Seems like a lot of anger over 1 bad comment about daycares/nannies. I certainly don't think many folks are "humble shaming", just pointing out their chosen circumstances.

As for paying for your kids college - I think it is awesome if you can, but I think it is worth making them shoulder some of the burden, even if you could pay it all cash on day one.

It isn't that I think it is good for kids to carry debt out of school, but it is good for kids coming out of school (with theoretically little meaningful income) and into the real world (with theoretically a huge jump in income for them) to understand the impact of servicing debt.

It's the same reason you see people who go from broke to millionaires (lotto winners, professional athletes) struggle with money - they never learned because they didn't deal with the transition. They were broke, then they were rich.

That's not to say you can't be absolutely successful with money if your parents paid your entire way - tons of folks do just that. It isn't to say that shouldering some of your college debt is a sure fire way to learn financial responsibility as we all know that isn't true.

It's just to say that there can be benefits to it and it isn't simply a matter of whether or not your kid has to deal with debt after graduation.

I could see situations where a kid is abnormally financially responsible early on (maybe they've had a job, have savings, etc. while in High School or the parents instill that early enough to where they just grow up that way) would benefit more from the entire bill being paid, so I'm not discounting that at all.

[This message has been edited by JDCAG (NOT Colin) (edited 7/31/2014 11:51a).]

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I know my wife's job at home is harder than mine most days.

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+1

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Half of these moms spend their time at "work" face booking, tweeting or blogging about the kid.

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Just like half of the stay at home moms who do the same thing while watching the latest episode of Dr. Phil while the kids play in the next room.

There is no reason to bicker about kids (etc.) on this thread. It's a wealth/net worth thread.

If you are gonna have kids - take it seriously and plan for the expenses. Four years at A&M now will cost > $100K. In 18 years how much will it cost?

Hoping to hit the number before my current overseas assignment is done. Of course part of it goes back into a house when we get stateside, but if we are talking net worth instead of investments it still works out.

Looking forward to the day.

One thing that sticks in my mind a lot is our student loan debt. We pay 4x the minimum each month and my annual bonus goes towards it each year. We will be done paying it all off in two and a half years (paid off in 5.5 years) and having that extra money will be so nice. We probably could have paid them off sooner, but we didnt feel like putting our lives on hold any longer after a decade in school (for her). Gotta live a little and enjoy it some!

Once we are paid off, then I can increase our retirement savings from 25% gross(before company matching) to closer to 35% or more. I always think that we dont contribute enough, but its about all we can do at this point. Luckily we are both higher income DINKS with no plans for kids, so hopefully we can remain on track.

[This message has been edited by Hoyt Ag (edited 8/1/2014 7:43a).]

if you can put 25% towards retirement, pay for student loans, and still "live a little"...then I think you'll be alright.

When you take into account the higher taxes most pay on a second income (income and SS), the cost of daycare and the added cost from both parents working (eating out, vehicle, house keeping, etc) .... That second income is often less than minimum wage.

11 years ago, my wife made 48, and I made 45, we did the math and she would be working 2,000 hours for about $10,000. It wasn't worth it to us.

^ does that include benefits and retirement benefits

It's been 11 years..... But she is a CPA (tax) and it was a pretty exhaustive list of items we considered....... At least that's my memory.

Those numbers may have been run before some of the Bush tax cuts.... but that would be minimal.


[This message has been edited by BBDP (edited 8/2/2014 1:54p).]

Im 26 and halfway there. me and the wife drive 13year old vehicles. and will have the house paid off in two months.

I know we discussed how to account for a mortgage in this thread but I don't remember what the consensus is. I have a mortgage on a rental property that would technically take my net worth (assets - debt) negative or right around zero. However, it generates income for me each month and I think if it as an asset to my bottom line. How do y'all factor this into your net worth calcs?

My thought is to put the net value of the house in the spreadsheet which would be (House Value - (Amount owed + closing costs if I were to sell it)). If I use that, then I should still have a positive net worth because I put 25% down and therefore owe less than the house is worth. Thoughts?

The house is an asset you could sell. It absolutely should be counted.

If the house worth is $180k and you current owe $120k on it, it should be $60k positive on your net worth.

Yeah - I've always seen/used the "home value - remaining mortgage" for the purposes of establishing net value.

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Yeah - I've always seen/used the "home value - remaining mortgage" for the purposes of establishing net value.

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For an investment property, I'd say net realized gain from a sale (Price - (Amount Owed + Closing Costs)) plus the present value of the future cash flows that the property is expected to generate.

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Yeah - I've always seen/used the "home value - remaining mortgage" for the purposes of establishing net value.

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For an investment property, I'd say net realized gain from a sale (Price - (Amount Owed + Closing Costs)) plus the present value of the future cash flows that the property is expected to generate.

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Hmm, that's an interesting take. Is 10% gross rent per year a reasonable assumption for maintenance costs?

I'm no expert, but I don't see why you would use the liquidation value of the house today, plus NPV of future cash flows. I think it would be one or the other since no one is likely to pay you both.

I fill out a personal financial statement for my bank once a year. I just use liquidation value for my assets even though the majority of them are income producing business assets and I'd never sell them for liquidation value.

Maybe I should start a new thread about real estate, but I figured after reading through, I "owed" a brief testimonial.

- grad from A&M in '94
- Ph.D. in chemistry at 26/got married
- started at about $0 NW, after paying off loans with savings and first few paychecks
- pay cash for cars, 20% down on house, eat out with coupons...typical Dave Ramsey-type stuff
- have 6 kids and tithers to church
- wife is SAHM
- working for "the man" for 15+ years, never given one thought to going out on my own
- hit the $1M mark at 40

If I keep going at this rate for another 20 years and the economy doesn't collapse, I'll put everybody through college, sock away another couple of million, and retire.

