with boring adults. It will take a while for that to really be a thing, given baby isn’t due until January and then it’s, well, a baby for at least 8 months or so, but eventually… he will have a live-in friend. Or enemy.  At least some age-appropriate entertainment outside of Sesame Place and turning his Little Tykes slide upside down and jumping on it.

I’m trying to embrace that things are going WELL for a change, but my anxiety is THROUGH THE ROOF. Well in that I’m actually doing a good job at work. I don’t think I’m doing a GREAT job, but I’m doing a REALLY GOOD job. It’s rare for me to say that. I can focus on what matters at home and because I get tired so often I can take breaks and no one cares. As long as I get my work done. It’s wonderful.

But I’m also extremely unhealthy. I’m not moving enough. I live in this 800 square foot 1br apartment and spend most of my day working from my bed. I know that’s horrible especially being pregnant. I need to force myself to move more. But then the days just disappear and I’m like well I guess I’ll get out tomorrow.

January will be rough. I don’t know how to imagine it. My husband and I with a toddler and an infant and probably no childcare and no sleep. If we’re lucky we buy a house where his dad can live and his dad watches our toddler while we go through the delirium that is the first few months child rearing.

I’m sad I won’t get to go to the prenatal fitness classes I loved so much in my first pregnancy, or go to the mom meetups after I give birth and heal enough to go outside. With my first born I took a child development class. I didn’t really stay friends with the moms because I suck at socialization but it was nice to be around other people going through the same thing. I took part in a PPD group at my therapy office and that was nice also, though I’m not sure I want to do that again anyway as I think I have heard the gamut of sad mom stories and at this point I need the strength to do this on my own.

I am nervous about telling my boss I’m pregnant. I’ll be in my second trimester in 2 weeks or so. I could tell her then. I kind of want to wait. She would be happier, I’m sure, if I give her plenty of warning. But things are going so well and I just want to show I can kick ass without her suddenly having to think on how to replace me next year when I’m gone for 5-6 months. It also is awkward to bring up on our zoom 1x1s that are usually so tactical and productive. We don’t small talk much. I will probably just email here before a 1×1 in a few weeks. Very matter of fact. I’m pregnant and I am due on X date and I plan to be out these dates and that’s that. Then if she wants to discuss beyond a quick “congrats” she can. Or we can just bookmark it and she can start shopping for my replacement even though I’m coming back but we all know when you go on maternity leave you lose your step in the career ladder.

Do I care? Not sure. Kind of? I’m not a lifer but I certainly plan to stay a while. And things are finally going well and it is just a shame that I have to pause everything and start over again. But maybe that’s ok. I can use a “break” even though having a kid is NOT a break but it at least is a mental break from my job with another job that is not sleeping and changing poop and having my nipples ripped off by an itty bitty cute baby mouth.

it feels like I’m about to take this massive step to adulthood–home ownership. Second child. Yadayada. I don’t feel like an adult. I just feel tired. I guess that is what being an adult is supposed to feel like, huh?

Still Shopping For a Home—Will We Ever Buy One?

Nine weeks pregnant with number two. Wide awake at 4am due to some pretty bad nightmares and a moderate amount of dehydration. I would go to the kitchen to get a water bottle but I can’t because I live in a one bedroom apartment my son sleeps in the living room, next to the kitchen.

I feel so ridiculous to consider my problems problems when the real problems in this world and in this country are so, so much worse. Anyone reading my story, especially without context, would think—man, what a crazy rich woman who is afraid of spending money. Maybe I am. Maybe I shouldn’t be. But my mental health issues make it really hard to know what my life will be like in a year let alone a day. So what do I do?

Looking at houses here that are under $2M and you wonder why anyone buys a house. If they cosmetically are acceptable then there is something wrong with their bones, if their bones are in good shape they are three bedrooms in a space only slightly larger than my current one bedroom apartment. With my husband’s mission to have his dad live with us (which I support IF we could find a place that worked), it makes it all the more difficult.

Part of me says — rates are so low right now, now is the time to buy your forever home. It will hurt financially for the first 5-10 years and then not be too bad. But that is if I can maintain employment for 30 years. I cannot imagine doing what I am currently doing for 30 more years. I desperately need a career change. Without a clear vision of what that is or the income on the other side, I really don’t know how to plan at all. And my husband mutters how I make unreasonable requests of him like try to earn $150k in 5 years (he is at about $80k now but works part time, and he is 38.) I try to tell him I don’t care about his income but if we are going to buy a house that changes things. I need to know we can afford the mortgage or at least most of it on one income—mine OR his.

I know many families have one SAH parent and buy a house. But around here the only families like that I know are one engineer households. If you are a good engineer at a good company you are pretty much set for life unless you massively fuck up. I’m not in a position like that. My job is a weird one that in some companies would be considered a junior role and in companies where it is paid anywhere near what I’m making it would require a lot more management experience.

