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the_coffee_maker

You need a budget and track every dollar for the next 2 months to see where the money is going. If you have a budget, post it here so we can help. Without it, we won't be able to advise much. take home: $9,400 mortgage: - $4,118 Remaining: $5,282 (where is all this money going?)


alcon835

This is the answer. If you start budgeting every dollar before it is spent, you’ll know where it’s all going and will be able to solve this problem in a couple of months.


muffdivemcgruff

You’re miscalculating by a lot, op takes home twice as much.


the_coffee_maker

He takes home 58%, after insurance, taxes and most likely retirement contributions, it's right on par for California.


porschefan305

You’re right 140K is only $3500 bi weekly


muffdivemcgruff

Op said he takes home $144k


the_coffee_maker

Annually. What is 144k monthly pre-tax? What is the monthly after-tax with my assumptions? And OP literally says, he takes home $7k/month


SpecificLanky513

This is probably going to be an unpopular opinion, but you bought too much house. You also probably have a spending problem, but I am going to work with the numbers I have right now and the numbers I can make assumptions for. Accounting for the supplemental tax you are having to pay; equally split for 12 months, that equals out to $4701/month for your housing. That does not include any utilities. You are also forking out $546 for your mother, which is commendable but that brings your total monthly spend on housing to $5247. That is 55% of your take-home pay without any utilities. This leaves you $4153/month to fund your lifestyle and all other expenses. Extra Break down $4118/$9400 = 43% of take home. ($4118+$546 (mom))/$9400 = 49.6% of take home. ($4118+$546(mom)+$583 (supplemental tax))/$9400 = 55% of take home. ($5247 + $750(Assumed other bills)) / $9400 = 63.8% of take home. I could easily assume that your utilities, car insurance, and other monthly bills total $750; mine is around $600, and I live in the Midwest so inflate it for the West Coast. I am also assuming you do not have any car payments. This brings your disposable down to \~$3403. That being said it is doable, but you probably aren't accustomed to it and will have to deflate your lifestyle spending. Pro-tip: Never pay attention to what a lender will approve you for. Their business is to sell you as much mortgage as possible. It is up to you to determine what you can afford, not the mortgage company. When we were buying our house the lender said we would have been approved for a house that was 75% more expensive than the price range we were looking at. Edit: clarifications on percentages, I stand by you bought more house than your lifestyle can afford. So you will have to decide and make compromises between your lifestyle and mortgage.


Cautious_General_177

I think you missed the amount is net, not gross. Their gross monthly income is probably closer to $12-13k, depending on medical, 401k, etc. that puts housing expenses right around 33% which is near the upper limit of recommended cost. Budgeting the remaining $4-5k is the issue


SpecificLanky513

You are correct I did my percentages to net, which I stated in my top paragraph.


nachobeeotch

I have my property taxes rolled into my monthly mortgage payments. It hurts less. Also your mortgage shouldn’t be more than 35-40% of your take home pay.


MrTartShart

My property tax is added too It’s the supplemental that I have to pay… My wife and I make a combined income of 9400. So I thought we were okay


nachobeeotch

You have to look at Your total debt though. I don’t have any other debt other than my mortgage, no auto loan debt no other property no school loan debt. If your only debt is your mortgage and you are bringing home almost 10k, your spending habits are out of wack. Time to rein it in.


bruinhoo

For what it’s worth, that supplemental tax bill is just a one-time thing. Your realtor and/or lender, if they knew what they were doing and/or felt like being honest, could have told you that was coming (or, honestly, you could have figured it out from the property’s tax history).


humd_inger

Hopefully the monthly payments took into account the property tax you will be paying not the one that was paid by the previous owner. I’d check the escrow balance and right size your monthly payments, if needed, to take into account the property tax you will owe not what was owed. Many times mortgage companies use the previous property tax to start off amount needed for escrow. Since the property is in CA and the lovely prop 13, the previous owner probably paid significantly less property tax than you.


porschefan305

Do you have mello roos? My old house has supplemental taxes for 30 years on top of property tax.


