Moving to HCOL, worried, need help.

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Brokepilot
Posts: 49
Joined: Sun Sep 25, 2016 10:14 pm

Moving to HCOL, worried, need help.

Post by Brokepilot » Wed May 30, 2018 6:59 pm

Soon I will be moving to Whidbey Island. My wife and I are dreading the housing market as the age and size of the homes verse there cost are not great. Living in a high cost of living duty station is not new for me, however, the housing allowance is low and behind the market. Reasonable places to live are 20+yearold homes that have period correct kitchens and bathrooms, average 1300 sq ft and costs around 340K. The housing prices jumped dramatically when the maritime community left Hawaii and a large influx of service members moved into the area and the demand for house exceeded the supply. I am expected to be stationed in Whidbey for five to six years with the possibility that I may return 10-11 years down the road, so renting for five plus years seems foolish to me.

Current financial stats.

1) Own a home at my current duty station that we bought less than a year ago with a VA loan. I was not expecting to have to move so quickly, otherwise, I would have rented. Selling a home in my area takes on average six months and a few friends have their houses on the market that are comparable to mine, haven’t received much if any interest. Renting is an easy option here, on average it only takes a week or so to find a tenant, usually military.

2) I used up a good portion of my VA loan guaranty on my current home. Because the cost of the homes in WA exceeds my remaining guaranty I will have to pay a percentage down to get a VA loan, which I need. So I am forced to put down 5% (which I would do regardless). However, after a 5% down payment and closing costs, I will use almost all of my liquid assets (which is my e-fund as well). I will also need to have my current home rented to get the second loan, if I cant get tenants then I will eat away at my down payment and have to rent.

3) We have one car (a coupe) that is 16 years old and is always needing some maintenance (which I can perform most of). Soon we will need a more reliable and practical car. Likely an AWD SUV out of necessity.

4) We are in our mid thirty’s and want to have a baby now. So we will need a large portion of our income reserved for that. This effect number three as we will need a safer vehicle.

5) We need a home with some space for family growth and room for my wife to run her business. We also have too much furniture and crap that we have collected over the years. I have easily already donated nearly a thousand pounds to goodwill preparing for the move. I will be forced to have a firesale with some of our furniture and goods before we leave. Unfortunately for us, our current location is full of lower class people who likely won't buy our stuff, so it will be donated, abandon or trashed.

6) Our take-home of 70K is locked and I won't receive a sizable pay increase for three to four years. A side job is not realistic for me and my wife has no real skills or job experience (besides being self-employed in a failed business) so likely she won't bring in any income.

7) I Won't sacrifice my TSP or Roth contributions. I started late, cant pause on my retirement contributions at this point.

I am lost on how I will be able to afford a 340K home, buy a reliable family car, spend 8-10k a year on a baby (zero friends or family there to help us with hand me downs) and still save any money to rebuild my devastated efund. Forget creature comforts and vacations..

I guess my question is how many more years will my iphone 5 continue to work and can I sell bone marrow?

ytrewq
Posts: 46
Joined: Wed Jan 22, 2014 10:08 pm

Re: Moving to HCOL, worried, need help.

Post by ytrewq » Wed May 30, 2018 7:10 pm

One option for your wife could be to explore jobs based on local industry like tourism, healthcare, school teacher, admin positions in companies or do short-term course to become Loan processor, Accounting, insurance claim adjudicator etc. to augment income.

NJ-Irish
Posts: 25
Joined: Wed May 30, 2018 7:23 pm

Re: Moving to HCOL, worried, need help.

Post by NJ-Irish » Wed May 30, 2018 7:43 pm

Hey there - I’m happy to give a few suggestions.

First off, it sounds like this rotation has been treaded before. Try checking out resources in your military network. If there are any relocation officers, friends, coworkers who have made this switch before they can probably give you some good advice on each of these issues.

