Author Topic: Should we increase housing costs to move to a community we love?  (Read 1712 times)

taytay

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Hi everyone,

 I would love your thoughts and advice about an upcoming Life Decision my family is looking at. As with everything in life, we all seek to find balance between optimizing our lives, and creating a life that we love and is sustainable in terms of happiness.

My husband and I have been on the MMM 'path' since around 2012. I discovered this whole ERE/MMM/FIRE world and slowly my husband has come on board. We now have a 3 year-old, and are trying for Small Human #2 :)

We currently live in Denver, and although we like where we live, we are very tired of living in a (relatively) big city. Denver is getting really crowded and traffic is becoming worse and worse. Luckily, we have optimized our commutes (mine is one minute, and husband's is 15-20 minutes). We keep our spending low (although not as low as some of you folks, we are still working on it).

So here we come to the Big Life Decision: we've always wanted to move up to Boulder. I grew up in a college town and love college towns. Husband loves Boulder as well, and it would be a great environment to be in given his work (he's in the tech start-up world). Boulder has amazing nature and really good schools (which is important to use, we refuse to pay for private school down here in Denver).

Perhaps most importantly, my husband's office will move up near Boulder within the next two years, so unless we move his commute gets horrible. If we move, I will commute down to Denver once per week, and work from home the rest of the week.

Boulder housing is crazy expensive though. No surprise that lots of people want to live there, and most of the land is parks/open space, so it drives up the cost of housing.

On the other hand, I think moving up there would increase our quality of life, boost happiness, facilitate bike-riding and raising happy kids who roam outside in nature rather than sitting in traffic on weekends to go to the zoo or museum or even a play-date as our friends are far-flung all over the city.

We are willing to down-size to move up to boulder, but still want a house (rather than an apartment) if we have two kiddos.

It comes down to this: moving up there is raise our annual housing costs by about $15k. All other costs will remain the same.

We will keep our current house as a rental in Denver, which will cash-flow about $600 per month, so let's say we get $6000 net per year rental income (accounting for some maintenance costs). I will manage it myself.

With that in mind, our Boulder housing cost is $9k/year over our Denver housing costs.

To me, that seems like a good trade-off, but what do you guys think?

Anyone done an intentional lifestyle inflation to increase quality of life?

As far as the rest of our finances, we have a 40-50% savings rate (variable because we own 3 small businesses, and the incomes vary month-to-month), no debt other than our mortgage, and have one other rental property that cash-flows $200/month.

Happy to answer any other questions!


ShoulderThingThatGoesUp

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Re: Should we increase housing costs to move to a community we love?
« Reply #1 on: April 29, 2018, 08:05:53 PM »
Move when his office moves.

Another Reader

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Re: Should we increase housing costs to move to a community we love?
« Reply #2 on: April 29, 2018, 08:15:55 PM »
I would have to see a complete operating statement on the two rentals to see if I agree with your net income estimate.  Most people fail to understand that all expenses, including pro-rated capital improvements on a single family are likely going to be 45 to 50 percent of your AGI.  The net income is not just rent less the mortgage and some maintenance.

Move to Boulder if you want to and you can afford it.  However, move when you have the really good reason - your husband's commute.

mozar

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Re: Should we increase housing costs to move to a community we love?
« Reply #3 on: April 29, 2018, 08:22:46 PM »
So Boulder is more expensive than Denver? Your husband needs a cost of living raise when you move.

WalkaboutStache

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Re: Should we increase housing costs to move to a community we love?
« Reply #4 on: April 29, 2018, 11:16:43 PM »
As I see it, the point of this whole exercise is to lead a life you enjoy, emphasizing quality of life over mere accumulation of possessions.  Occasionally, you will come to a decision to get something expensive that might be superfluous to others but from which you derive such pleasure and enjoyment that the cost may be well worth it. 

For me, that something is canoes and kayaks.  For most people, it would be silly to blow a bunch of money on a fragile carbon shell, but I use one or the other of my craft several times a week and get an inordinate amount of pleasure out of working on my technique and racing them. 

