Gradual release

[DLgal]

Our TAKE HOME pay is $150,000/year and we can't afford a home here. At all. Not even a little bit. We'd need someone to die and leave us several hundreds of thousands of dollars. And even then, it would be a stretch. Well just keep paying our $4000/month in rent forever, I guess. Maybe once my husband retires and is making more like $250,000. Maybe we can buy a house then.

 

[QueenIsabella]

I have a follow-up question, for those of you who are helping your adult children out--do you have an exit strategy? A date certain or possibly a salary or education goal, at which point you'll pull back from the support? I'm not asking to be snarky, I'm just curious. I can understand helping with some things, like health insurance or a cell phone, maybe car insurance. But at some point, the bird's gotta fly, right? They're going to need to figure out how to live within their means, even if they aren't in their dream job. What happens when they get married? Have a child? Do you continue to throw support their way, because housing is expensive, child care is expensive, cars are expensive... On a side note, will they be expected to help YOU if you can't afford retirement, or get a debilitating disease?

P.S. I'm talking about neurotypical adult children here--some of us have special needs adults, which changes the calculus. Some may never fly solo, but the goal is to get them as close as reasonable (for them).

 

[daisy2013]

The math is off, I think my husband gets about $6000 a month after taxes, 401k contribution, health insurance - pretty much everything that can be taken out, and he does get a significant bonus that we depend on but shouldn’t. But if you do the math on a $600,000 starter home with property taxes, it’s still not an upper class situation.

Urg darn you’re correct. I meant to multiple by 4 and I multiples by 2. But either way $150,000 does not buy you the lap of luxury when a started home is north of $600,000. (And we are talking a 3 bed 2 bath ranch on 1/4 acre that could use some updating). Taxes are around 13k in my town and 18-20k the town next door (which is why the prices are lower and we didn’t buy there).

 

[dvcgirl67]

Our TAKE HOME pay is $150,000/year and we can't afford a home here. At all. Not even a little bit. We'd need someone to die and leave us several hundreds of thousands of dollars. And even then, it would be a stretch. Well just keep paying our $4000/month in rent forever, I guess. Maybe once my husband retires and is making more like $250,000. Maybe we can buy a house then.

At this point, I just look at our paid-off home as about 20% of our nest egg. And the maintenance costs on a home are no joke...just yesterday $330 unexpectedly HVAC bill as A/C unit wasn't keeping up during our heatwave. Our backyard hedges needed trimming. We're in our mid 50s now, and would have done this ourselves when we bought the house in our early 40s...when we were younger (and the hedges were a lot smaller . But now...it's $350 for that. On and on....it truly never ends. I know rent escalates, but so do taxes, home insurance, utilities...etc. I wouldn't be so negative about renting....rent and save as much as you can.

We're looking forward to selling and becoming renters, at least for awhile...in early retirement.

 

[tvguy]

Urg darn you’re correct. I meant to multiple by 4 and I multiples by 2. But either way $150,000 does not buy you the lap of luxury when a started home is north of $600,000. (And we are talking a 3 bed 2 bath ranch on 1/4 acre that could use some updating). Taxes are around 13k in my town and 18-20k the town next door (which is why the prices are lower and we didn’t buy there).

No lap of luxury, for sure and the house you are describing would be a pretty nice home. My daughter's house is 980 square feet, 3 bedrooms, 1 bath on .15 acre $249,000 purchase price. Yes, you live in area with crazy high property taxes. In California property taxes are capped at 1% of what you paid for the home. So the property tax on a $150,000 house would be $1,500 a year. That can increase by no more than 2% a year. So in my daughter's case, her property taxes at about $2,500 a year.

 

[Lumpy1106]

Things have certainly changed. When I was going to school my parents paid my rent IF I was in classes - end list. Anytime I was not in classes (summers, co-op for 6 months) I was on my own 100%. I had a job and paid for everything else. I only took out a student loan at the very end when my college car called it quits and I couldn't get to my job. Moved in to a small place with now DW right after college so we could save to buy the house and pay for the wedding. We put off having kids until we could afford them.