1. Don’t dismiss renting. 5 years is borderline for renting vs buying, and could make sense in your overall situation. The NYTimes has a good rent vs buy calculator. Also- you could rent the first year to get familiar with the area.

2. Regarding cars, cast a wide net on your search. If your car is still in running condition then time is on your side. You can afford the be patient for a deal.

3. Try to make as many connections as possible the first few months, both inside and outside the military. You will be surprised what business opportunities might arise for your wife.

I have no kids so I can’t help you much with that :happy but as somebody who has much to multiple HCOL areas, the formula for personal and financial success is to keep an open and flexible mind, and listen to the advice of those within the locale. Good luck.

mega317
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Joined: Tue Apr 19, 2016 10:55 am

Re: Moving to HCOL, worried, need help.

Post by mega317 » Wed May 30, 2018 8:07 pm

It's not clear to me why renting is foolish. You can't afford a house and your time there is finite.

I also question some of your expenses. I would be interested to see how you come up with 8 grand for a baby without daycare. Why do you need awd SUV? Why do you need space to accommodate a failed business that generates no income?

gliderpilot567
Posts: 24
Joined: Wed Feb 10, 2016 10:32 am

Re: Moving to HCOL, worried, need help.

Post by gliderpilot567 » Wed May 30, 2018 11:35 pm

I applaud your intention to keep funding your TSP and Roth. I would do the same thing. However, you will likely need to accept some lifestyle changes. The good news is, the more dramatically you cut your expenses, the shorter of a time you will have to put up with it.

Can you refi the VA loan on your current residence with a conventional, possibly putting down a little money, and get your entire VA guaranty back? I don't know what you would pay in closing costs but that is probably at least worth investigating. You also can still have renters in your house while you list it for sale, there are some gotchas but also worth exploring. What is your current duty station? Are you upside down on the current house? Can you get enough rental income to cover mortgage plus all expenses? Consider also the hassle of managing it from afar. In some cases it is preferential to sell a residence even if you have to pay some money in to sell it, just to get rid of the liability.

Sell as much crap as you can like you already alluded to. Even if you trash it or give it away. It will cut down on moving costs (even if you use the military movers, there are still moving costs) and will reduce the size of the residence you will need. If it is just you, DW, and one baby, you can get away with a tiny amount of square feet. I grew up with a brother and sister in a small house in HCOLA that was only about 1400 sq ft. You can do it on a lot less.

Keep milking the car. If it runs fine and you can keep fixing it, keep using it. My father still drives a 20 year old civic which has tons of problems but still gets him around town. I don't see why you need an AWD SUV, it hardly every snows there and though it rains a lot, it rarely gets much below freezing. A good front wheel drive sedan with even 10 year old traction control technology is perfectly safe and will take care of pretty much any paved-road situations you should run into. A baby in a car seat in the rear seat will be perfectly safe. The car manufacturers have done a fantastic job marketing, convincing everyone they need AWD SUVs as soon as they have kids else they are crappy parents.

Is there no on base housing? If the BAH/BAQ is as crappy as you say, then I think you should try to score on base housing. Even if you have to rent for a little bit while on a waiting list. It will save you a huge amount of money on the commute and a beater car won't be as much a problem, you will be able to get to work and the commissary, etc without driving far. Baby stuff can be found cheap at the base thrift store. In general, you should take maximum advantage of the free/low cost services and benefits available on base until you can get to a financial situation that lets you stop hyperventilating.

Ditch your wife's failing home business. Sorry. If she has no marketable skills, she should explore ways to gain some. Even a lame job, waiting tables or something else like that is still a job and will still help pay the bills until she can move up to something better. As others have already said check the resources available on base - family readiness center, education center etc. If her business turns around and starts making money then great - but guess what, you don't need a dedicated office to run a home business. Many military spouses run their home businesses from the breakfast nook or kitchen table.

