Case Study: should I stay or should I go?

[AgentChe]

Life Situation: I signed up for a few credit cards in my early 20's to try to rack up airline miles by sending all my bill payments through the credit card. When I met my wife in Boulder, CO, I stopped paying off the card so I could save up for a house down payment (min. payments only). I also made some frivolous purchases (motorcycle, expensive meals, etc) and paid for some of the wedding/honeymoon expenses on a card. 1 year after purchasing our first home, my wife got the urge to move closer to my family, so we sold our first home and moved into a nice Victorian in a small town in WI.

Turns out property taxes are about 3x higher in WI than CO... we did the math wrong when we calculated the payment and ended up paying about $250 more for our mortgage payment. Also, living in a town where the average age is 60 will make a pair of 20-somethings fairly miserable. Cue loneliness/baby fever. 10 months later, our pride and joy is born, and now we are looking at about $7,000 in medical bills (which is thankfully covered by my tax return because I didn't adjust my withholding after getting married).

I work from home, so I don't have a commute.

I am almost 1 year into a 30-year mortgage with 5% down. We are fairly sure we can sell this house and make enough of a profit to move back to the Denver/Boulder area. We are fixing up and selling my motorcycle and both of our cars so we can purchase a van for $2000-$4000 that will accommodate my family and 2 dogs. This will leave us with a single vehicle for the 1000-mile drive back to CO.

My wife is pretty much dead-set on us buying a home in CO. After many late nights reading MMM I tried to convince her of the benefits of renting (increased savings, flexibility, not dropping $7-10,000 on closing costs, biking distance to work) but I haven't had much luck swaying her, so I am trying to plan on selling/saving enough this summer that we have a 5% down payment just in case. I realize that this amount of debt is an emergency worth shaking many sticks at, and it would be much better in the long run to pay off cards and rent until we can afford 20% down... just not sure how to convince the lady that her comfort isn't worth this much!

Questions: Is it possible to buy a house for ~$200,000 and still get out of debt/saving money in a reasonable amount of time? Will anyone other than State Farm bundle my home/auto insurance for cheaper? (Already checked Geico) Any recommendations for getting your spouse to look past the short-term, or is that impossible with a 1 month old baby? (She is very concerned about safety of biking and living in close proximity to other renters). Would it be worth staying another year in a place where we're unhappy in order to have a better financial situation? (My heart says no, but my heart has led me to make/agree with some terrible decisions)

Thanks for your insight everyone. My real mustache may be large, but my money mustache is yet very small. I'm looking forward to hearing your suggestions on how to grow it.

