Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

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nigel_ht
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Joined: Tue Jan 01, 2019 9:14 am

Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by nigel_ht »

stoptothink wrote: Wed Nov 03, 2021 7:28 am
Wenonah wrote: Tue Nov 02, 2021 9:15 pm Being close to outdoor activities is huge if that is what you are after. On the other hand, why are you paying for Grad School for your kids? Not many parents do that--high earners or low. By 22 your kids should be taking responsibility. They can work for a few years and earn the money, work for a company that pays for part of the degree, get financial aid, etc. And truly, shouldn't one have some world and work experience before they get a graduate degree? Take it off of the table and lessen your load. Enjoy your outdoor time with the fam.
Constant debate on this board. In the many education threads there are parents even paying for medical school. Seems absolutely bananas to me, and I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.
One reason to have have money is so you can invest in your kids future…and rich people do it all the time including donating millions so Junior can attend Harvard or whatever.

Merely paying for med school is plebeian.

What is bananas is in this day and age of internet and global access that anyone thinks everyone else’s value systems should be like their own…
stoptothink
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by stoptothink »

nigel_ht wrote: Wed Nov 03, 2021 7:36 am
stoptothink wrote: Wed Nov 03, 2021 7:28 am
Wenonah wrote: Tue Nov 02, 2021 9:15 pm Being close to outdoor activities is huge if that is what you are after. On the other hand, why are you paying for Grad School for your kids? Not many parents do that--high earners or low. By 22 your kids should be taking responsibility. They can work for a few years and earn the money, work for a company that pays for part of the degree, get financial aid, etc. And truly, shouldn't one have some world and work experience before they get a graduate degree? Take it off of the table and lessen your load. Enjoy your outdoor time with the fam.
Constant debate on this board. In the many education threads there are parents even paying for medical school. Seems absolutely bananas to me, and I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.
One reason to have have money is so you can invest in your kids future…and rich people do it all the time including donating millions so Junior can attend Harvard or whatever.

Merely paying for med school is plebeian.

What is bananas is in this day and age of internet and global access that anyone thinks everyone else’s value systems should be like their own…
Who's trying to push their value system on someone else? I expressed a personal opinion, nothing more.
YeahBuddy
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by YeahBuddy »

Yes, I would incur debt to move and improve our family's quality of life and it sounds like you can do it.
Light weight baby!
nigel_ht
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by nigel_ht »

stoptothink wrote: Wed Nov 03, 2021 7:40 am
nigel_ht wrote: Wed Nov 03, 2021 7:36 am
stoptothink wrote: Wed Nov 03, 2021 7:28 am
Wenonah wrote: Tue Nov 02, 2021 9:15 pm Being close to outdoor activities is huge if that is what you are after. On the other hand, why are you paying for Grad School for your kids? Not many parents do that--high earners or low. By 22 your kids should be taking responsibility. They can work for a few years and earn the money, work for a company that pays for part of the degree, get financial aid, etc. And truly, shouldn't one have some world and work experience before they get a graduate degree? Take it off of the table and lessen your load. Enjoy your outdoor time with the fam.
Constant debate on this board. In the many education threads there are parents even paying for medical school. Seems absolutely bananas to me, and I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.
One reason to have have money is so you can invest in your kids future…and rich people do it all the time including donating millions so Junior can attend Harvard or whatever.

Merely paying for med school is plebeian.

What is bananas is in this day and age of internet and global access that anyone thinks everyone else’s value systems should be like their own…
Who's trying to push their value system on someone else? I expressed a personal opinion, nothing more.
Yes, you expressed your personal opinion that my view is “bananas”.
Topic Author
Electrified
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Joined: Thu Oct 28, 2021 10:37 am

Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

NorCalHiker wrote: Tue Nov 02, 2021 8:41 pm You mention that you've already considered prop taxes, but what about state income taxes?
I have, and they will be higher in the VHCOL area, but I think the delta still pales in comparison (at least initially) to the mortgage amount. And even though the state income taxes are higher, I view that as sort of the price you need to pay if you want to be in that state.
nigel_ht wrote: Wed Nov 03, 2021 7:50 am
stoptothink wrote: Wed Nov 03, 2021 7:40 am
nigel_ht wrote: Wed Nov 03, 2021 7:36 am
stoptothink wrote: Wed Nov 03, 2021 7:28 am
Wenonah wrote: Tue Nov 02, 2021 9:15 pm Being close to outdoor activities is huge if that is what you are after. On the other hand, why are you paying for Grad School for your kids? Not many parents do that--high earners or low. By 22 your kids should be taking responsibility. They can work for a few years and earn the money, work for a company that pays for part of the degree, get financial aid, etc. And truly, shouldn't one have some world and work experience before they get a graduate degree? Take it off of the table and lessen your load. Enjoy your outdoor time with the fam.
Constant debate on this board. In the many education threads there are parents even paying for medical school. Seems absolutely bananas to me, and I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.
One reason to have have money is so you can invest in your kids future…and rich people do it all the time including donating millions so Junior can attend Harvard or whatever.

Merely paying for med school is plebeian.

What is bananas is in this day and age of internet and global access that anyone thinks everyone else’s value systems should be like their own…
Who's trying to push their value system on someone else? I expressed a personal opinion, nothing more.
Yes, you expressed your personal opinion that my view is “bananas”.
I think nigel_ht has it exactly right. We will be paying for graduate school for our kids. That is our plan and prerogative. Nor is doing so exclusive of our kids "taking responsibility." And I am not saying that is the right choice for everyone, but it is for us for various reasons.
swaption
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by swaption »

