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Do You Still Want to Live in a Mansion?

by J. Money on Tuesday, September 14, 2010

[Back in February I wrote about how our house cost us $24,000 in mortgage interest & taxes alone last year.  It was pretty eye-opening! But even more so were the comments of this anonymous guy telling me what it's like to live in a mansion. I wanted to share it with you because a) it shows just how expensive home ownership can be, esp as you upgrade higher and higher! and b) it's just kinda fascinating. At least if you're anything like me :)  You'll have to excuse the organization of it though since I had to mash-up all the comments to make it as coherent as possible. Enjoy!]

life list
Most people have their own ideas on the housing market/pockets, and I tend to think that my neighborhood isn’t totally instep with most places. (But doesn’t everyone think they are the exception.) It is one of 3 true old money/old neighborhoods in our beloved state with the best schools and some famous denizens including your congressman, the owner of a pro team in the area, and other illustrious, “old money” folk. I’m definitely an abnormality who managed to make money in the stock market while in school.

I pay roughly $2,200 in mortgage (30 year at 4.75%) after having 500k+ in equity ($1.2 million equity at bubble), then $1,024 per month in taxes and $1,000+ in maintenance. I also pay in an extra $2,000 plus to keep PITI at 5k and it can hurt. (That’s a total payment of $6,200 a month)

The problem with having an expensive house in a mature/wealthy community is that things are expensive.

  • Problem with plumbing, gotta bust through very expensive marble that you order from Italy.
  • Problem with AC, got to put something high end to match the house for later buyers. (we’re talking $18k+)
  • Need a window, well too bad it’s a custom sized high end Anderson at $1900.
  • Need a roof, well a big/steep roof runs $25k.
  • Got marble, natural stone, granite, ceramic, different grouts–well you need different cleansers and sealants that run as high as $90 per gallon.
  • Got neighbors with exquisite yards–yours needs to be too unless you want to be the douchebag in the neighborhood. And weed treatment/overseeding/airration isn’t cheap if you buy your 30 bags of Scotts a year at Costco.
  • Have exotic plants, well good luck pruning exotics that cost $4000 each, especially since there is no book or internet information. You might need to call up the one person that specializes in pruning the at $120 an hour.
  • Need anything new: can’t put the McMansion builder’s grade crap next to customized stuff.
  • Oh and we have a Homeowner’s association because I live in a fancy gated community.

Even though my DI (Debt to Income) ratio is roughly 20%, it’s still a stress! Given the overall costs of transactions, though, I don’t think it is worth it to sell as I can afford it just fine, have some money in the bank and just enjoy living here. The DCF (Discounted Cash flow Models) are becoming more difficult to justify as I contemplate spending $18k to replace an AC system, but overall they still work IMO and I actually like the house and my lawn that I tend. Or “my little box.”

I’m not wealthy and feel outclassed by the women driving Cayanne turbos in my neighborhood. Income is roughly $220k per year, but increases come steadily. I might actually be taking a substantial pay cut just to ease the stress, and the added income seems to go to taxes and makes it impossible for me to contribute to an IRA anyways.

On the other hand, I am not a snob. I bought a 1,000k Volvo last summer. But it failed inspection so I bought something for 8,000k in cash. I dress cheaply, and have inexpensive furniture. On the other hand, I’ve bought several $1,000 bottles of wine that I remember and appreciate, but think: “if only I bought XYZ stock when I felt they were a strong buy.” I’ve also pushed all-in several times with 3/4 suited. Go figure. (Editor’s note: I’ve done this too!  I think it’s the whole “adventure” part of it that’s so damn appealing) I still have student loans (small, but helps with taxes) and struggle to gain control of my budget so I find your blog inspirational and helpful, especially with a baby on the way and thoughts of starting a company.

Being in control of your money is a greater boon than having a pretty good income. I often roll my eyes when I listen to D. Ramsey, but heh, following grandmas advice is a more successful approach than 95% of the other schemes and 95% of the population. So I’m learning not to quibble over the exceptions if he’s neglecting stochastic models and various valuation methods.

