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Comment by yawnr | Hacker News Reader

What…?

300K post taxes is basically 150K, the are probably paying 60K+ in rent and another 30+ in other basic cost of living expenses.

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If you take your numbers at face value and don't try to cut costs, that is still 60k savings per year and would take 2 years instead of 1 to hit a down payment.

If you take the mortgage interest tax deduction, you will be spending about 35k/yr less on taxes and have more disposable income relative than renting at 60k/yr rent VS (70k mortgage - 35k less taxes).

If two years is too long for the road map, you can rent a room in Palo Alto for 15k/yr or a 1Br apartment for 30k/yr.

If you are paying a 50% tax rate, I would also look at tax avoidance strategies. Maxing out the 401k and HSAs to get that down. Each person can always borrow 50k back from the 401 account to put toward the down payment.

Cost of living is definitely much bigger than you make it to be. Just paying rent, car, bills, etc. easily cost 5k a month. A good chunk of my comp is stocks, which could go up or down with time, so a bit of a wildcard there. My wife is a freelancer, and she can bring home anywhere from 1k-10k each month depending on the market (and market is REALLY bad now), so can't count on that.

I might be able to save all my stocks, pray that they don't go down any further, and cash all of them for a down payment. Then I have to pray to not have any unexpected emergency or lose my job, since I dumped most of my life savings in a down payment.

Hardly what i'd call a middle class lifestyle.

I can certainly empathize, living in the Bay Area on ~half the family income and having bought at the peak last year.

All I can say is that no option will be risk free and all involve uncomfortable tradeoffs. Every choice has an opportunity cost, but they are mostly financial.

5k/mo including rent actually sounds reasonably frugal in a HCOL city, about as low as my partner and I wanted to go in SF. My only recommendation would be to pick a number for your emergency fund and pick a goal for your down payment. If you have a concrete goal, you can see yourself getting closer, unlike some nebulous idea. I considered my 401k part of my emergency fund and wanted a year of mortgage because I would spend that before selling the house if was laid off. The banks will tell you how much they are willing to loan based on stock comp and variable freelance work so you my not even have the choice to worry about that.

The worst that can happen is you lose your house and all your money, haha.

People with a $300k/year income don't face a 50% tax rate all in.

It can start to push up that way if you count 20-ish% in Federal income taxes, 10-13% in state income taxes, 6.25% (on the first $150k for social security). 4.5% for Medicare, a 3.8% surcharge on any capital gains or non-qualified dividends. Add in a 10% sales tax and plenty of misc fees (another name for a tax) and while you might not get to 50% exactly, it's a pretty good approximation.

California marginal income tax rates for a single person on $300k are less than 10%. On the other hand, federal rates are higher than 20%. You don't pay 10% sales tax unless you're using your entire income (uh, including the stuff that was taxed away?) on items that the sales tax applies to (and you certainly aren't).

If you're a single person in California, at $300k, if you have no special tax situation, you'll pay a bit less than 40% tax. If you're married, significantly less than that.

No, it is basically 215K post taxes. Taxes are marginal. 300K couple faces ~28% _effective_ tax rate in California. Even marginal tax rate is far from the 50% you claim - it is ~36%. They will have to be making 2M or higher in order to be paying 50% effective rate.

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