Buy a small ~$350k home full cash or have a 230k Mortgage on a $530k home?

[jwinder]

Hello, Just wanted to get all of your opinions on this. I know of course paying a home full in cash is the smartest move but wanted to see if the other option isn't too irresponsible.

We have around $520k in cash. All debts paid, Cars paid off, No CC debt, No student loan debt.

We are planning on purchasing a home that we love and can see ourselves growing into. The house is 530k and has a bit of everything we love and need in a home. If we purchase this, we would have around 150k in savings after doing some upgrades. I would be making around 60-70k a year to support my family of 3 in this house as my wife wants to be a SAHM for a few years. Eventually she would go back to work and our income would double or triple.

Option two. We buy a smaller home for around ~350k and pay all in cash and maybe 25-30k in upgrades leaving us with a bit less savings but with the same Salary able to save more in the long run.

We like option two but really love the more expensive home as it is a home we would just love a lot more. What are your thoughts? Should we really consider the fully paid off home more?

 

[derek1933]

@jwinder 60k a year is not enough to support a family of 3. I'd recommend financing the smaller home to avoid having all your cash tied up in case there's an economic meltdown. Use your cash to invest in your children's education, and your retirement. Try to get a higher paying job and make higher than minimum payments on your mortgage to pay it off early.

 

[saskia]

@derek1933 We got people making 60k trying to be SAHM now??? Like bruh I make 140k and can’t support my family of 4 alone. I need my wife’s income. Everyone just staying at home regardless of the family income is wild.

 

[sisyphe]

@saskia Lifestyle creep is a real thing. I can’t imagine it now, but I’ve seen my family members do it on less. We have very different goals and values in life though.

 

[saskia]

@sisyphe Sure. We live the life my wife wants. At the same time she doesn’t want to stay home. We discussed it before we moved last year. I get wanting to stay home but sometimes you just can’t afford to and other times neither parent wants to.

 

[ladyingreen83c]

@saskia So what your saying is that it’s not because you can’t afford it, it’s because your wife didn’t want to?

I know plenty of people outside of major metro areas with SAHMs for under 70k.

 

[saskia]

@ladyingreen83c My wife had a choice. Increase standard of living with bigger house and continue to work.

Or

Stay put and be a SAHM.

She chose the former. She’d rather live this way than be mean and at home with the kids. She can’t stay home now cause we can’t afford it. But at least it was her choice to forgo SAHM life.

 

[ladyingreen83c]

@saskia Right, but that’s different than your initial “how is it possible to be SAHM on 60k post”

It’s possible with sacrifices. Your family just chose differently. Which is totally fine, but it’s also fine to make different choices.

 

[saskia]

@ladyingreen83c In my old house we couldn’t on 60k I make more than that. Idk how in this state of affairs you afford a family of 3-4 in 60k. Unless you own your home from way back when. We drifted from my original comment. 60k is 5k a month before taxes. Housing at 1500 bucks is 30% take home before taxes. Sure I know people. Why struggle when you can work and utilize daycare. Unless your earning potential is seriously that low. Daycare is expensive but if you can earn 50% more than it cost yearly I say work.

 

[renewingmymind]

@saskia There are still areas of the country where it’s doable (this is vastly shrinking though), it’s just not where you live obviously lol

 

[notafan84]

@saskia Probably a low cost of living area and good financial habits at play. Still, it's not great income when you consider the size of the household.

 

[itsdavidharvey]

@saskia If you don't have a mortgage, it could work.

 

[saskia]

@itsdavidharvey I was thinking people dealing with current housing cost or rent if I had no mortgage yea that’s easy

 

[shibuthambi]

@saskia Depending on where you live, 140k is enough to get by with a family of four.

 

[pikceedust]

@shibuthambi That’s not his salary though. It’s between 50-60k

 

[shibuthambi]

@pikceedust Ahh! Read it wrong, no way in hell about to spend half a million in that salary for a house!

 

[chocolatenquilts]

@saskia I had a SAHM. Remember my dad talking about having $27 in the bank after all expenses paid at end of the month. She pleaded with him to let her go to work to help support the family. He wanted to have his kids raised my mom and dad not daycare. (Please understand, no judgement on anyone who chooses otherwise…or doesn’t feel they have that choice…just the choice they made. And his words, not mine…his perspective ).

He made that $27 a month (which increased with promotions, though not astronomically) grow enough to retire at 48. And support her for the rest of her life, though he’s gone now. And put two kids (doctor and engineer) through college.

Yes, inflation. Cost of living. It’s a different world. But $20k wasn’t a lot even then.

People have different values and priorities. You’d be surprised what you can do.

 

[777hamie]

@derek1933 I’m a PhD student making 30K my wife stays at home with our toddler (and is about to have another) and runs our new travel agency and has made less than 5K in the first few months. Rent is $1,400/mo. We have wic on her and our toddler and they’re on Medicaid. I get student insurance for ~$130/yr. We make it. Not easy, but we do. Crazy thing is we don’t qualify for snap and I don’t qualify for Medicaid. The new baby may qualify us, but we have one more year and we will be abroad for research during it on Fulbright, so hopefully we will be good still.

 

[thezman]

@777hamie I was shocked when we couldn't get food assistance while I was going my PhD. I thought it was for poor people; apparently it's for poor people that also had way too many kids.

 

[777hamie]

@thezman Right. It’s unreal how little they pay a lot of PhDs and expect them to get by. I’m pretty blessed in mine, but I know some that only make like 12K. It’s not right to do someone, especially an international student, that way.

And I’ll let you know lol. Having our second kid today. Maybe I’ll qualify now