Author Topic: Reader Case Study: Advice for indecisive/risk averse couple  (Read 1789 times)

Terry

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Reader Case Study: Advice for indecisive/risk averse couple
« on: February 04, 2016, 02:19:57 PM »
help, what should we do? 

Life Situation:
Me:  42
Husband:  49
child:  3 whom we would like to help with college expenses
live in NYC suburb

Income:
me:  $100k, hate my easy, boring, unrewarding office job but don't want to be a stay-at-home parent either.
husband:  $50k, doesn't mind working and doesn't have good benefits from work and will likely never get good benefits due to his field of work
rental income:  $5,150/mo.

Assets: 
Investment Property(2family):  worth about $600k, $18k in property taxes, Mort+Tax= $4,600
House: $260k, purchased and moved-in last year, $10k in property taxes, Mort + tax= $1,900
combined 401k accounts:  $600K
Combined Roth:  $190k
Non-Retirement:  $180k
529:  $40k

Liabilities:
Investment Property:  $220k (about 5 years left)
House: $220k (29 year left)
no car or educational loans

Expenses:  about $50k/yr.  We don't really budget, but we live a frugal lifestyle. 


Questions:

1. Should we move to LCOL area to save some $$$.
The problem is that we live in a HCOL area with high property taxes.  Although we live in a close suburb, the commute into NYC still sucks.
 
Last year, we purchased a single family house in a cheaper nearby town to save money.  However this neighborhood is not as nice and the schools are not so great.   The apartment we lived in in the 2 family house now rents for $2,400/mo while our current mortgage on the new house is $1,900.  Our 2 family house is in a very nice neighborhood with excellent public schools and this is where we would live once DD starts school in 3 years.  They're lots of kids playing and running around and into each other's houses and yards like the good old days. Plus, its a very walkable town and NYC is very accessible during the weekends.  We would love to live there except for the high property taxes. We have some family here also, though I don't know if that's a pro or a con.  Should we move to a totally new LCOL which has nicer weather, good public schools and is a cosmopolitan walkable town?  Does such a place exist?  Any suggestions?

2.  Is it wise to quit our safe, easy jobs now to explore location and vocation options? 
The other problem is that I don't have other interests that I want to pursue, beside perhaps travelling (internationally and domestically), but that can get tiring after a few months, especially with a toddler in tow.
Husband wouldn't mind working.  He is worried we will both have difficulties finding new jobs since we're "older" and we don't have very marketable or high-demand skills.

3.  If we plan to travel for 6-12months, should we sell both properties or rent out? (If we can make the big leap and quit our jobs)

I know this all is very vague and something that we need to find the answers to ourselves, but haven't been able to for about a year.  So I'm looking for your pearls of wisdom. 

Thank you,

Indecisive long time lurker


« Last Edit: February 05, 2016, 08:41:35 AM by Terry »

marblejane

  • Bristles
  • ***
  • Posts: 358
  • Location: SF Bay Area
Re: Reader Case Study: Advice for indecisive/risk averse couple
« Reply #1 on: February 04, 2016, 08:37:00 PM »
More details, please!

First off, do you want to help your kids with college expenses? How old are your kids? How will they adjust to moving to a new place?

Third, is it just the commute that you hate? Or are you ready to stop working? Just because you don't work, that doesn't make you a stay-at-home parent. You seem to be in a good financial position to consider different options without regard to your current high salary.

By my math, your 401ks, Roth and non-retirement assets ($970k) have a 4% safe withdrawal rate of $38.8k annually. You are also cash flowing $550/month or $6,600 per year from the investment rental. So, you are at $45k/year in retirement expenses. I'm assuming that your expenses of $50/yr include the mortgage on the current house. If so, then you can either save another $125k or cut $5k annually from your expenses, and be FI in your current situation.

To me, it sounds like you liked living in NYC and just moved to save money. If you want to move back to NYC, you should do that. Moving back into the apartment in the rental property would cost you another $500/mo (assuming that your current house could be sold at a break even or rented out to neutral or positive cash flow). This adds another $150k to your target FI amount. Or, you can cut another $6k in annual expenses.

Terry

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Reader Case Study: Advice for indecisive/risk averse couple
« Reply #2 on: February 05, 2016, 08:55:33 AM »
thanks, MarbleJane for your input. 

DD is 3 years old and we'd like to help with college expenses.  We live in NYC suburb near the investment property.  We would move back there once DD starts school if we were to remain in the area.

Most importantly I hate my job, then I hate that I have to spend so much time getting there and stressing about traffic.  I also dislike having to wake up DD to drop off at daycare when it seems like she wants to sleep some more. 
The problem is that I don't want to be SAHP, I don't have the patience to deal with her all day.  Mabye a local PT gig would be the best solution for this. 

My concern is: we cannot afford to live in this HCOL?  Even if we can afford it, should we waste $$ living in a HCOL area?    I also wouldn't mind a dramatic change since I've lived in this area for 30+ years, but not sure another location would suit us better. 

mozar

  • Magnum Stache
  • ******
  • Posts: 2871
Re: Reader Case Study: Advice for indecisive/risk averse couple
« Reply #3 on: February 05, 2016, 09:59:28 AM »
Is there a low cost nursery co-op nearby? You could put your daughter in part time and quit jour job and live off husband's salary for awhile and see how it goes.