Standard buyer's remorse or should we sell?

[Sport014]

Hi all! I'm a long time occasional lurker who's posting for the first time, so please excuse any poor etiquette. I'll try to give you the cliffs notes and can fill in the details if needed.

In short, we recently bought a new home to fit our expanded family. We're 4 in total, ages 35, 35, 4, and 7 months. We won't have any more kids. My wife and I both work. Together we make about 180K/yr and pay about $2,400/mo. in daycare and school loans. We don't carry any other debt. We save about 28% of our take-home and the rest feeds our moderately frugal life. We live in CT with very high taxes and a high overall cost of living.

We'd been living in a rent-free apartment and home shopping for just over a year when we purchased something at the top of our monthly price range. It's also further from work than we'd been living (roughly a 40-minute commute one-way on average), hasn't been renovated in a while, and doesn't have A/C. That said, it's in a really nice neighborhood, a great community, and a high-quality school district.

We're really concerned we may have made the wrong decision. We ended up there because the property had a lot of the characteristics we desire and because the school system is really great, but we're having a hard time justifying the price given the fact that our school loans (4.5%) won't be paid off for another 8 years. We're trying hard to semi-retire in our early 50's, and we think we may have just shot ourselves in the foot.

It seems like we're at a crossroads here. We can keep the house, which will probably require either my wife to work another day (she's reluctant to do so while the kids are still young) or shave 2-5% off our savings rate. We'd get about $700/mo. in relief when my daughter goes to kindergarten in a year and doesn't need daycare anymore. This would help, but it would me much better to employ that money to paying down school debt. Alternatively, we're thinking about selling the house, eating about $30K in the sale, paying off my wife's school loans, and living rent-free for another year while we build up enough money for another 20% down payment. The downside there is that the living conditions are tight, and we're up against the clock to get our daughter into a better school system in 2019.

I realize this is sort of detail light, and I'd be happy to include more if people are interested in the discussion. I'm wondering if anyone else has been in a similar situation and/or might have some perspective to offer. No one in my family or network of friends cares anything about the concept of semi-retirement, so I've go no one to confide in. Hence, I reach into the community for some help.

[jlcnuke]

Well, there's two decision here: what is the best financial move and what is personally do you want.

From a financial standpoint, there's nowhere near enough information to give an accurate assessment, but here are a couple factors:
1 year from now, your savings rate can go back to where it is today with the $700/month savings, even if for the next year you'd have to drop it by "2-5%" (very wide margin btw....).
$30k loss immediately is a lot to swallow for many people. Then there's the costs of buying another house to throw on top of that. Will the "savings" of going rent-free for another year be worth the costs?

From a personal perspective:

You have no certainty of finding something better in a year. You could end up back with something further away or more expensive.... or you could find your dream home next door to work for less. Is that a risk you're willing to take?
What things are most important to you; your savings rate, the school ratings, the commute distance, the size of the home? I'd guess you bought the house because you felt it was the best compromise for things that matter to you... has that changed?

[Imma]

I believe in taking your time making big decisions. You have recently bought this home and had a second child. You are not in a hair on fire-debt situation. Instead of rushing into the big decision of selling this home, I think you should stay put for at least a year before deciding what your next action will be. I remember when we bought our home it took us about a year before we were completely settled, and we never regretted the move for a second.

It seems you underestimated the commute. Is there a possibility to work from home or change your work schedule so you can avoid rush hour (if that's a problem) ? I would also take a long hard look at the reasons why you bought this house in the first place. If proximity to a good school was one factor, how likely is it that you're going to find that somewhere else before your child starts school? This seems like an important concern to me.

[Sport014]

Thanks for the thoughts. I really appreciate the input. We could, in fact, make back all the money we lost within a year, but it would mean not contributing to our employer sponsored accounts beyond the minimum required to get our matches. I forgot that mention that part.

The commute is traffic free, and I do have the ability to work from home at least 2 days a week, which I will take advantage of that. It's still a little hard to swallow when you have a young family who you want to spend time with.

The realization that our cash flow will mostly be used up is what got our wheels turning, but I think it's the regret that we didn't buckle down, stay put longer, and get the school loans paid off before we bought, which is the real problem. We kinda wish we could reverse the decision. Sometimes you can't can't see a situation for what it will be until you're in it. You live, you learn I guess. Life will be fine no matter what we decide, just different.

Badassity is tough. You really need to live and breath this stuff if you want to stay inspired and make decisions accordingly. Take you eye off the ball too long and it's easy to derail. I think that finding like-minded people to associate with will be super important on our journey. I'm very appreciative of this community and it's support. Thanks again!