8 ms·

If you save $2.5k/mo for 15 years, after 14 years (mid-30s), you’d have $800k at 8% interest. Even in Seattle, $800k would get you a decent starter home. (I c

by itake 2y ago

If you save $2.5k/mo for 15 years, after 14 years (mid-30s), you’d have $800k at 8% interest. Even in Seattle, $800k would get you a decent starter home. (I chose $2.5k, bc 15 years ago out of college, that’s how much I saved living in GA on a $70k salary). I saved even more when I move to California in my mid 20s.

xeromal 2y ago
That' assuming houses don't go up in price though right? Also I think it's pretty rare for people to have the mental fortitude to save 2.5k a month for a house on top of living expenses, rent, and trying to build your retirement / savings / emergency fund. It's definitely possible but I think it's out of reach for the average person.
- mulmen 2y ago
  > That' assuming houses don't go up in price though right? No, it isn’t. You can invest your savings. If you had put $2,500.00 a month into SPY500 since October 2009 (15 years ago) you’d have $1,388,302.13 today. https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/ https://dqydj.com/sp-500-periodic-reinvestment-calculator-di... > Also I think it's pretty rare for people to have the mental fortitude to save 2.5k a month for a house on top of living expenses, rent, and trying to build your retirement / savings / emergency fund. How is saving for a house “on top of” literally “saving”? If you can save for retirement, savings, and emergencies then you have the mental fortitude to save for a house. People are bad with money, we know that. One of the best examples is buying a house they can’t afford. > It's definitely possible but I think it's out of reach for the average person. Yes, agree.
  - xeromal 2y ago
    Yeah, I just think examples like this need to work for the masses in order to be useful otherwise they're just pie in the sky advice like abstinence to prevent childbirth. It does work and it's 100% effective but humans are horny. Same with saving this amount of money, there's a select few that can pull it off but most are incapable. Those are the people advice is for
    - mulmen 2y ago
      I don’t disagree with you. But I was replying to this question: > So how does one buy a house without being dependent on cash flow? The answer to which is “you don’t”. Most people can’t afford to buy a house and never will. Even many homeowners. I will spell it out if it isn’t already clear. Live within your means and save as much as you can, investing that savings in a diversified portfolio. Buy a home only when your savings allow for it.
      - JumpCrisscross 2y ago
        > Most people can’t afford to buy a house and never will Most homes in America are owned by the person who lives there.
        kasey_junk 2y ago
        And it’s not particularly close. ~65% of households own their home. That rate is higher now than in the 50s, 60s, 70s, 80s or 90s. It rofl stomps the pre-war era.
        mulmen 2y ago
        Do you have a full dataset on this? All I could find is https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N which only goes back to 1965.
        kasey_junk 2y ago
        The datasets and collection methodologies have changed overtime, the Fred one is the best if you want continuous definitions. The census also collects data on the subject https://www.census.gov/data/tables/time-series/dec/coh-ownerchar.html#:~:text=Generally%2C%20homeownership%20rates%20rose%20in,to%2066%20percent%20in%202000 https://www.census.gov/data/tables/time-series/dec/coh-owner....
        2y ago
lancesells 2y ago
Glad you made that work but that's counting steady job, steady health, no kids, cost of living staying the same the entire time.
- xeromal 2y ago
  Plus the cost of houses which will definitely go up
  - mulmen 2y ago
    2008 would like a word. House prices absolutely do go down. They rose for a long time but recently they are again beginning to fall. Median home price in the US peaked at $479,500.00 in 2022. By Q3 2023 it was down to $431,000.00. In Q3 2024 we reached $420,000.00.
    - sgerenser 2y ago
      Case-Shiller seems to disagree that home prices are still below 2022 levels: https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA
      - mulmen 2y ago
        Ah yeah fair. The numbers I quoted are median and I don’t have the source. They are from a quick search of financial news. Your index numbers are probably a more sound comparison of overall house prices. But even using the index numbers it isn’t hard to see that housing prices do in fact go both up and down.
    - csomar 2y ago
      They are not going down because of lack of inventory. Look at commercial, some properties had an 80% discount. But that requires that supply overwhelms demand. It’s not happening with regular housing.
  - itake 2y ago
    Estimation considers that as my career started 13 years ago and we can see how home prices are today
csomar 2y ago
Bonds didn’t pay 8% during the bull run.
- deleted 2y ago
  [deleted]
srockets 2y ago
Which real world financial instrument would give you that 8% interest?
- deleted 2y ago
  [deleted]
- mulmen 2y ago
  Basically any S&P 500 index fund [1] averages over 8% return over the trailing 15 years, even inflation adjusted [2]. Using [3] October 2009 to present gives an annualized return of 13.763% and going back 20 years to include the great recession returns 12.06%. Post-tax current-day value scenarios: Starting in 2004 (20Y): $500.00/mo: $418,349.29 $2,500.00/mo: $2,091,746.42 Starting in 2009 (15Y): $500.00/mo: $252,413.58 $2,500.00/mo: $1,262,067.88 [1]: https://www.financecharts.com/etfs/SPY/performance/total-return-cagr https://www.financecharts.com/etfs/SPY/performance/total-ret... [2]: https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ [3]: https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/ https://dqydj.com/sp-500-periodic-reinvestment-calculator-di...
  - srockets 2y ago
    That's not guaranteed, and not how you save for a fixed goal. I don't know of any lower-risk and higher-interest alternative to the 30-years-fixed that is currently offered to US consumers, and based of the above answer, neither do you.
johnnyanmac 2y ago
>at 8% interest. What savings account do you have? Even the best HYSA's I've seen in the '10's is 4% I suppose if you're really confident in your monopoly money you can do it.
pjc50 2y ago
> $800k at 8% interest. OK, and how does that work when houses appreciate at 9%?

