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Comment by aphextron | Hacker News Reader

I make low six figures as a single, childless person, and am just barely doing ok. I rent a cheap 1 bedroom apartment, drive a 20 year old Toyota, and end up with just enough for a small amount of savings each month with very little discretionary spending. Buying a home is an impossible fantasy. Being out of work for a couple months would leave me homeless. I literally cannot imagine what it's like trying to support a family on the average salary in this country.

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With respect either you left out some major details or you have a skewed perspective of what it means to be "doing ok." My position matches what you stated almost exactly (low 6 figures, single, childless, 17 year old Toyota) and I'm doing _very_ well. I bought a house last year, max out my 401k and Roth IRA contributions with additional savings on top, have a decent emergency fund, paid off my student loans five years early...

I'm not trying to brag, but a single person making six figures should be doing quite well anywhere in the US. I really suggest sitting down and carefully tracking how you spend money for a month or two to find out where it's going.

Even a single person making mid-high 5 figures can be doing really well if they don't live somewhere super expensive

There are many factors aside from spending habits that might lead to discrepancies between purchasing power of a 6 figure salary.

One example: discrepancies in the local cost of living. For example, someone could live like royalty on a 6 figures is Arkansas, but might barely scrape by with the same salary in San Francisco. According to nerd wallet, a salary of $106k in San Francisco is roughly equivalent to a salary of $50k in Little Rock, AR.

It's pretty presumptuous to suggest that they need to sitting down and carefully tracking spend without knowing more information. Especially considering the original poster wasn't asking for advice (or judgement) from a random internet stranger.

source: https://www.nerdwallet.com/cost-of-living-calculator/compare...

If you can muster up 10k-15k you can buy a $300k house with 3% down. There are down payment assistance programs as well. After a few years you can refinance to remove PMI etc…. It’s not impossible but it is certainly difficult.

Unfortunately if the OP is located in California, there are very few places left in the state where one can purchase a home for just $300k; these are generally places in the southern half of the Central Valley (e.g., Fresno, Bakersfield) or places in the far north of the state (e.g., Chico, Redding). Sacramento, my hometown, is no longer cheap; last I checked the average price for a home there was around $440k, and homes in Sacramento's nicer suburbs tend to average in the $500k range (and homes in Sacramento's walkable core are even more expensive).

There are out-of-state alternatives where $300k is doable such as Las Vegas, Phoenix, and Houston, but if the OP is a lifelong Californian like myself, then moving to another state may be quite a change.

I'm in a similar situation as the OP. I currently rent an apartment in a coastal area near Silicon Valley that I love. I can afford to purchase a place up to about $425K based on my income, savings, and DTI, but $425K isn't enough to purchase anything near commute distance from Silicon Valley, and while I could have afforded Sacramento two years ago, the pandemic-era rise of prices in the Sacramento area have priced me out of the neighborhoods I want to live in. Thus I still rent.

You can afford condos on both sides of the bay.

I'm very interested in a low down payment, not to buy a house beyond my budget, but instead to avoid locking in more cash than I have to. Could you recommend any guidelines or important factors for me to determine whether I should prefer minimal down payment vs standard (>=20% iirc)?

Are you planning on living there for a short period of time (<~5yrs)? It may end up being cheaper overall to pay minimum down and go with the private mortgage insurance and a 30-year mortgage so you pay as little as possible while you're living there. But if you're planning on staying there long-term, a 15-year mortgage may be a better option.

How good is your credit? If it's good and you have a high income to debt ratio, your PMI will likely be pretty minimal. If so, you may end up netting better if you invest what you'd put down and let that money grow instead. Or you can put some of that into points for lower interest rates.

These things are pretty easy to figure out if you know what your home budget. There are a few places you can get rough estimates based on your credit score.

What would a "pretty minimal" PMI look like? My partner and I both make pretty good income and have zero debt. I've heard about places like Ally where you can get a mortgage estimate without a hard credit pull; is that the kind of thing you mean?

I wasn't talking about an actual estimate just a rough listing of your options like this [1]. A pretty minimal PMI could be like $50/month depending on the cost of the property, and there are some calculators for that too [2].

[1]: https://www.bankrate.com/mortgages/mortgage-rates/?mortgageT... [2]: https://www.hsh.com/calc-pmi.html

You should do the research. First, check with a local bank within your state. Then check out of state lenders.

While you are doing that, see if you can get a Naca loan.

https://www.naca.com/purchase/

How is this possible? Are you living in LA or San Francisco? Where is all of your money going?

By my calculation, if this person made ~$120k year and lived in a typical $3000/month 1-bed apartment in San Francisco, they should have about $40k/yr left after taxes and housing costs are paid. Out of this $40k they'd need to pay food, transportation, discretionary, and savings. Definitely puts efficiently saving a large downpayment on a home in California out of reach, but I'm surprised OP feels at risk of becoming homeless with that much budget slack. A generous $2000/month budget for non-housing spending (food, transportation, discretionary) would still leave $16k/yr they could save. Not a lot, but a lot better than many. Large debt payments or lifestyle inflation could pretty easily skew this person more toward an experience of paycheck-to-paycheck living.

When I lived in San Francisco, it seemed like the hedonic treadmill was in full force. People came to the Bay Area stunned that they could start out making more money than their parents ever dreamed of, then a few years later they feel grumpy because they're ONLY making $300k/yr when their buddy is making $450k/yr at FAANG and driving a new Tesla. It's easy for lifestyle inflation to happen in an environment where people all around you seem to have Scrooge McDuck levels of money and all the lifestyle bloat to go along with it.

My advice is to take your tech skills and leave for greener pastures. I see absolutely no reason to pay all those extra California taxes and housing costs.

Yeah this sounds about right. If they were in a fancier place and were hitting $4000 per month in housing costs (parking spots aren't cheap I guess), that'd put them down to $4k savings per year with the rest of the spending held constant.

Highly recommend creating a ledger of all spending. It's amazing how quickly the little things add up, by simply taking the time to write things down it becomes much easier to see where it all goes.

Many credit cards claim to do this for you, but to me that defeats the point. If you aren't taking the time do your own accounting, it simply becomes another email/HTML table/push notification/whatever to ignore.

I do this. I have a daily planner with plenty of blank pages and write down, by hand, every transaction I make. I start with my monthly budget, subtract rent, groceries, a video game, a movie, etc. Anything beyond my budget, whether it's salary or a stimmy, goes to saving/investing.

It's been incredibly helpful for being aware of my spending. In fact it's so helpful I actually forgot how much I'm saving and was pleasantly surprised when I remembered how much it is. It's also very effective for staying on top of lifestyle creep.

I make $15.60 an hour in a city of ~800,000 and I'm doing better than this... What went wrong? How is that possible?

What do you think the main reasons for this are? Are you in a super high cost of living area?

I make low 6 figures and support a family of 4. We have to budget, but we definitely aren't struggling, we are able to afford plenty of luxuries. Buying a house was not too big of a task. You should move to the Midwest.

Others have done ballpark figures based on what you've said. And as someone who has lived in San Francisco making even less at times, I agree that you should be able to build up at least several months savings.

Unless: you have some crippling college debt ($20k/semester*8 semesters paid over ? years), or have a persistent medical issue ($10k/yr out of pocket), or another terrible corner case that I haven't had the displeasure of encountering.

Move.

Definitely tell us more if you're willing to share.

You must have some incredible debt? Or a bad gambling habit?

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