Where to Live after the split

[WonderingAgain]

Ok, short version -

Partner and I are splitting up after 15 years, both in late 50's. No marriage, not a community property state.

We own 15 yr old manufactured home on a city lot, free and clear, as Joint Tenants.

Each of us is self employed. They are moving out of the area.

What I do could be done anywhere that the Post Office and UPS deliver.


The obvious choices seem to be -

1) Keep house and buy them out.

Pro - inexpensive town to live in, 1/2 mile or less walk to store, bank, Post Office, Library, etc. Nice climate. Large shop with power, water, etc.

Con - 2 hours from big city, ongoing maintenance of owning a house, property taxes and insurance, house loses value over time because it's a manufactured house, would need at least 2 housemates (for at least 10 years) to pay partner off. I travel in to big city about once a month on business.

2) Sell house and rent 2 bd place for the next 20-40 years.

Pro - smaller space for self and pet, no maintenance, free to move when opportunity arises
Con - rent due monthly and annual increases, neighbors on the other side of the walls, smaller workspace

Income - Very low (under $20,000 for the last 5 years due to medical issues, see last bit of debt below), not likely to increase much (also medical issues, sucks getting old), will collect SS in about 5 years.

Assets - minimal - $16,000 in Trad IRA, my half of the sale might net $40,000 after paying off LOC

Debts - $25,000 LOC (int only for 5 more years, @4%), $5,000 medical (0% interest, $175 monthly payment.

Monthly expenses are about $1000 for the house including tax, insurance, utilities and food. No cell phone, no cable, 16 yr old car in good condition.

This will be the first time I'm on my own again in about 35 years. Scary and exciting at the same time.

Option #3, Sell, sell it all, move to another part of the world.

Suggestions welcome.

[WonderingAgain]

Well, 169 views and no suggestions.

Does this mean everyone else thinks I'm screwed too?

Hmm. much to think about.

[pbkmaine]

It's not that, it's just that there is not a lot of information to go on. Are you happy where you are? Do you have potential housemates in mind? Do you have a support system where you are? As I get older, I find that is the people around me who matter, much more than my living situation.

[gooki]

Will your debts halve after the split?

How much will you get in SS?

[footenote]

If you aren't sure how much Social Security you will receive, it's worth downloading the detailed SS estimator. You will need your lifetime earnings (which you can request from SSA in advance).

Given your circumstances, I recommend moving (doesn't sound like you are enthused to have roomies!). If you have long-lived relations, I also suggest delaying filing for SS benefits to maximize them. Compare how much you will receive for life if you file at 62  vs 70 (or whatever your full retirement ages are for your birth year).

[StarryC]

If possible, I would advise never living someplace where you would NEED roommates to make ends meet each month.  You have to figure that sometime in the next 10 years the roommates are going to turnover/ move out etc.  So, if you couldn't float the house expenses for 2-3 months a year during roommate problems, I think selling is the better choice. Also, I imagine it is harder to find housemates in a small town compared to a more populated area. And that it will be harder to find roommates as you get older.   

You might also have better access to social services in an urban area- public transit if something does happen to the car in the next 5 years, low cost clinics, senior centers in the long run. 

Why rent a 2 bedroom instead of a 1 bedroom or a studio?  Or buy a condo? Do you need the shop to do your work?
With that $40,000 from the sale you could put down about 25% on a $100,000, 1 bedroom condo and have a pretty low monthly payment ($405 + taxes and insurance and utilities, probably a total cost lower than $1,000 a month).  Then you would know the rent won't increase.  Find out your SS payout (estimated) and make sure you can make a budget with the mortgage based on the SS alone.  You would then have a $15,000 emergency fund which you might be able to make last a year.

[dadof4]

A couple of things to analyze. For the sake of simplicity, I'll assume you are conservatively getting 4% back on investments, and likewise paying 4% interest on LOC or mortgage.

A few things are missing from your post.
Rent?

