For an audio version of this post, please click on the speaker icon (top left).
Welcome to this episode of The Doctor’s Bill (Can You Afford It?).
Wonder if you should buy that big ticket item or not?
Well here’s your chance to have a wealth management expert, Johanna Fox Turner, of Fox & Company Wealth Management analyze your overall finances and make a final verdict on whether or not you can indeed swing for the fences and splurge on yourself or whether you should just walk away.
[Johanna and I have no current financial relationship]
Disclaimer: This is not meant to be a substitute for paid professional advice but only meant to serve as a suggestion/guideline.
The following are the details from our submission form:
Item/Experience Desired:
Shore house/2nd Home
Approximate Cost:
$750,000
On A Happiness Scale of 1-10 (10 Being Happiest), rate what this item/experience will do for you A) Short Term and B) Long Term:
A) 9 B) 9 [Plan to create memories with the kids]
Age:
40
How many years till planned retirement?
20 years
What is your total household income?
$450,000
What is your % Annual Savings Rate? (savings/gross income)
30%
Primary Home Equity (Market Value-Debt) [For Renter =$ 0]
$600,000
Brokerage Account Value (Taxable):
$300,000
Additional Real Estate Holdings Equity (Market Value-Debt):
$0
Current Liquid Asset Value (Savings, Checking, Etc.):
$300,000
Retirement/HSA Combined Value:
$600,000
Miscellaneous Asset Value:
$200,000 (angel investing)
Mortgage Balance:
$350,000
Student Loan Balance:
$0
Additional Liabilities:
$15,000 (car)
How do you plan on paying for this item/experience?
Mortgage with 20% down
So does this submitter get to purchase a second home on the beach?
Or are the family dreams washed up and they will be beached financially?
Click on the Doctor’s Bill Image and find out the verdict:
Open the Bill And Find Out If Can Afford It or Not
After you see the verdict please come back to this page and comment whether you agree or not with the decision (and no cheating by looking at comments first!)
If you would like to submit your own Doctor’s Bill request please fill out the submission form (and remember email subscribers to XRAYVSN will get priority)
NOTE: The website XRAYVSN contains affiliate links and thus receives compensation whenever a purchase through these links is made (at no further cost to you). As an Amazon Associate I earn from qualifying purchases. Although these proceeds help keep this site going they do not have any bearing on the reviews of any products I endorse which are from my own honest experiences. Thank you- XRAYVSN
On the one hand current finances support the beach home. On the other losing a job after the home purchase could be really painful. I’d say for me the reliability of your income and a very well planned contingency plan would be a must to make such a purchase. Given those I would approve.
Appreciate the comment FTF. I agree that the loss of a job would drastically shift the equation into the negative. Adequate own occupation disability is a must in this scenario but even that would not replace income fully.
Certainly agree.
My immediate thought was “if this person doesn’t deserve a thumbs up then no one does”. But after reading all of the considerations I realize why my financial situation is extraordinarily suboptimal. So helpful!
Thank you so much for the kind words. I agree it is so easy to look at income and have a gut reaction to say yes (which is why a lot of people get into trouble financially with that line of thinking). I learned my lessons through the school of hard knocks (made so many mistakes I had enough to write 5 posts on it in the very beginning of my blog). Lot of factors at play and what seems like a slam dunk situation in beginning may not always be. You have highlighted the main goal of why I… Read more »
Thank you, Michelle – I’m glad the considerations were helpful to you!
Great post and discussion. My wife and I talk about getting a beach house someday as well. However, with two children who will soon go to college and parents who are getting older, it will have to wait. The other thought is to save the money and travel to all different beach places in the world. Thanks again.
Thank you for the kind words. I know people like 2nd vacation homes (Beach or otherwise) but for me I never saw the appeal. As Johnanna pointed out, owning one essentially limits your vacations to that one location because you feel like you have to utilize it to make back some of the cost. If you choose to make it income generating that comes with its own hassles as well as there will be very quick turnaround and getting it prepped role the next stay. I figure without a 2nd home anchor thing me down I can vacation anywhere I… Read more »
This may be the first “thumbs-up” in this series that I’ve seen. With a generally high income (with no early retirement), high savings rate, no loans and no college tuition in sight, it seems very realistic. As an island girl myself, though, I’d think really hard before committing to something beachfront, or even in close proximity. You have to factor in SO much in insurance and upkeep, and consider how easy/difficult it is to physically get to the house because you’ll likely need to do hurricane prep at least once per year. That’s not really something you can relegate to… Read more »
Thanks for stopping by and adding your 2 cents. Learned something new about you as an “island girl” 🙂 I think we started out the series with a thumbs up (the tesla one) and actually got blowback because it was such a slam dunk case (to our defense, we only can analyze the cases that are submitted). There are definitely some things to take in consideration when owning beachfront and you pointed that out nicely, especially given the recent news of hurricanes hitting Florida for example. I prefer to use the money to go to different places for vacation and… Read more »
I say spend but beach houses are better to be rented,
if you never lived by the beach (Hawaii), you do not understand how much everything rusts and needs to be replaced.
Spend the money on an ABNB. Tools rust in three months. If you will live full time- go for it and know the cost. Part time, you better be able to rent it out for ridiculous amounts of money,
Personally I never got the appeal of a 2nd vacation home.
If you have a vacation home it feels like you are almost obligated to spend all your vacations there to justify your decision. I much rather have options open for vacations and see more places than going to the same one over and over again like I would if I had a vacation home.
Great point on accounting for the extra maintenance if home on the beach.