"I Want to Buy a House and Have Four Kids— Is My $130K Enough?"

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I'm Nicole Lapin, the only financial expert you don't need a dictionary to understand.

It's time for some money rehab.

Today's guest is a fellow financial nerd in the best way possible.

She's a CBA, she's in her early 30s, and she and her partner are crushing it with no debt, strong savings, and they even own a rental property.

But like so many of us, she's wondering, are we doing enough?

Are we doing it it right?

And how do we afford the life we want without falling into the trap of financial FOMO?

Today, we talk about how to save for the future without sacrificing your financial present.

And because we get pretty real in this episode, this listener wanted to stay super duper anonymous.

She didn't even want her voice used, which I am always happy to make work because talking about money can be hard and I want to make it as easy as possible.

So in this episode, you'll hear my side of the conversation with the money rehabber, but instead of hearing the guest's voice, you're going to hear my producer Morgan.

Morgan pulled the transcript from the conversation and then recorded her reading the lines from the money rehabber.

So it's my audio from our actual conversation with the guest and then audio that Morgan taped after the interview smushed together, movie magic style.

I get that money dysmorphia is a scary thing to talk about, but it is so common.

So if you've ever compared your spending to a friend's vacation photos or found yourself spiraling over whether you can afford a home or kids or a Birkin, this one's for you.

Rose, welcome to Money Rehab.

Thank you so much for having me.

I'm so excited to talk to you.

Yay, I'm so excited to talk to you.

Normally, I ask my guests to tee up their questions, but girl, you have so many.

I'm just going to walk the listeners through them.

But I think the big picture is: if I can gather this, you have a great financial foundation.

Now you're wondering how to maximize for your future, but you're feeling like a little bit keeping up with the Kardashians, I guess, Kardashians instead of Joneses these days.

But you don't want to feel like that comparison is holding you back right now.

Is that?

I think so.

And I think like getting validation that we can start a family and that we can like buy a house and still live how we want to live with the means that we have.

And yeah, the comparison and lifestyle creep is huge with me.

And I know that that's just going to ruin any joy, but it's hard to divide that out.

For sure.

It is hard.

Despite the, you know, saying that comparison comparison is the thief of joy.

It, it creeps up and it thieves a lot.

So basically you've said to us that you want to start a family, but you also want a tennis bracelet.

So is that a fair balance that you want to strike?

Yes.

So before we get into all that, I want to bring up something that you told our producer.

You said, I feel like I'm constantly comparing our financial situation to our friends who are very successful in their careers.

Can you tell me more about what that looks like?

Because you are also successful in in your career.

Yeah.

So I feel like my friends are in corporate America.

They've been climbing, quote, the corporate ladder.

And so watching them have those successes really feeds into me feeling like we're not where we should be or personally, I'm not there.

I've moved around jobs.

And so I haven't been at like a job for eight years right out of college, like some of my friends.

And so I think that feeds into maybe like money dysmorphia in a way, where it's like, you think that somebody who's been at their job for so long has all these responsibilities they have the compensation to go with it and then our friends are always talking about extravagant trips or purchasing this or that or we're talking about homes right now and everyone's looking at like million dollar plus homes and so that feeds into it do you know how much they make or are you just assuming So for one couple, yes, we do.

And then just sort of assuming based on discussions, so tidbits I've learned.

And it's definitely like you don't know people's financial situations.

They could be in debt.

But from conversations with friends, it doesn't seem like they're carrying credit card debt.

So I mean.

But we don't know.

We don't know.

No.

Where roughly are you guys at?

I think W-2 wise, we're around 230 as a couple.

And we're right around the couple.

that I know what they make.

I think they're right around there.

So, wait,

you're comparing yourself to the couple that earns the same amount as you guys?

But maybe like $20,000 to $30,000 more than us.

Okay.

Not talking a huge difference here.

No, I guess not.

I mean, I think a little bit of competition is healthy.

It actually could motivate you to make better financial choices.

So I'm not knocking that.

I think money dysmorphia, however, has become a thing and that is not healthy.

Money dysmorphia is this phenomenon where this heightened sense of comparison makes you feel financially insecure, depressed in some cases, anxious, without a real basis in reality.

So, do you feel like you struggle more with that?

Yeah, I think so.

And I think, especially, it's like I try to cut back on our spendings in different places, which can be healthy.

But it's also like my husband will be saying, Well, we can do this.

We're financially able to do this.

Like, let's do it.

Whereas I struggle with that.

And I know, like, growing up, I saw that in my parents too.

That's where it is.