In your case, it is living in a college town and having access to all tangible and intangible benefits of that.  If you were just looking to move to a bigger house with self-grooming carpet (or whatever other silliness is fashionable these days), I would say it is a bad decision.  In this case you like the place and are poised to get a quality of life bump.  You are not proposing to just burn the cash and I presume you can afford the payments without completely derailing your FIRE, so go for it.  Shop hard for a place, negotiate cost of living adjustments, do whatever you need to do to make the move cheaper, the go for it.

You may be a little too optimistic on your rental prospects. Once you rent your current house, take a year and then have a cold, hard look at your cash flow (keep a good expenses log).  If your current house does not yield a decent return, you might want to think of selling it and redeploying the equity, but that is for future consideration.

Where you live makes a HUGE difference in you quality of life.

undercover

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Re: Should we increase housing costs to move to a community we love?
« Reply #5 on: April 30, 2018, 03:17:38 AM »
$9k/yr while also adding to your husband's commute? Hell no, unless that's like under 5% of your income.

Absolutely no reason to do it now for many reasons I'm sure, but the largest being that it will likely put him in a worse situation for negotiating a pay increase once the move occurs.

Also, 95% chance that your house is a bad rental.

If you want to do it now, then make it happen by finding jobs commensurate with the cost of living increase.

Gone Fishing

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Re: Should we increase housing costs to move to a community we love?
« Reply #6 on: April 30, 2018, 07:33:36 AM »
Lots of missing information here.  How about a full blown case study? 

Not only will your saving rate decline, but your required stache will increase.  Do the math, see how many additional years of work it will cost you.  Then decide. 

frugaliknowit

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Re: Should we increase housing costs to move to a community we love?
« Reply #7 on: April 30, 2018, 09:43:16 AM »
Not enough information.  Anything said is "shooting from the hip".

Cranky

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Re: Should we increase housing costs to move to a community we love?
« Reply #8 on: April 30, 2018, 11:07:54 AM »
Only you can decide if it's worth it.

But it wouldn't be worth it to me, at this point, in terms of the added commute if nothing else.

Find something outdoorsy to do in your own neighborhood if you want more outdoors time. Surely there's a neighborhood park? Meet some families close by.

I liked Boulder when it was scruffy and cheap, and I feel really bad that I voted for the green belt plan that changed all that and made it a place for rich people. House prices are ridiculous there. Last week, the NYT featured a place for $2 million, a place that I used to walk by all the time, and it sure wasn't $2 million at the time. Ack.

But if your dh's office really does move, you can decide at that point what it's worth to you.

Dicey

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Re: Should we increase housing costs to move to a community we love?
« Reply #9 on: April 30, 2018, 11:49:55 AM »
Move when his office moves.
Absent more information, I'm firmly in STTGU's camp. The grass isn't always greener. I'm sure people complain about traffic and housing and schools in Boulder, too.

honeybbq

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Re: Should we increase housing costs to move to a community we love?
« Reply #10 on: April 30, 2018, 11:56:47 AM »
I would definitely move. Do you know where H's new office will be? I'd get a place along the bus route so that H can commute via bus (or bike) and you can commute downtown via the bus line.

Commuting from Denver to Boulder would be hell IMO.

patchyfacialhair

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Re: Should we increase housing costs to move to a community we love?
« Reply #11 on: April 30, 2018, 12:02:55 PM »
Fellow Coloradan here: no, I would not move to Boulder. It's too crunchy even for Colorado.

Jokes aside....sounds like your husband should request a COL adjustment. Then, sell your Denver house (rents aren't high enough here to justify the opportunity cost of investing what should be good proceeds from sale), and move there if you think it'll be worth it for all of the other reasons you cited.

Also, keep in mind that moving to Boulder and staying put aren't your only two choices. Broomfield, Louisville, Lafayette, Erie, etc could be acceptable options for relatively short commutes without the sting of Boulder housing prices.

Jon Bon

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Re: Should we increase housing costs to move to a community we love?
« Reply #12 on: April 30, 2018, 12:04:53 PM »

Also, 95% chance that your house is a bad rental.


This ^^^^

Share some numbers.

Your best move between happiness and economics IMO would be to sell the Denver house, roll the equity in into the Boulder house to get the payments down. Or sell the Denver house get a traditional 20% down loan on the Boulder house and invest the proceeds from the Denver house into something else.

Unless the Denver house is worth about 120k I dont think it makes any sense at all to hold onto it.