And yes, I was an actual investment banker and not an employee of an investment bank. It sucked.

(Photo by andy castro)


{ 29 comments… read them below or add one }

1 Philip September 14, 2010 at 9:10 am

Very interesting seeing how someone way up the ladder from me feels most the same issues. Just on an entirely different scale. One question I have that was simply a side note, you said “I still have student loans (small, but helps with taxes)” but from my understanding and filling out my own taxes if your income goes over 75k then there is no tax break at all for you. How are you able to have this help with taxes?

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2 too funny September 14, 2010 at 9:17 am

Too funny JMoney! :) I’m that writer and we should have a beer. After all I’m only 45 minutes from your house. My wife and are 30, she did a PhD (ABD) in DC, and we’re rockin USAA.

Minor corrections: my salary was 220k, not total family income, but now, alas, I have started a company and took a major pay cut. I recently got an offer in the upper 200′s, but turned it down. P&J’s and Spaghetti/meatballs for the next 6 months.

I did make the IRA contributions for this year in Feb!! :)

We had a baby, so expenses are creeping.

Mortgage payments are at $3,000 which leaves us with roughly $4500 per month to pay for child care, utilities, and food/gas/cable, so we’re fine, but pretty tight while I get things up and running for the next 6-10 months.

This website has been very encouraging as I’ve recently transitioned from never worrying about spending to working within a strict budget.

PS. Still love the house.

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3 too funny September 14, 2010 at 9:21 am

RE taxes: they slide, correct, but I am able to reduce both my MAGI and AGI through a variety of mechanisms and its dual filing. But to think of it, not even sure what I realized on the slide, if anything. In any case, 2.8%… no obligation to pay soon.

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4 too funny September 14, 2010 at 9:21 am

And I wouldn’t consider myself way up the ladder by any stretch.

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5 Nick September 14, 2010 at 10:07 am

Great article and glad to hear too funny is still happy through the comments!

@too funny – very interesting about not considering yourself “way up the ladder.” A lot of folks assume $500,000 in equity on a big house that you can fill and make the payments without too much trouble (obviously, otherwise you probably would have taken the upper 200s job, right?) would be like hitting the jackpot! Your story is fantastic.

Great post and thanks J. Money and too funny for sharing!

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6 annonymous September 14, 2010 at 12:37 pm

@too funny – what the $#@% do you do, where you make that much income? Banking, stealing, human trafficing?

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7 Jake @ NotRichYet September 14, 2010 at 12:38 pm

Interesting but slightly confusing post.

Don’t get the PITI comment if you have north of $500k in equity. You mortgage seems to be right around the conforming loan limit of $417k (bin there, done that), so total property value of around $1M. PITI usually only kicks in when you have less than 20% equity at closing, so weird for you to have it.

I think the cost of upkeep that you mention can differ quite a bit by location / community. Your taxes are high, ouch, and your maintenance cost of $1k per month seems high too.

However, you love the house and can afford it – good for you.

Good luck on the new venture.

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8 Jake @ NotRichYet September 14, 2010 at 12:40 pm

Oops, my bad – confused PMI and PITI…. damn acronyms..

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9 jennydecki September 14, 2010 at 12:58 pm

It’s so interesting. This is a person who doesn’t feel they are far up the ladder but many think they are. I don’t really have an opinion relative to where I am because everyone takes a different path to get where they’re going. I took a huge pay cut to go back to school, but my house is not worth nearly what too funny’s is. Nor will it ever be. Liquid assets make me quake with … well, let’s just say real estate has never been attractive to me. Land ownership? That’s a whole ‘nother ball game (and my ultimate goal if it’s still possible).

