After 15 years with the same company I’ve been laid off. I’ve reading MMM for about 3 years, and have made many of the small adjustments, which had a pretty significant effect on our finances, but didn’t do many of the large adjustments, such as moving closer to work to kill the long commute. We currently live in a rural area where the shortest errand is a minimum drive of 15 minutes one way. My commute was 45-60 minutes
I’m debating what course to take. More specific questions at the end.
Married, OP 44, Wife 36, kids 3 and 6; on the outskirts of a HCOL area, west coast
Current income ?; no debt but mortgage
Net worth ~2M according to personal capital, includes houses
Combined 401k’s, IRA’s - 1.1M
Taxable accounts (cash, brokerage) - 400k (generates about 700/mo in dividends)
HSA - 47k
Rental house - 143k mortgage, market value ~400k, 3.875/15 year fixed; it isn’t a very good rental, currently rented for under market value; income is $150/mo
House - 433k mortgage, market value 700-800k, 2.875%; 5/1ARM; adjusts beginning of 2020
Monthly costs
Mortgage 1950
Property taxes 584
Property insurance 50
HOA fee 84
Groceries 400
Internet 52
Electric 300 (electric heat so this is a max; will drop to 15 in a couple months because of solar panels and warmer weather)
Propane probably have enough to get us through the winter
Garbage 25
Car gas 80 (with sudden lack of commute)
2 Cell phones 80
Car insurance 153 (3 cars - will drop to 103 soon with sale of 1 car)
Preschool 150
Healthcare on exchange 1000
Total 4903
The reason for the large amount of cash is that we were going to pay the house off in a lump sum; kept it in cash because of concerns about job stability and the need to get out of the ARM. No longer a question mark, this will go into the (now expensive) market.
The old plan was to pay off the houses, save up for the Roth ladder, and retire. Needed about 3 more years. We weren’t certain about staying where we are, but would have had the time to get the house ready to sell in the meantime.
The job was a gilded cage - nerve wracking and stressful, but about double the average pay for my industry. I’m burned out and don’t want to do what I was doing anymore.
The house may take some time to sell, and is going to require some significant maintenance to prepare. Houses in this area can move very slowly. This is a huge stressor for me right now. It is a huge property and we’ve accumulated mountains of crap.
Wife is stay at home mom, so we will be without healthcare very shortly. Severance puts our income at about 120k for 2018 already, so not sure how to figure what healthcare is going to cost. On the exchange we are looking at 1000/mo with no subsidy. I’m not sure how this works. Former employer healthcare ends at the end of January. I can get COBRA, but haven’t been informed how much this will cost yet, or really have any idea how it works. I t Does the exchange pricing always look at the trailing 60 days income to calculate the premium? Is the rate locked in once per year? Can I do 2 months of COBRA then move into the exchange with subsidies? With a family, I want to know what I’m doing with healthcare, and the info I’m finding online isn’t answering my questions.
We definitely want to get out of our current house and it’s high cost. The rental isn’t a nice house, but it’s well located for a mustachian lifestyle. It has been rented to the same people for 9 years and will need some work. From where I’m standing moving into the rental house is my most cost effective option, but I’m also not sure I’m thinking clearly. I generally do all of my own work on houses, cars, etc.
I guess the question is do I attempt to stay in my industry, removing the immediate pressure to sell the house and deal with healthcare, but will slow down our exit from this house and exacerbate my burnout, or put up with the high cash burn and get out of the house and into the rental, where hopefully the stress levels will start to drop off? We have no track record of living the mustachian lifestyle - we’ve never been ridiculous spendypants, although we’ve been other kinds of ridiculous. It will be a move into the unknown. We are expecting to spend about 30k/yr after getting out of the expensive house and into an area where most things are within bike riding distance, but this is really just based on mental comparison of what we do now and things I’ve read on MMM and this forum.