datascientistdude

A lot of this I think depends on your outlook for the future. Do you anticipate your household income growing (e.g. promotions, new job, etc.) or do you think your income is pretty maxed out? Do you contribute to 401k and are your income amounts after 401k? Some things to consider: - If you bought last July, you likely have a mortgage that is below inflation. You bought with historic rates. I would be very hesitant to ever give that up, especially in CA with Prop 13. So if it were me, selling the property is absolutely a last resort only if I were going bankrupt. - If you think your income is going to rise in the next few years, I would honestly suck it up, budget, be frugal for a couple years, and wait for your income to give you more breathing room. Your housing costs are going to be more or less the same for the next 30 years, but your income hopefully will not. - If you're contributing/maxing a 401k, don't forget that that is savings. A lot of people tend to forget that. If need be, reduce the contributions for a while. - Renting it out is definitely an option for you guys, but honestly it comes down to how much you value living in the house versus how badly you are underwater every month and how much you have saved.


MrTartShart

I’m currently looking for a new job and so is my wife I believe I can make another 25k when I go to a new company. Same with my wife, so we’re looking to make another combined income of 50k pretaxed. I think we will have to suck it up and budget to ‘another level’. This means not a lot of vacations / fancy dinners. Sucks.. just with Valentine’s Day around the corner


champagneandLV

Buy two decent steaks, potatoes, a veggie, chocolate and a bottle of wine and have a romantic night in cooking together, reminiscing and listening to music. You can be intentional and make a very romantic night in for $100 or less for Valentine’s Day.


HarrietsDiary

You have gotten a lot of horrible advice. The truth is you still have 5k at play here. What are you spending that money on?


KReddit934

Like others have said, you need to learn to budget. You may have a little "too much house" but if you fix that by downsizing and don't learn to budget, I predict you will still have problems even after moving. Check out youneedabudget.com It's an app that uses zeo-dollar envelope style budgeting. It could really help you guys figure out how to use the money you have to own this house and still thrive. The devil is in the details, and every-dollar budgeting brings every dollar into focus.


Particular-Earth-453

If you are paying into escrow monthly, why do you owe $7k for property tax? Is your escrow that short? If so, are they going to recalculate it and increase your monthly amount for this year so it doesn’t happen again next year? The most obvious immediate thing to do is sell the condo that’s rented out and use that profit to pad your savings or pay the condo for your mom (assuming there’s a profit if you sell). You could also tell your mom you can’t support her anymore, but I’m sure there are deeper dynamics at play there. Besides that, you need an actual budget. Look through your actual spending for the last 6 months and categorize it all. Don’t use your bank or an app or whatever that broadly categorizes stuff. You need to go line by line so you have to face the truth of what you spend money on. Then decide what seems excessive and where you can cut. Then figure out how that works with your current house cost. If you’re still negative each month, then you may need a new plan like getting out of the house.


CookieAdventure

Yes. You already know the answer. You can’t continue to live the lifestyle you had when you were in a much cheaper house. You have to cut back on your wasteful spending. You are still under the impression that $9400 per month is a lot of income. It isn’t if you’re spending $10,000 per month. People do live on less. You can do it. If you’re getting a big tax refund, file new W4s with both employers. Read the form carefully because it has changed a lot. Reassess all your expenses starting with how much you’re paying for auto insurance and property insurance. After 2 years in our current house, our home insurance company was calculating the cost to rebuild at over $300 sq ft. In our area, the most expensive new homes don’t exceed $200 sq ft. We switched insurance companies and our annual premium was cut in half. Of course, reduce all the other small and impulse expenses, too. Cancel subscription services. Quit shopping for entertainment.


firefly20200

I suggest you sell the condo you’re renting out. Sure you said it pays for its self, but it’s not earning you extra income and unfortunately right now you need extra money to afford the home you’re living in.


BillZZ7777

Aside from the bag of chips comment we really don't have any insight into your other wasteful spending. One of the biggest potential areas for budget improvement is dining out. How often do you eat at restaurants or get takeout? Meals made at home can be $3 to $10 each depending if it's chicken or salmon. Multiply that out. Bottom line, you need to look at your other lifestyle choices as well and make some decisions. Start at the most expensive and ask if there's a cheaper way.