Category	Monthly	Comments	Annual
Salary/Wages for earner #1	$6,917		$83,000
Pretax Health Ins.	$322		$3,864
Pretax Vision/Dental Ins.	$13		$150
Healthcare Flex Savings Acct. (FSA)	$212		$2,544
FICA base salary/wages	$6,370		$76,442
401(k) / 403(b) / TSP / etc.	$415	6% income	$4,980
Employer Match	$138	50% match on first 4% income	$1,660
Income subject to IRS tax	$5,955		$71,462
Federal Total Income	$5,955		$71,462
Federal tax	$371	2017 rates, MFJ, item. ded., 3 exempt.	$4,447
State/City tax	$307	Guess, using 6.27% * (AGI - Exempt'n)	$3,689
Soc. Sec.	$395	Assumes 1 earner paying	$4,739
Medicare	$92		$1,108
Total income taxes	$1,165		$13,984
Add Health + Daycare reimb.	$212		$2,544
Income before other expenses	$5,002		$60,022
Monthly Average Expenses:
Mortgage	$962	Input to Itemized Deductions	$11,547
Property Tax	$329	Input to Itemized Deductions	$3,943
Mortgage Insurance	$141		$1,690
Home/Rent Insurance	$69		$826
Car Insurance	$63	Recently cut to $38	$755
Car Maintenance, Registration, etc.	$95		$1,140
Charitable contributions	$28	Children intl.	$336
Clothing/Shoes	$50		$600
Computer (paper/software/etc.)	$5		$60
Credit card fees	$25		$300
Dining (Lunch/Dinner/Etc.)	$250	Need to eliminate!!!	$3,000
Gifts (not charitable contributions)	$65	Average over 1y - includes holidays	$784
Electricity	$160	Old house, too much AC usage over 1y	$1,920
Entertainment	$37		$444
Fuel/Public Transport	$136	Driving for midwife appts - down to about $45/mo	$1,629
Gas/Oil for heating	$50		$603
Groceries	$583		$6,999
Hair Care	$18		$216
Household; Maintenance	$282		$3,390
Internet	$63		$756
Life Insurance	$75		$900
Medical (Doctor, Hospital, etc.)	$50		$600
Medicine (OTC + Prescription)	$5	Input to Itemized Deductions	$60
Pets	$304	Boarding for travel, some pricey v bills	$3,648
Phone (cell)	$35	2 lines	$420
Subscriptions (paper/magazines/etc.)	$20	Netflix/Spotify	$240
Travel/Vacation	$50	Hotels	$600
Water/Sewer	$40		$480
Wine/Beer/Tobacco	$20		$240
Non-mortgage total	$3,048		$36,580
Loans:
Student Loan	$124		$1,493
Frontier MasterCard	$134		$1,610
Chase Sapphire Preferred Visa	$83		$996
Chase Slate Visa	$71		$852
Total Expense	$4,423		$53,077
Total to invest	$579		$6,945
Summary:

"

""Gross"" income

$6,917

$83,000

"

Income taxes	$1,165		$13,984
After-tax income	$5,751		$69,016
IRA+401k/403b/TSP/457	$415		$4,980
Living expenses	$4,345		$52,140
Non-mortgage loans	$413		$4,950
After-tax investable	$579		$6,945

Time to FIRE?:
Time to FIRE	10	years
Safe Withdrawal Rate	4.00%	percent
Real return on tax-deferred investments	5.00%	percent
Real, after tax, return on taxable investments	4.25%	percent
Current Savings
Tax-deferred (e.g. trad. IRA/401k)	$17,047
Projected Savings at Retirement
Taxable	$120,982
Tax-deferred (e.g. trad. IRA/401k)	$111,286
Total projected stash	$232,269
Projected Expenses in Retirement
Non-loan, non-work expenses	$36,580
Annual non-tax retirement expense	$36,580
Income taxes	$999
Total	$37,579
Total loan principal due at FI	$147,928
Stash needed for retirement @4.0% SWR	$1,087,406
	Need $855,137 more.

Filing Status	2	1=S, 2=MFJ, 3=HOH
# Exemptions	3
# Children <17	1
# Children <13	1
# Children for EIC	1
	Adult #1	Adult #2
Age	25	23
# of earners	1
Total Income	$71,462
Std. Deduct.	$12,700
Act. Deduct.	$16,310
Exemption	$12,150
SL int. (approx.)	$474
AGI	$70,988
MAGI	$71,462
Taxable	$42,529
1040 Tax	$5,447
Tax after n-r credit	$5,447
Child Tax Cred.	$1,000
Net Tax	$4,447
Monthly	$371
Mtg. Int. (approx.)	$8,342
State tax	$3,689	6.27%
Prop tax	$3,943
Charity	$336
Item. Deduct.	$16,310
Version	V8.14

Loans:	Orig. Prin.	Orig. Length	Curr. Prin.	Yrs left	Rate
Mortgage	$189,905	30	$187,246	29	4.500%
Student Loan	$12,000	11	$8,310	7	6.000%
Frontier MasterCard	$1	1	$13,176	4	.000%
Chase Sapphire Preferred Visa	$1	1	$8,280		.000%
Chase Slate Visa	$1	1	$2,224	1	18.490%

[Hargrove]

If you're asking if throwing away 20k+, it will still be possible to get out of debt in a reasonable amount of time, that's just a question of time lost and what you consider reasonable. It will probably cost you between 1 and 2 years if you can assume total job stability AND a thoroughly slashed budget. If you don't change your spending? No, you can't easily or quickly afford another 20k+ move.

