The New Construction Million Dollar Home in Bucktown: 1845 N. Winchester
This 5-bedroom new construction home at 1845 N. Winchester in Bucktown has been on and off the market since July 2007.
It was recently reduced $60,000.
From the pictures in the listing, there appears to be no kitchen appliances in the home. But there are cherry cabinets and granite counter tops.
There are also cherry hardwood floors.
The listing says there is a lower level entertainment room with heated floors.
3 out of the 5 bedrooms are on the second floor with the remaining 2 on the lower level.
What will it take to sell this property after more than 3 years on the market?
Anthony Zaskowski at Property Consultants Realty has the listing. See the pictures here.
1845 N. Winchester: 5 bedrooms, 3.5 bathrooms, 2 car garage, 4500 square feet
- Sold in April 2005 for $560,000 (old house)
- Originally listed in July 2007
- Off and on the market
- Listed in July 2010 for $1,399,900
- Reduced
- Currently listed for $1,339,900
- Taxes of $14,740
- Central Air
- Bedroom #1: 14×17 (second floor)
- Bedroom #2: 11×11 (second floor)
- Bedroom #3: 14×17 (second floor)
- Bedroom #4: 10×13 (lower level)
- Bedroom #5: 16×17 (lower level)
Correct me if I’m wrong, but weren’t the Bucktown SFHs down to the ~million dollar range? I remember that red brick one on Wabansia being $400k less than this.
The boom is back?
“kitchen like you see in a magazine”-didn’t know there was a new magazine called ‘Appliances Wanted’.
Ah, Mr. Zaskowski and his rapid fire price change strategy, as also featured in (which finally sold):
http://www.redfin.com/IL/Chicago/2013-N-Oakley-Ave-60647/home/13356730
“What will it take to sell this property after more than 3 years on the market?”
Moving the house or Lottie’s smoking yard so that they are more than 10 feet apart? Just a thought.
Add to the list of must haves: “CONVENIENT GARAGE AND BACK YARD”
everyone must read this listing… so much wrong… head exploding…
“HOME WILL EXCITE YOU AND MAKE YOUR LIVING HERE PERFECT.”
and
“MANY WINDOWS THAT PROVIDE ENDLESS NATURAL LIGHT. ”
I guess there are some windows that will only provide limited artifical light.
perhaps the BACK YARD is a discount chiropractor nearby?
180 degree gator deck too!
Behind every million dollar house is an $800,000 mortgage.
At what point do you think the agent takes down the “RECENTLY COMPLETED” from the description, when we know it was completed in 2007? Also, for a $million + house, how about getting some nicer pictures.
i love the rapid fire price change. it’s almost like playing quibids.
so at one point this place was $1.5M
http://www.urbanrealestate.com/property/1845-N-Winchester-Ave-CHICAGO-IL-60622-HARIM4VJEMLE2.html
A…n…d cue Clio in 3, 2, 1…
“This place is great and will sell at or near the list price (especially if the seller will finance). I’ve been trying to buy a few homes in Bucktown in this price range, and this place is much nicer than anything I’ve seen. You’re all losers for criticizing the listing quality, the property’s proximity to certain things, and the price reduction strategy. Appliances…get a grip! This generation is so over-entitled, what with wanting appliances included for a mere $1.3 million, not to mention access to healthcare. Maybe you lowlifes should get off of this website and make something of yourselves, so that one day you can buy a place like this or a car like mine (which I only mentioned once, for crying out loud!).”
Is it just me, but where are bathroom sink faucets?
WOW – anonny, you have me down to the very last detail!!! ….except, of course that I would never buy anything in or near bucktown….
I would pay 100 human dollars to get my hands on a copy of “Poor Little Rich Kid ~ By Clio”.
“WOW – anonny, you have me down to the very last detail!!! ….except, of course that I would never buy anything in or near bucktown….”
Would have *never* guessed that this was actually Groove. WOW!
“so at one point this place was $1.5M”
And at one point it had “Viking Subzero And Bosch Appliances”.
I don’t really have a good sense of pricing of these places. They’re outside of the price range I’m looking at. There are a bunch of these modernish houses on these streets east of Damen, including a number that have sold in the $1.25-$1.50 MM range. They probably had appliances though.
The exterior looks half-decent – a sort of Polish-emigrant-builder neo-classical interpretation. I did a walk-through – and I will be kind and say that the interior is uninspired. And there is so much to choose from on the market, why settle for less?. Good luck ever selling it over a million in 2010.
Does it bother anyone else that when you enter the house you are dumped directly into the living room? I would expect some type of entry foyer in my +1 million dollar house.
“Does it bother anyone else that when you enter the house you are dumped directly into the living room? I would expect some type of entry foyer in my +1 million dollar house.”
The bumped out coat closet (almost mirroring the fireplace) doesn’t provide enough definition for you? h8r.
The photos of this house put me to sleep. Very boring and uninspired finishes and not what I’d hope for in a $1.4M place. I know that there are severe limitations on what can be built on a standard 25×125 Chicago lot however it is time to try another look. It has that “been there done that” feeling when I see these photos.
“Behind every million dollar house is an $800,000 mortgage.”
800k mortgage isn’t that expensive right now. 30 year jumbo rates around 5% = PMT of $4,300. No interest rate risk and in 5-10 years that really will not be that much. Add taxes and a clean front end / back end ratio of 40% (no additional debt) and 160k qualifies you just fine. Plenty of DIs that can afford that. Bigger issue is the 200k down.
“Plenty of DIs that can afford that. ”
Until one of the I’s either loses their job or drops out of the workforce to raise kids.
20% down should not be a big issue for a financially prudent professional couple making 160k/year. Maybe instead they shouldn’t be leveraging themselves to a $1MM property and should look lower down the price scale. Ever considered that?
what Bob said.
we are DINKs making 155k a year and we need more space now i moved into my husbands 1br place. but there is no way we will even look at properties over 600k. there’s more to life than cool digs. we want to kept most of our lifestyle (able to travel, go out to eat) without it being all sunk into our home. i would definitely question a DINK couple making $160k that buys a million dollar place.
so i guess that means we’d pass on this property 🙂
I thought the general rule (before the exotic mortgages) was never to exceed 3 times your gross income. A couple making 160k generally shouldn’t be looking at properties more than 480k (and, if they have kids/loans or other obligations, they better lower than 50-100k). This was always the rule of thumb when I was growing up.
do you mean 480k sales price or 480k total borrow amount? we would only be borrowing 480k if we put 20% down on 600k.
480k with 20% down is a mortgage of 384k. For a take-home income of 8k a month, that’s a pretty conservative monthly mortgage amount. considering 3 years ago my husband afforded a 250k place (with 20% down) very comfortably, i think we are pretty realistic in looking at properties below 600k.
we have school loans (about $300 a month total), but that is our only obligation. no car pymts, no other debt.
Depends on your job security and whatcha got in the bank. No way I’d take on 400k in debt if I had a job with your income that wasn’t verrry secure or a couple years worth of mortgage payments comfortably available. Just not worth the undue stress IMO when there’s plenty of quality stock in the 400-500k range all over the city.
Errr make that 500k I wouldn’t borrow, not 400.
@tay we would NEVER even consider buying another place if either of us was worried about job security. the people that do are asking to get burned!!! thats common sense.
the downside of your argument though, is we want to stay somewhere long term. i kind of think this business of moving every 3-4 years is getting people into trouble..you shouldnt be coming/going real estate like you are renting vs. owning. our thoughts is that RE should be a long term investment. our lesson learned from my husbands condo now is that 3 years and sell isnt the best idea.
id rather get a mortgage for 480k for some more square footage and stay there for 10 years. rather than get a mortgage for 380k with a smaller place and stay there for 3 years and have to go thru the process of selling/buying another place b/w closing costs, realtor costs, moving costs, etc
but we’re younger (28), still trying to gain our RE expertise (hence my time on this site). i’m all about hearing advice.
p.s. i must admit sometimes i am hesistant to post on this site because i’ve seen ppl get torn into. so, please, easy on me…i’m no westloopelo 🙂 (at least yet anyways)
You will be successful w that mentality, don’t look at your house as an investment but still make a responsible decision w/regards to what you can afford, time horizon, etc.
If your jobs are legitmately secure and you think there’s a good chance you can stay there for 10 years without tastes changing, outgrowing the neighborhood/style/size, and you aren’t living hand to mouth to afford the place, then ya, I think you can probably swing 480k loan. Personally, I’m not sure I’d do it, but I’m a little irrationally risk averse when it comes to borrowing $$ for my primary residence for reasons that aren’t important here.