Electrified wrote: Tue Nov 02, 2021 4:10 pm
swaption wrote: Tue Nov 02, 2021 2:52 pm I say go for it. This is your life, and I mean the meat of your life, so go live it the way you want. I live in a VHCOL area, two kids have just come through very high quality public schools. Now they are in expensive Ivy league schools, total price tag roughly $600k. I'd back up the truck on the 529, best deal around given the tax free appreciation. I think embedded in some of the replies might be some implications of some of the negatives for kids in these types of places. No doubt, that is real, but ultimately up to you in terms of the people you want to be with, the life you choose to lead, and the values you impart to your kids. Good luck!
Sounds like you were in a pretty similar situation as me not too long ago. That is why we have been loading up the 529s so much, and as early as possible. As for inherent negatives in VHCOL areas, I think I would rather trade those for the negatives of our current setup. While it may be a grass-is-greener thing, we are familiar with the VHCOL area we are considering and have had a fondness for it for years. Can I ask how you went about choosing/finding your very high quality public schools?
I'm in Westchester County, NY, pretty much the only choices are HCOL and VHCOL. I'm also originally from here, so the short list of the best school districts is fairly common knowledge, but can be confirmed via numerous rankings. The whole rankings thing has become a bit of an absurd cottage industry, but I think Niche seems to do a decent job. The results have been great. But I think important to understand if you're really doing a deep dive on this, even the best public schools likely not as good as private, and for certain types of kids there might be a wider disparity. With that said, public schools also comes with a sense of community, which is great if you also happen to like your community.
stoptothink
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by stoptothink »

nigel_ht wrote: Wed Nov 03, 2021 7:50 am
stoptothink wrote: Wed Nov 03, 2021 7:40 am
nigel_ht wrote: Wed Nov 03, 2021 7:36 am
stoptothink wrote: Wed Nov 03, 2021 7:28 am
Wenonah wrote: Tue Nov 02, 2021 9:15 pm Being close to outdoor activities is huge if that is what you are after. On the other hand, why are you paying for Grad School for your kids? Not many parents do that--high earners or low. By 22 your kids should be taking responsibility. They can work for a few years and earn the money, work for a company that pays for part of the degree, get financial aid, etc. And truly, shouldn't one have some world and work experience before they get a graduate degree? Take it off of the table and lessen your load. Enjoy your outdoor time with the fam.
Constant debate on this board. In the many education threads there are parents even paying for medical school. Seems absolutely bananas to me, and I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.
One reason to have have money is so you can invest in your kids future…and rich people do it all the time including donating millions so Junior can attend Harvard or whatever.

Merely paying for med school is plebeian.

What is bananas is in this day and age of internet and global access that anyone thinks everyone else’s value systems should be like their own…
Who's trying to push their value system on someone else? I expressed a personal opinion, nothing more.
Yes, you expressed your personal opinion that my view is “bananas”.
I wasn't even responding to you. Whether OP wants to pay for grad school is only their business, regardless of how I think about it personally. I was essentially disagreeing with Wenonah by stating that the OP certainly isn't alone in their perspective on this board (again, even if I don't agree with it). I made absolutely zero judgement on those who have a different opinion than I do and I am mature enough to recognize that anybody who doesn't agree with me is neither automatically wrong or trying to force their value system on me. Take a look in the mirror before calling someone else out :sharebeer
nigel_ht
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by nigel_ht »

Electrified wrote: Wed Nov 03, 2021 9:06 am
NorCalHiker wrote: Tue Nov 02, 2021 8:41 pm You mention that you've already considered prop taxes, but what about state income taxes?
I have, and they will be higher in the VHCOL area, but I think the delta still pales in comparison (at least initially) to the mortgage amount. And even though the state income taxes are higher, I view that as sort of the price you need to pay if you want to be in that state.
nigel_ht wrote: Wed Nov 03, 2021 7:50 am
stoptothink wrote: Wed Nov 03, 2021 7:40 am
nigel_ht wrote: Wed Nov 03, 2021 7:36 am
stoptothink wrote: Wed Nov 03, 2021 7:28 am

Constant debate on this board. In the many education threads there are parents even paying for medical school. Seems absolutely bananas to me, and I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.
One reason to have have money is so you can invest in your kids future…and rich people do it all the time including donating millions so Junior can attend Harvard or whatever.

Merely paying for med school is plebeian.

What is bananas is in this day and age of internet and global access that anyone thinks everyone else’s value systems should be like their own…
Who's trying to push their value system on someone else? I expressed a personal opinion, nothing more.
Yes, you expressed your personal opinion that my view is “bananas”.
I think nigel_ht has it exactly right. We will be paying for graduate school for our kids. That is our plan and prerogative. Nor is doing so exclusive of our kids "taking responsibility." And I am not saying that is the right choice for everyone, but it is for us for various reasons.
Depending on the kind of graduate school it may be covered by employers (me) or stipends as TA/RA (my wife).

I might save graduate school money in taxable rather than 529s. On the other hand you can always change the 529 beneficiaries to grandkids.

The other factor is without school loans there can’t be school loan forgiveness…my kid isn’t sure about the military so I told him to just do 2 years on our dime (preferably with a federal loan) and see if the AF picks him up. Last year they only accepted about half of the ROTC cadets.

Had he continued the PA route and gone direct commissioning that provides loan forgiveness.

So you MAY have enough in 529s depends on how things go…
Topic Author
Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

swaption wrote: Wed Nov 03, 2021 9:13 am I'm in Westchester County, NY, pretty much the only choices are HCOL and VHCOL. I'm also originally from here, so the short list of the best school districts is fairly common knowledge, but can be confirmed via numerous rankings. The whole rankings thing has become a bit of an absurd cottage industry, but I think Niche seems to do a decent job. The results have been great. But I think important to understand if you're really doing a deep dive on this, even the best public schools likely not as good as private, and for certain types of kids there might be a wider disparity. With that said, public schools also comes with a sense of community, which is great if you also happen to like your community.
Good to know. I have looked at Niche and Great Schools and they seem to provide some value, but I agree that the whole ranking thing is a bit absurd. However, I do not have too many other resources since I am not on the ground in the VHCOL area and in that community (although my local family can certainly help in that regard).

And I hear you on public versus private. We have wrestled with that for some time, but I think we would be OK with pursuing the public route.
nchunter
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by nchunter »

I guess if the activity is only available in the VHCOL then go for it. I just posted about having a beach place, but we still ski a lot. I guess if you are talking moving from San Francisco to Aspen and skiing is what you guys do, then go for it.
I have found having my life revolve around kids came to screeching halt. We are very close, but at a certain point they drive, work, leave etc. So if they are teens, hold tight and buy plane tickets. If they are young, then make it happen and do it quickly.
Topic Author
Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

nigel_ht wrote: Wed Nov 03, 2021 9:20 am I might save graduate school money in taxable rather than 529s. On the other hand you can always change the 529 beneficiaries to grandkids.

. . .