That said, and while selling after only a year in is a horrendous waste for the closing costs... if you can already make a profit, that's only a paper loss. Nobody knows what the market will do tomorrow. If you can make a profit and have money left over from moving, and you're sure you're going to have to move anyway, won't your cars and the house get you the 10k down? How much will you really get from the house sale?

Yes, you should obviously be focusing on paying down that horrible debt instead. Try to strike a balance with your wife. You're going to feel alienated if you think you're just funding how she wants things to be. Ask if renting for a year in CO to meet her part-way will be enough for her to let you build up money to get some of those CCs gone before you buy another house. Don't focus on "convincing" her to abandon whatever she desperately wants to move to CO is about - try to understand what it is and why. Try to find out if SHE knows and is sure about it, because you're throwing an awful lot of money at moving like this.

As for living near renters... my SO had that one... as a renter most of my life, it struck me as completely nuts at first, but many people who are used to houses have a fear of incessant territorial battles over who made a noise, or horrible reductions in privacy, and I have never really had much of either. Renting for a year may help that, or it may not, but you need to have a frank discussion about how long you have to work to move this much.

Dining budget: 0
Grocery budget: 250

There's over 6k for you in one year. It's most of your down payment, or your worst debt and half of your second. Property tax and mortage insurance would be worth 12k, total, with the dining and grocery budgets slashed. You would have 2k and your top two debts gone, or a down payment and your top debt gone. That's a much healthier place to be.

www.mrmoneymustache.com/2011/08/23/grocery-shopping-with-your-middle-finger/
http://www.mrmoneymustache.com/2012/03/29/killing-your-1000-grocery-bill/

[AgentChe]

Thanks for the thoughtful reply. I really never thought about this from the perspective of how long I have to work for it... I think we would both be glad to make a decision that will save me ~18 months of work.

I'm more concerned with turning a profit than usual because we live in a rural area of WI, and the market is much slower than we are used to. We won't be going anywhere if it means accumulating more debt, but I'm OK with the paper loss if it means I can bike to work/errands and have a lower rent payment.

I rented for 7 years with anyone from friends to random people from Craigslist, so I'm much more comfortable than my DW. I think she would actually love the experience, but it's the first step that is hardest.

Thank you, this is helpful.

[MDM]

Life Situation:...my wife...our pride and joy....

Category	Monthly	Comments	Annual
Federal tax	$517	2017 rates, MFJ, stand. ded., 1 exempt.	$6,203
State/City tax	$343	Guess, using 0.00% * (AGI - Exempt'n)	$4,120

With two parents and one child, that's 3 exemptions so your federal tax should be lower.  Wisconsin does have a state income tax, but that number seems high (unless there is a local tax as well).

Don't know if you are using paycheck withholding amounts here.  Although some do, for planning purposes actual tax liability provides a clearer picture and should be used instead of withholding amounts.

[AgentChe]

Wisconsin does have a state income tax, but that number seems high (unless there is a local tax as well).

Don't know if you are using paycheck withholding amounts here.

I was, and I'll go back and edit that in the original post. WI takes 6.27% in my tax bracket, so 6.27% * ($70988 - $12150) / 12 = $307 state tax.

[Jubes]

Hmmm... One month old baby makes me think postpartum freak out. I know we are trying to focus on the money here. But, a new baby is a gigantic life stress. CO won't run away.

However, it seems like some of the urgency comes from seeing that the housing market is good enough where you are to sell your house right now and at least break even. And that is an important factor.

But... NEW BABY. Perhaps hunkering down for 6 months wouldn't hurt too much?

Perhaps the choice could be move sooner, into a rental. Or move later and buy a house. And then DW and you can think about which option you would prefer?