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10 Jenna September 14, 2010 at 2:08 pm

I’m not sure I ever wanted to live in a mansion (minus when I was younger and saw Richie Rich – OH! Another movie for your previous post list!). But this post definitely confirms my desire to not live in a mansion or a gated community. Wonder if this guy has a pool, I know those are expensive upkeep. Or has expensive toys, boats, boat slips and fuel are all $$$.

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11 brooklyn money September 14, 2010 at 3:43 pm

I don’t want to live in a mansion, but a two bedroom apartment costs that in NYC. Sigh.

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12 Yana September 14, 2010 at 3:46 pm

I hear you about mansion expenses, but it brings to mind another scenario – buying too much of a dump because it is “affordable”. May not be relevant if you don’t live in overpriced California ;) It is better to buy a good home than to buy a dump that needs work in a lower-middle/middle class neighborhood. That dump can cost much more than buying a better home in the first place, and as long as the neighborhood is not so hot, it is even less possible than usual to get any kind of return on the money. From what I’ve seen here in California, you can buy a home for $75K-$100K more and still be far ahead in the end. Redfin is a great site to check these things out.

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13 Jaime September 14, 2010 at 9:03 pm

wow talk about a lot of work, it seems that no matter what socioeconomic status you belong to, there’s always a higher place to climb up, no wonder people get exhausted and call it a rat race, even if I was a multimillionaire I still wouldn’t want to live in a mansion, I guess I’m a little bit different from most people in that I don’t really care about the type of housing that I live in.

As long as a neighborhood is safe and clean I’m fine with it. I’ve never really wanted to take care of a house. I just couldn’t fathom of taking care of a mansion or any house that is just overwhelming. When people say they have money to hire help I’m happy for them, but I would just hate having strangers coming to my property frequently. I’m not the type of person who wants a house to be a continuous project. I’m the type who just wants to be done with it, move on and enjoy my life.

This also makes me think about how we as humans try to have different things that make us feel better, more privileged than others, and it makes you wonder how much is enough, and when do we stop, even in primitive societies, people still like to distinguish themselves as privileged.

It all just sounds exhausting to me, to the author, please don’t misunderstand, I’m not being negative, but to me it just sounds well exhausting.

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14 Jaime September 14, 2010 at 9:05 pm

However some people love living in mansions, so if its worth it to them, then that’s cool. =)

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15 myfinancialobjectives September 14, 2010 at 9:17 pm

Interesting post. I just wrote about how I love reading about people more successful than me – this was no exception.

You have successfully made me want to get rich, and buy an average size house. Those expenses are just astronomical… Granted I have a ‘poor’ mindset right now.. But I can’t imagine spending that kind of money just on upkeep. It would feel like I’m just throwing money away!

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16 Mrs. Money September 14, 2010 at 9:25 pm

I definitely wouldn’t want to live in a mansion! I am looking to downsize and we only have a approximate 1400 sq ft house. :)

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17 Pretty Unfamous September 14, 2010 at 11:07 pm

I think I’ve been to Disneyland plenty of times to say with 99% certainty that the photo you used is of the Haunted Mansion.

And yes, if the Haunted Mansion were a real building, I’d LOVE to live in it =)

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18 StackingCash September 15, 2010 at 12:25 am

LOL that is the Haunted Mansion! I wish we could go there for Halloween. The conversion to The Nightmare Before Christmas is sweet.

I would find it difficult to live in a house larger than 3000 sq. ft. The upkeep would be a second job I would not like to have. On that note I’m going to look for a new house tomorrow. Hopefully I find the right one. I’m so picky these days :)

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19 Molly On Money September 15, 2010 at 10:36 am

And this is why I love my double-wide.