On manufactured home:
Taxes?
Insurance?
Maintanence?
Depreciation?
Are you paying rent on the lot?

You'll need to pay for food and most utilities on both, so we can leave them out.
$1000 seems on the high side, considering you didn't include mortgage/LOC payments there.

 
First, from an equity standpoint:

Scenario #1 - Renting (year 1)
12* Rent - 4% * 40k  (investments) = 
(eg for $500 rent, annually you pay $6000 - 1600 = $4400)

Scenario # 2 - Keeping mobile home (year 1)
4% * 65k  (mortgage interest) + taxes + insurance + maintenance + depreciation + lot rent=

(eg assuming annual taxes = 1500, insurance = 400,  maintenance = 1000, depreciation = 1000, lot rent = 2000, you pay 2600+1500+400+1000+1000+2000 = 8500.

As you mentioned, you can reduce this by having housemate.

You are also slowly losing liquidity by paying off the principle of your mortgage/LOC (though paying off principle is equity neutral).

------------------------------------------------------------
Plug in your own real numbers and see what makes sense.

If the numbers are anywhere near that, I would definitely sell the house and start renting wherever you choose. I worry about your extreme lack of liquidity in the second scenario - if anything prevents you from working, you are in a very dangerous spot.  And that gap is going to become even bigger in the future.

Renting smaller place vs bigger place with housemate - that's a personal choice, but other things being equal I would prefer renting. You don't have a stranger living in your house, you don't have to deal with tenant issues (vacancies, payment issues, evictions, requests etc.). You also have more freedom to move around.

[pbkmaine]

I would also say, that given your income level, there may be forms of assistance you are eligible for.  Have you checked those out?

[WonderingAgain]

Well, folks have given me many things to think about.

I have been self-employed since 2000 and the business is still going along well enough.
There were a few lean years when I had major medical issues and couldn't produce or travel to vend as much. That's what racked up the LOC balance. I'm almost at the end of paying the off the medical bills, so it will free up another $500-$600/mo.

The home is paid off, so no rent or mortgage payment.
Taxes and Insurance run $1700 and $550 per year. I put aside $200/mo for that.
We own the land so no rent payment.
Maintenance has been running about $500 a year because one or the other of us did the work, so that's just 'parts'.
The LOC is indeed at 4% but it's interest only for another 5 years, though I do pay it down a bit after each large sale/event/harvest.

I've been tracking our expenses for 13 years so the $1000/mo came from

Taxes/Insurance  $200
Utilities (Electric/Water/Sewer/Wood) $250
  the highest electric bill is in the Summer for A/C. It gets high 90's here from mid-June to late August)
  the lowest electric is mid-winter because we heat entirely with a wood stove and the 2 cords of wood average out to $50/mo
Garbage is $20/mo
Phone is VOIP and includes hosting for two business websites $70/mo, no cell phone, no cable tv (antenna and converter box)
Car Insurance $23/mo
Food for two people runs between $300 and $600 (depending on if we're stocking up or using up stocked up stuff) so the average would be about $450.

That comes out to about $1063/mo

Actual $'s
May $1295
June $1342
July $948
August $1461
September $839
October $1046
November so far $591

Actually, aside from the car insurance all those numbers have been split two ways for all those years, so my share was typically $400-$600. I'd be picking up the balance if I lived alone.

More than half of my income since 2007 has gone to paying off medical bills (and yes, that's after getting charity adjustments). I'm almost finished with that. Yes, I probably should have declared bankruptcy but that's long past now.

I will sit down and work through your formulas.

Thanks to all the other folks who gave me things to consider that hadn't occurred to me.

A couple of things to analyze. For the sake of simplicity, I'll assume you are conservatively getting 4% back on investments, and likewise paying 4% interest on LOC or mortgage.

A few things are missing from your post.
Rent?

On manufactured home:
Taxes?
Insurance?
Maintanence?
Depreciation?
Are you paying rent on the lot?