I do feel your pain, though. I'm glad almost every day that I don't live in my hometown, and that instead I am living in this semi-utopia. So, sorry about that.

I really think the safety of biking with kids has so much to do with what neighborhood you live in and how bike accessible the area is. If you choose right when you move it can be quite safe. This is another great reason to rent --> you get to really assess all the possible neighborhoods up close in personal while you're renting and choose the best option when you're ready.

[former player]

Your finances won't make any progress as long as you have a credit card bill on which you are paying 18.49% interest.  Your immediate priority is to pay that off and never use it again.

As far as I can see your story is: you get married and buy a house in Colorado.  After a year you sell that house, move to WI and buy another house.  Another year on and you want to sell that house, move back to CO and buy a third house.  Three houses in less than three years is madness, and given that history what's the odds that you'll be selling that house after a year, either because of another cross-country move or because "it's the wrong house"?

You are lucky that you can work from home so all this moving has not affected your earning ability.  But the level of moves you have been putting in is greater than people in the military are subject to.

I think life is too short to stay somewhere you don't need to if it is making you unhappy.  But you do need to be sure that it is the place that is making you both unhappy, rather than anything else, in order to justify moving again so soon.  And "once bitten twice shy" seems the right attitude to take to buying a house: by all means move, but make it conditional on renting for a year, taking that time to settle down, work out exactly what house you want, and get your finances in order. 

I'd tend to think that if your wife is so unhappy about renting, she probably isn't unhappy enough about your current situation for the move back to Colorado to be worthwhile.

[Laura33]

Your finances won't make any progress as long as you have a credit card bill on which you are paying 18.49% interest.  Your immediate priority is to pay that off and never use it again.

As far as I can see your story is: you get married and buy a house in Colorado.  After a year you sell that house, move to WI and buy another house.  Another year on and you want to sell that house, move back to CO and buy a third house.  Three houses in less than three years is madness, and given that history what's the odds that you'll be selling that house after a year, either because of another cross-country move or because "it's the wrong house"?

You are lucky that you can work from home so all this moving has not affected your earning ability.  But the level of moves you have been putting in is greater than people in the military are subject to.

I think life is too short to stay somewhere you don't need to if it is making you unhappy.  But you do need to be sure that it is the place that is making you both unhappy, rather than anything else, in order to justify moving again so soon.  And "once bitten twice shy" seems the right attitude to take to buying a house: by all means move, but make it conditional on renting for a year, taking that time to settle down, work out exactly what house you want, and get your finances in order. 

I'd tend to think that if your wife is so unhappy about renting, she probably isn't unhappy enough about your current situation for the move back to Colorado to be worthwhile.

This.  You already lived in CO, and she was unhappy there and wanted to live closer to home.  Why will this time be different?  I don't mean that in a snarky way -- people don't change out of the blue, and all of the things that annoyed her last time haven't changed either (her family will still be where you are now).  So it is entirely illogical to assume that moving back will "fix" everything and this time she'll be happy. 

I get the impression that she has this vision of Life in her head, and that when something doesn't live up to the expectations, well, that's no good, better try again.  And if you are at all like my DH, you want her to be happy, and so you are willing to blow everything up to give her what she wants.  But life never lives up to those sorts of idealized expectations -- even [insert desirable actor here] throws his dirty socks on the floor.  As Buckaroo Banzai said, "no matter where you go, there you are."  Running away never works, because you're still you; sure, you can get rid of specific annoyances, but if you are the type to get annoyed by little things, you will find new ones to replace them. 

So slow down, stop, think it through.  What problem(s) will CO fix?  What problem(s) will CO create that you don't have now?  Are there other alternatives to where you are now that might do a better job of maximizing the good parts of where you are now and minimizing the downsides?  E.g., if it is boredom/neighbors, WI must have at least one metropolitan area where the average age is below 60, but that is still close enough to drive to visit her family, right?  Ultimately, you have to choose whatever combination is the best fit for your own goals, and find a way to live with the downsides that come along with it.  And you can't figure out while you're busy-busy-busy running from one "solution" to the next.