So you MAY have enough in 529s depends on how things go…
Saving for graduate school in taxable makes sense. Thanks for the suggestion.
Luckywon
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Luckywon »

stoptothink wrote: Wed Nov 03, 2021 7:28 am .. I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.

I'm surprised to hear you say this because in another thread you stated that you work with many physicians, and as a physician myself my experience is totally different. While I was in medical school, it was the expectation of the financial aid office that parents would contribute to their child's medical school expenses within parameters. For quite a few I knew, parents paid the full ride.

And since then, I know many colleagues who have paid for all costs for their children to attend graduate school and I've actually never heard of one who didn't at least pay the majority of costs. Of course there must be some who don't contribute, but it's the exception, not the rule. Most have the ability to pay and are happy to do it. Therefore, I'm not surprised at all that the OP, who has an income similar to physicians, is preparing to pay for graduate school for his children, if they attend.
nigel_ht
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by nigel_ht »

Electrified wrote: Wed Nov 03, 2021 9:49 am
nigel_ht wrote: Wed Nov 03, 2021 9:20 am I might save graduate school money in taxable rather than 529s. On the other hand you can always change the 529 beneficiaries to grandkids.

. . .

So you MAY have enough in 529s depends on how things go…
Saving for graduate school in taxable makes sense. Thanks for the suggestion.
Depends on your goals right? If education is a thing important to promote then assuming you ever have grandkids the 529s can be shifted…and it’s one less thing for your kids to worry about.

My dad told me our last kid was covered (I had a left over 529) and that was nice. For simplicity it was transferred to me and I put it into her account as a parent.

But grandkids is really planning far far in advance…

Honestly I’d consider funding private vs grad school…our kids are in one of the best school districts in the country and it’s still a big difference between what they get vs the couple families we know doing private. Of course one of them is at Sidwell Friends…

$80K a year is a big hit on the budget though…and getting in isn’t easy either.
remomnyc
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by remomnyc »

Yes. I'm in a VHCOL, and I would not move to a HCOL, MCOL, or LCOL to be debt free, improve cash flow, and be farther away from family and the activities I want to do. I left a high paying job for better hours, less stress, and more time for family. Good public schools send lots of kids to elite colleges. I would put 100% of the sales proceeds into the new house and take out a $750k mortgage. I would fund the 529 account with a goal of enough to pay 4 years of private for each child. Any extra educational savings can be done in taxable. What is money for if not to improve your quality of life?
getthatmarshmallow
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by getthatmarshmallow »

On the 529 question: I'd recommend not putting the grad/med expenses in the 529; if you want to save for them, put them in taxable to preserve the flexibility. It's reasonable to be certain that your kids will go to college, but how to pay for graduate school will depends a lot on their interests and precise career path.

I have a PhD and it didn't cost me a dime, and most of my friends are in a similar situation. Some had full rides like me, others pursued master's degrees that were paid for by their employers. I also know some that paid for master's degrees independently, and it's only in that last case where family money might have been helpful. So one has to consider first the likelihood that the kid goes onto graduate school, and second that they'll need to pay for it out of pocket when deciding where to place the money. If you want to save for it, chuck it in taxable.
Topic Author
Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

remomnyc wrote: Wed Nov 03, 2021 10:58 am Yes. I'm in a VHCOL, and I would not move to a HCOL, MCOL, or LCOL to be debt free, improve cash flow, and be farther away from family and the activities I want to do. I left a high paying job for better hours, less stress, and more time for family. Good public schools send lots of kids to elite colleges. I would put 100% of the sales proceeds into the new house and take out a $750k mortgage. I would fund the 529 account with a goal of enough to pay 4 years of private for each child. Any extra educational savings can be done in taxable. What is money for if not to improve your quality of life?
This is sort of the opposite of the move we are looking to do, but I see how you have also made financial tradeoffs to improve your quality of life. The general sense I am getting from most is that such a trade is indeed worthwhile.
getthatmarshmallow wrote: Wed Nov 03, 2021 12:03 pm On the 529 question: I'd recommend not putting the grad/med expenses in the 529; if you want to save for them, put them in taxable to preserve the flexibility. It's reasonable to be certain that your kids will go to college, but how to pay for graduate school will depends a lot on their interests and precise career path.
As with remomnyc's and others' comments, you all have persuaded to me to save for graduate education in taxable instead of the 529s. I knew I would learn something from reaching out to this forum, so thanks. For that reason I am also starting to think it is indeed a good idea to superfund the 529s with some proceeds from the sale of our current home. We could then focus only on taxable thereafter.
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Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

Would anyone’s answers change if the house in the VHCOL area was $2.5M instead of $2M?
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Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

Electrified wrote: Thu Nov 04, 2021 2:13 pm Would anyone’s answers change if the house in the VHCOL area was $2.5M instead of $2M?
Any takers?
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Watty
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Watty »

swaption wrote: Wed Nov 03, 2021 9:13 am .... But I think important to understand if you're really doing a deep dive on this, even the best public schools likely not as good as private ......
I really doubt that.

It is much much more complicated than that and there are many mediocre(or worse) private schools. At many lower ranked public schools there can also be subgroups of excellent students, like groups of AP students.
ncbill
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by ncbill »

No one else skeptical they'd actually leave the kids in public school after years in private?

I bet that $85k/year expense wouldn't really go away.
calwatch
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by calwatch »

Electrified wrote: Sun Nov 07, 2021 7:49 pm
Electrified wrote: Thu Nov 04, 2021 2:13 pm Would anyone’s answers change if the house in the VHCOL area was $2.5M instead of $2M?
Any takers?
No. Although for $2.5 million the public schools should definitely be in the top quartile in the state or region, including both overall and income/socioeconomically adjusted. At that rate you are paying top dollar to select demographics of your children's peers and so the quality should be commensurate to their standing.
denovo
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by denovo »

Electrified wrote: Mon Nov 01, 2021 2:13 pm I am considering moving my family from an HCOL area to a VHCOL area, taking out a mortgage in the process, and am seeking the collective wisdom and advice of this forum about whether such a move is a good idea.