That was then. Now...
DS is home from school for summer AND is paying rent on the place he will be moving into. Actually, WE are paying for all of it. Any time he works it's for spending money as he does not work when he is in school. He was going to get a job for summer and didn't quite (took him too long to get home and apply for jobs) - now it looks like we will be paying a bit more of his expenses when he goes back to school as he has not saved as much as he thought he would. Not the plan but we'll manage.

Now this is a thread about paying expenses AFTER college? Huh. Not sure I'm on board with that.

 

[cvjw]

I have a follow-up question, for those of you who are helping your adult children out--do you have an exit strategy? A date certain or possibly a salary or education goal, at which point you'll pull back from the support? I'm not asking to be snarky, I'm just curious. I can understand helping with some things, like health insurance or a cell phone, maybe car insurance. But at some point, the bird's gotta fly, right? They're going to need to figure out how to live within their means, even if they aren't in their dream job. What happens when they get married? Have a child? Do you continue to throw support their way, because housing is expensive, child care is expensive, cars are expensive... On a side note, will they be expected to help YOU if you can't afford retirement, or get a debilitating disease?

P.S. I'm talking about neurotypical adult children here--some of us have special needs adults, which changes the calculus. Some may never fly solo, but the goal is to get them as close as reasonable (for them).

We don’t have an exit strategy. We will always help our kids if we can. Both my parents and my husband’s parents have been very generous with us over the years. We plan to do the same. We do not want to die with a lot of money and have the government get it. We would much rather our boys enjoy it.

 

[disykat]

As a teacher I had roommates until I got married and shared expenses with my (higher earning) husband. Teacher salaries are definitely getting better now in our area, but I think roommates are a good idea for anyone starting out. Having roommates and living out in the suburbs until I married in my late 20's allowed me to do a year of post graduate work and do some budget traveling. (My sister wanted to be "Mary Richards" and live by herself in the city and was always poor. Both she and my brother stayed on the gradual release plan until they married.)

I would say both our kids were on gradual release slightly beyond college, but the release was pretty quick once they got their jobs in their career field - probably within a month or two. The biggest reason they didn't need much help is that they both had insurance well before the age they had to be off of ours, but if they hadn't that is one expense we would have taken on for them. It's doable to split rent/expenses with enough roommates and budget your food etc. to fit within what you can earn with basic low wage jobs as long as you get enough hours in. Health insurance expenses and other health care expenses are pretty non-negotiable. We never had the expectation that our kids would immediately be living to the standards they grew up with and they knew it so they knew their living standards would be scrutinized if they were asking for money! Once they had jobs with benefits they both quickly surpassed how we lived at their ages, that's for sure.

 

[CdnCarrie]

My son is starting college. Bought his own car with his money from part time job. Pays his car insurance, phone and spending money.
We are paying his tuition.

No plans to keep paying his expenses when he is is grown adult with a full time job. He can live at home for awhile after graduation and pay low rent if he likes.

If not a student he wouldn’t be allowed in my health benefits. Doesn’t cost me anything to keep him on as a student.

 

[DLgal]

At this point, I just look at our paid-off home as about 20% of our nest egg. And the maintenance costs on a home are no joke...just yesterday $330 unexpectedly HVAC bill as A/C unit wasn't keeping up during our heatwave. Our backyard hedges needed trimming. We're in our mid 50s now, and would have done this ourselves when we bought the house in our early 40s...when we were younger (and the hedges were a lot smaller . But now...it's $350 for that. On and on....it truly never ends. I know rent escalates, but so do taxes, home insurance, utilities...etc. I wouldn't be so negative about renting....rent and save as much as you can.

We're looking forward to selling and becoming renters, at least for awhile...in early retirement.