by itake 2y ago

xeromal 2y ago

That' assuming houses don't go up in price though right? Also I think it's pretty rare for people to have the mental fortitude to save 2.5k a month for a house on top of living expenses, rent, and trying to build your retirement / savings / emergency fund. It's definitely possible but I think it's out of reach for the average person.

mulmen 2y ago
> That' assuming houses don't go up in price though right? No, it isn’t. You can invest your savings. If you had put $2,500.00 a month into SPY500 since October 2009 (15 years ago) you’d have $1,388,302.13 today. https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/ https://dqydj.com/sp-500-periodic-reinvestment-calculator-di... > Also I think it's pretty rare for people to have the mental fortitude to save 2.5k a month for a house on top of living expenses, rent, and trying to build your retirement / savings / emergency fund. How is saving for a house “on top of” literally “saving”? If you can save for retirement, savings, and emergencies then you have the mental fortitude to save for a house. People are bad with money, we know that. One of the best examples is buying a house they can’t afford. > It's definitely possible but I think it's out of reach for the average person. Yes, agree.
- xeromal 2y ago
  Yeah, I just think examples like this need to work for the masses in order to be useful otherwise they're just pie in the sky advice like abstinence to prevent childbirth. It does work and it's 100% effective but humans are horny. Same with saving this amount of money, there's a select few that can pull it off but most are incapable. Those are the people advice is for
  - mulmen 2y ago
    I don’t disagree with you. But I was replying to this question: > So how does one buy a house without being dependent on cash flow? The answer to which is “you don’t”. Most people can’t afford to buy a house and never will. Even many homeowners. I will spell it out if it isn’t already clear. Live within your means and save as much as you can, investing that savings in a diversified portfolio. Buy a home only when your savings allow for it.
    - JumpCrisscross 2y ago
      > Most people can’t afford to buy a house and never will Most homes in America are owned by the person who lives there.
      - kasey_junk 2y ago
        And it’s not particularly close. ~65% of households own their home. That rate is higher now than in the 50s, 60s, 70s, 80s or 90s. It rofl stomps the pre-war era.
        mulmen 2y ago
        Do you have a full dataset on this? All I could find is https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N which only goes back to 1965.
        kasey_junk 2y ago
        The datasets and collection methodologies have changed overtime, the Fred one is the best if you want continuous definitions. The census also collects data on the subject https://www.census.gov/data/tables/time-series/dec/coh-ownerchar.html#:~:text=Generally%2C%20homeownership%20rates%20rose%20in,to%2066%20percent%20in%202000 https://www.census.gov/data/tables/time-series/dec/coh-owner....
        2y ago

lancesells 2y ago

Glad you made that work but that's counting steady job, steady health, no kids, cost of living staying the same the entire time.

xeromal 2y ago
Plus the cost of houses which will definitely go up
- mulmen 2y ago
  2008 would like a word. House prices absolutely do go down. They rose for a long time but recently they are again beginning to fall. Median home price in the US peaked at $479,500.00 in 2022. By Q3 2023 it was down to $431,000.00. In Q3 2024 we reached $420,000.00.
  - sgerenser 2y ago
    Case-Shiller seems to disagree that home prices are still below 2022 levels: https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA
    - mulmen 2y ago
      Ah yeah fair. The numbers I quoted are median and I don’t have the source. They are from a quick search of financial news. Your index numbers are probably a more sound comparison of overall house prices. But even using the index numbers it isn’t hard to see that housing prices do in fact go both up and down.
  - csomar 2y ago
    They are not going down because of lack of inventory. Look at commercial, some properties had an 80% discount. But that requires that supply overwhelms demand. It’s not happening with regular housing.
- itake 2y ago
  Estimation considers that as my career started 13 years ago and we can see how home prices are today

csomar 2y ago

Bonds didn’t pay 8% during the bull run.

deleted 2y ago
[deleted]

srockets 2y ago

Which real world financial instrument would give you that 8% interest?

deleted 2y ago
[deleted]
mulmen 2y ago
Basically any S&P 500 index fund [1] averages over 8% return over the trailing 15 years, even inflation adjusted [2]. Using [3] October 2009 to present gives an annualized return of 13.763% and going back 20 years to include the great recession returns 12.06%. Post-tax current-day value scenarios: Starting in 2004 (20Y): $500.00/mo: $418,349.29 $2,500.00/mo: $2,091,746.42 Starting in 2009 (15Y): $500.00/mo: $252,413.58 $2,500.00/mo: $1,262,067.88 [1]: https://www.financecharts.com/etfs/SPY/performance/total-return-cagr https://www.financecharts.com/etfs/SPY/performance/total-ret... [2]: https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ [3]: https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/ https://dqydj.com/sp-500-periodic-reinvestment-calculator-di...
- srockets 2y ago
  That's not guaranteed, and not how you save for a fixed goal. I don't know of any lower-risk and higher-interest alternative to the 30-years-fixed that is currently offered to US consumers, and based of the above answer, neither do you.

johnnyanmac 2y ago

>at 8% interest. What savings account do you have? Even the best HYSA's I've seen in the '10's is 4% I suppose if you're really confident in your monopoly money you can do it.

pjc50 2y ago

> $800k at 8% interest. OK, and how does that work when houses appreciate at 9%?