Background Info and Current Expenses:
  • Partner and I are in our upper thirties with stable jobs.
  • We have three kids, all under the age of five, and do not plan to have any more. All kids are currently in private school/day care, at a total cost of about $85k/year.
  • We now live in a smaller place in a HCOL area but want to move to a larger place in a VHCOL area. We believe the move will substantially increase our family’s quality of life.
  • HHI is currently about $375k/year gross, but will likely soon drop to about $325k–$350k/year gross in order to obtain better work-life balance.
  • We max out three tax-advantaged retirement accounts every year and also receive from one employer an additional annual retirement account contribution of about $20k–$25k, so are currently putting approximately $80k/year into those accounts. (I did not include that $20k–$25k employer contribution in our HHI.) We will continue to max out the contributions even if our HHI drops.
  • We contribute $1k per kid per month into 529s, for a total contribution of $3k/month.
Assets:
  • We do not have a mortgage and could probably sell our current place for about $1.36M.
  • Collectively, tax-advantaged retirement accounts currently total about $1.1M.
  • 529 balances total about $165k. We plan to use the 529 funds for college and graduate education starting in about thirteen years.
  • Other cash: about $50k.
Liabilities:
  • $70k remaining on an auto loan at 1.99% to be paid over the next 4.5 years (~$1,350/month).
  • All credit card balances paid off fully every month.
  • No other debt.
Impacts of Move on Financial Picture:
  • A slightly larger house in the VHCOL area we are considering will likely be about $2M. Although generally averse to debt, we feel that taking out a mortgage could be worth it in order to obtain the better quality of life offered by the VHCOL area.
  • Property taxes and home maintenance in the VHCOL area would be more or less the same as what we currently pay.
  • We plan to put our kids in public school upon moving to the VHCOL area, which over time would free up the $85k/year that we currently spend on private school/day care. These funds would be reallocated to the monthly mortgage payment. The oldest child would start public school immediately upon moving the VHCOL; the remaining two would join in the next two to four years.
Questions:

1. Assuming a $2M house in the VHCOL area, do you think we can afford this move?

2. If yes, how much would you finance?

3. Along the same lines as question 2, would you divert any of the proceeds from selling the current place to paying off the auto loan and/or augmenting current cash holdings?

4. Would you make this move if you were in my shoes, and why or why not?

Thanks in advance for your advice.
As long as you are committed to public school in the VHCOL, I think this is a no-brainer since that's a huge saving to get that 85k off your budget. You can certainly afford it. Also, are you someone that worked remotely prior to COVID-19. If not, that's the only reason I would be hesitant as your employer in the other location may demand you start coming to work next year.

Also, consider taxes on your current home. Only up to $500,000 in profits is exempt from taxation.
"Don't trust everything you read on the Internet"- Abraham Lincoln
Topic Author
Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

Delete.
Last edited by Electrified on Mon Nov 08, 2021 2:48 pm, edited 1 time in total.
Topic Author
Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

ncbill wrote: Mon Nov 08, 2021 12:53 pm No one else skeptical they'd actually leave the kids in public school after years in private?

I bet that $85k/year expense wouldn't really go away.
We have only been in private for about three years. Less than that if you exclude the virtual learning during COVID. So I do not believe it will be an issue to stay in public (at least until college).
Last edited by Electrified on Mon Nov 08, 2021 2:48 pm, edited 1 time in total.
Topic Author
Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

Duplicate post.
Last edited by Electrified on Mon Nov 08, 2021 2:48 pm, edited 1 time in total.
Topic Author
Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

calwatch wrote: Mon Nov 08, 2021 2:14 pm
Electrified wrote: Sun Nov 07, 2021 7:49 pm
Electrified wrote: Thu Nov 04, 2021 2:13 pm Would anyone’s answers change if the house in the VHCOL area was $2.5M instead of $2M?
Any takers?
No. Although for $2.5 million the public schools should definitely be in the top quartile in the state or region, including both overall and income/socioeconomically adjusted. At that rate you are paying top dollar to select demographics of your children's peers and so the quality should be commensurate to their standing.
All good points. I agree, and those are the types of schools/exact locations we are considering.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Katietsu »

If the only choices are spending $85k a year on private school or taking out an extra $700k mortgage and relying on quality private schools, I feel that you should make the choice on lifestyle not financial reasons.

My concern is whether you have a good handle on your budget and net worth trajectory going forward. Based on your HHI, it seems that your current financial position has involved some luck that the next decade or two might not be extending. I am concerned that strong returns for equities, the real estate run up, crypto millionaires, historically low income tax rates, historically low interest rates and all the other factors that have benefited a slice of the population is creating an unrealistic view of income/expenses/net worth relationships over the long run. Just something to keep in mind.
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Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

Katietsu wrote: Mon Nov 08, 2021 3:23 pm My concern is whether you have a good handle on your budget and net worth trajectory going forward. Based on your HHI, it seems that your current financial position has involved some luck that the next decade or two might not be extending. I am concerned that strong returns for equities, the real estate run up, crypto millionaires, historically low income tax rates, historically low interest rates and all the other factors that have benefited a slice of the population is creating an unrealistic view of income/expenses/net worth relationships over the long run. Just something to keep in mind.
What if I have not relied on any of those?
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by swaption »

Watty wrote: Sun Nov 07, 2021 8:31 pm
swaption wrote: Wed Nov 03, 2021 9:13 am .... But I think important to understand if you're really doing a deep dive on this, even the best public schools likely not as good as private ......
I really doubt that.

It is much much more complicated than that and there are many mediocre(or worse) private schools. At many lower ranked public schools there can also be subgroups of excellent students, like groups of AP students.
Had not seen this earlier. Just my own anecdotal observations, having brought up kids in a school system broadly considered to be among the best in the country, it is not uncommon to see kids opt out along the way for private school. There is a level of control and accountability catering to the broad spectrum of students that you can get at a high quality private school that I think is unreasonable to expect at a public school.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by drzzzzz »

You can afford it, so it's not about the money, but where you and your family will be happy. Move or stay, but go to where ever that happy area is. I have read many articles about happiness in life and it's not about having the most money, but rather enjoying experiences and activities. Move and don't worry about it if that is what you and your family want.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Starfish »

bradinsky wrote: Mon Nov 01, 2021 3:37 pm Just curious as to how life is better in a VHCOL area versus just a HCOL area? Not trying to be wise but just fascinated.
Isn't that the reason why an area if higher cost?
For kids, better schools, better peers, plenty more educational opportunities, more density/walkability to meet friends etc., more activities and nature etc
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by AnnetteLouisan »

VHCOLA means high COST - taxes, rents, home prices, regulations plus everything else. Crowds, urban landscapes, not much nature.