I'm happy renting forever. It's easy to find long term rentals here. We've been in this house for 7 years and could stay another 20 if we want. We need a larger house though. We have outgrown this one since our boys are approaching adulthood (one is already 18) and they will be living at home for the foreseeable future.

My husband is the one who wants to eventually own a home. Must be a guy thing.

I have told him already that owning a home will cost us a LOT more. I'm under no illusion that owning is cheaper than renting. It's definitely not that way around here.

 

[DLgal]

No lap of luxury, for sure and the house you are describing would be a pretty nice home. My daughter's house is 980 square feet, 3 bedrooms, 1 bath on .15 acre $249,000 purchase price. Yes, you live in area with crazy high property taxes. In California property taxes are capped at 1% of what you paid for the home. So the property tax on a $150,000 house would be $1,500 a year. That can increase by no more than 2% a year. So in my daughter's case, her property taxes at about $2,500 a year.

LOL. That is NOT true. At all. Have you never heard of local taxes? The property taxes on the home we rent are 1.36% and it's on assessed value, not the purchase price. In the neighborhood next door, where all the newer homes are being built, its 1.9% total property tax. And it can go up 2% every year.

The property taxes on our rental home were $11,857 in 2001 on an assessed value of $869, 381. If this house was put on the market today, it would easily sell for $1.2M.

My sister in LA pays close to $15,000/year on her home. And it's super, super average.

 

[goofytinkerbell]

My daughter is moving out and starting her own life. The lease has been signed and move in is scheduled for this coming weekend.

That past weekend we were helping her set up her classroom as she starts her career as a teacher. While there we met a friend of hers from college and her parents who were doing the same for their daughter.

We ended up having a conversation with the parents.

The father mentioned that his daughter has asked if she could be placed on gradual release, her way of asking if she could continue to receive monetary help.

I thought it was a great term for how parents continue to help their adult children.

My daughter is moving in with 3 roommates. Splitting the cost of a rental home with 3 others should make her transition from college student to young adult smoother from a financial perspective.

At today's prices and starting teacher salaries I don't think she could afford to rent even a one bedroom apartment by herself, certainly not the $2450 plus utilities that the 3 bedroom house is costing.

I am keeping her on my health insurance as it does not cost me anything for her to remain but would cost her about $150 a month. The same applies to dental insurance, she will remain on mine since there is no cost associated(I would get no savings if I dropped her as a dependent).

The same goes for her cell phone. It only costs $20 a month for her to remain on my plan but would cost $80 or more a month.

I am sure there other items that will come up as well.

How much help did you continue to provide your adult children and for how long?

How sudden or gradual was the release?

I don't have kids, so I can't help you from that end. However, when I moved out my parents borrowed a truck to help me take my belongings to my new place (maybe 75 miles away) and that was it. At that time I wasn't working, just going to university. I got student loans to pay my bills and worked through summers. It sounds harsh, but my parents could barely afford to pay their own bills, let alone help with mine.

 

[disneychrista]

Both my daughters continued to live at home well into their 20's. They both supported themselves completely and paid me rent while living "at home." I honestly couldn't afford to help pay their expenses.

 

[tvguy]

LOL. That is NOT true. At all. Have you never heard of local taxes? The property taxes on the home we rent are 1.36% and it's on assessed value, not the purchase price. In the neighborhood next door, where all the newer homes are being built, its 1.9% total property tax. And it can go up 2% every year.

The property taxes on our rental home were $11,857 in 2001 on an assessed value of $869, 381. If this house was put on the market today, it would easily sell for $1.2M.

My sister in LA pays close to $15,000/year on her home. And it's super, super average.

See my PM. Yes, bonds approved by voters can increase what your tax bill is, but the base property tax is ALWAYS 1% of purchase price plus a 2% increase per year. I paid $101,000 for my house. My TOTAL tax bill is $2527 on an assessed value of $212,890 and a market value according to Realtor.com is $564,000.

