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:
Kitchen Remodel.
Approximate Cost:
$30-40k.
What is your timeframe?
2020.
How do you plan on paying for this item/experience?
Cash.
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:
7 (We are home a lot).
Age:
45.
Gender:
Female.
Occupation:
MD & Marketing.
Marital Status:
Married.
Any Children (If so please provide ages)?
3 (10 year old, twins age 5).
How Many Years Till Planned Retirement?
20.
What is your total household income?
$470k.
State Income Tax (if Any)
5.75%
What is your % Annual Savings Rate? (savings/gross income)
20% (we are trying to push higher each year.)
Estimated Annual Living Expenses (Current):
$220k.
Estimated/Desired Annual Living Expenses (In Retirement):
$100k. (This is a best guess. Will need more analysis but plan on downsizing house in retirement.)
Market Value of Primary Home [For Renter =$ 0]
$1.3M
Additional Real Estate Holdings Equity (Market Value-Debt):
$0
Current Liquid Asset Value (Savings, Checking, Etc.):
$80k (Emergency fund CD & Checking.)
Retirement Assets (401k/IRA/HSA):
$621k.
Brokerage Account (Taxable):
$65k (This is also earmarked for retirement.)
Miscellaneous Asset Value (Please elaborate):
$15k (automobiles.)
Mortgage Balance:
$973k.
Student Loan Balance:
$10k (0% interest rate loan.)
Additional Liabilities:
$0
Unfunded Future College Costs & Years Left Till Needed:
Currently, our savings rate will have $60k per child which was goal in expense number above.
Retirement savings and mortgage paid by retirement are higher priorities, however.
Other Unfunded Goals and Years Remaining (Today’s Dollars):
- Retirement.
- Working Less when #1 is funded more.
Other goals are paid from current expenses.
Any other pertinent information not addressed?
I am a Kaiser doctor.
Retirement plan covers healthcare (assuming nothing changes).
Will inherit portion of Bay Area rental properties (my portion estimated property value is $500k, mortgage free).
So does this doctor get her dream kitchen?
Or will her plan for retirement become half-baked because of it?
Click on the Doctor’s Bill Image and find out the verdict:
Click on the Bill (image) 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.
Note:
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Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
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Definitely on the low end for a kitchen remodel. I fear that would mushroom. I would like a breakdown of 220k living expenses. Seems high but I do not live in California.
Thanks Hatton. Yes for a home worth over $1M I would think a kitchen remodel to fit that kind of house would be in the 6 figure range. Plus once it is started all sorts of issues tend to crop up driving the price up higher.
Thanks for stopping by and commenting.
We spent about $22k to remodel the kitchen at our old condo. It was so worth it. We cooked all the time and we loved it. We didn’t get much back when we sold our condo, probably close to zero.
In our new place, we need to remodel the kitchen again. I’m putting it off for now, but we’ll do it at some point.
My verdict, if you cook a lot, it’s totally worth it. Don’t count on it to increase the price of your home.
Thanks for giving us a real life example of how a kitchen remodel should not be considered an investment. I never got why real estate agents would push to update things when you are about to list your property. Granted it may sell faster but the higher price achieved never seems to offset the cost of the updates. It seems it only benefits the realtor making their job easier to sell it and also get a higher commission. ROI for the seller is most likely negative in the whole exchange.