Lastly, from your username: Are you a military pilot? How much experience do you have? How much service commitment do you have remaining? Have you already accepted the assignment? Can you decline it and get out? The opportunities for pilots right now are unbelievable and demand for pilots is far outstripping supply. Unless you are handcuffed with a commitment or very close to military retirement, consider dropping a few grand toward an ATP certificate, moving to a VLCOLA, and getting an airline job.

Startled Cat
Posts: 354
Joined: Thu Apr 03, 2008 8:54 pm

Re: Moving to HCOL, worried, need help.

Post by Startled Cat » Thu May 31, 2018 12:50 am

I know it's not a useful contribution to this thread, but I did a double take when I saw $261/sqft described as HCOL. Makes me realize how messed up my local market is (I'm seeing prices about 5 times that high in my search).

Brokepilot
Posts: 49
Joined: Sun Sep 25, 2016 10:14 pm

Re: Moving to HCOL, worried, need help.

Post by Brokepilot » Thu May 31, 2018 12:59 am

gliderpilot567 wrote:
Wed May 30, 2018 11:35 pm
I applaud your intention to keep funding your TSP and Roth. I would do the same thing. However, you will likely need to accept some lifestyle changes. The good news is, the more dramatically you cut your expenses, the shorter of a time you will have to put up with it.

Can you refi the VA loan on your current residence with a conventional, possibly putting down a little money, and get your entire VA guaranty back? I don't know what you would pay in closing costs but that is probably at least worth investigating. You also can still have renters in your house while you list it for sale, there are some gotchas but also worth exploring. What is your current duty station? Are you upside down on the current house? Can you get enough rental income to cover mortgage plus all expenses? Consider also the hassle of managing it from afar. In some cases it is preferential to sell a residence even if you have to pay some money in to sell it, just to get rid of the liability.

Sell as much crap as you can like you already alluded to. Even if you trash it or give it away. It will cut down on moving costs (even if you use the military movers, there are still moving costs) and will reduce the size of the residence you will need. If it is just you, DW, and one baby, you can get away with a tiny amount of square feet. I grew up with a brother and sister in a small house in HCOLA that was only about 1400 sq ft. You can do it on a lot less.

Keep milking the car. If it runs fine and you can keep fixing it, keep using it. My father still drives a 20 year old civic which has tons of problems but still gets him around town. I don't see why you need an AWD SUV, it hardly every snows there and though it rains a lot, it rarely gets much below freezing. A good front wheel drive sedan with even 10 year old traction control technology is perfectly safe and will take care of pretty much any paved-road situations you should run into. A baby in a car seat in the rear seat will be perfectly safe. The car manufacturers have done a fantastic job marketing, convincing everyone they need AWD SUVs as soon as they have kids else they are crappy parents.

Is there no on base housing? If the BAH/BAQ is as crappy as you say, then I think you should try to score on base housing. Even if you have to rent for a little bit while on a waiting list. It will save you a huge amount of money on the commute and a beater car won't be as much a problem, you will be able to get to work and the commissary, etc without driving far. Baby stuff can be found cheap at the base thrift store. In general, you should take maximum advantage of the free/low cost services and benefits available on base until you can get to a financial situation that lets you stop hyperventilating.

Ditch your wife's failing home business. Sorry. If she has no marketable skills, she should explore ways to gain some. Even a lame job, waiting tables or something else like that is still a job and will still help pay the bills until she can move up to something better. As others have already said check the resources available on base - family readiness center, education center etc. If her business turns around and starts making money then great - but guess what, you don't need a dedicated office to run a home business. Many military spouses run their home businesses from the breakfast nook or kitchen table.

Lastly, from your username: Are you a military pilot? How much experience do you have? How much service commitment do you have remaining? Have you already accepted the assignment? Can you decline it and get out? The opportunities for pilots right now are unbelievable and demand for pilots is far outstripping supply. Unless you are handcuffed with a commitment or very close to military retirement, consider dropping a few grand toward an ATP certificate, moving to a VLCOLA, and getting an airline job.
I laughed at lifestyle changes, I have no style in life besides saving to pay future bills. I haven't bought myself something nice in years and the wife literally cries because we cant go on vacation like the other people on facebook do. We have accepted that we will have to live in a smaller older home and that she will have to find work. I am handcuffed for at least five to six more years and at that time Ill only be seven years away from retirement. It is a slippery slope. Uncle sam owns me at this point.