Also I may or may not be some wack job on the internet so take what I or anyone else here says for what it’s worth, just my 2 cents above.
“800k mortgage isn’t that expensive right now. 30 year jumbo rates around 5% = PMT of $4,300. No interest rate risk and in 5-10 years that really will not be that much. Add taxes and a clean front end / back end ratio of 40% (no additional debt) and 160k qualifies you just fine. Plenty of DIs that can afford that. Bigger issue is the 200k down.”
You guys are nuts! How are they going to pay the taxes on a property like that? How do they save for retirement or for their kids college?
Wow.
I agree w/Sabrina. There are also many problems getting loans. I have a client (2 young physicians) – aged 35 w/2 young kids under 3y/o. Their combined income is around 380k w/no debt. They were having an incredibly hard time finding financing for a 1.3million dollar house (w/ an accepted offer of 950k) . The issue that seems to keep arising are appraisers. I don’t know what happened , but appraisals are coming in so low, it is ridiculous. The appraisal came back at 750k for the house (their comps were 1 short sale, 1 foreclosure, 1 regular sale and 1 sale in another town 3 miles away). The bank was still OK with that as long as the clients came up w/ 350k (based on 80% of the appraised value). This is ridiculous!!!
Typical DINKs making $150-$200k usually don’t buy places more than about $500k.
Industry standard for debt ratios are 28% front ratio and 36% back ratio. PITI shouldn’t be more than 28%. PITI plus major debt (student loans, car payment, credit cards) shouldn’t exceed 36%. The back of the envelope rule of thumb is 3x-4x HHI depending on your debt level.
A couple making $175k HHI (about $14,500/month) shouldn’t spend more than $5250 on PITI and other major debts. Depending on your life style, that might be stretching too.
With that said, the debt ratios that banks use are a little out of date because they don’t take into account all the misc expenses people have these days – cell phones, gym memberships, starbucks, dime bags, clothes, utilities, etc.
At one point, Fannie & Freddie were approving loans up to 65% DTIs!!! Most banks won’t go above 45% now though. Many jumbo lenders won’t go above 36% and most require huge reserves now.
Clio:
It is called Home Value Code of Conduct. Long and short of it is that the AG of NY, Andrew Cuomo f*cked up the appraisal process because WAMU was putting pressure on appraisers. Now all appraisals have to be ordered through third party appraisal management companies so no pressure can be put on appraisers to over value the property.
The problem is that the AMCs have cut the compensation of appraisers and all the good appraisers have left the business. What we get now are the AMCs just hiring the cheapest appraiser they can find instead of quality appraisers so the appraisal quality has gone WAY DOWN.
It isn’t uncommon for a bank to hire some random schmuck out in Joilet to come appraiser a property in Lincoln Park.
On the other hand, your property could just be over priced… 🙂 Some banks are also overriding appraisals with AVMs (basically Zillow). Recently had BofA desk jockey in a different state cut a $2.5 million dollar appraisal on a Single Family home in Lincoln Park to $1.8… they were wrong, so just sent the deal to different bank.
“It isn’t uncommon for a bank to hire some random schmuck out in Joilet to come appraiser a property in Lincoln Park.
On the other hand, your property could just be over priced… 🙂 Some banks are also overriding appraisals with AVMs (basically Zillow).”
I’d sooner trust the random schmuck from out of town over Zillow eight days out of the week.
Seriously Zillow had 2005 pricing up until…today? Their Zestimates to me are hilarious.
I mean if they were true you’d be an automatic almost-millionaire in the USA merely by owning property and sitting on it.
At least the incompetent Joliet appraiser is an unknown whether they’re drinking the RE Kool Aid. With Zillow you are basically guaranteed it.
Zillow? HAHAHAHAHAHA!
Anyone who buys a $1,000,000 house on $160k income is either a moron or a doctor, or both.
“#JMM on August 4th, 2010 at 5:13 pm
“Behind every million dollar house is an $800,000 mortgage.”
800k mortgage isn’t that expensive right now. 30 year jumbo rates around 5% = PMT of $4,300. No interest rate risk and in 5-10 years that really will not be that much. Add taxes and a clean front end / back end ratio of 40% (no additional debt) and 160k qualifies you just fine. Plenty of DIs that can afford that. Bigger issue is the 200k down.”
“Anyone who buys a $1,000,000 house on $160k income is either a moron or a doctor, or both.”
I don’t think you CAN buy a 1 million dollar house on a 160k income, whether you are a doctor or a moron. Oh, I also realize it doesn’t fit well into your fantasy world, but doctors cannot be morons. If they were, everyone would be able to get into medical school!!
@Bob:
I think it is crazy as well, but hey what do I know? I am just some lowly loan officer…
They will get a perfectly good appraisal that the u/w actually agrees with and then another department will come back and cut the value based on a computer model (similar to Zillow) OR they have desk appraiser review the appraisal and challenge it. Of course, the desk appraiser knows nothing about the local market.
I recently had a deal in a resort area killed because the appraisal review couldn’t determine value! The property was purchased for about $500k in an estate sale (appraised at $600k at time of purchase). The borrowers put 50% down. Recently gutted the kitchen and baths. New appraisal comes in at $430k (due to a few foreclosures). No big deal, the loan is only around $210k at this point. Borrowers are millionaires and wanted a 10 year fixed loan…
Loan denied. Too Big Too Fail Bank’s “appraisal review” department 800 miles away couldn’t determine value.
I find it amusing that banks all of a sudden care about underwriting standards now that they can’t get govt securitization
Russ,
That is why I keep saying the seller financing/contract sales may be a great way to go at this time. I offer that with all of my personal properties and have sold a few just because of this option. The buyers typically are NOT bad risks, etc. – they just are having problems getting mortgages.
Sonies, actually it is driven by government securitization. Fannie/Freddie are making banks buy back billions in loans so now underwriting has been reduced to whether the loan application was filled out in blue ink or black ink.
The vast majority of loans are sold to Fannie/Freddie. Fannie/Freddie have some of the most asinine guidelines and it also makes it next to impossible for an underwriter to actual underwrite and assess credit risk. Now underwriters are just processing clerks checking a box. So what the applicant has $3 million in cash and wants a $300k mortgage. We need a letter of explanation why he has a 30 day late on a utility bill 3 years ago! If we don’t get it, Fannie/Freddie won’t buy the loan.
Underwriting mortgages is the most mindless process I have ever seen in my life. Inefficiency caused by over efficiency.
clio – doctors have reputations as being financial morons. That’s not true for all doctors but some for sure. I’m not saying it’s a well deserved reputation, but they sure do make some dumb mistakes.
Russ – If typical DINKs making $150-$200k usually don’t buy places more than about $500k, and $150-or $200k is pretty much near the top of the income sale in the city; why are there so many places listed above $500k? And why are there so many crapshacks listed between $350k and $500k? Do they really think that a DI couple is going to pay $400k for a small crapshack and then gut rehab it when a few blocks away is a beautiful home listed for only $499?
It seems to me like somebody flipped a switch in June and ‘shut off’ the market. All the deals were snapped up prior to the tax credit expiration and all that’s left on the market are overpriced crapshacks and extremely overpriced nice homes. No wonder why nothing is selling. Its like walking into a nissan dealership and the entry level $hitbox sentras are priced at $40,000 and the maximas, the nicer cars, are price at $70,000 and the SUV murano is listed for $100k! No wonder nobody wants to buy!
bn – and by top of income sale at $150k – $200k I mean top 10% or better; of course there are oprah’s and sports stars making millions but they aren’t looking to buy overpriced homes listed for $550k in random neighborhoods around the city.
“That is why I keep saying the seller financing/contract sales may be a great way to go at this time. I offer that with all of my personal properties and have sold a few just because of this option. The buyers typically are NOT bad risks, etc. – they just are having problems getting mortgages.”
I’ve seen you touting this lately and I’m glad you can stomach this but this is absolutely crazy to me.
I feel ya Russ, I could never in a million years be a loan officer due to the asanine buerocracy involved. I’d wind up going on a murderous rampage or bombing a fannie mae building or something from one to many blown deals 🙂
160 is the MINIMUM at a back end of 40% with no other debt. And, yes I think you could do it for an 800k mortgage assuming 1k in taxes per month and no other debt. Russ are you saying Perl would not underwrite at a clean back end of 40% to someone with cash reserves? In reality, most buyers of this home would be in the 300k total income range. The 3x ratio quoted earlier relates to mortgage, not total purchase price, because that is what is relevant to income. And historically, that was based on 8%-10% mortgage interest rates, which are half of that today. Given that the 30 year JUMBO is at 5%, there is no risk these rates will rise on you before you are paid off. The only concern is job loss.