Let's double-click there.

I feel like sometimes I'm a psychologist.

All right.

So, so what did you see in your parents that these conversations with your husband triggers?

Being very frugal, it was always kind of pulling teeth to get my dad to go on any vacations because he had this scarcity mindset that

we don't have the money for that, that we can't afford to do that trip.

And my mom was the one having to be like, we do have the money, we can do this.

So I see that playing out in my marriage, kind of.

Where you are your father, basically.

Yeah.

Yeah.

And how do you think that manifests?

You feel like you hoard more, you save more,

you maybe binge sometimes on things because you've felt so deprived?

How do you internalize it?

Probably hoarding, wanting to save our money, but then definitely wanting to go on trips.

That's where I spend my money.

So

a little bit of both.

I mean, here's the thing.

Your financial foundation, the reality of it is really solid.

You shared a bunch of details with us before we chatted.

You don't have any debt.

You have juicy dual incomes.

You have growing investments.

You have real estate that you're investing in on the side.

You're in your early 30s.

All of this is a huge accomplishment, Gross.

So what is exactly of that picture keeping you up at night financially?

Is it more about affording the future or feeling like you're currently falling behind with some of the trips and some of the luxury purchases right now compared to your peers?

I think both with the how are we going to afford life, like we're in our 30s, so we have the rest of our lives in a way that we have to financially support and knowing like we want to start a family and kids aren't cheap and how are we going to do that.

I feel like I am just getting by with just a man and a dog and wondering how we add on humans to this.

So I don't know if that's like a form of lifestyle creep, but that's sort of the one that I feel.

Whereas you're getting older, you're getting all these responsibilities.

So it's not necessarily the extravagant lifestyle creep.

It's just sort of the life creep.

I don't know.

Yeah, listen, we will get to kiddos because I just had one and you're right.

They are expensive.

But when when it comes to luxury, so let's just cross that one off the list.

There are definitely smart ways to do it.

There are not so smart ways to do it, right?

If we're talking handbags here, you can either rent a bag, you could invest in a bag that actually appreciates in value, like an Hermes bag or a Chanel flat bag.

I mean, let's be real: like, if you're going to do it, just be smart about it.

Our producer bought Balenciaga, what Triple S sneakers, the big, thick, chunky ones, I think.

Those do not not appreciate.

Those depreciate.

So, when it comes to a luxury purchase, think about the ones that appreciate, not depreciate.

When it comes to friends, I would do the same thing.

I would think of the ones that appreciate and that the ones that appreciate you in the different sense and move away from some of this comparison toward aspiration.

I don't think it's about being flashy

around your friends or trying to keep up or show them what you can do or where you can go.

It's about being really disciplined.

And I'm sure your friends didn't get rich by acting like they're rich.

They got rich by hopefully acting like they're not rich and living below their means.

So

let's talk about what something like that would look like for you.

Do you feel like you have good friends?

Yeah, yeah, I do.

And I know like it feels like the conversations are happening more because everyone's like, it's so expensive to live.

How are we paying our bills?

We all want to buy houses.

And so it's at the forefront of our conversations.

And I think just how relevant it is is weighing on me.

But like previously, this wasn't a big deal with us.

It's just become a bigger thing, I've noticed.

So

if we're being honest, it's not really your friends.

It's you.

Yeah.

Look, you know.

The first step to any recovery is admitting you have a problem and having this self-awareness.

I think it's really, really

big of you to come out and talk about this honestly and be self-reflective, because I think that once you name whatever this thing you're feeling is around money dysmorphia, you can finally attack it.

So you have an issue of comparison.

It's not that they're flashing it around in your face and making you feel bad about it.

No, they're, I mean, not at all.

It's just the picking apart like conversations of being out with friends and then coming home and just sort of ruminating on those conversations and being like, wow, they're doing this or that.

It seems like they're so well off.

It seems like they're doing such a great job at work and everything.

So I feel like it's definitely a me problem.

Okay.

So

let's tell the mean girl inside your head to try and sit down

because you guys are doing just as well.

It sounds like you and your partner take home about almost $13,000 a month.

Your rent is $3,300.

You're saving.

You're investing constantly.

And those are all huge wins, but you're also dreaming of a million-dollar home.

It sounds like all of your friends are in the same sort of life stage where you're buying homes and starting families.

So, how did you land on a million dollars for your budget?

Just sort of looking at what we could get in our area, what's available.

So, looking at like a $400,000 house in the area of the suburbs that we're in, it's just sort of like a shack, to be frank, in my opinion, because I do like the higher things.