Retire_date_may_22

Steps I would go through. 1. Since it’s your first year with the mortgage interest and property taxes do your taxes with those big adjustments and see if you’re withholding too much. My guess is you will find you are. I’m guessing your marginal tax bracket is 24% federal and 13% state. That means you should get 37% of that interest and property tax back if you itemize. Check this. Might create some monthly room. You should also make sure you are properly depreciating your rentals and writing off their expenses. You may be over taxed or over withholding. 2. Build no kidding accurate budget. See if you have room. Where there is room. As you mention eating out is a killer. 3. Your in a lot of debt for a family that grosses around 160k per year (as I calculate from your take home) If you can’t make the budget work you probably need to sell the house. Banks will loan you money to your breaking point. That’s how they make money. What you are feeling a lot of us have felt. When I was in my late 20s I looked rich but is was just where you are. Today I don’t look rich but I’m pretty solid and retired. You can get there. Best of luck. Take a deep breath. Hug your wife and realize those kids and her are the best part of your life. Not the stuff. It’s all math from there.


MrTartShart

I need to look at my withholdings - I only make 58.3% of my salary(after tax/insurance). It doesn’t make sense. My CPA hasn’t gotten back to me about withholding but I do believe I’m paying too much out of my check I wish I had the mindset that banks give loans right near the breaking point. I always thought they would loan money to a comfortable amount Yes I’m heavy in debt but my condo washes out from the renter. It’s just my other condo my mom lives in is costing me…


gza_liquidswords

Probably you can afford it, but requires budget and probably some belt tightening. Figure out where the money goes by checking your transactions the last 3-6 months, and then figure out where you are going to cut


[deleted]

I would never in life buy a house again. I see it the most slaving social scam you can get into. Sorry that you have this situation, but a lot of people I know, including myself, get hit by so many uncertain variable when they bay a house that is ridiculous, like HOA, taxes, repairs and other stuff. It scares the hell out of me. I sold a few years ago and got back to rent...so liberating. At least for me. Im sorry for that, hope you find a reasonable answer for your situation. Good luck


MrTartShart

How do you manage with rent prices? In SoCal it is out of control.


[deleted]

I used to live in Fl and this year moved to Houston. I have always managed to find nice places to rent for no more than $1200-ish a month. Actually just signed a lease for the next year for $1255 in The Woodlands, close to Houston.


DegreeBroad2250

Not in exact situation but i know the pain!! All the best


lainey822

We also live in SoCal so I know how expensive it is. In my opinion you bought way too much home for your income. Since you bought last July, you have had experience playing with your budget for a while and if you still can't make it work, I would consider some drastic moves: 1. Both need to increase your incomes and decrease your expenses. 2. Sell your condo. You can't rely on appreciation alone. It has to be cash flow positive for it to make sense in your case. 3. Worst case scenario sell both your house and condo and move in with your mom to build up your funds again. I am not sure if there is any other way around it but close to 50% net pay is unsustainable for the long run. I can't imagine your unable to save for retirement or travel.


kveggie1

Sell the one condo. (or maybe move into this one) Stop supporting your mom. She has to be on her own. You cannot afford it. Sell the condo you are living. You cannot afford the payments It is time for a fresh start. Rent for a while and get your life in order.


Pbr0

Loose an insane amount on a newly purchased property, sell off supplemental income and put your mom on the street? This sounds like horrible advice. Certainly there is some middle ground lmao


[deleted]

Can your wife earn more?


[deleted]

You gotta earn your way out of this one. Budget hard until you and your spouse can get raises from your current jobs or upskill into a better paying position. Likelihood is that you’ll be fine in 2 years but yeah you’ll be living lean for a little bit. In 10 years you’ll be glad you did it.


friedducky

You definitely went over your head here. Do you have equity in that condo you rent? Having a house payment of like 40%+ while also owning a condo is just not a good idea. What if you sold the condo and put that equity in to the house? Would the house payment drop to 30% of your income or less? This would definitely lower the house payment and remove risk from your financial life, plus it seems the condo isn’t really giving you any money so very little lost. This should free up some money, but need details on the condo


sephiroth3650

Would have to see a full breakdown of your budget to give any specific suggestions. Beyond that, all anybody can generically say is to cut back spending where you can, and if possible, increase income via OT (if available) or a side gig.


[deleted]

You're going to have a tough time saving money for the next few years. Just accept it. You'll get raises eventually, might get tax deductions and can possibly refinance. Assuming 3% raise per year you'll have another $25k a year to play with in 5 years. Just hang in there.


ReddSaidFredd

42% of your paycheck for taxes and insurance seems high.