People can do whatever they want with their money — not for me to pass judgment. I was just pointing out the 800k mortgage has gotten a lot cheaper. Basically 100 bps in about 6 months. And a purchasing family with 160k in income, clean credit and modest cash reserves could do it. It’s true, though most would scale it back.
Saving for retirement is called a 401k. At that income level you can easily max the $16,500 (likely with a generous match). People who do that consistently in their 30’s to retirement exit with well over 2M in retirement assets. I suppose the 1k you equitize per month means nothing too?
What people forget is that at this income strata the basic necessities are a lot cheaper based on total income and the other 60% in the ratio is much more discretionary. Let’s also not forget that 160k is LIKELY NOT peak earnings. Most people who are buying a home like this are increasing their cash flow and career success. Or are older and can do the deal with substantial equity.
Case in point — you will ROUTINELY see Subaru wagons (and other mid-priced cars) parked in the garages of very expensive homes. Good for them — at least they are overindexed on the asset that supposedly appreciates and is tax deductible.
Oh, last point. Inflation — the 800k mortgage is fixed — the income floats and rarely goes down (unless it goes to zero). Why don’t you check the commodity indexes and tell me what you think.
“by top of income sale at $150k – $200k I mean top 10% or better; of course there are oprah’s and sports stars making millions but they aren’t looking to buy overpriced homes listed for $550k in random neighborhoods around the city.”
I don’t know if the income distribution in Chicago is knowable. It is knowable for at least the US. You could at least do some back of the envelope calculations and see what it says in terms of number of households versus amount of housing stock in a given range. Just saying there are not a lot (whatever that means) of households that make more than $X while there are a lot (whatever that means) of homes that cost more than $Y isn’t very convincing. Not saying you’re wrong necessarily.
“and by top of income sale at $150k – $200k I mean top 10% or better”
Top 10% isn’t saying much. We’re pretty much ONLY talking about the top 25% of the housing stock in the city of Chicago anyway. Assuming the entire South and West sides take up the bottom 50%, that pretty much stands to reason.
“Saving for retirement is called a 401k.”
Really???
Yeah REALLY. Say you make 160k and have a 4% match plus you max out $16,500 from your payroll (650 bi-weekly). Assuming your income grows 3%, inflation is 2% and the investment grows 6%, and you are 30 starting at zero, your retirement at 65 is…
$2,000,000 in today’s dollars.
That will buy you a 30 year annuity of $130k per year at 5%. Not a bad retirement. Oh plus social security if it exists then (which it will).
JMM, it’s academic to use cribchatter to underwrite a $160k a year household into a $1,000,000 home.
“People can do whatever they want with their money — not for me to pass judgment.”
Actually, it’s OK to pass judgment; see what other people do with their money and making judgments about their decisions is what gives a person credibility. Clio said he bought a Lambo with his money and we all laughed. Either because he’s joking, lying or a fool.
Now if clio were an NFL player who just signed a $30,000,000 5 year contract and bought teh lambo, we wouldn’t be laughing so hard. But clio is a real estate investor who makes money in real estate by losing a little every month.
Put away the USAA retirement income calculator because none of those assumptions are not comporting with reality.
Income is not growing 3%; inflation is roughly 2% only if you use the owner-equiv rent instead of the CS index; and investments are not growing at 6% a year…. the stock market is the same place it was in 1999.
“JMM on August 5th, 2010 at 8:58 am
Yeah REALLY. Say you make 160k and have a 4% match plus you max out $16,500 from your payroll (650 bi-weekly). Assuming your income grows 3%, inflation is 2% and the investment grows 6%, and you are 30 starting at zero, your retirement at 65 is…
$2,000,000 in today’s dollars.
That will buy you a 30 year annuity of $130k per year at 5%. Not a bad retirement. Oh plus social security if it exists then (which it will).”
Further more, many companies have cut the 4% match – for example, KPMG and children’s memorial hospital are the two I can think of off the top of my head.
So, yeah, in an academic world, it’s easy to have $2,000,000 at retirement plus a paid off $1,000,000 home, and that worked well for the boomers…but Past Performance Is Not A Guarantee Of Future Returns…
“Actually, it’s OK to pass judgment”
No. It is not ok. It reduces your credibility, makes you look myopic and simply unaccepting that anyone could have a better financial situation than you do.
It is ok to be critical of the institutions that compelled ordinary people to spend too much for houses. Loose monetary policy, lack of discipline for well-intended housing programs, tax policy that is out of date with the maturity of our country… Those are all places to point fingers.
People buy at the market price. They want a home, and they pay market price. You would expect them all to be superstar traders, which they are not.
yeah i understand the concept of time value of money…i just think it’s pretty lol to think everyone 1) has a 401k 2) will have one for the next 30 years 3) has an available 4% employee match, 4) will max out 401k every year.
3% real return on investments seems pretty reasonable, though.
Cut the match in half, you still end up with a $110,000 annuity for the rest of your life.
“People buy at the market price. They want a home, and they pay market price.”
But HD is debating what the market price will be. Obviously you can go out and observe the market price at the moment. It’s a little harder in some cases than others, but not that hard. You could also have observed the market price during the peak of the boom and said, look, that’s the market price. It is what it is.
The issue HD is trying to address (and I often/mostly don’t agree with his assessments) is what the market price will be over the next few years. And for that it is fair to look at whether current prices are sustainable. Simply saying the market price is what it is is not terribly informative.
Maxing is 10% of gross income at 160k. 40% to PITI. The vast majority of this is pre-tax.
Means you have 50% left and a lower tax bill for all the other stuff. $80k to cover household expenses. It can be done.
Yeah and market price between 2003-2008 was based on bozos with 100% financing and fraud.
So yeah, it sucks to have to rent and stay out of the market for half a decade or more…
but if the alternative is to be $100k underwater or borderline foreclosure…
Then yes, staying out of the market for 7-10 years was probably a good decision.
And cut the match in half..
if by half you mean zero (0) with no indication that it’s going to start up again anytime in the near future…
“People buy at the market price. They want a home, and they pay market price. You would expect them all to be superstar traders, which they are not.”
I love my chats with you JMM but I got to run, we’ll finish this up at some later point. We’re both frequent visitors here!
“Clio said he bought a Lambo with his money and we all laughed. Either because he’s joking, lying or a fool.
Now if clio were an NFL player who just signed a $30,000,000 5 year contract and bought teh lambo, we wouldn’t be laughing so hard. But clio is a real estate investor who makes money in real estate by losing a little every month.”
Ohh boy… can’t let this one go:
1. I’m not joking, lying, or a fool. I suppose you think I should have invested that money in the stock market? more real estate? 0.0000001% savings account? I, along with hundreds of thousands of Americans have lost money in the stock market and real estate(my losses are multiple times what I paid for the car). The car gives me much more pleasure than looking at my dwindling (relative) portfolio statements/empty units. In addition, I did not borrow any money to pay off the car and am not struggling to pay for food, housing, clothing, etc.
2. You don’t know anything about my financial situation. You act as if you know me and then you judge accordingly -but you don’t know how much money I have so shut the f@#k up.
wow when did this thing called “401k match” get invented?
how does that work exactly?
“Simply saying the market price is what it is is not terribly informative.”
If we could predict the future, no one would be wasting time here.
“I suppose you think I should have invested that money in the stock market? more real estate?”
I suggest you should have spent it on ANOTHER CAR. Really a lambo? with all the other greats out there. A Lambo is a 10 year old’s wall poster car. not a gentleman’s car.
listen JMM i agree w/you. it can and should be maxed (i do it myself using a SEP). people just don’t do it in practice.
as soon as they have kids, need to save for college, want to buy a boat, whatever, the first thing to go is forced savings.
it looks great to say that “oh, at 30 i can easily max my retirement plan, afford this XYZ mortgage, and still have 50% leftover for living expenses.” they don’t think out 10 years to what might change in their lives if god forbid their income isn’t rising at 3%/year. to top it off, when that time arrives they make questionable decisions.
what you are saying is completely reasonable but it just doesn’t often happen in practice.
“I suggest you should have spent it on ANOTHER CAR. Really a lambo? with all the other greats out there. A Lambo is a 10 year old’s wall poster car. not a gentleman’s car.”
I already have the Bentley continental, SL 500 and 645ic (in addition to the grand cherokee, jeep wrangler and ford F250) – not bragging, but again, you shouldn’t judge anyone unless you know EVERYTHING about him. Regardless, let’s stop this idiotic discussion on cars and money and get back to real estate talk.
“but again, you shouldn’t judge anyone unless you know EVERYTHING about him.”
i think i learned enough by the cars you choose to purchase.
and now on to RE
“Maxing is 10% of gross income at 160k. 40% to PITI. The vast majority of this is pre-tax.”
