Financial advisers recommend spending no more than 30% of take-home pay on housing. I have always lived by this rule and now have $750,000 in cash savings. But now I need to make a big move. Is there ever exceptions to this that make good sense?
My wife and I just found out that we are pregnant with our second child. We want to move closer to be with family for childcare support because our oldest is still 22 months old and can’t be put in daycare for medical reasons.
We are living in our single family house in a nice neighborhood in Los Angeles. We purchased the house for $758,000 in 2016. We put down $200,000 and financed the remaining $568,000. Our monthly housing costs, including mortgage, tax, insurance and utilities, total roughly $3,400 per month. My wife and I both work full time. Our combined monthly take home income is $12,200.
We want to move into a house that is closer to family. A relative has a house available and it’s very comparable to our current house. She rented in the past for $6,000 but is willing to offer us for $4,600. Factoring water and power utilities, I estimate our new housing costs to be close to $5,000 per month. She said the $4,600 covers all her overhead, and she is willing to give discount in exchange for not having to deal with tenant issues. Going from paying $3,400 to $5,000 is a big change, in addition to our growing family and the increasing cost of childcare. I also worry about the inflation which is driving up the cost of…
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