Maybe you are looking for a Super ZIP - affluent zip codes with good schools, nature, space, clean air. There is some overlap but not all VHCOLAs are Super Zips.

I would take on debt to move my family to a super zip but as a lifelong urban VHCOLA resident one may need a loan to move here but it’s hardly advisable.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by KlangFool »

swaption wrote: Wed Dec 01, 2021 12:43 pm
Watty wrote: Sun Nov 07, 2021 8:31 pm
swaption wrote: Wed Nov 03, 2021 9:13 am .... But I think important to understand if you're really doing a deep dive on this, even the best public schools likely not as good as private ......
I really doubt that.

It is much much more complicated than that and there are many mediocre(or worse) private schools. At many lower ranked public schools there can also be subgroups of excellent students, like groups of AP students.
Had not seen this earlier. Just my own anecdotal observations, having brought up kids in a school system broadly considered to be among the best in the country, it is not uncommon to see kids opt out along the way for private school. There is a level of control and accountability catering to the broad spectrum of students that you can get at a high quality private school that I think is unreasonable to expect at a public school.
swaption,

In summary, you do not live in Fairfax county and/or surrounding county that the county pay upward to 30K per year (no charge to the parent) to send kid to this high school.

https://en.wikipedia.org/wiki/Thomas_Je ... Technology

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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by BernardShakey »

Trader Joe wrote: Mon Nov 01, 2021 6:48 pm "Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?"

No, never.
Why not ? What better to spend money and / or go into mortgage debt for than family's QOL ? I'd buy the $2M house in a heartbeat. And my next car, and every one thereafter, would be a modest, pre-owned one.
An important key to investing is having a well-calibrated sense of your future regret.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by BernardShakey »

bampf wrote: Mon Nov 01, 2021 8:17 pm
marcopolo wrote: Mon Nov 01, 2021 7:16 pm
bampf wrote: Mon Nov 01, 2021 2:24 pm I think you can take on $600K in debt with your savings and income.
I question the need for any more money at all in the 529s. I have three kids and I can't see how you would need anymore unless they are going full boat IVY and even then, its problematic.

Can you? Absolutely. I might even do something like that if it were me. The one thing I might caution you about is buying a house for $2MM. Thats a lot of bones to try and resell for if things go south. That being said, pretty hard to go south giving your current assets and income.

1. Yes
2. No idea
3. No
4. Yes probably.
You can't see how three kids going to college could chew through $165k?!?

Our kids went to an in-state school, we had ~35k of expenses per year. Using that number, x4 years; x3 kids, comes out to $420k. One can spend significantly more, even without going to Ivy league.

Working the other way, $165k/4/3 = ~$14k/yr. Yes, one can find schools at that price point, but it does limit the options quite a bit.
Sigh. OK. Fine.

In state tuition for a 4 year stem degree at the University of Colorado Boulder is about $15K a year. Ask me how I know.
OP stated he has approximately $55K per kid 14,15, and 16 years before they start their first year.
You don't deplete the 529 the first year, at best you deplete 1/4 (1/6th assuming grad school) for tuition.
Growth of the S&P 500 in the last 10 years would have seen that $55K turn into $250K.

So, can I see how OP can deplete the $55K per child 15 years from now? Sure. It would require room, board, books, computers, 6 years of higher education and mediocre returns over the next 15 years.

Now, OP contributes $1K a month per child. For the next n years where n is a function of age of child and distribution during university years.

To make the equation work the following must be true or partially true:

You must assume all three kids don't get scholarships, ROTC, etc..

You must assume all three kids go to expensive top tier schools.

You must assume all three kids go to university.

You must assume that all three kids go to graduate school.

Finally:

OP has a boat load of money already at 35. OP could literally cash flow the kids education at top tier in state university. Ask me how I know.

Given those circumstances, I don't know that I would contribute any more to a 529. I certainly question the need. Could I have been more precise? Sure. But then I would have missed out on this fun exchange of information that we have seen dozens of times before. Think carefully before you overfund your 529s. It wont kill you but you may not need it.

--Bampf
I disagree. 529's are a great option for someone like the OP making solid money and already maxing out tax-deferred accounts. His emphasis on higher education suggests he will spend it. 3 kids, undergraduate school, maybe one to med school, law school, etc. He could spend $750k before he's done. 529's are tailor made for people like the OP.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by bampf »

BernardShakey wrote: Thu Dec 02, 2021 12:39 am
bampf wrote: Mon Nov 01, 2021 8:17 pm
marcopolo wrote: Mon Nov 01, 2021 7:16 pm
bampf wrote: Mon Nov 01, 2021 2:24 pm I think you can take on $600K in debt with your savings and income.
I question the need for any more money at all in the 529s. I have three kids and I can't see how you would need anymore unless they are going full boat IVY and even then, its problematic.

Can you? Absolutely. I might even do something like that if it were me. The one thing I might caution you about is buying a house for $2MM. Thats a lot of bones to try and resell for if things go south. That being said, pretty hard to go south giving your current assets and income.

1. Yes
2. No idea
3. No
4. Yes probably.
You can't see how three kids going to college could chew through $165k?!?

Our kids went to an in-state school, we had ~35k of expenses per year. Using that number, x4 years; x3 kids, comes out to $420k. One can spend significantly more, even without going to Ivy league.

Working the other way, $165k/4/3 = ~$14k/yr. Yes, one can find schools at that price point, but it does limit the options quite a bit.
Sigh. OK. Fine.

In state tuition for a 4 year stem degree at the University of Colorado Boulder is about $15K a year. Ask me how I know.
OP stated he has approximately $55K per kid 14,15, and 16 years before they start their first year.
You don't deplete the 529 the first year, at best you deplete 1/4 (1/6th assuming grad school) for tuition.
Growth of the S&P 500 in the last 10 years would have seen that $55K turn into $250K.

So, can I see how OP can deplete the $55K per child 15 years from now? Sure. It would require room, board, books, computers, 6 years of higher education and mediocre returns over the next 15 years.

Now, OP contributes $1K a month per child. For the next n years where n is a function of age of child and distribution during university years.

To make the equation work the following must be true or partially true:

You must assume all three kids don't get scholarships, ROTC, etc..