I thought we were talking DI–so maxing 401k is actually 20+% of gross.
And who *are* all these employers with “generous” 401k matches, especially ones that are uncapped?
The $130k I proffered assumed only one “I” was maxing (math would tell you that too). If you double that, you double the value of the retirement amount ($4M or $260k annuity).
I can’t speak for your crappy employer*, but most of the value is in the employee deferral anyway. For example, no match at all takes you to 90k at retirement or $1.4M lump. I’m no financial planner, but I see those ING commercials and people are carrying numbers less than that.
* Our businesses typically match 5-10% depending on performance.
JMM:
We underwrite to standard guidelines for a variety of different banks. In general, the loan would get approved, but I can tell you flat out unless that person is a hermit, there is absolutely no way a couple making $160k can “afford” a $1 million dollar place with an $800k mortgage.
$800k loan at 4.5 = $4053/mo. Property Taxes around $1458/mo. Hazard insurance around $100. Looking at around $5600 +/- on PITI.
$160k income is $13,333. $5611/$13,333 = 42% DTI without cell phone, car payment, utilities, cable bill, weed, starbucks, gym membership, eating out, clothing, lawncare, nanny.
To be comfortable with an $800k mortgage, people really should be making around $300k at least.
HD:
I know we disagree on this, but I think you vastly underestimate the number of DINKS making $200k+ in this city. What is really slowing down the higher end in Chicago is that most of the housing stock is condos and the down payments required to get jumbo financing in particular.
I call this the no man’s land. Places priced between $525 – $750k. Too high for conventional financing, but not really the kind of places that older wealthy buyers with liquidity want.
Most of the DINKS I see simply don’t have $200-$300k laying around for down payments in cash. Particularly when everyone is nervous about job security. Most have scaled back dramatically or putting off buying altogether until they can go buy a single family. This is why the condo market is languishing. Condos in Chicago are a short term play for 80% of buyers and the market realizes this now, so people are just skipping the condos and thinking more long term. This is why we can literally say CRIB chatter on here… every place has a crib. Buyers don’t want to be stuck when Junior comes along.
JMM–from your first post on the subject:
“160k qualifies you just fine. Plenty of DIs that can afford that.”
That’s why I asked about the DI thing. You changed context–which was obvious, but I was unclear on the why.
“Our businesses typically match 5-10% depending on performance.”
Your businesses are on the generous side of the marketplace. Most cos I know about are in the 3-5% range, usually with some sort of cap.
“$160k income is $13,333. $5611/$13,333 = 42% DTI without cell phone, car payment, utilities, cable bill, weed, starbucks, gym membership, eating out, clothing, lawncare, nanny.”
Or 401k or taxes. And, at that income with that mortgage, a fulltime nanny would be out of the question.
“I know we disagree on this, but I think you vastly underestimate the number of DINKS making $200k+ in this city. ”
There’s a good amount, but what’s a reliable hard number? In my experience (38, college degree, wife as well) many DINKS in that profile end up becoming family units with the mom becoming a stay-at-home.
The one thing that may be unbelievable and depressing to many people on this site is ability of people to afford 750+ housing. The truth is that you can pretty much pay your “everyday expenses” with less than 200k. Everything above that (to a majority of people) is “extra” and 100% can be put towards housing/savings. This is why all of those “rules of thumb” rarely work. There should be a graduated calculation for home affordability.
skeptic: so they become SIWK or maybe just SIK? I’m part of a DINK but can’t quite rule out getting SIK.
my employer’s match maxes out at 1k a year….
but hey at least we get a little company stock too in an esop
but what is really awesome though is that they offer the ROTH 401k
“skeptic: so they become SIWK or maybe just SIK? I’m part of a DINK but can’t quite rule out getting SIK.”
Right. And the $225k combined income becomes $150k or $125k (or $175k w/ some freelancing). Which makes affording (w/o any non-kid-related lifestyle sacrifices) the $800k mortgage a *lot* harder.
Clio is correct. The basic necessities (aka everyday expenses) do not vary with income. Savings and large ticket items like luxury housing do, however.
It is also one of the reasons why we have a progressive tax structure, though rich people rarely appreciate this point when they complain about taxes.
Once you make over $300k in Chicago, there is not much within reason that is not affordable assuming you make the proper trade offs and choices.
Yes, I see quite a few stay home moms & dads, but typically it is because one of the DINKs gets over the salary hump by making it to Partner, CxO, etc.
For instance, I have a number of clients (and friends) where both are making good money… say $125k-$200k each. Both with a reasonable shot at making Partner at a good firm (insert BigLaw, Strat Consulting, PE, etc) or rising the ranks in f500. Usually, the hubby gets the big promotion and starts making $300k+ or so on his own and then the wife quits because her income is no longer needed.
Rarely do I see a $250 HHI situation where one quits leaving the other only making say $125k with no real prospects for going dramatically higher.
Single income is more valuable than you are giving credit for. There are significant offsets as household labor is rarely valued but it carries real dollar savings. No cleaning lady, perhaps one less car, no commute expenses, less eating out, lower effective tax rates, no nanny, less waste and more time to make informed consumer decisions (coupons, sales). There are good academic studies on this that compare the 1970s with today and suggest dual incomes and more women in the workforce have basically thrown away that incremental money into the housing bust. Interesting view.
The other important aspect of single income is that if the household spending is scaled to operate on one income it makes you SIGNIFICANTLY less vulnerable to job loss simply because the other spouse can enter the workforce with potentially more employable skills.
So in fact, a couple with an employable spouse who chooses to stay home and whose primary wage earner makes 160k / yr is a more stable buyer than a DI couple that makes 80k each. Of course, lots of stay at home mommies I see don’t look that employable to me.
Regarding the disposable income… most people live to their income. People who make a lot of money have a lot of extra expenses by in large. In the 80’s, $100k was big balling. In 2010, I don’t think you are really balling until you cross about $400k imho. At that point, you pretty much can get the Bimmers, house, save a lot, etc. Pay a nanny. Not really much other than over priced Italian sports cars you can’t afford and really shouldn’t be living check to check.
$250k is NOT living large in Chicago. Yes, you can fund a 401k, save a little, get a decent place, and not really have to “budget” when you want to eat out or take a weekend trip. But you are far from really living large. Many of the folks in this price bracket resent being called “rich” because if you strip away their 401k/savings contributions they are for the most part living check to check.
“Usually, the hubby gets the big promotion and starts making $300k+ or so on his own and then the wife quits because her income is no longer needed.”
Yeah but Russ this is how the foreclosures start in Winnetka. 300k per year jobs are in fact quite rare (certainly on a base salary basis). When hubby loses his job in the merger, he has a REALLY hard time finding another job that pays anywhere close to that. People often forget this fact.
“So in fact, a couple with an employable spouse who chooses to stay home and whose primary wage earner makes 160k / yr is a more stable buyer than a DI couple that makes 80k each. Of course, lots of stay at home mommies I see don’t look that employable to me.”
Yes, absolutely correct, but … $80k jobs are a lot more common that $160k jobs (not that I take HDs view of the rarity of the latter), so the $160k HH–especially in the market for City condos–is more likely to be a DI than a SI.
And, I was only relating it to making the stretch to afford the big mortgage for the big house.
You guys are also forgetting that there is a whole population out there who actually made a killing in real estate and the stock market in the 90s and 2000s. These people do not necessarily need to rely completely on their income. The people you are discussing are young up and coming individuals (less than 35) who have not had opportunity to make a lot of money – this is only a very small subset of people out there.
JMM:
Most stay home mommies are not type A MBA/attorney/corporate ladder climbing types from what I have seen. Typically, when the hubbie is on the lower scale with a single income, the wife never was making a ton of money to begin with so it makes sense she stay home since her entire salary would be eaten by a nanny. At that point it makes no sense for her to work only to contribute $50k/yr of which all of it is goign to pay for the nanny.
yes, they are relatively rare, but so are houses in Winnetka generally speaking. Typically, those folks find comparable jobs. A partner at (insert firm of your choice) that gets laid off is not going to go from $300k to $100k because that is the only job they can find.
Typically when I see people who get huge salary cuts that can’t be replaced it is over paid young associates. Associate i-banker/attorney two years out of school making $300k, deals dry up and they have to go get a real job and really have no true executive skills and can be replaced by an overworked third year analyst. now they are making $150k in corporate. Not quite the same.
“Rarely do I see a $250 HHI situation where one quits leaving the other only making say $125k with no real prospects for going dramatically higher.”
this situation describes a large number of my friends, many of which I met at UIUC.