I want a nice house.

And so it's like, okay, where, what like price range will give us the house that I would like.

And so it's sort of around the $800,000 range, I think.

And then using like various calculators, seeing how far we could push it.

And so I feel like the million 1.2 would be our highest end.

And also hopefully assuming that our incomes will continue to go up since we're only in our 30s.

And we have both said we would rather maybe stretch a bit, knowing and hoping that our income will increase.

And then that monthly mortgage would be a smaller chunk of our expenses.

Like, my father-in-law bought one house, and they've been it for 30 plus years.

And as his career progressed, he was like, I could have bought a better, bigger house because my financial situation changed.

So that's sort of in the back of my head, too, that that could happen.

Or you could sell your house and buy a bigger house.

Like your story doesn't have to be your parents' story.

And I think that's part of the thing you're falling into.

A lot of people are falling into it because you see a certain financial story.

You know, we only live in one household growing up.

So that's the story we know.

And it's coming to a place where you realize you are the hero of the story and you get to decide, or you could rent and use all of that liquidity to invest in other things like your, your rental side hustle, it sounds like, or something else.

So you don't have to buy a house.

You don't have to stay in that house like your father.

If you do and you decide that you want to do that, great.

But just remember that you don't have to do that.

You get to decide.

So if you do go this path, let's just break down the numbers.

Your mortgage, including property taxes, insurance, all that stuff is going to be hopefully no more than 30% of your gross income.

That's a sweet spot for living within your means.

So that means based on the money that you guys are making, a safe monthly housing budget is around 4,500 bucks.

I don't know if you're looking at buildings with,

you know, monthly fees, homeowner associations, but don't forget to factor those in.

With a 20% down payment,

you know, that really pushes you up at your limit.

It's not impossible, this budget, it's going to require some trade-offs.

I think you are not super keen on trade-offs if you're being honest.

So you can definitely afford a beautiful home, but you're going to want to balance that out with some of your other goals, like eventually raising a family and traveling.

So I'll pause there because I want to know your thoughts.

Yes, I'm not good at trade-offs.

That's very true.

I definitely want to, quote, have it all.

I'm not going to compromise.

So that's a little hard.

And that also is sort of the reason that I'm struggling because I know we want a family and everything and it's everything's just so expensive.

And so that's like the loop in my head that

how are we going to make things work knowing like, okay, we have a good financial foundation, but it doesn't feel like it when we look ahead.

And maybe I'm looking too far ahead and I'm worried about the future that's not even here yet, but it's definitely

it's definitely causing stress.

Yeah,

because I don't think you've actually defined what that looks like.

That's what's causing causing you a lot of this anxiety.

You can have it all, sister.

You just have to define what it all means and stop changing the goalpost on yourself.

So what does having it all mean?

The house that we want and then having the kids, hopefully, ideally.

I used to say I wanted four kids, but as we've gotten older and seeing how expensive it is, I realized that probably won't happen.

It would be more like two or three.

And then being able to travel, definitely.

That's where I spend my money right now.

My parents took me on vacations to Europe as a kid and I loved it.

I want to give that to my kids.

It teaches them about different cultures and it's a funner way to like learn about history.

That's where my passion for history came from.

So just being able to give our family that would, I think, be having it all in my mind.

Yeah.

And in that definition, you didn't talk about your job.

So when you feel sort of comparison creeping in, you didn't define what having it all looks like as having a higher position or a bigger base salary.

You also didn't talk about luxury purchases as having it all.

So sometimes when you, you know, see somebody else having a thing, you have to remind yourself, it's really easy to say, oh my gosh, I suck.

What am I doing with my life?

I don't have that bracelet or whatever.

But then you go back and you look at your list and you say, hey, was that even on my list?

Or am I, am I veering from what having it all means?

Because once you start changing the goalpost on yourself based on an Instagram you see or based on what your friend does, you're never going to win the game.

So I think we have to just decide on what that looks like.

What does success look like?

And when you hit it, you've hit it.

And don't keep changing it on yourself.

Another really smart question that you asked was whether you should keep your down payment in cash or if you should move it into the stock market.

Great question.

In general, the guidance is if you need your money in a year or two, keep it in cash.

I don't, and by the way, I do not mean like actual cash.

I don't mean in, you know, a low interest savings account or checking account.

I think if your timeline is three years or more, you can consider putting some of that into a conservative mix of some equities, which are stocks or bonds, maybe a little bit of both.