You must assume all three kids go to expensive top tier schools.

You must assume all three kids go to university.

You must assume that all three kids go to graduate school.

Finally:

OP has a boat load of money already at 35. OP could literally cash flow the kids education at top tier in state university. Ask me how I know.

Given those circumstances, I don't know that I would contribute any more to a 529. I certainly question the need. Could I have been more precise? Sure. But then I would have missed out on this fun exchange of information that we have seen dozens of times before. Think carefully before you overfund your 529s. It wont kill you but you may not need it.

--Bampf
I disagree. 529's are a great option for someone like the OP making solid money and already maxing out tax-deferred accounts. His emphasis on higher education suggests he will spend it. 3 kids, undergraduate school, maybe one to med school, law school, etc. He could spend $750k before he's done. 529's are tailor made for people like the OP.
I can be wrong. Have been before. Will be again. Personal finance is rather personal as I have been reminded on occasion. No wrong choices here.
Nescio
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BL
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by BL »

I don't see any mention of putting 6k/yr/person into a Roth IRA. Assuming one or both of you have no non-Roth IRAs, you might be able to do the Backdoor Roth conversions annually (see Backdoor Roth IRA in Wiki). One can withdraw contributions without paying tax or penalty, possibly after waiting 5 years, and withdraw the rest tax and penalty-free after age 59.5.
With a Roth IRA, contributions are not tax-deductible, but earnings can grow tax-free, and qualified withdrawals are tax- and penalty-free. Roth IRA withdrawal and penalty rules vary depending on your age and how long you've had the account and other factors. Before making a Roth IRA withdrawal, keep in mind the following guidelines, to avoid a potential 10% early withdrawal penalty:

Withdrawals must be taken after age 59½.
Withdrawals must be taken after a five-year holding period.
There are exceptions to the early withdrawal penalty, such as a first-time home purchase, college expenses, and birth or adoption expenses.
Also consider adding 10k/person/yr to buy I-Bonds at treasurydirect.gov. Rates follow CPI-U (inflation) and are currently 7.2% rate for 6 months and the next 6-month rate is unknown at this time.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by BernardShakey »

stoptothink wrote: Wed Nov 03, 2021 7:28 am
Wenonah wrote: Tue Nov 02, 2021 9:15 pm Being close to outdoor activities is huge if that is what you are after. On the other hand, why are you paying for Grad School for your kids? Not many parents do that--high earners or low. By 22 your kids should be taking responsibility. They can work for a few years and earn the money, work for a company that pays for part of the degree, get financial aid, etc. And truly, shouldn't one have some world and work experience before they get a graduate degree? Take it off of the table and lessen your load. Enjoy your outdoor time with the fam.
Constant debate on this board. In the many education threads there are parents even paying for medical school. Seems absolutely bananas to me, and I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.
Well, I'm paying for my kid's medical school. If I have the money, beyond retirement savings, why not ? She busted her hump for years to get in and I know she will continue to work hard. Should I just pad my retirement nest egg a little more and buy a couple of unnecessary luxury cars --- and watch her come out of residency at age 30 with $300k+ of debt ? That would be absolutely bananas in my book :wink:
An important key to investing is having a well-calibrated sense of your future regret.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Wannaretireearly »

Correct me if I’m wrong but seems OP is moving to CA.
Please spend time understanding how CA schools are funded (very little of your property tax goes to the school directly) & how your kids success is measured especially in HS (class GPA rank counts for a LOT, especially with standardized testing becoming less of a factor with the UC’s).

I say this primarily so you avoid landing in a top school district, that could be an academic hell hole for the child to succeed in. This then could lead/force private school options (double cost whammy!).

I have a kid in private elementary and a kid recently transitioned to public at 8th grade. I can see both sides of the house, but overall am pretty happy with the JH.

Also, most parents/kids coming from the east coast get a bit of a culture shock with CA public schools, given how good east coast public schools are in general (well funded, small class sizes etc)
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by nigel_ht »

KlangFool wrote: Wed Dec 01, 2021 7:47 pm
swaption wrote: Wed Dec 01, 2021 12:43 pm
Watty wrote: Sun Nov 07, 2021 8:31 pm
swaption wrote: Wed Nov 03, 2021 9:13 am .... But I think important to understand if you're really doing a deep dive on this, even the best public schools likely not as good as private ......
I really doubt that.

It is much much more complicated than that and there are many mediocre(or worse) private schools. At many lower ranked public schools there can also be subgroups of excellent students, like groups of AP students.
Had not seen this earlier. Just my own anecdotal observations, having brought up kids in a school system broadly considered to be among the best in the country, it is not uncommon to see kids opt out along the way for private school. There is a level of control and accountability catering to the broad spectrum of students that you can get at a high quality private school that I think is unreasonable to expect at a public school.
swaption,

In summary, you do not live in Fairfax county and/or surrounding county that the county pay upward to 30K per year (no charge to the parent) to send kid to this high school.

https://en.wikipedia.org/wiki/Thomas_Je ... Technology

KlangFool
It’s relative. TJ is great…for STEM. One of my nephews went there.

Compared to Georgetown Day or Sidwell for overall education? I would say those provide a different level of experience and they (despite Sidwell hosting the kids of presidents) aren’t the highest ranked privates. And you’d hope so given the price.

While TJ is great if you don’t get in then you can end up in relatively meh schools. TJ may rank #1 in rankings for public high schools but had he not gotten in he would have ended up at Falls Church which is ranked 4,902.

Which in the grand scheme of things isn’t terrible since Fairfax is a strong school system. But you can’t just pick charter schools and say public education is awesome.

We don’t pay teachers enough or hold them in high enough esteem to attract the best and brightest to the profession. That includes asians in the US which pay a lot of lip service to the importance of teachers but very few would want their kids to become one.

The expectation is that the top privates end up with better candidates than even the best public school system because despite the sometimes lower pay the class sizes are much smaller and the discipline issues are different (affluenza vs other issues).
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Somethingwitty92912 »

I’d be carful equating cost of living with quality of living. My spouse and I moved to what we considered a better quality area based on this, turns out we couldn’t have been more wrong. Nightmare nosey neighbors, expensive and intrusive HOAs, also a longer commute.

As long as you do your due diligence you should be fine.