I think you’re not aware of how strong that nesting urge can be for a new mom – especially when you go to a second kid. when daycare starts getting to the $20K+ range, plus the hassles of travel, the desire to raise your own kids, etc.
to be sure, a lot of these moms probably plan on reentering the workforce at some point, but so far, none in my friend circle have.
Housing and savings aside, you really should be able to live very nicely on $40-50K. If you look for better stuff to buy, it never ends.
“Housing and savings aside, you really should be able to live very nicely on $40-50K.”
And furniture and transportation. And kids. I’d go “reasonably well” rather than “very nicely”, in any case.
Are you saying pre-tax or take home?
“Are you saying pre-tax or take home?”
Take home. The key is to make “reasonably well” feel like “very nicely”. Easier to do in Logan Sq than North Center.
“Take home. The key is to make “reasonably well” feel like “very nicely”. Easier to do in Logan Sq than North Center.”
As noted above, the necessities don’t vary much, and beer and restaurants and vacations cost the same in NC, LP and LS. So, I’m not sure how it’s easier, if you strip out housing.
“You guys are also forgetting that there is a whole population out there who actually made a killing in real estate and the stock market in the 90s and 2000s.”
I remember them and 90% of this group is now broke or nearly there. Those who did well on RE during the bubble spent it just as quickly as it came in. I have a NYC who’s who in the RE Industry directory from that ear that lists contractors and business owners and gives details of their businesses, most of them have gone into hiding for committing mortgage fraud and the rest are no where to be found.
“Housing and savings aside, you really should be able to live very nicely on $40-50K.”
In a metro area such as Chicago, that covers the bare neccessities and not much more. I don’t live ‘large’ in regards to spending money and for my two years in Chicago, I spent double that amount each year for just the basics.
“So, I’m not sure how it’s easier, if you strip out housing.”
The “feel” part. I think even when you’re not trying to keep up with your neighbors, relative comparisons inevitably become part of comfortably you feel you are living.
ahhh may favorite imaginary subject on CC, the good ol 200k a year power couple that “represents” some how 50% of chicago.
well you guys always leave out the 100k family “move-up” family that can breeze a life buying a 800k-1mil property. yes this is a 40-50 year old with teens a established job savings and equity in the current home.
as i said many times before and will state again, where are these mass amounts of magical 250k dinks? i guess the only hang wit the likes?
but a SIWK at 60k-70k can live a good life. i think the city wide average is 45k. and i see many 40k-50k families living “ok” (i do their taxes and used to coach their kids) yes there are compromises that come with that lifestyle but one can do it and be happy.
as i stated earlier this week, Chicagoans Wages dont reflect the “expected” lifestyle, really todays average wage cant support a family in todays Standards.
Ok, more for your collective amusement than anything else, here’s a proposed budget. I think we’re not far off it, but I’m not really sure as I don’t keep track of what we spend:
Vacation/travel $10K
Utilities (gas/elect) $2.5K
Cable/internet/cell $2.5K
Clothes $2.5K
Groceries $7.5K
Dining $5K
Entertainment $5K
Kid crap $5K
Misc (car/big ticket/commute/gas) $5-10K
Total: $45-50K
“The “feel” part. I think even when you’re not trying to keep up with your neighbors, relative comparisons inevitably become part of comfortably you feel you are living.”
Guess so. It’s easy for me to say, but the only people I feel the bad side of the comparison to are those who have non-office, non-regular hour jobs and still hit the income mark.
This is 50k take home, after tax and after housing? That is 4k a month. I agree you should absolutely be able to live on 4k a month once housing is covered. Implies 120k pre-tax assuming 3k housing.
Schedule J. These are necessary and reasonable expenses.
http://www.ilnb.uscourts.gov/forms/Official_Bankruptcy_Forms/Form_6J_1207.pdf
Give yourself $350 for food for one person and $50 for each additional member of the household.
“I agree you should absolutely be able to live on 4k a month once housing is covered. Implies 120k pre-tax assuming 3k housing.”
Student loan + day care + car payment and GEICO insurance = $2,400 a month or more.
$1,600 remaining.
Now it seems a lot tighter doesn’t it?
Let’s put it this way, 400k would not make me feel like a “baller” as Russ puts it. It is all relative.
$1,600 minus $500 for food, $300 for utilities, $50 for clothing, $500 for gas/maintenance/etc and there’s only a few hundred bucks left.
now that $3,000 a month mortgage seems pretty high, right?
I’ve kept a budget my entire adult life and I do literally hundreds of budgets a year for lower, middle and higher income earning people.
That’s where credit cards/HELOC’s come in and make up the difference, which is how they arrive in my office.
This is the kind of conversation better had at a Crib Chatter happy hour. When we’re done we can all compare the size of our.. oh nevermind.
I know that as I get older, it is harder and harder to resist the urge to spend more on lifestyle, especially as part of a DINK couple.
The one thing I think about the most is the future value of my current savings. Inflation isn’t much of a concern right now, but I refuse to put capital at risk in this stock market. I don’t have the tolerance for the volatility with school debt to pay off in the future, current short term elevated costs, etc. Trying to keep net debt as close to zero with student debt is a challenge in of itself.
ps student loans $500 + day care $1,300 plus car payment $400 plus insurance $100 = $2,400.
not too difficult to do. and I see it and possibly live it on a daily basis.
“Guess so. It’s easy for me to say, but the only people I feel the bad side of the comparison to are those who have non-office, non-regular hour jobs and still hit the income mark.”
Besides the “feel” part (which I know I brought up), I also think if you socialize with people who are spending more, you will inevitably spend more, especially if there are no hard constraints on your doing so. Spend more both in activities you do jointly, as well as in the type of individual purchases you think about making.
“Let’s put it this way, 400k would not make me feel like a “baller” as Russ puts it. It is all relative.”
Agreed.
Not sure about you HD, but my line item for all that might be $700 per year. Doesn’t feel very tight.
Face facts, HD, a “lowly” 160k wage earner CAN buy a $1M house and afford a 800k mortgage. At these interest rates, face facts, it is cheap to borrow this much money on a FIXED, GUARANTEED basis. No changes. Keep the house until it is paid for. And when we have inflation — you are covered.
Current rates: $4,300
1990s average rates*: $6,500
1980s average rates*: $9,300
* http://www.freddiemac.com/pmms/pmms30.htm
plus I added 100 bps for jumbos to 1990s and 1980s — jumbo / conforming pricing has never been tighter than today
$500 for food! Lol.
“not too difficult to do. and I see it and possibly live it on a daily basis.”
I hear you on the food bill. You MUST live that bill to come up with a number like that.
And just to think that the shady looking 20-something across from you on the el could kill you, and leave your bleeding body in the alley, for the $20 bucks in your wallet and your iphone. And he would consider that a score.
“anon (tfo) on August 5th, 2010 at 12:59 pm
“Let’s put it this way, 400k would not make me feel like a “baller” as Russ puts it. It is all relative.”
Agreed.”
Talk to trutees Tom Vaughn or Marilyn Marshall or Glenn Sterns. those are the steadfast Chap 13 numbers. Due to the means test when the BK law changed in 2005 – all those $100k+ earners filing Chap 7 BK and discharging their credit card debts are now forced into a chap 13 payment plan.
And every payment plan in northern half of IL has food at $350 for the first person and $50 for every person thereafter.
it can be done – but you’ll be eating rice and beans. and if you charge up too much credit card debt (like the people I see ‘ballin’ that make $150k a year and have $100k in CC debt) they’re all eating rice and beans too.
“JMM on August 5th, 2010 at 1:02 pm
“not too difficult to do. and I see it and possibly live it on a daily basis.”
I hear you on the food bill. You MUST live that bill to come up with a number like that.”
“And every payment plan in northern half of IL has food at $350 for the first person and $50 for every person thereafter.”
That seems to assume incredible economies of scale. Also, is $500/month for groceries insanely low? What are you people buying?
“And just to think that the shady looking 20-something across from you on the el could kill you, and leave your bleeding body in the alley, for the $20 bucks in your wallet and your iphone. And he would consider that a score. ”
I do everything in my power to stay away from you and Bob.
@JMM:
yeah, $400k isn’t hanging out with Diddy on a g4 going to St. Tropez, but you won’t be hurting for funds unless you are a complete douche bag.
I have no desire for a Continental GT on 22s and multi million dollar Mega Mansions with rooms I will never use. Although, I would pull the trigger on an Audi r8 🙂
While I like the finer things in life, consistently bringing home $400k would get me almost nearly everything I need to be happy at this point from a purely materialistic standpoint along with taking care of any future college tuition, retirement, etc along with one two nice vacations per year. Gives a nice worry free lifestyle that isn’t overly extravagant.
