Author Topic: Stache Advice wanted (moving and saving)  (Read 2131 times)

shortstache

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Stache Advice wanted (moving and saving)
« on: July 06, 2013, 03:06:29 PM »
I have been slowly working a debt snowball for a little over 3 years, since getting married. My wife and I have paid of about 80k in debt and have 40k left to pay on a student loan @ 4.5% interest. I also have a rental property in another state that is about 40k underwater. We live in NJ, have one car w/140k miles, a 9 month old daughter, I ride my bike to work, I work 60 hours a week and my wife works 10h. We are on track to make about 140k in 2013 if I can keep my sanity. I have 2 questions. 1) We are looking at moving somewhere cheaper (possibly Chattanooga) and I am not sure if we should try to move now, or wait till my SL is paid off. NJ is not for us, it is too expensive and not enough outdoors stuff. When moving we face the risk of loosing 50k a year in income b/w my wife's PT job and my side business. I put our current town in a cost of living calculator against Chatt and it looks we would have the same standard of living despite the huge pay cut. I am not very happy w/our current situation; i.e. me working 60 hours a week. 2) Should I be throwing all my xtra money at that student loan or saving for a home to buy when we move (we currently rent)? Mortgage interest rates are starting to creep up and I can deduct a portion of my SL interest (although not much w/my current income). So I am not sure if long term it is best to continue with the get out of debt 1st scenario. Thanks for any advice!

Frankies Girl

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Re: Stache Advice wanted (moving and saving)
« Reply #1 on: July 06, 2013, 04:00:06 PM »
Congrats on paying off that amount of debt so far! That's a great job!!


I guess I have a few questions regarding the moving/debts:

Would you and your wife have job prospects in Chattanooga? Is there some reason you've picked that (family, used to vacation there, etc) that made you land on that, or is a "threw a dart at a map" situation? (don't get me wrong - Chattanooga is supposed to be a lovely town)

The rental property in another state - is the rent covering the taxes and mortgage payment? If not, can you sell it and at least pay off the mortgage? Cause that is one thing that would bother me personally; hanging onto a property that is a money drain. But I don't do rental property, so probably don't listen to me on that one...

Could you and your spouse easily find a job in the area? Done your research on decent/safe neighborhoods, cost of homes in the area, daycare and relocation costs?

If it was me, I'd stay put and really hit that school loan with everything I've got. I would not want to do a big move like that with 40K earning 4/5% hanging over me. You say that you're currently on track to earn 140K this year... that loan should technically be knocked out in less than a year with that much in earnings (unless you're COL is sky high or you're spending like crazy).

You're going to have much more in expenses than just a house downpayment (which should be at least 20% to avoid PMI) - you need a moving fund, living expenses while you are in transit, emergency funds in case the job situation isn't what you thought, purchases for all the things that come with being a homeowner... that's a whole lot of stuff to plan for, and unless you're a minimalist (making it easy to pack/move) with a job skill that will have people beating down your door, you're going to need to make sure you've got a plan and the funds in place.

So if it was me, I'd sell the rental if it pays off the mortgage and get free of that, stay at the current job/location saving like a fiend and pay off the SL debt and then stockpile a tidy sum so in a year's time, I could do the move at my own pace (making a trip or two to scout the locations and find a house/job). Even a crappy situation is tolerable if you know there's an end date and reason you're staying.

Again, that's just how I'd approach it. I'm sure there's wiser than me that would do it differently.

shortstache

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Re: Stache Advice wanted (moving and saving)
« Reply #2 on: July 06, 2013, 04:41:56 PM »
Thanks Frankies Girl!

The job in Chatt is with the organization I currently work for. I wouldn't actually be leaving my primary job but would take a cut in pay b/c the diff location. Plus I wouldn't be able to continue my side business in Chatt. I am a licensed atty in NJ and I have a small private law practice. My wife is an RN with a pretty marketable resume. We are hoping finding pt work for her won't be to hard. We are on schedule to have the SL debt done in 12 months, tops.

I have a property manager handling my rental property and it has been a nightmare with some of the tenants. I bout in 2006 in an "up and coming neighborhood." The neighborhood stopped coming up when the market tanked. I really don't want to shred my credit with a short sale. But, last month someone stole the compressor for the AC from outside the house. When I have a tenant in there, with no repairs, it pays for itself. The PM company just placed the new tenant a couple months ago but b/w the PM getting 1st months rent, the ac and repairs I have shelled out about 6k this year on mortgage payments for the months when I don' t have a tenant as well as repairs. I am 36 and have done a bit of moving the past few years. My wife and I just want to settle in a great area with a reasonable cost of living where we can raise and outdoorsy family. I saw the posting for the job in Chatt and so we have been just kicking the idea around. But a change when are making steady progress on our financial goals has me a little uneasy.

Thanks again for the feedback

Frugally-raised

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Re: Stache Advice wanted (moving and saving)
« Reply #3 on: July 06, 2013, 07:13:39 PM »
Tough decision.

Would you choose Chattanooga if it weren't for the job? It sounds like you may need to do more research—investigate it without the job. (Because what would happen if you lose your position?) MMM talks about analyzing this in several blog posts, and I'd follow that. Where, exactly, would you live? How many homes are available and at what price? What are the tax rates? Schools?

Do a job search for your wife as if she's really looking for a job now. Look for future predictions for her career in the area, too.

If you make the move, how long will it take you to repay the student loan? (Don't forget to factor in cost-of-moving expenses.)

I'd be nervous about that out-of-state additional property you own. It sounds like it's actively costing you money. If that's the case, what do you think is your loss for the year? If not, how much are you making? If you're not making much, I'd seriously consider selling it, hit to your credit aside. Just how long do you want to wait it out?