Myamar wrote: ↑
Sat Oct 13, 2018 7:06 am
Long time lurker, first time poster. Curious what some of you would do in our situation--spouse and I want to go two different directions.
We live in a very HCOL area. Real Estate here is about 900/sq ft, give or take depending on building amenities. We live in the NYC area, in an urban walkable neighborhood, in a condo building with parking, but not a "full service building" with doorman, etc. We have two kids, 4 and 7.
So here's the question: We bought a small 2 bedroom condo in 2013, and now we are growing out of it. But we can't agree on our next step. We love our neighborhood and we love being close to my husband's job. We both work full time but he works longer hours so being close to his job means he gets some time at home with our kids that he wouldn't get if we moved to the suburbs and his 25 minute commute turned into a 1 hour, 25 min commute. His job is pretty specialized and doesn't really exist outside of the NYC area--he would have to switch gears entirely and do something else if we moved to another state, which would result in an enormous pay cut (he keeps his eyes open on jobs because we have only lived in the NYC area for 7 years and would be okay with moving somewhere else if the right job/right salary came along--so far it has not).
He takes public transport to work. I drive (because I drive further out to the suburbs), so we have 1 garaged parking space and 1 car.
Here are our housing options:
1)Stay in our 2 bedroom condo. It's worth about $950k now, and we only owe $200k left and my husband is aggressively paying it down (that's his thing--it has to do with his very chaotic childhood. He wants nothing in this world more than to have a paid off house--we've already gone round and round about that). Staying in our 2 bedroom is great financially speaking, because our mortgage is way lower than market rental costs since we refinanced last year. Our mortgage plus HOA plus taxes are only 3.1k. Market rental costs are around 4k for a rental like our unit. The con is, both of our parents live in other places (his parents are in another country, mine are in the midwest), and they are all retired and love to visit. Which means they visit and squeeze into our small space. We are close to our parents and love for them to visit, but we hate that our kids sleep is disrupted because their bedroom is taken over for a week, several times a year. We also have no storage, almost no closet space, a tiny kitchen, the works. BUT--my husband commute is very short for the NYC area, so he gets to do school drop off in the morning, he's always home before bedtime. etc. We don't have to drive--everything is walkable and is feels healthy to walk the kids to school, walk to activities and the supermarket, etc.
2) Move to the suburbs. Taxes in the NJ/NY suburbs of NYC have exorbitant taxes and the ones with good schools are extremely expensive right now. If we sold our condo and bought a 4 bedroom house, it would definitely be in the 900-1 million + range, and would have taxes from anywhere from 20k-30k a year. The houses in the smaller range (say, a 1800 sq ft house that needs some work) would still be in the 700-800k range with taxes around 18-20k, depending on the town. Husband's commute would be much longer (he'd have to leave around 7:15 am and wouldn't be home till around 8pm,) essentially never being home when the kids are awake during the week. We would either live in a smaller, needs work house OR we could buy a bigger nicer house but for a much higher monthly payment than we have now. We would have more space, but less time when Dad and kids are together.
3) stay in our neighborhood and really stretch our house budget and get a bigger condo. A 3 bedroom with parking will be 1.2-1.5 million (HOA plus taxes). Or we could look for a row house where we could rent the finished basement, but the price would be more like 1.7-1.9 million (higher taxes, but no HOA).
Here's a snapshot of our finances.
yearly income: 320k this year. 240k base, 80k bonus last January
Monthly income: 11k, take home. This is after 401k, some small investments, 529, healthcare premiums/contributions
Overall savings/investments. I have 2 pensions from 2 different states (I work in education). My current pension will be vested in 3 years. Husband has about 375k in 401ks and old Roths and regular IRAs. We have about another 75-100k in other investments. We can't do Roth anymore and haven't done IRAs last few years since they aren't tax sheltered. 529s only have about 12k because we just started them last year. We plan to dump another 5-7k in January 2019 when the next bonus comes. If we sold the house today, we'd have about 700k for a downpayment on the next thing. We're down to 1 college loan of 4k balance we are also paying off after January bonus cycle (we throw huge sums into it every year from bonus money).
-current mortgage/HOA/taxes: 3.1k
-Childcare: $1400/month (after school babysitter)
-gas/auto insurance: $250/month
-variable expenses (groceries, clothes, fun, eating out, travel): 2k (bulk of this is travel because our families live far away, and we pay for them to fly to visit us as they are retired and on fixed incomes).
-Classes/activities for kids: $400/month (language class and dance class for 2 girls, soccer for only older kid--classes are very expensive here, it's not like the cheap prices people get in other states).
When we have money left at the end of the month, husband dumps it into an additional house fund or dumps it into vanguard funds. For the past few years, we have paid an additional 30-50k a year into the house through additional monthly payments and a big chunk from bonus money.
Here's the argument: I want to stay in our current neighborhood, buy a 3 bedroom, tweak our finances to make that bigger mortgage work.
Husband wants to either stay in our current 2 bedroom indefinitely (at least till it's paid off, approx 4-5 years from now). Our kids will be teens/pre-teens by then and still sharing a room...OR he wants to move to the suburbs and buy a small house that needs work in the 700-800k range and pay cash. His preference is to always do the most frugal thing. My preference is to find a way to meet our savings goals (we have always maxed our 401 k and invested additional every year and would continue to do so) and still have my husband home to see our kids during the week.
WWYD? I would love input from other people.