My wife and I spend about $250 a month on groceries plus $200 for lunches and we eat filet mignon at least twice a week… wtf are you people spending your money on?
“That seems to assume incredible economies of scale. Also, is $500/month for groceries insanely low? What are you people buying?”
Yeah, the extra person amount is nuts. But so is $350/ for a single.
I don’t think we average $500/month for groceries, but we eat out more than average, too, so that keeps the groceries down some.
@ Homedelete,
-so what happens if youre a Real Housewife of New Jersey? I hope the bankruptcy allowances are higher in that state.
“Gives a nice worry free lifestyle that isn’t overly extravagant.”
Not that I really understand what “balling” is or should be, but that sure doesn’t sound like a definition of it.
“My wife and I spend about $250 a month on groceries plus $200 for lunches and we eat filet mignon at least twice a week… wtf are you people spending your money on?”
Dude, didn’t you read HD’s post — speak to the BK trustees. Nice to know you can eat so well when you are BK.
“But so is $350/ for a single.”
It’s nuts in what direction? Too low or high? Also, I guess it includes all food including any dining out.
Balling, from the urban dictionary:
balling
To full of money, To be rich.
“Yo, dat ricer is balling.”
“As noted above, the necessities don’t vary much, and beer and restaurants and vacations cost the same in NC, LP and LS. So, I’m not sure how it’s easier, if you strip out housing”
Gotta disagree there – almost everything costs more in a nicer/more expensive neighborhood, it’s just a fact of life. People with higher incomes attract services and businesses that cater to those incomes, and the inexpensive places move to where they are more in demand.
Yes, you can almost find a single dive bar, even in LP, or stores which don’t vary as they are chains and have consistent pricing, but generally speaking, when I moved to Avondale from lake View I started saving money across the board on the average stuff – gas, restaurants, beer, etc.
“when I moved to Avondale from lake View I started saving money across the board on the average stuff – gas, restaurants, beer, etc.”
I guess. It’s certainly true w/r/t drinking at the neighborhood tavern, but beer from the store is basically the same price, the gas is about $30/year, and we’d continue to shop and eat out at mostly the same places.
“It’s nuts in what direction? Too low or high? Also, I guess it includes all food including any dining out.”
Including dining out, it isn’t much, but if you’re BK, you’re not “supposed to” be eating out. It’s a lot for one person for groceries for one month, but $400 isn’t crazy for 2 and $600 for 6 isn’t much at all, especially if 4 of them are teenage boys.
“It’s certainly true w/r/t drinking at the neighborhood tavern, but beer from the store is basically the same price, the gas is about $30/year, and we’d continue to shop and eat out at mostly the same places. ”
well, you seem pretty smart, no offense intended. : )
but a lot of people I know who move to LP and LV seem to also think they are required to buy their beer, cheese, clothes, etc at the local high-end boutique. It’s not just that they go to a different “Joolz,” they patronize all of these little – and expensive – trendy places.
People must get increasingly jaded the more money the make, because I can’t really imagine a scenario where I was making $400k and not saying to myself “I am a baller”. Yes, you’re not jetting off to Ibiza every weekend to rent out a club or whatever for TRUE baller status, but god damn that’s a lot of money.
My grocery bill is like $150/mo and I eat a lot. What the hell are you people buying.
My wife and I (no kids) easily spend $500 per month on groceries. Likely closer to $750. Good beer, good coffee, good wine, some nice cheese: that’s $100 a week right there. Fresh vegetables, add the dry goods, and some ice cream: another $50-75. In the summer, hit the farmer’s market for a few pints of blueberries, some good bread, etc., etc. It adds up. But then I’d never pay for a fancy car, so it all depends on what you’re in to.
Also, my two cents: I agree with Russ that $400k is enough money for any sane person to want for nothing in this city. I also agree with others that say $50k is enough to live comfortably in this city. I’ve done both, felt fine at both. At $50k I didn’t know what I was missing, which makes me think in hindsight I wasn’t really missing anything important. I’d have to adjust my grocery list, but I suspect that if I had to go back to $50k I’d be just fine. Only thing I know I’d really miss is peace and quiet. It’s expensive in this city.
“well, you seem pretty smart, no offense intended. : )”
None taken–I just wasn’t getting what’s *meaningfully* cheaper living in LS/Avondale vs. NC/LV other than the keeping up with the Jones/who you hang with thing. But that’s probably b/c–short of moving to far NW Chicago or the ‘burbs–we’d probably go to the same 5 or 6 places we do now (like Groove does) and mix in a local or two–heck we might eat out *more* depending on the distance to places we like–and we’d buy groceries at the same places and maybe pull off saving a couple bucks on booze.
“maybe pull off saving a couple bucks on booze”
Let’s not be ridiculous here.
“Good beer, good coffee, good wine, some nice cheese: that’s $100 a week right there.”
Beer/wine/booze is a separate expense, even if purchased with groceries. Roll that in, and we definitely spend over $6k/year.
“Let’s not be ridiculous here.”
I was speculating that the walk-to liquor store in Logan might be slightly cheaper than my current walk-to. Not that I’d start buying Old Style, Yellowtail and Popov.
“Beer/wine/booze is a separate expense, even if purchased with groceries. Roll that in, and we definitely spend over $6k/year.”
Gotcha. Good policy. Instead of saying it’s all what you’re in to, I should have said it’s all how you do your accounting.
whats wrong with old style?
(as I pop the top off a La Fin Du Monde)
So what is true baller status in the chi? Steady 7 figs+?
So true that you don’t realize what you’re doing without until you’re making $$$… wasn’t long ago i was def rice and beans by necessity, now im ordering in sushi on the regular and trying overpriced cheese/wine/whatever at the grocery store. God it sounds douchey just typing that, good news is it really wouldn’t be hard to cut that crap out.
Lincoln Park has a college campus. You can definitely get by cheaply if need be. You just need to know where to look.
In fact I have some friends that live in Humboldt Park and they wind up paying more for beer/liquor as there are no chain stores like a CVS near them that have cheap standardized pricing.
Sushi delivered on the reg.
Cabs on the reg.
Dry cleaning your Ben Sliver blazer on the reg.
ELP on the reg.
Gepharths brats on the reg.
Could all be done on probably less than 50k. Probably not, I don’t know.
I definitely did not live like that on $50k. Tamales instead of sushi. Blazers came from Filene’s. Cabs were an absolute luxury, only hailed in the rain.
I can’t wait until I’m rich so I can constantly brag about it on the internet and belittle people for being poor (how INCREDIBLY gauche of them)
“I can’t wait until I’m rich so I can constantly brag about it on the internet and belittle people for being poor (how INCREDIBLY gauche of them)”
You rate that over doing it IRL by cruising the town in your supercar?
“So what is true baller status in the chi? Steady 7 figs+?”
Sure. Less if you have assets. I’d go with under $500k if that were totally passive/income income.
“I can’t wait until I’m rich so I can constantly brag about it on the internet and belittle people for being poor (how INCREDIBLY gauche of them)”
If you were referring to me, sorry. I didn’t intend anything I wrote that way. If you’ve read many of my posts you should know I’m not interested in belittling people for having less than me. I was actually agreeing with one of your earlier posts — that anyone who says $400k isn’t more than enough is crazy.
Alanon – I couldn’t agree w/you more about the relativity of money and perception of “living rich”. When I used to make 75k in the early 90s, I was very happy and living the ultimate single life. I had a 300k condo in the South End (Boston), a used Mercedes and little else. I was free and could lock up my little condo, go out of town, go out to dinner. Now, although I am several times richer, I am no happier and, in fact, true to the saying, trapped by my surroundings/possessions. Even though I am still single, I have the damn dogs, staff, houses, etc. – maybe people here have a great point – RENT (not just for the financial gain – but for the personal freedom!!!).
I suppose we are talking about a net budget. I don’t see health insurance, doctor, dentist, 401K/IRA, emergency fund (bail your brother out, just had an accident),life insurance, car repairs, furniture, etc. in this budget. Add on FICA and federal taxes, and your gross is way over $50,000. Living on $50,000 means you have to be both frugal and smart with your money.
“If you were referring to me, sorry. I didn’t intend anything I wrote that way. If you’ve read many of my posts you should know I’m not interested in belittling people for having less than me. I was actually agreeing with one of your earlier posts — that anyone who says $400k isn’t more than enough is crazy.”