You'll need to pay for food and most utilities on both, so we can leave them out.
$1000 seems on the high side, considering you didn't include mortgage/LOC payments there.

 
First, from an equity standpoint:

Scenario #1 - Renting (year 1)
12* Rent - 4% * 40k  (investments) = 
(eg for $500 rent, annually you pay $6000 - 1600 = $4400)

Scenario # 2 - Keeping mobile home (year 1)
4% * 65k  (mortgage interest) + taxes + insurance + maintenance + depreciation + lot rent=

(eg assuming annual taxes = 1500, insurance = 400,  maintenance = 1000, depreciation = 1000, lot rent = 2000, you pay 2600+1500+400+1000+1000+2000 = 8500.

As you mentioned, you can reduce this by having housemate.

You are also slowly losing liquidity by paying off the principle of your mortgage/LOC (though paying off principle is equity neutral).

------------------------------------------------------------
Plug in your own real numbers and see what makes sense.

If the numbers are anywhere near that, I would definitely sell the house and start renting wherever you choose. I worry about your extreme lack of liquidity in the second scenario - if anything prevents you from working, you are in a very dangerous spot.  And that gap is going to become even bigger in the future.

Renting smaller place vs bigger place with housemate - that's a personal choice, but other things being equal I would prefer renting. You don't have a stranger living in your house, you don't have to deal with tenant issues (vacancies, payment issues, evictions, requests etc.). You also have more freedom to move around.

[WonderingAgain]

It's not that, it's just that there is not a lot of information to go on. Are you happy where you are? Do you have potential housemates in mind? Do you have a support system where you are? As I get older, I find that is the people around me who matter, much more than my living situation.

This response was an interesting way of looking at the situation.

I hadn't considered the contentment/support factor.

I'm not actually attached to anyone in this town. My only child is full grown and living in another state. We visit regularly but I wouldn't want to live too close. I enjoy my own company and could be described as a hermit *laugh*.

I'll have to think about this because now I don't know who to put down for Emergency Contact Person, and they always ask for one.

Much to think about.

Thanks.

[scrubbyfish]

One more thought, more on the psychological/emotional end of things:

Your situation may well become much clearer for you *after* your former partner moves out. So, my suggestion would be to let your former partner move out, then sit with your home for 1-3 months to see how things feel for you. e.g., Living in it alone may feel utterly wonderful and freeing -or it may feel lonely, or "haunted" by memories you'd like to detach from. Or you may so adore the solitude that you can't bear even the thought of roommates, and you will naturally move toward a place cheap enough for one.

My partner (not former) and I stopped living together last year. We both quite liked the apartment we had been sharing, but I knew I wouldn't want to live in it with the memories (and also with no buffer to run interference with the nutty landlord), nor have to get a roommate, so I decided to move out. My partner decided to keep the place and was very excited about getting a roommate. But get this: About a month after I moved out, a totally different idea surfaced for him. He checked it out, found it to be totally viable, gave his notice, and moved into his dream situation -a creative and unique "third option" he hadn't even realized was available to him until he'd had the opportunity to hang solo for a bit and hear his deepest self. He's very, very happy in that new place. (Me, I'm less happy with the whole shebang, but I definitely prefer my new pad over his new one, and I'm very happy for him.)

I'm one to crave and encourage the "sell it all and start fresh in a brand new location" approach, and as a fellow hermit craving detached space I could never encourage shared walls. But I think your answers may come clear with just that few months of space.

[frugaldrummer]

Option 3 - move somewhere that your $40,000 equity from the sale of your home would buy you a new home.  You did say that your business could be done anywhere, correct?  It's not much money but there are places in the U.S. where that money would still go pretty far, I think.  Having a paid-off (or very low mortgage) home would go a long ways towards ensuring your future.

[frugaldrummer]

(Las Vegas, for instance, has a boatload of condos - and some houses - for that price.)