I agree with some posters who've said $1M isn't much money. Think about 5 - 6 college educations, weddings, etc.

I like my job, but this real estate idea intrigues me. I DO NOT WANT TO BE A LAND LORD!!! I "own" my home, and have some REIT funds. But this idea of a management company helping me leverage ~$100K - $200K of rental properties to create a steady extra paycheck is interesting. Any further advice? I'm in Houston.

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I like my job, but this real estate idea intrigues me. I DO NOT WANT TO BE A LAND LORD!!! I "own" my home, and have some REIT funds. But this idea of a management company helping me leverage ~$100K - $200K of rental properties to create a steady extra paycheck is interesting. Any further advice? I'm in Houston.

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The real estate clubs like Lifestyles Unlimited in Houston suggest you manage them on your own. I prefer sending money to a property manager every month instead of towards a mortgage.

I use a property manager and have a good relationship with him.

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The real estate clubs like Lifestyles Unlimited in Houston suggest you manage them on your own. I prefer sending money to a property manager every month instead of towards a mortgage.

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I'm not taking on anything else in life. Family and career consume me. I went to school for a reason, and I love being a scientist. I'm not at all interested in becoming a capital-generating automaton. What I do want is to realize some of the benefits that might be available after having accumulated some liquidity.

Typical management companies charge 6-12% rent per month and 1/2 to 1 month's rent to sign up new tenants. People who invest in real estate for a living and who live near their properties, see this as a capitol drain and recommend against it. It makes since that if this is what I did or made a good chunk of my money from, then absolutely should manage my own. If, however, this is just another way to diversify and create cash flow, a management company is a great way to have a more hands off approach once you have bought your property. You'll only get calls during business hours unless huge expense comes up and most months you just see money deposited in your account if you invested wisely.

I have only one house so far that I rent out in College Station. Having the management company has been worth it in my mind if not just from their experience and advice for us through the process. My wife and I work full time and don't want to deal with the additional stress and time of managing it ourselves, collecting checks, making sure everyone pays on time, beign on call 24/7 even on vacation, etc so management company works for us and appears it would be best in your situation.

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- grad from A&M in '94
- Ph.D. in chemistry at 26/got married
- started at about $0 NW, after paying off loans with savings and first few paychecks
- pay cash for cars, 20% down on house, eat out with coupons...typical Dave Ramsey-type stuff
- have 6 kids and tithers to church
- wife is SAHM
- working for "the man" for 15+ years, never given one thought to going out on my own
- hit the $1M mark at 40

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What's the top take away?

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- grad from A&M in '94
- Ph.D. in chemistry at 26/got married
- started at about $0 NW, after paying off loans with savings and first few paychecks
- pay cash for cars, 20% down on house, eat out with coupons...typical Dave Ramsey-type stuff
- have 6 kids and tithers to church
- wife is SAHM
- working for "the man" for 15+ years, never given one thought to going out on my own
- hit the $1M mark at 40

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What's the top take away?

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Make enough money that you can do all of that and save $30k per year?

This thread has me thinking more about buying rentals near UT so I can rent it out. I would definitely use a management company as I do not want to deal with daily issues.

I do not even need to make any money, I think appreciation and rent increase will be worth it in the long run.

Looking in the UT area, I see that Condos 2 bedrooms goes for about 200-250k. After doing all the numbers, it looks like these places would break even or make me alittle money a year (like 5-10k).

With the interest rates still low, it looks worth it. When rates goes up, the numbers stop making sense.

I could put down 50-100k on a condo and finance the rest.

Am I missing something?

Did you remember HOAs?

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I do not even need to make any money, I think appreciation and rent increase will be worth it in the long run.

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famous last words.

Property Taxes, Mortgage, HOA fees, management fees, vacancy times, and upkeep (a/c, appliances, paint, yard, etc) are the major expenses I can think of after you have closed on the property. I typically use the 1% rule to give a very rough estimate if I am in the right neighborhood valuing houses right off the bat. So a $200-$250K home should rent for $2-$2.5K/month. If rent in the area for comparable location/house is more like $1k-1.5K then I will move on.

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Property Taxes, Mortgage, HOA fees, management fees, vacancy times, and upkeep (a/c, appliances, paint, yard, etc) are the major expenses I can think of after you have closed on the property. I typically use the 1% rule to give a very rough estimate if I am in the right neighborhood valuing houses right off the bat. So a $200-$250K home should rent for $2-$2.5K/month. If rent in the area for comparable location/house is more like $1k-1.5K then I will move on.

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Solid post. And property taxes will always surprise you, especially since they tend to go up.

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Make enough money that you can do all of that and save $30k per year?

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I would agree. With all the "limit your expenses" talk, I feel this is overlooked.

Property taxes in central Austin on a $250K unit will be about $7,000 per year. That's almost $600/month. No homestead exemption.

[This message has been edited by SpicewoodAg (edited 8/6/2014 5:15p).]

I don't understand diehard's question. Maybe some of the others did. I'm not interested in moonlighting or a career change. I am interested in leveraging accumulated wealth in an income producing manner.

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I don't understand diehard's question. Maybe some of the others did. I'm not interested in moonlighting or a career change. I am interested in leveraging accumulated wealth in an income producing manner.

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I think he's just asking you if you had to give somebody advice, what would you say? It looks like you've done pretty well so he's just asking what you would say was the biggest thing you've learned in the process that you would pass on to somebody else.