Sorry, it wasn’t really directed at anyone in particular, especially not you. Just the way people are sometimes is kinda ridiculous 🙂
“When I used to make 75k in the early 90s”
Clio- what was your profession in the early 1990s? Because that was an enormous amount of money for that time period. Large law firm lawyers were barely making that in, say, 1991. My friends were making $55k to $75k in 1995-1996 but that was only at the most prestigious law firms. And that wasn’t in the “early” 1990s.
Just keeping it real. A $300k condo also would have been very, very expensive in the early 1990s. Probably equivalent to a $700k place today.
sabrina,
I emailed you proof that what I have posted is entirely true. I know that you will keep it private.
In response to Russ’s comments about a worry-free lifestyle at $400K per year – I’m assuming you mean outside of work. Often, to reach that level of pay, you need to enter a pretty stressful job where you have to make pretty big decisions on a day to day basis. You aren’t just some random junior VP, doing your thing and staying anonymous.
Also, the job security of the $400K set and the viability and consistency of that income stream for the next 10 years is suspect at best. People may say and lie that they are doing just as good as 2008, but many of them aren’t and are now making $250-300, which is still not bad, but they don’t want to admit the fall in comp they encountered.
In addition, the comment about MBA’s not being stay at home moms is mostly erroneous as well. I know several who are doing this and intend to be home until at least their second child is in school. They and their husbands were both making over $100K, but they made the decision that they didn’t want day care/part time nannies taking care of their kids at a young age and were willing to take the income hit for a few years.
“You guys are also forgetting that there is a whole population out there who actually made a killing in real estate and the stock market in the 90s and 2000s.”
Most of the people who did make a killing in these 2 eras failed to get out in time, and ended up not much better off than where they started. I’m sure there are a lucky few, but is more indicative of having perfect timing and the ability to sell at the right time.
If the $500-750K condos (“no man’s land”) is a tough market, what will happen to these places? Will the owners eventually have to default or take huge losses in order to move?
For 2 people we EASILY spend $500/month on groceries if not more, and that’s with hardly ever even consuming read meat or alcohol. These are the reasons why:
– I am a healthy, picky eater and need lots of fresh fruits and vegs
– We both work out every day so we have healthy appetites
– We eat a full, balanced breakfast and dinner at home every day
– We rarely eat out except for lunches
I shop mostly at Trader Joe’s because it’s the cheapest place anywhere and a lot of their products are additive-free and their packaging makes it very easy to cook quickly at home.
And btw, Westloopelo, I STILL eat rice ‘n beans, but I’m grateful that now I can buy brown rice add some fresh spinach and chicken-apple sausage to the beans 🙂
“So what is true baller status in the chi? Steady 7 figs+?”
“baller” as they call it in the late 90’s is all subjective.
I feel i live the baller life, but to most of you i a a poor schlub (sp)
HHI of 60k…was happy and probably didn’t know what I was missing
HHI of 400k…still happy and more financially flexible but also more stuff to worry about
HHI of ???…not going to stay
I personally agree that an important distinction is whether the HHI is passive income or wages/salary.
meant “not going to say…”
“I shop mostly at Trader Joe’s because it’s the cheapest place anywhere”
Milky,
you want to cut that bill in half, shop at the mexican or polish produce places around chicago. fruits, veggies, lunch meat, and breads are dirt spanking cheap.
also dont know if that chinease place over by kimball and belmont is still open to the public, but you can get a gigantic bag of rice and other asian spices and dry goods for wholesale prices.
dry goods if your savvy and dont “need it know” jewel will have great sales and you can always add coupons to a great sale. just last weekat jewel i got 4 boxes of cheerios for 69 cents each. BOOOYA!!
Thanks Groovy! I love to shop at the local ethnic grocers whenever time permits. That’s why I love exploring Albany Park. The Trader Joe’s habit is kind of an opportunity cost. I go there every week or two to stock up because having fresh stuff washed, cut and bagged for you makes it easier for me to make a stir fry over getting takeout after long days at the office.
And just so everyone doesn’t get the wrong idea about me from my last post, I wanted to clear something up. The Milkster loves to drink AND dance and socialize, but prefers to do it in a bar or a club than at home 😉
“I feel i live the baller life”
That’s really all that matters (as long as you are living within your means).
“cut and bagged for you makes it easier for me to make a stir fry over getting takeout after long days at the office”
Milks,
you know what since my wife is at homemaker now i really dont have to worry about cooking after a long work day. i forget about those days when we would both get home late and just get take out or just “drink” our dinner because of exhaustion.
DZ,
you know me i live way below my means, its my strange nature.
“Large law firm lawyers were barely making that in, say, 1991. My friends were making $55k to $75k in 1995-1996 but that was only at the most prestigious law firms. And that wasn’t in the “early” 1990s.”
Large law firms didn’t raise salaries b/t about 88 and 98. So, what they made in 95-96 is what they would have made had they the same job in ’91.
@Dave:
I was referring to life outside of work. Most jobs that pay any decent amount of money are quite stressful.
@Anon:
There are certainly MBA types that stay home. What I normally see happen though is that when you have a power couple, they also have a power couple lifestyle that can only be achieved on both incomes. Unless one of the couple advances to the upper echelon (ie. making partner, etc), the spouse cannot stay home because there is no way they can support their desired lifestyle dropping from $300k to $125kish or whatever it maybe.
On the other hand, if the power couple is very frugal from the start, it is usually much easier for them to give up one of the incomes because they don’t have the large mortgage, two car notes, etc.
As for me, I still eat the same stuff I did when I was first starting out on my own. Very basic with middle to lower prices. When I started making a very good salary, I did go for a year or so of a ‘no limits, get every thing that was trendy and uber expensive’ lifestyle. That got tired very quickly! After a year of spending so foolishly, I went back to the basics and have remained there.
Dining out is a weekend only event with the exception of entertaining potential clients, a good bottle of wine ($45-$100) is a once a month choice and places like Luger’s or Morton’s (I am a steak man) is a once or twice a year event…usually on my or one of the crew’s BDay.
I think you have to go from rice and beans, burgers & hot dogs as they are all you can afford to having a $60 Porterhouse every night to fully realize all of the outrageous spending is not at all neccessary.
What I do splurge on (once every 3 or 4 years) is good furniture, and for me this is almost a required expense. I love nice furniture and the homes I have. It is important in my work to portray this upscale life style although I do not live as it seems on the surface. I think it is important to project this image to potential clients as that is what they are seeking from me…the way they want to live.
To save more $$$, I entertain our potential clients or long term clients/friends in my home frequently. Going out with a party of 6 to an upscale NYC restaurant could run $600-$1000 easily and doing the same thing in my own home costs far less than half of that amount.
I treat myself to a new car every three years on my BDay…nothing like a Lambo or Ferrari, but still a large expense as I like nice cars.
Living in NYC (for me, not speaking for anyone else) costs around $100k just for the basics. I don’t have any mortgages only mainteance for my unit and the four others in my building. That is my largest expense but I don’t consider that a living expense as it is an investment. I have no clothes that require dry cleaning, I have no ‘staff’ as I do all chores myself, and I stopped trying to maintain an enviable wine cellar years ago as the differnce between an Opus One and any other Meritage wine is only slightly discernable.
Whatever one choses to spend their riches on is entirely their business. If you work hard to earn it, who’s business is it where or how you spend it?
If I posted about personal things and it seemed as though I was flaunting wealth, it was not my intention at all. I prefer to not tell others about my lifestyle…which is really not that different from anyone elses.
BTW Milkster, I too eat Rice n Beans several times a week and always have. The way you mentioned it on that thread regarding the server who was forced to go into foreclosure seemed to me that you were talking bad about him. If that was not your intention, then I apologize for misunderstanding your post.
Groove: Super H Mart – Korean place a bit north. It’s like a Costco of interesting foods.
“also dont know if that chinease place over by kimball and belmont is still open to the public, but you can get a gigantic bag of rice and other asian spices and dry goods for wholesale prices.”
that’s right by my place:
http://www.yelp.com/biz/joong-boo-market-chicago-2
I think it’s actually Korean, but they have tons of stuff from all over Asia, very cheap.
It’s a zoo on weekends, btw, and it is like leaving America. Last time I was there I don’t think I heard English spoken by more than 10% of the patrons (most of whom seemed to know each other).
“Super H Mart – Korean place a bit north. It’s like a Costco of interesting foods.”
Tis true, but Joong Boo (formerly Chicago Food Corp, which is what I think groove was referring to) is much more convenient from Wicker or Logan Sq. Right off/on the Kennedy. And takes care of most needs.
Love H Mart for produce especially. Their food court is oddly mediocre. Mitsuwa food court is much better.
Hi Westloopelo –
I think we are actually similar in many respects. I live in NYC too, but I am in love with Chicago and spend a lot of time there and I am also looking for a small place of my own there. I am looking for a studio or 1BR to keep my expenses low. I am open to pretty much any nabe on the North or West Sides.