So I am in this weird spot. I am earning more than I ever thought I would and my networth is climbing (it is realistic to think, if I can keep my job, I’ll have $2M in 2-3 years saved up pre tax, unless the stock market crashes) but I still don’t feel at all stable or accomplished. Yes living in the Bay Area is living in lala land — anyone reading this post from anywhere else would say leave! But my husband grew up here, our friends are here, I am better mentally without my typical seasonal depression in most of the country, and we really want to stay.

I just wish my husband would step up a bit. I know he is tired since due to COVID we lost our part time childcare and now he is watching our son all day while also working part time at night or whenever he finds time to do his work. So maybe I am asking for too much. I would like him to take an online class or something—just to move in the direction of building a career. Like my job, his doesn’t really make sense outside of his company. Some skills would translate but since he has worked for one small company his entire 13 year career, it’s harder to show variety or new learnings. I still think he could get a better paid full time job if he tried, but he never has been interested in having a career.

And some days I think—maybe I can just work my way up to VP and consistently earn, say, $300k a year. For others in my position, that might be doable. But I’m no VP. I do not like managing people or hiring or firing people. In my creative field, I find it very difficult to give feedback without redoing the work myself—and even then I don’t like what I’ve done so how am I supposed to guide someone else to do better?

All of this is to say, here I am, 36, pregnant with #2, with a good chunk of change in savings, and I feel more vulnerable and scared than ever. Up until now I’ve lived with no debts. Some of that is due to fortunately having parents who footed my bill for college (and I really want to pay my mother back for that one day!) But I’ve also bought my cars used with cash and live in small apartments that are less than I can afford based on any housing to income cost calculators.

It’s hard to go from NO debt to $1,500,000 in debt.

But isn’t that how wealth is acquired? My friends who 11 years ago paid $800,000 for a small house, probably with $180,000 down, now own a small house valued at $1,700,000. Maybe $2,000,000 in 10 years will sound as cheap as $800,000 sounds now? Though it’s hard to imagine these homes being worth $3M let alone the $2M they are going for today.

On top of all this, I dislike the real estate business as a whole. Sure, if you know what you are doing and buy the right investment properties you can do very well for yourself. But when you are buying a home for yourself, you are in it on your own while all the people who are supposed to help you don’t really have your back —

your lender — well they want you to be as low risk as possible and any small risk they say you have gives them a reason to charge you more for it. This makes sense for actual risks — but my latest finding from one lender is that we qualified for 3.125% 30 year fixed except when they realized my husband is self employed it jumped to 3.85% (clearly they don’t care that my husband has worked for the same one non profit for the past 13 years and has always made the same annual income with them plus raises while in that same time I’ve had six jobs. Whose income is more stable???)

Then, since you can’t do contingencies in the Bay Area if you want to buy a house, you apparently have to risk 3% of the price of the house (your “earnest money deposit”) and pray to god your loan closes in the allowable amount of time. If not, bye bye $30k! Well, none of these lenders are giving me much confidence our loan will close with no hiccups. With my husband’s self employment status and some new rules around that, not only will our rates be higher, they also will need to see some crazy things like a deposit within 10 days of close. Maybe that makes sense for someone with ongoing business income, but my husband gets paid four times a year for each quarter of work. That is not a big deal—to hold a check and deposit it, but only one lender told me this. What other weird rules will pop up during our closing process that we don’t know about?

your realtor — she drives a nice car, always. And she is an extrovert and smiles and sells you on why to buy a house. She may look at the disclosures and warn you of major risks, but she isn’t really an expert on that stuff, that’s what inspectors are for. But you don’t need an inspector to see that this house built 60+ years ago has issues. There are tiny cracks here and there. The floor is uneven. A tree looks like it’s roots might be going under the house. Everything creeks when you walk upstairs. The layout is nonsensical which is a cosmetic issue but still will you regret having to walk a weird way to get around for the hundredth time? What other issues are lurking in the foundation and in the walls?

The sellers, at least here, pay for their own inspections. I’ve read plenty of reports. Termites. Water damage. Fungus. Liquefaction zones. Flood zones. Seismic hazard zones. Environmental hazard zones. The list goes on. In any area where we are considering a $1.8M home (that will probably go $2.1M anyway) the ground water apparently is 0-10ft deep. That’s not in the inspection report, I found that online! But two “tanks” with one leaking(?) is in the report. What does that mean? My realtor said she would be comfortable with that risk. But we don’t know what’s leaking.

