[dpark]

In general conversation, "if X" often says a lot about "if not X". "If you're a white male on America, you have entrenched institutional benefits" actually does imply something about non-white/non-males. It implies that non-white/non-males do not have the same entrenched institutional benefits. General conversations do not follow the rules of prepositional logic.

When you repeatedly refer to being single, you imply that it's the better way to save, whether you intend that or not. And when someone asks about it, brushing off the question by pretending they should have applied rigorous logic to the statement is somewhat... let's say silly. Ability to control a spouse's spending and willingness to relocate are legitimate answers that you make weaker with the attempted logical refutation.

Having 500k in the bank also isn't really life changing if your plan is to spend it on a house. With a high income, you could theoretically save for 10ish years and buy a pretty nice home outright. You could also just take a loan out immediately and live in the same home for those ten years, acquiring equity and tax benefits along the way.

Saving to buy outright or mostly outright only makes sense if you are either extremely risk averse or you believe that non-real assets will appreciate much faster than real assets over the medium term. Right now you can get a super jumbo loan at less than 4%. If you want buy a million dollar home and have a million dollars in cash, it's really not a given that you should buy the house in cash. That implies that you believe the stock market will do worse than, say, 3% (reduced due to tax advantages of mortgages and disadvantages of capital gains) for many years.

[Retric]

The glaring exception for dual incomes as I said was you can't control your partners behavior. That's a major caveat and derails the conversation. You go from stuff you can do, to some sort of theoretically ideal couple. In most areas the major savings is being socially acceptable to share a bedroom with someone and being a 1 car family. But, in SF you may already be sharing a bedroom limiting the savings.

Further a 100k income simply can't afford to buy a 900k place. 900k * .06 = 54k/year + taxes + repairs + insurance + utilities. Put a 500k down payment on that and suddenly it's a 400k place and much higher taxes. Now you might be able to swing 900k that with a roommates, but again not having them is a major life change.

[dpark]

> in SF you may already be sharing a bedroom limiting the savings.

I mentioned that in another fork of this thread but was being facetious. Adults do not generally share a bedroom unless they're in a sexual relationship. Sharing a bedroom platonically is not a reasonable thing to expect people to do to save money. Sharing an apartment, yes. A bedroom, no.

> Further a 100k income simply can't afford to buy a 900k place. 900k .06 = 54k/year + taxes + repairs + insurance + utilities. Put a 500k down payment on that and suddenly it's a 400k place and much higher taxes. Now you might be able to swing 900k that with a roommates, but again not having them is a major life change.*

Your numbers don't make sense. First, if you're paying 6% on your mortgage, you're overpaying by a ton. Assuming you even try to get a decent rate, you're looking closer to 3% once you factor in the tax advantages. Second, if you can save 500k in 10 years, you're saving close to 50k/year plus paying for housing. So it's a lie to claim you cannot afford 54k/year in house payments.

[Retric]

Interest is only part of the cost of a loan you also need to pay principle if you don't have a large down payment your interest rate increases. Feel free to calculate a 900k home w/ 0.8% property taxes and insurance. http://www.bankrate.com/calculators/mortgages/mortgage-payme...

You do get to deduct interest, but you lose out on the standard deduction you can also play a lot of games with savings. Things like not taking a car loan because use can pay with after tax money saving on the loan and paying less for the car. Financing your own credit card saves money where if your house poor debt is just a fact of life etc. You can also more safely have a high deductible health insurance.

Also, you get interest on savings so your not saving 50k per year to get 500k in 10 years.

[dpark]

I'm quite painfully aware of what a $1MM mortgage costs with taxes and insurance. The point is that if you can save enough to put down half of that in 10 years, you could swing the cost of the mortgage today. When you talk about saving, you have to remember that 1) you still have to live somewhere, and that's definitely not free, and 2) home prices are generally increasing over time so you probably need to save more than you think. On the subject of the standard deduction, you're right that you'd lose that, but with a jumbo mortgage, you'll still come out ahead for many years.