I don’t own a car and I take public transportation or walk everywhere. I rarely take cabs unless I’m moving something heavy. I like to eat out but I like places like Tank Noodles or Zebda which are tasty but casual and inexpensive. I like bars and pubs but I’m a lightweight and can only handle 3 drinks MAX and Milky don’t do bottle service!
All I meant about Felix was that if I was in his situation I would have made some sacrifices to hold onto my house. Buying rice in 50 lb bags for example from Groove’s Chinese store. Having all adult members of the household chip in to pay the bills. Collecting cans was kind of a metaphor for just finding any creative solution to his predicament and putting in some hard work. I guess he didn’t have to make any sacrifices since he chose to abandon his responsibilities, but I guess that’s a whole ‘nother can ‘o beans!
“Mitsuwa food court is much better.”
One of the main reasons I miss working in the burbs
Milk…
I hear ya! $1000 for Grey Goose & cheap cranberry juice/accompaniment bottle service is something that will never happen to my wallet.
Thanks for explaining your comment. I took it at first read that you were putting Felix down because of his probable race and occupation. What was not really clarified in the article was the extent to which he and his family went in atttempting to retain their home. We don’t know what caused his predicament so it was unfair of us to place any judgement on him…other than being swindled by some fraud RE people we know little else.
I know the strong $$$$ sensibilities of servers (and other restaurant/service industry employees) very well. Because of the hard work they perform and the extent they have to go to in order to buy and maintain a home (just proving their income is hard enough), I don’t doubt that he and his family did everything possible to stay in their home. When one is forced to work as hard as they do, their possessions are valued so much more.
formerly Chicago Food Corp,
yep thats the one, it supply’s like 80% of the Chinese restaurants in the city. and if your not oriental (yes i said oriental, deal with it) you will get shyt service and looks. the trick is dont ask for help just get what you need and get out.
“the trick is dont ask for help just get what you need and get out.”
LOL. that goes in my experience for just about every establishment that caters largely to a particular non-native English speaking clientele. I love that in Avondale most of the Polish places I go to usually hav guys who talk to you in Polish until they realize you don’t speak it. ok, by “places” I mean pretty much the Avondale Armanetti’s liquor store.
“What I normally see happen though is that when you have a power couple, they also have a power couple lifestyle that can only be achieved on both incomes. Unless one of the couple advances to the upper echelon (ie. making partner, etc), the spouse cannot stay home because there is no way they can support their desired lifestyle dropping from $300k to $125kish or whatever it maybe.”
I’m often shocked when I talk to my coworkers and learn they are essentially living paycheck to paycheck, even when most have spouses that are also making a lot of money. My wife works in field that is low on financial rewards, yet we feel like we’re swimming in it. Then I start digging. Those people, have therapists, personal trainers, accupuncturists, etc. They drive BMWs. They have a flat screen in every room of their house. They go out of town every weekend. They’ve never cooked a meal in their fancy kitchens. Etc., etc. I really don’t get how they can piss it all away . . . but they do. And, like someone said above, when the baby comes they suddenly freak out. They can’t fathom living on only one income. Even though that one income alone puts them in the top 99% of this country.
“LOL. that goes in my experience for just about every establishment that caters largely to a particular non-native English speaking clientele”
skeptic,
i agree the stores that cater to other ethnicities it is always a get in get out type of thang, bu tthe deals there cant be beat.
why is it that if i stay to long in an eastern european store i strangely become depressed? even when there are hot european ladies there?
“why is it that if i stay to long in an eastern european store i strangely become depressed? even when there are hot european ladies there?”
because the dark cloud of the Iron Curtain still hangs over them?
“because the dark cloud of the Iron Curtain still hangs over them?”
they never look happy.
Oh the bills start to add up when you feel entitled to the better things in life when you have dual $100k+ a year incomes. Nannies that cost $700 a week; a mortgage in excess of $4,500 a month on a home in lakeview or roscoe village; a brand new acura SUV’s in the garage; a $10,000 vacation once a year; a media room that costs $50,000; fancy dinners of $150 or more for two, including booze and tip at least once or twice a week, and then a cab home…
I know one guy in his 40’s close to making partner but spending like he already is. New construction home, media room, fancy car, even a lakehouse and a boat…and he’s not partner…will he ever be? Not until the ink is dry on the partnership agreement…
whatever, some people here just think I’m jealous and say that I can’t fathom that others earn more than me.
When in reality, I think they’re just foolish, when they’re making $200k a year but are little more than a few paychecks from the entire house of cards crashing down upon them.
But you know, it’s people like this, with access to so so so much credit (car note, mortgage, credit card, HELOC’s) that set the prices for so many things because they’re putting it all on credit.
Believe me the house of cards will fall down, it just takes a little bit longer.
“I’m often shocked when I talk to my coworkers and learn they are essentially living paycheck to paycheck, even when most have spouses that are also making a lot of money. My wife works in field that is low on financial rewards, yet we feel like we’re swimming in it. Then I start digging. Those people, have therapists, personal trainers, accupuncturists, etc. They drive BMWs. They have a flat screen in every room of their house. They go out of town every weekend. They’ve never cooked a meal in their fancy kitchens. Etc., etc. I really don’t get how they can piss it all away . . . but they do. And, like someone said above, when the baby comes they suddenly freak out. They can’t fathom living on only one income. Even though that one income alone puts them in the top 99% of this country.”
I guess what I find so shocking is that folks like that seem to have such a hard time just ceasing the frivolous expenses. I know you get used to a certain lifestyle, but if I or my wife lost our job, we’d simply do without. Of course, we don’t live beyond our means and put a lot away into savings.
“whatever, some people here just think I’m jealous and say that I can’t fathom that others earn more than me.
…
Believe me the house of cards will fall down, it just takes a little bit longer. ”
My issue is that it seems that you’re rooting for it and ignoring the *fact* that if it all gets as bad as you seem to expect, it will be much, much worse for you than you seem to expect.
Much worse for HD than he expects AND he will be still renting his 2br at age 48. Misery loves company.
“Oh the bills start to add up when you feel entitled to the better things in life when you have dual $100k+ a year incomes. Nannies that cost $700 a week; a mortgage in excess of $4,500 a month on a home in lakeview or roscoe village; a brand new acura SUV’s in the garage; a $10,000 vacation once a year; a media room that costs $50,000; fancy dinners of $150 or more for two, including booze and tip at least once or twice a week, and then a cab home…”
HD — sounds as if this was your life before the divorce?
If I’m still renting a 2br at age 48 I guarantee you’ll I’ll be in better financial shape than 95% of my generation.
“#JMM on August 6th, 2010 at 3:01 pm
Much worse for HD than he expects AND he will be still renting his 2br at age 48. Misery loves company.”
Assuming no second divorce right?
No second divorce because no remarriage.
HD, You seem like a nice enough guy but you need to stop obsessing on peoples lifestyle/debt/etc. Let me provide you with a couple positive examples.
#1. Myself….worked thru high school and saved for college, secured a scholarship, worked thru college and invested in stocks, graduated with a stock portifolio of around 60k in today’s dollars. After graduation lived with parents for 2 years to save and invest, bought my first home cash at age 26. Never carried a credit card balance in my life. Currently own 3 properties (no mortgage on any) but carry line of credit on each for investment purposes. Realestate is approx. 28% of my net worth, last year traded stocks (best year since 9-11). My wife and I both max out our 401k/IRA every year. Another view of the +200k power couple.
#2. Around 15 years ago my parents hired this hispanic gentlemen to cut their grass, started his buisness from the back of his pickup truck. Now he has a landscape company with over 10 employees, he now owns the house across the street from my parents additionally he owns a house in Mexico which he occupies in the winter.
The American Dream is out there……. if you have a positvie outlook and are willing to work for it. Please HD try to focus some of your energy on positive things.
“HD, You seem like a nice enough guy but you need to stop obsessing on peoples lifestyle/debt/etc.”
This is something that I have an issue with also as it drags away from the conversation. Baseless and unwarranted speculation about their spending decisions is also one of my biggest pet peeves. Obviously if an individual has the resources and know how to receive financing and the ability to maintain their own home, he/she/they are not idiots as well. And I will further this by saying even if a person goes into forclosure, we don’t know the circumstances to the point of ripping them apart.
Not picking on you HD as your contributions to CC are valuable…but if we ALL could refrain from unneeded judgement call about others, this would be a more informative site to read. Making comments like this only serves to make the poster in question appear to be a jealous juvenile…something I know is not true.
Keep comments constructive and really think about your posts before sending them.