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20 Rob Ward September 15, 2010 at 2:57 pm

A great reason to live in a house only as large as you need. He didn’t say how large the house is, but if it is truly considered a mansion it must cost a fortune to heat or air condition. I love having a small house…

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21 Briana @ GBR September 15, 2010 at 2:57 pm

I used to want to live in a mansion (when I was younger of course) but home is really where the heart is (cue sappy music here). In all honesty, I’m not searching for a huge house. My boyfriend and I plan on having four kids, but right now we’re looking for a 3 bed 2 bath house for now since we won’t be starting our family for a few years. We’d like to settle in a 5 bedroom 3 bathroom house eventually, but just enough room. Like you said, all the ridiculous mortgage payments, property tax, etc, it’s just a hassle. I’d rather just live comfortably

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22 ajc @ 7million7years September 15, 2010 at 6:00 pm

LOL. ‘mansion’ … I have a ‘spare house’ in the USA worth more than this; we paid cash, but running costs are similar, although our taxes are nearly tripe (over $30k per year). Finally started renting it @ 4$k p.m. (just covers taxes and insurance) while we try and sell it.

On the other hand, we have a USD$5 million REAL mansion in Australia, thankfully, also paid for by cash, and land taxes here are paid up front (‘only’ $400,000!). Running costs are similar and add cleaning lady $300 p.w. (2 days). Fortunately garden only cost $60k … I think this guy got ripped off with his ‘exotic’ plants, our grow on 1/2 an inch per year so are considered quite expensive.

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23 J. Money September 16, 2010 at 9:37 am

Hah! Glad you’re still around here @too funny :) Look at all the discussion you started! Thanks again for being cool w/ me re-posting this and sharing another story out there – def. got our brains thinking. And congrats on the new venture and baby!!!!

Of course I’d have a beer with you, but only if you give me a tour of the house ;) Now I’m curious as $hit. Email me on the side? j (at) budgets are sexy (dot) com – let’s meet up.

My responses:

@Philip – Yup, or at least those same people that read this blog ;)
@Nick – Glad you enjoyed! (and glad I found this in my draft inbox from the other month!)
@annonymous – Stealing? haha… ton of jobs you can get to pay that much – just gotta be smart and hard as hell worker ;) And big degrees usually help too – and passion.
@Jake @ NotRichYet – Oh yeah, everything is JACKED UP here in DC area – like to the extreme. You drive out 60 miles and everything gets cut in 1/2, maybe even 2/3 depending on which direction you go (like West Virginia)
@jennydecki – Mmmmm…..liquid assets…. gets me all hot and bothered too!
@Jenna – Oh yeah, forgot about that movie! Good one.
@brooklyn money – Isn’t that depressing? :( I remember looking at a condo for sale there once (upper west side – 1 bedroom) and it was “only” $300k. I was like hot damn! And then took a look at the condo dues – were like $2,000 a month!! incredible. NYC is even more crazy than DC.
@Yana – Very true, good to keep in mind for sure. Although I’d much rather get in financial trouble with a dump than a mansion. There’s only so much damage you can do ;) As long as it was in a safe area, of course.
@Jaime – Are we soul mates? :) That word def. sums it all up for me too “exhausting”. I can see the excitement about it for sure, but I’d be too worried the whole time to enjoy it. Much rather have my sexy studio apt and be free! haha…
@myfinancialobjectives – Yup, I think to most of us it’s not worth it, but the reader def. seems happy and it’s a high priority for him so it still works out just fine :) I’m sure he doesn’t enjoy spending his time blogging all hours of the night like we do! haha…. we all cherish different things.
@Mrs. Money – Cute! I don’t think I’d like a house much bigger than that myself. Our Townhouse drives me crazy!
@Pretty Unfamous – HAH! Is it really? had noooo idea! found it on Flickr ;)
@StackingCash – You guys are good!
@Molly On Money – Do you really have a double-wide? That is AWESOME!!! I told my wife the other day that I could totally live in one, esp if it’s move-able ;) She wasn’t that thrilled, but I bet I could convince her. Perhaps if I find something she can spend a lot of money on w/ everything we’d save!
@Rob Ward – Yup, I want one of those tumbleweed houses! haha… although that may just be a bit wee extreme ;)
@Briana @ GBR – Nice big Catholic? Family! :) You’re much more practical than I am – I don’t think about space for kids unless I actually have one on the way – haha…
@ajc @ 7million7years – Why do you have so many houses? Investments? I couldn’t deal w/ all that management. But I imagine it feels pretty damn good living dream! :) Esp Australia – still on my list to visit one of these days.. good for you bro, you’ve cracked the code!

