Background: My wife and I are thinking of purchasing a new home. The cost of the home (1.8M) maxes out our cash reserves, after taking into account the extra money required for moving and then furnishing the house. Because of this, I decided to prepare a budget to make absolutely sure we could afford it. In particular, I want to make sure that I'm not missing anything or being unreasonable. Part of me wonders whether we should consider something a little cheaper (say 1.3M) to be absolutely sure.
Here are some basic assumptions you should make when considering this budget.
Income: After maxing out 10% retirement contributions and health care costs including life insurance, my after-tax (federal, FICA, state) takehome pay is 145K. Retirement saving is on track.
You can assume that my job is very secure (tenure). My wife also works, but her job has no guarantees so we don't want to count on her income. In other words, this budget is a bad case scenario. Obviously things could go worse in terms of unexpected significant health care costs, for example. But it is not unreasonable to expect that my wife will continue to have a 1K+ job (before taxes).
We have a child who is 1YO and don't plan on another.
My job also basically covers college tuition so saving for college is not necessary.
I am estimating that the increase in my income will keep pace with general inflation.
The house is in very good condition but is an older home which is large (5000sq+) with a substantial yard.
Having taken that into account, here is my budget:
Question: Is there anything I am missing?
Notes 1: My estimates for house maintenance and insurance (1% and 0.4%) are taken from various recommendations online, I don't know if this is a good estimate. Similarly the house cleaning and yard work estimates are guesses, assuming that a bigger house will be more expensive to clean, and a big yard expensive to maintain.
Notes 2: I understand that $600 per week is not enough for a full-time Nanny, but this scenario is assuming that my wife is no longer working. The cost of private school in general is higher than what I have listed but please assume for the purpose of this exercise that I am pricing it correctly here.
Notes 3: There are obviously items in this budget which could be trimmed if necessary. The point is not to ensure that we can survive, but that in a situation where my wife no longer has a job we can still be very comfortable.
added: It was mentioned by @chepner in the comments that it might be better to not deplete our cash reserves entirely and perhaps have a small mortgage. Is there a "minimum" amount of cash we should have in hand after we move in? Does it make sense to take out a small mortgage to have that cash on hand? I expect my wife will work for around 2 years before her job becomes uncertain, so that gives us a chance to replenish some savings.
added: From the comments: I think the fact that your wife's income is as much as yours is pretty important, and should have been disclosed clearly in the question, not offered as an afterthought in a comment. It would also change much of the advice offered. . I guess the reason for not mentioning it was that my idea was to budget for the scenario where my wife leaves her job and the economy turns south and she is unable to get another job. (I know that's not the worst case scenario but it seemed at least a possibility.)