I’d feel so much better buying a 3/2 for under $1.4M. If it turns out to need work we would have the money to do that work. Husband refuses, wants a large home on a large lot with an in law where his 76 year old dad (who can pay $2000 a month until he goes into assisted living) can live. I want that too—but without me knowing I can maintain a mid-senior role in public tech companies every month for the next 30 years, well, that seems like a horrid idea.

your inspector — ok, they are going to try to find issues to help you out (that is their job after all) but given no inspection contingency is allowed in most cases, you won’t actually have your own inspector.

Ok, so maybe we should rent-forever. It is difficult to find rentals I want to live in (at a reasonable cost) and I can’t fight the nagging feeling that if we don’t buy now we will be priced out forever. I certainly know most people would recommend we rent for a few years then move to an area with a lower cost of living. But we really plan to stay here forever. At some point, into the far off future, buying becomes a better financial Option than renting. Emotionally, it is a better option day one.

The reality is that houses that really check all the boxes are around $2M-$2.5M. Y’all think I’m crazy but look at Bay Area listings on the Peninsula and in the nicer areas of San Jose. Can we get a house for less than that? Of course. It’s even possible to get a dump for $1M! But if we get what we want — 1800 sq ft, 4br/2ba with an in law or ADU on 7000 sq ft in actual good shape, in a half decent school district, that’s easily $2.2M. So then I question should we just wait until we can afford $2.2M? Will we ever be able to afford that? And by then I won’t that house be $3M and the mortgage rates will have gone up?

i know I know first world rich people problems. But most rich people have either trust funds or faith in their career and ability and skills and value, and often two parents who are earning a good income. What do I have? A few crazy good years of income thanks to RSU growth then back to earning $150k a year, if that?

I feel like I can’t buy a house until I figure out my career but at 36 that now seems like it’s never going to happen. I want my son and tbd child 2 to grow up in a house. It isn’t necessary, it is a want. But when I’m making $600k a year (what I will likely earn this year if I keep my job which is absolutely insane) I feel so confused about how I should think about my “class,” my risk tolerance, and my home purchase price. A few more years at this income and I can afford that $1.8M house. Heck, I can afford that $2.2M house. But in 2 years my income drops to $300k, then $210k, as my stock isn’t being refreshed enough since I am not a very valuable employee. I should get some small stick refresh this year so I’ll probably hover around $210k if I stay in this company in this role forever (last year I got a 1.7% raise so I’m not expecting any big salary growth here.) $210k isn’t bad either, but with my husband’s $80k that is not enough to afford $2.2M or $1.8M.

AND that $210k is IF i keep this job forever. It is good for now—I am going to stay at least to get all of my initial grant as long as I don’t get fired or let go, and maybe one more year, but then I need a change. Maybe I need to make $80k for a few years (or less) while I figure things out. Maybe I need to go back to school. Maybe I want to take some time off to spend with my kids while they are young and consult part time, I don’t know what I want but I know I don’t want to overbuy and close doors to whatever out there could make me happy, if such a career exists.

So this is where I am. We’ve agreed it we don’t buy a house by October we will rent a bigger place for a while. We are considering putting a $1.8M offer in on this 5br listed at $1.875, which I am fairly confident we wouldn’t get. I’d prefer to lose out on a bunch of bids then overpay. The house is far from my current job but I won’t have to go back to the office this year and in 3 years I can change jobs. But it’s also far from SF which most jobs I’m qualified for are. If I change careers, maybe that doesn’t matter. But it’s scary to think I might get stuck with some crazy San Jose to SF commute one day to not lose our house.

we are looking at another two coming up—not as nice, both $1.8-$2M, both with built in laws. The inspection report on one was pretty scary though most old buildings have issues so who knows.

I wonder at what networth I will be able to relax a bit and enjoy life. I have the $5M number in my head. It’s arbitrary, as all my numbers are, but I think that’s it. That’s enough for a $2.5M basic house and enough to stay in the stock market and grow as long as we keep working and at least pay our living expenses each year. That’s enough to pay my mother back for college and my wedding and help my sister out a bit if she is still earning minimum wage or close to it. And to start giving to charity in substantial ways. I mean, $10M sounds better, but more realistically I want to aim for $5M. I guess that’s my FAT FIRE number. I don’t know how I’ll get there (unless I manage to keep getting jobs at rocketship companies where my RSUs go up in value.) I mean, realistically I’m looking at $2M by 38 or so. If I don’t touch that and get 5% on it YoY, in 20 years we will have $5M. Of course, in 20 years $5M won’t be worth $5M today. The real question is how do I get to $5M by 45? That’s saving about $400k a year for 8 years in a mix of interest, stock growth, and new earnings. It seems impossible. But my first $100k also seemed impossible. So maybe it is possible. Maybe it’s only possible if I buy a house. Maybe it’s only possible if I don’t.

 

 

 

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