So, my wife and I recently moved to a new (high cost) area for my job, and have been living off of my income until my wife starts her new job in a couple weeks. We would really like to buy a house in the near-ish future. To complicate matters, we also recently found out that we will be having twins. I'm trying to figure out the best plan for our family going forward - we currently rent a condo that is fine for now, but will quickly become too small and not very practical once the twins are crawling/walking around. We live in a high cost of living area, and I'm concerned that we won't be able to afford a decently nice house that will suit our needs. I've been trying to use online tools to help me determine how much house we can afford, but I don't know how to factor in putting two kids in daycare. I've laid out our income, planned down payment and monthly expenses below. Apologies if formatting is not good - suggestions are welcome.
Income:
We will have a combined salary of $147k once my wife starts her job in a couple of weeks, monthly take home after taxes/deductions will be ~$8300. I have no idea how this will change after having two kids - I realize we will get a tax credit, but It will likely be more than offset by health insurance on two children, right?
Down payment:
I've worked out that we will have about $55k saved up for a down payment/closing costs on a house by the time the twins arrive. We also have $28k in an IRA account and two 401k's - one at $8k and the other at $5.4k. Would it be worth tapping into some of the retirement savings to boost our down payment?
Current Recurring Monthly expenses:
- $1700 rent
- $340 car payment (this will be completely paid off in 5 months, before the kids arrive)
- $250 student loans ($200 is the minimum payment, has $13k remaining loan balance)
- $165 mobile phones
- $137 auto insurance for two vehicles
- $113 TV/internet
- $73 pet insurance (two cats, we also have a dog who is uninsured)
- $~60 energy bill
We usually spend roughly $1000/month on groceries, pet food/supplies, and general home supplies. We've been spending an average of $5300 a month total, the remaining money going to restaurants, entertainment, commuting costs, shopping, incidentals, etc
Future Monthly recurring expenses with kids/mortgage):
- $???? mortgage, PMI, property taxes, home insurance
- ~$2000 daycare for two infants (this will be on the cheaper side of available options)
- $250 student loans ($200 is the minimum payment)
- $165 mobile phones
- $137 auto insurance for two vehicles
- $113 TV/internet (definitely not opposed to axing cable, which would bring us down to around $40/month)
- $73 pet insurance
- $~100 energy bill? (this will probably go up for a house as compared to a condo)
I have no idea how to quantify what our other child-related expenses will be. Given our other expenses, I think I've worked out that the maximum we would be able to handle is around $3000/month in mortgage, PMI, property taxes, and home insurance - which would translate to around $500k maximum budget for a house. After all recurring expenses and bills, this would leave us with ~$2400 a month to spend on food/supplies/whatever else. We likely wouldn't be able to save much money at all while the kids will be in daycare other than our 401k contributions. Does this sound reasonable? Will we be at risk of putting ourselves in crippling debt with a $500k budget for a house while trying to pay for daycare for two kids? We obviously do not have to go to the maximum on our budget, but in this market anything less than that will probably force us to make huge sacrifices in quality, size, neighborhood, etc.
Submitted April 08, 2018 at 10:47AM by Throwaway101101100 https://ift.tt/2qfy4vb