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24 too funny September 16, 2010 at 9:31 pm

One minor correction: I don’t live in a mansion! I was simply piggybacking (originally) on J. Money’s rundown of his housing expenses. It was just my story!

Nor am I implying that I am super wealthy or have the world’s most expensive house.

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25 dollar incense September 17, 2010 at 4:19 pm

How can student loans be helpful for taxes with an annual income of 200k+?

If your income is less than 70k ind/145k combined you can deduct the interest.

Would love to hear some helpful tip I have missed, since Im above the income levels but also have a little student loan debt!

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26 too funny September 17, 2010 at 8:57 pm

too funny September 14, 2010 at 9:21 am
RE taxes: they slide, correct, but I am able to reduce both my MAGI and AGI through a variety of mechanisms and its dual filing. But to think of it, not even sure what I realized on the slide, if anything. In any case, 2.8%… no obligation to pay soon.

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27 Funny about Money September 28, 2010 at 9:24 am

What an entertaining story! And great comments, too!

Having lived in a big house in a tony neighborhood myself (not quite up to this one though, I think), Too Funny’s upkeep headaches make me shudder. We also could afford landscaping help, pool repair help, cleaning help, electricians, plumbers, painters, tilers, glaziers, carpenters, and on and on. But there’s a limit. After I flew the gilded cage, my ex-DH had to install a new shake shingle roof. As I recall, he said it cost him $20,000. Augh!

It’s not just the cost, which shivers the cheapskate’s beams, but the endless distraction and hassle of having to ride herd on workmen and maintenance help. Most of these folks need to be supervised. Those who don’t at least need answers to their questions about what you want done and where you want it done. You can’t supervise a staff of workers and go in to your own office every day. This means one spouse needs to stay home from work to keep an eye on what’s going on. LOL! This turns the wife (usually) into a SAHH: a stay-at-home homeowner!

Obviously, Too Funny can afford this on an income in the high 200s. But his wife someday may start to wonder if there’s something better to do with life than deal with a gigantic piece of property, a man who works himself to exhaustion, the politics behind such a man’s career, and their monied, “entitled” kids.

I’ve learned that the key to living in a great upscale neighborhood is not to live in the million-dollar neighborhood, but instead to take up residence in a lesser house directly adjacent to it. Many very fancy areas are bordered by neighborhoods of more modest housing, whose property values are buoyed by the presence of good schools and proximate million-dollar houses, but whose homes require less expensive upkeep and are not taxed oppressively.

My present middle-class neighborhood is the low-rent district to a old-money enclave that starts a block away, centrally located, quiet, and surrounding a beautiful park. At 1,860 square feet, the house can be cleaned by me in a few hours, with no help from a housekeeper; the desert landscaping needs only once-a-month maintenance, and the neighbors are free of snobbery. Because the area was developed before the penchant for gated communities came into being, I can walk or bicycle through a very tony neighborhood, enjoying the expensive ambiance for a fraction of the cost and hassle.

Thank goodness! :-)

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28 Yana September 28, 2010 at 12:19 pm

Funny about Money, I think your house is the perfect size and you are right on that it is desirable to have a modest house near a high-end neighborhood as opposed to a castle in the ghetto ;) You’ve got it figured out, I think :)

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29 J. Money September 29, 2010 at 8:27 pm

Yeah, I like that idea too! Although I want the mini-house on that same block ;) The one that looks cozy and unique all at the same time. And especially the one that’s 1/10th of the price so I can travel the world and not worry about maintaining my house. So I want to rent it. haha… Totally get what you all are saying though – really cool hearing so many different perspectives on this stuff ;)

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