Brokepilot
Posts: 49
Joined: Sun Sep 25, 2016 10:14 pm

Re: Moving to HCOL, worried, need help.

Post by Brokepilot » Thu May 31, 2018 1:03 am

aaronl wrote:
Thu May 31, 2018 12:50 am
I know it's not a useful contribution to this thread, but I did a double take when I saw $261/sqft described as HCOL. Makes me realize how messed up my local market is (I'm seeing prices about 5 times that high in my search).
Yea, but this isn't Manhattan, Sandiego, San Fran or any other high-density area with industry. When I lived in San Diego I was paying $400 per square foot but!.. housing allowance was $1200 more a month.

Brokepilot
Posts: 49
Joined: Sun Sep 25, 2016 10:14 pm

Re: Moving to HCOL, worried, need help.

Post by Brokepilot » Thu May 31, 2018 1:06 am

Just found out tonight that my current home that is less than two years old may have foundation cracks....

The next couple of years are going to be really hard financially.

NJ-Irish
Posts: 25
Joined: Wed May 30, 2018 7:23 pm

Re: Moving to HCOL, worried, need help.

Post by NJ-Irish » Thu May 31, 2018 11:29 am

That sounds like a pain but you might have a warranty if it’s less than two years old. I’d get in touch with the builder and ask him to inspect. If in fact there are issues, then the builder can remedy. Don’t assume the cost will be 100% your responsibility.

With regards to your move, dont try to engineer a perfect solution on Day 0. Allow yourself some time to educate yourself and make those tough decisions once your informed and have a handle on the facts. My dad calls it “admitting what you don’t know.” My wife calls it “giving yourself some grace.”

Renting for a year would give you time to resolve the foundation issues, figure out a plan for a tenant/sale of the property, educate yourself about the local real estate market, know your exact cash situation with respect to that sale, Figure out housing “needs” i.e. if kids are in the picture, know how long you might be stationed on the base, figure out a long term solution with cars, give your wife some time to acclimate and find a job. There are lots of advantages. The difference in expenses probably isn’t that much. How much would that information be worth to you?

NextMil
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Re: Moving to HCOL, worried, need help.

Post by NextMil » Thu May 31, 2018 12:01 pm

Brokepilot wrote:
Thu May 31, 2018 1:06 am
Just found out tonight that my current home that is less than two years old may have foundation cracks....

The next couple of years are going to be really hard financially.
I think everyone sees the desperation in your words, but slow down. People a lot less smart have made it work, you can too. As others have said, DUDE, Rent. You don't want a collection of houses that you have to manage from far away if you keep moving around. You need to remain flexible.

I would be at the door of the builder of my two year old home asking him what he plans to do to correct it.

Don't sweat kids until you have one. There are people in NYC that have their infants in closets. The first 3 months your kid will probably sleep in your bedroom anyway. Seriously, you aren't even there and you are sweating it already.

Slow down, breathe. This is all doable.

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Cobra Commander
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Re: Moving to HCOL, worried, need help.

Post by Cobra Commander » Thu May 31, 2018 12:42 pm

mega317 wrote:
Wed May 30, 2018 8:07 pm
It's not clear to me why renting is foolish. You can't afford a house and your time there is finite.

I also question some of your expenses. I would be interested to see how you come up with 8 grand for a baby without daycare. Why do you need awd SUV? Why do you need space to accommodate a failed business that generates no income?
+1. The costs for the baby will be far less than $8K per year without daycare expenses. All clothing can be bought used for pennies on the dollar of what they cost new. Same with other baby gear (stroller, etc.) except for the car seat, buy that new but a moderately priced car seat will be fine. Formula is tough but even at the high end before our DD went to solid food we were spending $120 per month so it's not that bad.

gliderpilot567
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Joined: Wed Feb 10, 2016 10:32 am

Re: Moving to HCOL, worried, need help.