Oh I didn’t mention the whole keepin’ up with the joneses mentality.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by deltaneutral83 »

Probably more of a lifestyle issue with NW and HHI. But as to the math, $85k in K-12 tuition, $70k car, and $600-800k mortgage in a VHCOL high tax state would certainly increase the probability of money issues on $325k HHI. Freeing up 25%+ of income would ease my concerns, that's for sure (Private tuition) but again, as others mentioned, be prepared to spend on the kids in other ways and not saving the entire $85k if going that route.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by stoptothink »

Starfish wrote: Wed Dec 01, 2021 4:46 pm
bradinsky wrote: Mon Nov 01, 2021 3:37 pm Just curious as to how life is better in a VHCOL area versus just a HCOL area? Not trying to be wise but just fascinated.
Isn't that the reason why an area if higher cost?
For kids, better schools, better peers, plenty more educational opportunities, more density/walkability to meet friends etc., more activities and nature etc
Quality of life appears to have little association with cost of living https://worldpopulationreview.com/state ... e-by-state. COL is strongly associated with concentration of high-paying jobs though.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by JackoC »

BernardShakey wrote: Thu Dec 02, 2021 12:58 am
stoptothink wrote: Wed Nov 03, 2021 7:28 am
Wenonah wrote: Tue Nov 02, 2021 9:15 pm Being close to outdoor activities is huge if that is what you are after. On the other hand, why are you paying for Grad School for your kids? Not many parents do that--high earners or low. By 22 your kids should be taking responsibility. They can work for a few years and earn the money, work for a company that pays for part of the degree, get financial aid, etc. And truly, shouldn't one have some world and work experience before they get a graduate degree? Take it off of the table and lessen your load. Enjoy your outdoor time with the fam.
Constant debate on this board. In the many education threads there are parents even paying for medical school. Seems absolutely bananas to me, and I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.
Well, I'm paying for my kid's medical school. If I have the money, beyond retirement savings, why not ? She busted her hump for years to get in and I know she will continue to work hard. Should I just pad my retirement nest egg a little more and buy a couple of unnecessary luxury cars --- and watch her come out of residency at age 30 with $300k+ of debt ? That would be absolutely bananas in my book :wink:
It's true to say this isn't common. But the main reason IMO it isn't common is so few people can afford to do it. Note I'm not saying *nobody* can easily afford this but still doesn't do it based on 'values' but that's the exception IMO. Most times I believe 'values' based opposition to doing this is related to it being a heavy financial lift *to* do it or it's out of reach entirely and people are speculating what they *would* do if they had more money, a notoriously unreliable form of speculation IME. And some people are just not that close to their adult kids. I wasn't with my parents, much closer with my grown kids.

My parents paid for my brother's med school, did not pay for my MBA, which besides being a smaller amount I didn't want them to, back to varying relationships. None of our kids, now all years out of undergrad we entirely paid for, have pursued graduate degrees so far. If they do, we'd offer to pay, and they'd probably accept. Our situation and logic similar to yours: no reason to keep the money for them to get it later anyway, perhaps after the government takes another bite out of it. Especially when it's an investment like education, as opposed to buying an 'unnecessary' luxury car for kids rather than oneself.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by BernardShakey »

JackoC wrote: Thu Dec 02, 2021 10:22 am
BernardShakey wrote: Thu Dec 02, 2021 12:58 am
stoptothink wrote: Wed Nov 03, 2021 7:28 am
Wenonah wrote: Tue Nov 02, 2021 9:15 pm Being close to outdoor activities is huge if that is what you are after. On the other hand, why are you paying for Grad School for your kids? Not many parents do that--high earners or low. By 22 your kids should be taking responsibility. They can work for a few years and earn the money, work for a company that pays for part of the degree, get financial aid, etc. And truly, shouldn't one have some world and work experience before they get a graduate degree? Take it off of the table and lessen your load. Enjoy your outdoor time with the fam.
Constant debate on this board. In the many education threads there are parents even paying for medical school. Seems absolutely bananas to me, and I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.
Well, I'm paying for my kid's medical school. If I have the money, beyond retirement savings, why not ? She busted her hump for years to get in and I know she will continue to work hard. Should I just pad my retirement nest egg a little more and buy a couple of unnecessary luxury cars --- and watch her come out of residency at age 30 with $300k+ of debt ? That would be absolutely bananas in my book :wink:
It's true to say this isn't common. But the main reason IMO it isn't common is so few people can afford to do it. Note I'm not saying *nobody* can easily afford this but still doesn't do it based on 'values' but that's the exception IMO. Most times I believe 'values' based opposition to doing this is related to it being a heavy financial lift *to* do it or it's out of reach entirely and people are speculating what they *would* do if they had more money, a notoriously unreliable form of speculation IME. And some people are just not that close to their adult kids. I wasn't with my parents, much closer with my grown kids.

My parents paid for my brother's med school, did not pay for my MBA, which besides being a smaller amount I didn't want them to, back to varying relationships. None of our kids, now all years out of undergrad we entirely paid for, have pursued graduate degrees so far. If they do, we'd offer to pay, and they'd probably accept. Our situation and logic similar to yours: no reason to keep the money for them to get it later anyway, perhaps after the government takes another bite out of it. Especially when it's an investment like education, as opposed to buying an 'unnecessary' luxury car for kids rather than oneself.
Well said. Agree.
An important key to investing is having a well-calibrated sense of your future regret.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by swaption »

KlangFool wrote: Wed Dec 01, 2021 7:47 pm
swaption wrote: Wed Dec 01, 2021 12:43 pm
Watty wrote: Sun Nov 07, 2021 8:31 pm
swaption wrote: Wed Nov 03, 2021 9:13 am .... But I think important to understand if you're really doing a deep dive on this, even the best public schools likely not as good as private ......
I really doubt that.