Interest on savings is negligible. If you take the highest money market rates, you'll get just north of 1%. If you stick the money in a 5-year CD, you'll get 2% and lower liquidity. Meanwhile the housing market is rising faster (how long that's sustainable is unknown).

I'm not sure what you're talking about with the car loan. If you think it's worth having a cushion of cash in the bank (I certainly think so) so that you can do things like buy your cars in cash, then saving for 10 years so that you can dump all the money into the house is a terrible idea because you've just lost your cash cushion. (Your best bet for saving on cars is to just buy fewer of them anyway.) For the high-deductible insurance, you only need a few thousand in the bank to take the risk out of that. You need enough cash on hand to cover your deductible. After that it basically looks like any other insurance plan. And certainly, a larger cash cushion makes copay/coinsurance easier to handle, but that's not specific to high-deductible insurance.

If you think you should live far beneath your means as a general rule, I can't argue with that. There's no compelling argument for why you should spend all your money if you have the option to save. It insulates you from risk and allows you to retire sooner if that's your goal. But if you are living far beneath your means so that you can just dump all your savings into a house in 10 years that you could afford today with the same income, I think you're wasting your time, especially in a market like SF where home prices are increasing so rapidly.

[Retric]

The car comment is people see 0% interest loans for a car and think they are not paying interest. However, if you have cash for the car out of pocket you can pay a lower purchase price. Because it's money saved you don't pay taxes on your 'earnings'. Which means it can be a very high ROI investment vs. that loan. Not that you should be buying a car but sometime over 10 years a new / used car is reasonable.

Also, I am basically assuming your going to get raises over time. So your initial 100k salary might be 150k in 10 years. Thus ~35k savings in your first year + 4% net interest (inducing things like that car loan) and cost dollar averaging etc and 4% more savings next year = 500k at the end.

As to housing prices, they might go up or stall. But, because your not in the market you can time things to buy when the market dips. Further, rent control means renting is divorced from increasing housing price changes so you gain a lot of the upside with fixed payments even if prices increase without the downside. Further, if prices fall you can rent somewhere else.

The truth is people are rarely going to do this, but people are also rarely going to hit big money from a startup.

[dpark]

> The car comment is people see 0% interest loans for a car and think they are not paying interest. However, if you have cash for the car out of pocket you can pay a lower purchase price.

This is all hypothetical and a really bad plan for increasing your overall wealth. Car manufacturers are the ones who subsidize the loans. If you see a 0% loan, it's not the dealer who's giving you that, so it's entirely likely that paying in cash will save you nothing. Those 0% loans are also for new cars (I've never seen them for used cars) and if you need to save a few dollars, buying used will do far more for you anyway.

> Thus ~35k savings in your first year + 4% net interest (inducing things like that car loan)

You can't just assert 4% interest and hand-wave it away with "things like that car loan". That's double the interest you'd get on the best 5-year CDs. So somewhere you need to account for that extra 2% interest and how it's going to compound for 10 years. You aren't buying a car every year even if that somehow would double your effective interest. Also, if you buy a car outright, it's presumably coming out of that 35k anyway. So no, your numbers still do not work.

> As to housing prices, they might go up or stall. But, because your not in the market you can time things to buy when the market dips.

Good luck with that. Timing the market is a really bad bet. There's no guarantee that the market will dip during the next 10 years. It could maintain growth for 15 years, or plateau after 5, or crash in 1 year (while you're still saving) but rebound and keep growing for another two decades after that. There's also no guarantee that it won't dip 20% as soon as you decide you're buying at the bottom.

> Further, rent control means renting is divorced from increasing housing price changes so you gain a lot of the upside with fixed payments even if prices increase without the downside. Further, if prices fall you can rent somewhere else.

Lots of places don't have rent control. Also, rent control might help your rent stay "low" (it's definitely not actually low in the bay) but it won't make buying more attainable. Again, if you want to rent because you think it's a better strategy than buying, go ahead. But renting while you try to save a half million in cash to buy a house seems like a really bad strategy. Saving aggressively is generally a good idea. If your goal is homeownership, though, saving to buy in cash has not looked like a good strategy since the government started incentivizing mortgage loans.