Expensive house and no savings.

amother

Mon, Jun 05 2023, 10:43 pm

I bh own a home in NY which is worth close to a million dollars but have very little savings. The house needs work and whenever we have the money we put it into the house. We are bh fine day by day but not really putting anything away cuz we keep throwing it into the house. The house is bh appreciating in value.

My oldest is only ten but I imagine we will have to jsut borrow against the house to marry the kids off and when the time comes to retire
We will probably have to sell the house and downsize and live off the profit of the sale.

Am I totally nuts or this sadly a common plan for middle class ppl living in expensive areas.

amother

Darkblue

Mon, Jun 05 2023, 10:49 pm

His sounds like a disaster to me. If gd forbid one of you loses your job or gets sick you’re in big trouble. Way outside of my comfort zone. Living below my means is much for comfortable for me

amother

Mintcream

Mon, Jun 05 2023, 11:49 pm

Owning a house that appreciates in value is always a good idea. Even if/when beH your income improves, you'll always have it as an asset.

However, you can and should still speak to a financial coach or try budgeting on your own to work savings into your lifestyle. If any of the money being put into the house is cosmetic (e.g. updating kitchen vs fixing roof), you can earmark that for an emergency fund before you work on the house more.

amother

Valerian

Tue, Jun 06 2023, 1:27 am

I'm living in a house that has doubled in value in 3 years. But that does me no good right now because I can't sell it and then have nowhere to live. I mean obviously I'm glad its appreciating but it's so long term until I can downsize.....

amother

Feverfew

Tue, Jun 06 2023, 1:39 am

amother OP wrote:

It's pretty much a reality for a lot of frum people. At least you have a house bh.

amother

Birch

Tue, Jun 06 2023, 2:28 am

Better to live in an ugly house than to be house poor. We had a truly hideous kitchen for many years, in a community where everyone who buys a house renovates immediately because they "can't" have an old kitchen. Yes, you can.

Obviously you have to fix a leaky roof or broken boiler. But hold off on the cosmetic changes until you have a cushion of savings and can afford to pay in cash.

Saving and getting into the habit of living beneath our means has paid off generously.

Emuna360

Fri, Jun 09 2023, 1:17 pm

Sure, you can use a house for your retirement savings if you can sell and move to Cleveland provided you're not in Cleveland and yes you could take loans against the house and when you sell the house you'll have money again. If you move from New York say to Detroit but if you have a house that's bigger than you need in a neighborhood that you don't necessarily need to be in. Yes, go to a smaller house in a different neighborhood and before Trump becomes president again, invest like crazy

amother

Natural

Fri, Jun 09 2023, 1:19 pm

Emuna360 wrote:

Hes not becoming president again

amother

Snow

Fri, Jun 09 2023, 1:32 pm

Life is not all about money for the future. There’s a lot of mental value to a quality of life. If you’re putting money into the house even for necessary cosmetics (like a kitchen) I think the trade off is more important than your whole life revolving on what ifs or when. No guarantees you you’ll live till retirement. Hashem worried for you throughout life and he will worry for you when you get old. Be responsible and use your common sense but definitely don’t let the fear of the future control you.

amother

Glitter

Fri, Jun 09 2023, 1:53 pm

It's pretty much where we're at but we're renovating with increasing value in mind- adding square footage which is very valuable where we live.

Downsizing doesn't mean moving hundreds of miles away, it can be a 2 bedroom condo in a 50+ community ( or not) & can leave you with a nice amount of cash.

Being that your kids are 10 & under I don't think it's terrible but of course if you can start saving now that would be ideal.

amother

Glitter

Fri, Jun 09 2023, 1:56 pm

amother Snow wrote:

10 years ago I would've yelled that you're crazy & irresponsible, but life taught me that what you wrote is true. You still need to be responsible in the present but worrying too much about the future doesn't help anyone.

amother

Azure

Fri, Jun 09 2023, 2:00 pm

Emuna360 wrote:

Why invest beforehand?

amother

Pink

Fri, Jun 09 2023, 2:28 pm

Lots of thoughts here:
1) Owning a house is an asset. Worst case, you sell it and move to a cheaper area. Yes, those exist outside of Brooklyn. It's always better to own something that goes up in value than to have the money sitting somewhere in a savings account or gemach.

2) I don't know how big your property is. Is there space to extend? Our retirement plan is to take out a construction loan against the increased value of our house (by then it should be quite a bit), double or quadruple the size of the house, adding one or two rental apartments which will generate enough income to pay back the loan and help us with living expenses while we cut down on work.

3) Even now (but with the high interest rates, probably worth it to wait on this a bit), you can take out a HELOC or a home equity loan and use that to invest in something with a better return. You can buy a second property and rent it out. You can invest in stocks, EFT's.

You can even do a combination of 2 and 3.

amother

Jean

Fri, Jun 09 2023, 4:15 pm

amother Snow wrote:

You're speaking in paradoxes. Live for today and don't worry about the future, but be responsible. You can't have both.

Surviving until retirement age is considered a what if? Most people do live until their 60s, it's not such a stretch to prepare for life during the average lifespan. And what about next week or next month? It's responsible to have some savings for emergencies. The whole let's live it up because we might doe tomorrow is completely irresponsible. It's spending recklessly that unfortunately leads many people to worry about the future. Burying your head in the sand won't help you in the long run.

amother

White

Fri, Jun 09 2023, 4:25 pm

amother Valerian wrote:

If you take out a loan based on the increased value or refi your mortgage, it certainly does a LOT of good for you now!

amother

Birch

Sat, Jun 10 2023, 2:54 pm

amother Snow wrote:

I don't know what stage of life you're at. We're retired, so I'm looking in hindsight. And from where I stand, I'm glad we didn't arrange our lives so that we had to have everything just so.

amother

Navy

Sat, Jun 10 2023, 9:58 pm

My oldest is 17 (a boy), and while I hope things improve for us financially in the near future, my backup plan is to take out a heloc on our house for weddings iyh. I don’t think it’s crazy.