Author Topic: Case Study - Working on my stash by moving?  (Read 1467 times)

WorkingonMyStash

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Case Study - Working on my stash by moving?
« on: May 15, 2014, 04:22:02 PM »
Hi MMM Members!

I am new to MMM, but have worked toward the debt free lifestyle taught by a "beginner" financial personality for a few years. I am finally debt-free aside from my mortgage.

My question is about moving to reduce expenses my biking to work and local necessities. I live 26 miles from my office and the commute typically takes 45min-1hr. My fiance and I live together and she commutes to college 39 miles, typically taking an hour+ each way. The commutes alone are making us crazy, not to mention the cost!

I have a 07 manual civic and would like it to last another 10 years by rarely using it. I could also eliminate $130/mo parking, $125/mo gas, etc. by moving within biking distance to work.  My fiance has a 05 Mazda Tribute (Ford Escape) and spends $250+ on gas each month.  I would like to move to the city I work in to be bilking distance from work and necessities, drastically reducing our transportation costs.  She will also, most likely, work in the city  upon graduation.

I currently owe $139k on my home and zilliow est mkt price is $148k, so I would not walk way with much after fees&costs. In addition the home could use around $5k of work to make it ready to sell. Oh and best of all my subdivision's HOA does not allow renting. I know dumb me, but I was young and didn't have foresight.

At what point is the cost savings of moving worth it? 

I have around $7,000 saved, but know it will take significantly more to get myself ready for the move. My savings rate is around $1k/month.


I am trying to figure out the fastest way to be able to make the move happen. The other hurdle is the fiance and I have 4 dogs (merged household) so it will be difficult to keep our place showing ready while living in it. This issue also makes renting a place short term while purchasing a new home almost impossible (that I know of I would love to be wrong!).

I would love any advice regarding moving while owning a home you need to sell. Also would a non conventional (not 20% down) mortgage be worth considering to facilitate a quicker move? I never want to have PMI again (current home is on a 3.5% down FHA that quickly was underwater). I have heard of 80/10/10 mortgages putting 10% down and the other 10% as a line of credit to avoid the PMI. IS this sort of thinking anti-mustachian? Any other ideas for making the move happen sooner rather than later?

I filled out most of the case study info below to add the details I missed. Fiance will graduate in 2 years and is basically earning enough to cover her tuition and personal expenses and trying to stay debt free until graduation.

Income: $26/hour, 40 hrs week with opportunity for OT. After 401K, taxes, parking, and insurance coming out of my check I take home $1450-$1700 bi-weekly.

Current expenses:

Mortgage      $939.95
Utilites       $300
Internet   $49.95
DirectTV      $76.71
HOA      $40.00
Car Insurance      $103.00
Car Gas/Oil Change      $160.00
Cell          $82
Groceries      $500.00
Dog Food/Meds      $100.00
      

Assets: Savings $7k, 401k - $35k, Honda ~9k, Home (Mortgage below) - $148k

Liabilities: Mortgage - $139k

Thank you All! I look forward to a fun discussion below!

« Last Edit: May 15, 2014, 07:45:24 PM by WorkingonMyStash »

WorkingonMyStash

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Re: Case Study - Working on my stash by moving?
« Reply #1 on: May 15, 2014, 07:51:58 PM »
You nailed the grocery thing right on! We could certainly be more diligent in eating our leftovers and not wasting food. The grocery category does include household items as well, but could be reduced.

I forgot to update the budget spreadsheet I copied my expenses off, but directv is down to $77, but again you are probably right about being something to cut. Maybe I could sell it to my fiance as accelerating our move and she might go for it.

Re: car insurance it used to be 75, but I got a speeding ticket and it went up. Do you think it would still be cheaper with competitor?

Re: Same as directTV old spreadsheet actual is closer to 82 now. Still expensive I know.

I think you are right I need to tighten up the budget and hit savings harder. Would you consider a 80/10/10 mortgage or only go for a standard 20% down?

Thanks for the feedback!

Thegoblinchief

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Re: Case Study - Working on my stash by moving?
« Reply #2 on: May 15, 2014, 08:54:55 PM »
What are home prices like in the new area? You made no mention of the price difference.

I realize renting with pets, let alone 4, is tough - but consider that as an alternative depending on how your market falls on the rent vs buy scale.

You can cut $300 a month from your groceries - that's double your gas bill right there.

Tackle the spending, work on your savings. Take your time planning a move. What happens if your fiancÚ ends up getting a great offer somewhere completely different? You want to buy/sell houses AT MOST every 10 years. Otherwise the transaction costs eat you alive.