 

[DLgal]

See my PM. Yes, bonds approved by voters can increase what your tax bill is, but the base property tax is ALWAYS 1% of purchase price plus a 2% increase per year. I paid $101,000 for my house. My TOTAL tax bill is $2527 on an assessed value of $212,890 and a market value according to Realtor.com is $564,000.

But you can't ignore those bonds and special assesments. They add up to sometimes more than the base tax. It's all lumped together in one bill.

 

[goofytinkerbell]

No lap of luxury, for sure and the house you are describing would be a pretty nice home. My daughter's house is 980 square feet, 3 bedrooms, 1 bath on .15 acre $249,000 purchase price. Yes, you live in area with crazy high property taxes. In California property taxes are capped at 1% of what you paid for the home. So the property tax on a $150,000 house would be $1,500 a year. That can increase by no more than 2% a year. So in my daughter's case, her property taxes at about $2,500 a year.

I would absolutely LOVE if my taxes were calculated that way! That would save me $1000/year. Though I'm not sure how a 2% increase would work with the math.

The way ours work is that you pay a certain percentage (plus some fees) based on the current assessed value of your home. Last year they tried to raise my assessed value 33%, but I fought that. I think it wound up going up 8% or something like that, plus it had gone up 7% the year before. They're random values, since I'm not selling and can't afford to do any work on the place.

 

[QueenIsabella]

We don’t have an exit strategy. We will always help our kids if we can. Both my parents and my husband’s parents have been very generous with us over the years. We plan to do the same. We do not want to die with a lot of money and have the government get it. We would much rather our boys enjoy it.

Well, the government won't get it, but it may be taxed if you have over a certain amount (which can change, depending on the estate laws when you die, but it's in the millions). States can also tax it, but again--over a certain amount.

The book, "Beyond the Grave" by Jeffrey Condon talks about estate planning. One of his quotes that really stuck with us is: "You can give with a warm hand, or you can give with a cold one." Basically, if you have the bases covered--retirement, elderly health costs--then you can either share your good fortune with your family (or friends, or charity), or they can get it after you've died. We're with you on this--while we don't give our oldest cash outright, beyond birthdays and such, we do like to travel. We just got back from spending 12 days with her and her boyfriend in Hawaii. It was a luxury trip that they couldn't have dreamed of affording. They enjoyed 5-star hotels, exquisite meals, a helicopter ride, and a couples massage. Then, it was back to the grind for them--and us. We don't live that way all the time. But, it's a nice way to treat the family.

 

[tvguy]

I would absolutely LOVE if my taxes were calculated that way! That would save me $1000/year. Though I'm not sure how a 2% increase would work with the math.

The way ours work is that you pay a certain percentage (plus some fees) based on the current assessed value of your home. Last year they tried to raise my assessed value 33%, but I fought that. I think it wound up going up 8% or something like that, plus it had gone up 7% the year before. They're random values, since I'm not selling and can't afford to do any work on the place.

We had a property tax revolt in California in 1978. Voters passed a cap of 1% of purchase price on property taxes. Property taxes from that point on are not linked to assessed value A $100,000 house would pay $1,000 in property taxes. The next year, that tax could go up 2%.....$20 in this example.
Voters CAN approve bonds and special assessments on top of that, but 2/3rd of the voters have to approve it. In my area a $100 PER PARCEL tax was approved for remodeling schools. A $50 per parcel tax for the park district got over half the vote, but not the 2/3rds required, so it failed.
Senior citizens who had been in their homes for decades were at the core of the property tax revolt. In some cases people were expected to pay more in property taxes than they had paid for their homes 40 or 50 years ago.

 

[tvguy]

But you can't ignore those bonds and special assesments. They add up to sometimes more than the base tax. It's all lumped together in one bill.

Yes, but those all have to be approved by the voters. They can't just be added to your tax bill.

 

[DLgal]

Yes, but those all have to be approved by the voters. They can't just be added to your tax bill.

And? They have been approved. They exist, right now.