Post by gliderpilot567 » Thu May 31, 2018 1:36 pm

Click here:

https://www.whidbeyislandhousing.com/

They have a phone number to call to set up on-base housing: (360) 257-3331. Call it! They can also point you in the direction of suitable off-base rentals or houses for purchase. There is usually a waiting list for on base housing but if you have orders in hand you can often get on that list even before you PCS.

On base housing takes your entire BAH/BAQ, but no more. I have lived in on base housing both as single and married with kids at three different installations and the convenience of proximity to work and on-base facilities saved a huge amount of time and money. I would recommend it in your situation!

As others have said, take a breath. I was in almost your exact same situation four years ago, except unlike you my IRAs and TSP were empty! We were PCSing to a HCOLA, we owned a vacant rental that sucked down $1100/mo; many debts, no savings; so overall net worth, ignoring the rental house and mortgage which we assumed to wash each other out, was approximately -150k. We did not have enough VA guaranty available nor enough cash to cover the difference, and the minimum payments on our loans and credit cards used up nearly all my income each month, so we had to find a rental that we could just barely cover. We took a huge dose of humility, sold a bunch of stuff, sold even more stuff, sold some dear things from hobbies that I enjoyed, lived in a smaller house than we wanted, wife got a series of gradually improving jobs, and four years later our net worth number is black instead of red and pushing 200k. YOU CAN DO IT!

Also: Stop looking at all the other people on facebook and their vacations. Seriously? People only post stuff that they want to brag about or make everybody else envious. They are not posting pictures of the statements showing the $0 in their 401ks/IRAs, nor pics of their credit card statements. You are way ahead with your prioritization of retirement savings!

When time comes for a vacation, take some leave and get on the Space-A lists for all the bases in your vicinity, plus all the bases at possible destinations. You will have to wait for a few days but you will get a free airlift to somewhere. Do it now before kids, and you and DW can be super flexible, end up in Europe, Asia or wherever! You can then stay at the base lodging wherever you end up, and hit up the local ITT or Outdoor Rec for cheap or discounted activities.

warner25
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Re: Moving to HCOL, worried, need help.

Post by warner25 » Thu May 31, 2018 9:19 pm

I don't have any specific advice that others haven't already mentioned, but I wonder if maybe you're actually doing better than you make things sound. You're a mid-career officer with no kids, just one small 16 year-old car, who doesn't go on vacation, etc... So where is all your money going? If the only problem is this one bad house purchase, I think you should be able to cut your losses and do just fine going forward.

I'm a mid-career officer with two kids and a wife who hasn't earned income for the past five years, two cars (one of which is brand new), going on several out-of-state vacations each year, and I think we're doing just fine in terms of cash flow and savings.

Before we had kids, by the way, we saved loads of BAH money by renting the minimal space (e.g. 1BR apartment) that we needed off-base. After having kids, we realized that living on-base is a great deal for families, both financially and in terms of the lifestyle. And the housing on many bases, at least in the Army, is moving towards a market-pricing model instead of full BAH for older neighborhoods, which let us save loads of money for a couple years while living on-base too.

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Watty
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Re: Moving to HCOL, worried, need help.

Post by Watty » Thu May 31, 2018 10:28 pm

Brokepilot wrote:
Wed May 30, 2018 6:59 pm
.... my wife has no real skills or job experience (besides being self-employed in a failed business) so likely she won't bring in any income.
If she can pass a drug test, no felony convictions, and can speak at least basic english she can get a job that does not involve flipping burgers with no problem.

We were in a different situation but when we had a kid my wife wanted to be a stay at home parent. To make the numbers work better as soon as my kid was a toddler she did day care in our home for one or two kids that were about my sons age. That also gave my son other kids to play with.

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