But since you're starting to feel like you're serious about buying in the near future, it sounds like the next couple of years, I would stick with a high yield savings account, some treasury bonds, CDs.

Sounds like you're already dabbling in that.

It's not going to grow much, but it's not going to shrink.

And hopefully it will at least keep pace with inflation.

Because if you're keeping it in a checking account that's making you, you know, 0.01%,

you're actually losing money over time in your purchasing power.

So we don't want to do that.

And that's super key for near-term goals like a house.

Does that answer your question?

Yes.

And then I guess part of like a down payment, when we're thinking about hours, we're not thinking about our equity investments and our brokerage accounts.

Do you recommend people selling those and using them for houses?

We're just sort of putting money into equities and just forgetting about it.

I don't know.

How much do you have in your brokerage?

We have 130-ish.

What brokerage is it?

Vanguard.

And we have it in a mix of like VOO,

VTI, VF, IAX,

just different ETFs and mutual funds.

No, that's good.

That's the Vanguard mutual fund that tracks the SB 500.

And all the V stuff are Vanguard, which are typically low-cost funds.

So that's all great.

You also said you're generally worried about...

We're worried so much.

Listen, I'm a worrier too.

So I get it.

But you're worried about a lot of things.

So you're also worried that you're too cash heavy right now.

Is that right?

You just read me your brokerage.

Yes.

How much do you have in cash or where is that sitting?

Right now, our cash is sitting in the money market.

Making what?

I think it's like 5%

is the SEC seven day yield.

And we have $123,000 just about.

And that's what we're looking at for the down payment.

Like when we think about our goal to get to a down payment, we're only factoring in that 123,000 and excluding the equity of 130,000 in the other account.

But you're, so you're only factoring the 123.

Yeah.

I mean, cash is really great for short-term goals or buying opportunities, right?

When we saw the market tank, you know, I personally wish I had more cash to take advantage of that opportunity, but too much cash in the long term means you're missing out on growth.

So it is a balance uh your emergency fund should definitely be in a high yield savings account or a money market fund like you're doing so yay it's the easiest thing you can do is to have a high yield savings account beyond that maybe keep excess savings invested in a very safe, basic portfolio of stocks and bonds.

If you are looking more for the long term, if you guys push out this timeframe, you know, think 70, 30 or 80, 20 with stocks and bonds, mix in maybe some international funds for diversification.

But this is if you guys decide to push that timeline out longer.

And the thought process, of course, behind that is if we have major fluctuations, you're not selling or using the money to borrow against when it's low, because it happens, lows and highs.

We don't know when the lows are.

We don't know when the highs are.

So short-term cash, doing exactly what you're doing.

It is a lot.

So make sure that you are really certain that you're going to pull this trigger.

So we have like the automatic recurring investment transfers out of checking and into our savings.

What would you say, knowing like we hope to buy in the next one to two years, that we should be pumping that into the Vanguard money market fund so that it's sitting in cash when we're ready to buy?

Or should we be putting more of it into equities?

Putting it from where?

From your paycheck?

Yeah.

I mean, I think you should be growing your brokerage more.

I think you've gotten pretty much what you need, depending on what kind of loan you get out.

But I would, and the breakdown of your brokerage sounds really safe.

Generally speaking, it will yield you probably around 7%

historically.

That's what those types of funds have yielded.

So I would

I would

think about potentially beefing up some of your equity exposure.

You guys are young.

If it's just sitting in a checking account, just at the very least, ask your bank if there's a sweeps account.

So

a sweep account is basically like they sweep your money away overnight.

You tell them what amount you want.

to be available to you and the rest gets invested and then it comes back.

And if you need more than what you say, so let's say you, you know, want $500,

let's say you want $500 readily available

and you have

$20,000 in there, they're going to sweep $19,500 into this overnight.

They're going to invest it and then you're going to get an interest payment once a month, probably.

Oh, wow.

I'll look into that.

Should we talk about babies?

Yes.

Hold on to your wallets.

Money rehab will be right back.

So, how do you feel about fees?

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And now for some more money rehab.

You mentioned something that I hear a lot.

Can we actually afford a family?

It is a real concern.

You're living in a big city.

Bibbies are expensive.

Trust me, I know.

I just had one.

Here's what I'll say.

You don't need to have every expense mapped out before you start, but what you do need to have is a steady income check.

You need to have your emergency fund.

Sounds like you have that.

Yes.

So then the last part of this equation is really who's going to take care of this kid when you guys are working.

So daycare in a major city.

Have you looked into it yet?

Very expensive.

Very expensive people.

Like $30,000 or more, I've heard.