It is much much more complicated than that and there are many mediocre(or worse) private schools. At many lower ranked public schools there can also be subgroups of excellent students, like groups of AP students.
Had not seen this earlier. Just my own anecdotal observations, having brought up kids in a school system broadly considered to be among the best in the country, it is not uncommon to see kids opt out along the way for private school. There is a level of control and accountability catering to the broad spectrum of students that you can get at a high quality private school that I think is unreasonable to expect at a public school.
swaption,

In summary, you do not live in Fairfax county and/or surrounding county that the county pay upward to 30K per year (no charge to the parent) to send kid to this high school.

https://en.wikipedia.org/wiki/Thomas_Je ... Technology

KlangFool
Indeed not, just your run of the mill VHCOL enclave with very good schools, which I believe is the more directly relevant consideration for the OP. The magnet school you reference wouldn't seem to be the appropriate comparison given the hurdle for admissions is associated with student capabilies, and almost implicitly may not be well equipped to deal with a broad spectrum of students. Don't get me wrong, bug fan of public schools, worked out great for my kids and me, but I think those going through this process based on an assumption of equivalence may be engaging in some amount of wishful thinking.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by bradinsky »

Starfish wrote: Wed Dec 01, 2021 4:46 pm
bradinsky wrote: Mon Nov 01, 2021 3:37 pm Just curious as to how life is better in a VHCOL area versus just a HCOL area? Not trying to be wise but just fascinated.
Isn't that the reason why an area if higher cost?
For kids, better schools, better peers, plenty more educational opportunities, more density/walkability to meet friends etc., more activities and nature etc
“Better peers” is a weird statement. You can have great peers & friends at all socio-economic levels. Certainly snobbish!
Starfish
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Starfish »

bradinsky wrote: Thu Dec 02, 2021 6:40 pm
Starfish wrote: Wed Dec 01, 2021 4:46 pm
bradinsky wrote: Mon Nov 01, 2021 3:37 pm Just curious as to how life is better in a VHCOL area versus just a HCOL area? Not trying to be wise but just fascinated.
Isn't that the reason why an area if higher cost?
For kids, better schools, better peers, plenty more educational opportunities, more density/walkability to meet friends etc., more activities and nature etc
“Better peers” is a weird statement. You can have great peers & friends at all socio-economic levels. Certainly snobbish!
I want a group were I can learn from people around me. I don't want my kid to be the best in the class, I want plenty or role models, I want intellectually interesting people, and I don't want him to be exposed too early to certain behaviors. Where do I have a better chance to find these people, in Opioid Valley or Palo alto?
How is this snobbish, isn't this what everybody wants for their kids, good education and a good entourage?
bradinsky
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Location: Ohio

Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by bradinsky »

Starfish wrote: Thu Dec 02, 2021 6:48 pm
bradinsky wrote: Thu Dec 02, 2021 6:40 pm
Starfish wrote: Wed Dec 01, 2021 4:46 pm
bradinsky wrote: Mon Nov 01, 2021 3:37 pm Just curious as to how life is better in a VHCOL area versus just a HCOL area? Not trying to be wise but just fascinated.
Isn't that the reason why an area if higher cost?
For kids, better schools, better peers, plenty more educational opportunities, more density/walkability to meet friends etc., more activities and nature etc
“Better peers” is a weird statement. You can have great peers & friends at all socio-economic levels. Certainly snobbish!
I want a group were I can learn from people around me. I don't want my kid to be the best in the class, I want plenty or role models, I want intellectually interesting people, and I don't want him to be exposed too early to certain behaviors. Where do I have a better chance to find these people, in Opioid Valley or Palo alto?
How is this snobbish, isn't this what everybody wants for their kids, good education and a good entourage?
I don’t think living in a HCOL area is the same as living in Opioid Valley. Going from a HCOL area to VHCOL isn’t typically going to change the peer group much. Better schools I agree with. It does give the parents a better address in a higher class neighborhood. There are probably just as many messed up children in both areas. Parental involvement with their children is the key, not how much your house costs.
Topic Author
Electrified
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Joined: Thu Oct 28, 2021 10:37 am

Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

BernardShakey wrote: Thu Dec 02, 2021 12:39 am
bampf wrote: Mon Nov 01, 2021 8:17 pm
marcopolo wrote: Mon Nov 01, 2021 7:16 pm
bampf wrote: Mon Nov 01, 2021 2:24 pm I think you can take on $600K in debt with your savings and income.
I question the need for any more money at all in the 529s. I have three kids and I can't see how you would need anymore unless they are going full boat IVY and even then, its problematic.

Can you? Absolutely. I might even do something like that if it were me. The one thing I might caution you about is buying a house for $2MM. Thats a lot of bones to try and resell for if things go south. That being said, pretty hard to go south giving your current assets and income.

1. Yes
2. No idea
3. No
4. Yes probably.
You can't see how three kids going to college could chew through $165k?!?

Our kids went to an in-state school, we had ~35k of expenses per year. Using that number, x4 years; x3 kids, comes out to $420k. One can spend significantly more, even without going to Ivy league.

Working the other way, $165k/4/3 = ~$14k/yr. Yes, one can find schools at that price point, but it does limit the options quite a bit.
Sigh. OK. Fine.

In state tuition for a 4 year stem degree at the University of Colorado Boulder is about $15K a year. Ask me how I know.
OP stated he has approximately $55K per kid 14,15, and 16 years before they start their first year.
You don't deplete the 529 the first year, at best you deplete 1/4 (1/6th assuming grad school) for tuition.
Growth of the S&P 500 in the last 10 years would have seen that $55K turn into $250K.

So, can I see how OP can deplete the $55K per child 15 years from now? Sure. It would require room, board, books, computers, 6 years of higher education and mediocre returns over the next 15 years.

Now, OP contributes $1K a month per child. For the next n years where n is a function of age of child and distribution during university years.

To make the equation work the following must be true or partially true:

You must assume all three kids don't get scholarships, ROTC, etc..

You must assume all three kids go to expensive top tier schools.

You must assume all three kids go to university.

You must assume that all three kids go to graduate school.

Finally:

OP has a boat load of money already at 35. OP could literally cash flow the kids education at top tier in state university. Ask me how I know.

Given those circumstances, I don't know that I would contribute any more to a 529. I certainly question the need. Could I have been more precise? Sure. But then I would have missed out on this fun exchange of information that we have seen dozens of times before. Think carefully before you overfund your 529s. It wont kill you but you may not need it.

--Bampf
I disagree. 529's are a great option for someone like the OP making solid money and already maxing out tax-deferred accounts. His emphasis on higher education suggests he will spend it. 3 kids, undergraduate school, maybe one to med school, law school, etc. He could spend $750k before he's done. 529's are tailor made for people like the OP.
I think you are exactly right.
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