Yeah.

So like roughly it could be $2K a month.

You might qualify for dependent care FSAs, or eventually you might stagger parental leave.

And not every cost, of course, comes out at once.

Like you don't need to fund a 529 before you buy a crib, but it is helpful to generally budget for baby.

I'd recommend upping some of the allocation to your investments and your savings for baby.

Everyone is going to tell you diapers are expensive.

Listen to them.

They are expensive.

And honestly, the better ones are better.

Like the coterie diapers, whatever, way more expensive than the generic diapers.

But I got to tell you, the poop stays in.

And to me, that is priceless.

So it is worth the premium for sure.

Yeah.

All of that just sort of scares me because it's like, I feel like we're, quote, living paycheck to paycheck in a way, even without a kid.

And so then how do you feel like you're able to then afford a kid?

But you're not living paycheck to paycheck.

You are not living paycheck to paycheck.

You have a big juicy cash stash.

You have a big juicy brokerage account that is not living paycheck to paycheck.

You would be okay if your paycheck didn't come.

I know it feels this way, that like your whole paycheck is going toward places, but part of that is going towards your investing and going towards your saving.

So where like, where else do you want it to go?

You are not only taking care of all your expenses, but you're putting it into savings and investing.

Yeah, I feel like that's part of the thing.

I know we're saving for a house, but then it's like, I know you're supposed to be saving for retirement and we are, but then what are we doing with this brokerage account?

Is that like, do we start taking that out as childcare expense increases?

Yeah, I don't know.

That's, that's a question that, you know, my husband and I had this conversation.

It's actually like a mindset shift, I think, when you have kids where you realize like the first year, you have to be gentle on yourself that these are roots phases and you're planting roots.

You're not, you know, you're not flying yet.

I don't know, I'm mixing metaphors here.

You're planting roots and that's a spending time.

There are savings years.

This is all seasonal, cyclical, like any part of a marriage and a family and building a life worth living, right?

So you're going to have seasons where you're spending more and you're going to have seasons where you're saving more.

And I will tell you, because I am in it, the first year of baby is spending more and you just have to get comfortable with that psychologically.

Cause financially, you're okay.

It's psychologically that we need to work on.

Like, is the mean girl still standing up?

I still, I still hear her.

What is she doing in this conversation?

Yeah, I know.

It's hard.

Yeah.

So I know you're actively making big financial plans.

I love this about you.

We're working towards some big questions, big goals.

You know, come back, keep me posted on how you're doing.

I think it's just about priorities and timings.

You can afford anything.

You just can't afford everything at the same time.

So maybe the tennis bracelet will happen for, you know, your 50th birthday or whatever.

You will get the tennis bracelet.

Maybe it's not this year.

Maybe a vacation to Europe.

is going to happen when you're 40.

Maybe it's not this year.

And that's okay.

Yeah.

I like that mindset.

And And I can hear my therapist being like, you don't need everything now.

You don't.

You can have it all, just not all at once.

You can have anything, just not everything to decide.

Yeah.

Yeah.

I like that.

But you're doing great.

Like, no notes.

Oh, okay.

Oh, that's so hard.

I was hoping you'd be like, get this and that and you'll be fine.

Yeah.

And I'd be like, perfect.

Nicole says we can do this.

We're going to do it.

Or she said, no, we can't buy this house.

We're not doing that.

No, it's like when I went to Bali on my Eat, Prey Love adventure i went to an old medicine man and i wanted to know what was wrong with me and i was like this is this intuitive man he's 110 years old maybe i don't know he was like in e-pre love and i'm like what is wrong with me like what are my ailments

and he's like

busy mind And that just means like, I think too much and I worry too much.

And he's like, you're good.

And I was so upset because I was like, no, there's something wrong with me.

And he's like, no, there isn't.

I definitely resonate with that.

Nothing's wrong with you.

Just your busy mind.

The mean, mean girl, missy mind.

I appreciate it.

Thank you.

Money Rehab is a production of Money News Network.

I'm your host, Nicole Lapin.

Money Rehab's executive producer is Morgan Lavoie.

Our researcher is Emily Holmes.

Do you need some money rehab?

And let's be honest, we all do.

So email us your money questions, moneyrehab at moneynewsnetwork.com, to potentially potentially have your questions answered on the show or even have a one-on-one intervention with me.

And follow us on Instagram at MoneyNews and TikTok at Money News Network for exclusive video content.

And lastly, thank you.

No, seriously, thank you.

Thank you for listening and for investing in yourself, which is the most important investment you can make.