I think the biggest issue is that you guys aren't even able to evaluate these issues objectively, because you've been running around making huge life changes for the past couple of years (marriage, baby, moving-moving-moving).  That is overwhelming, and it interferes with the ability to think logically and rationally (believe me, I know -- job loss + new baby = less-than-optimal housing decision).  Don't expect so much from yourselves right now!  Most people don't make the perfect decision on the first try, or even the second or third; piling marriage-baby-moves on top makes that even more difficult.  So be kind to yourselves.  Settle in, give yourselves time to figure out what is really bugging you and leading to all of this tail-chasing (and give the baby time to start sleeping through the night).  You don't have to figure everything out *right this instant*; you just have to keep your options open while you are figuring it out.

And by "options," I mean, for the love of Pete, do NOT buy another house until you are both sure that you have found "it."  And pay off the damn debt.  Owing money puts its own strain on you, which by definition oozes into your relationship with your wife and colors all of your decisions.  If the ultimate decision is to move, imagine how many more options you will have if you have knocked out the debt and saved up a downpayment by that point?  Put the money in terms that matter to her -- moving/closing costs are XX dinners out with her, or YY vacations you can take together, or ZZ trips back to see her family, etc.  You're willing to spend that *for her*, but you need to be 100% sure that if you're going to give up all that fun family/couple time, it's for something even better.

[lovesasa]

We are fairly sure we can sell this house and make enough of a profit to move back to the Denver/Boulder area...My wife is pretty much dead-set on us buying a home in CO. ... Is it possible to buy a house for ~$200,000 and still get out of debt/saving money in a reasonable amount of time?

Where in Denver/Boulder are you buying a house for $200K??? Even the NW suburbs of Denver are $300K (Broomfield, Westminster, etc.). Louisville and Lafayette are getting pretty expensive now, too.

Maybe some searching on Zillow/Trulia will help convince your wife that buying in your current situation (and the current Denver/Boulder market) is unrealistic.

If you can actually show me a nice area with $200K houses please let me know, I'll be your neighbor!

[economista]

We are fairly sure we can sell this house and make enough of a profit to move back to the Denver/Boulder area...My wife is pretty much dead-set on us buying a home in CO. ... Is it possible to buy a house for ~$200,000 and still get out of debt/saving money in a reasonable amount of time?

Where in Denver/Boulder are you buying a house for $200K??? Even the NW suburbs of Denver are $300K (Broomfield, Westminster, etc.). Louisville and Lafayette are getting pretty expensive now, too.

Maybe some searching on Zillow/Trulia will help convince your wife that buying in your current situation (and the current Denver/Boulder market) is unrealistic.

If you can actually show me a nice area with $200K houses please let me know, I'll be your neighbor!

I was about to say this same thing!  Two years ago I was looking in the Denver/Boulder area with a budget up to $250k and the only things the realtor could show me were houses in terrible, un-livable condition that would require $50-$100k in renovations before they were livable.  I'm currently looking again and you can't even buy a 700 sq ft condo for under $200k.  If your wife really wants to move back to this area she will have to resign herself to renting for a few years while you 1) eliminate your debt 2) save a down payment 3) increase your income (or wait until the baby is old enough for your wife to go back to work) 

[CU Tiger]

You sound drifty, like both of you are being pushed around by the wind and your vague ideas of wanting to have a nice life. Your wife thought you should live near YOUR family? Why was that? Thinking more about your situation, I think that you and your wife are in the middle of a stressful situation – getting adjusted to new parenthood and keeping a small, demanding baby alive! It’s not the time to make things more challenging. I’d stay in place for a year, and use that year to get out of debt and to spend a lot of time talking about your future and scheming and planning to make it what you want it to be.

Spend some time sharing your dreams and investigating the BIG picture, the “whys” of your lives.

Why do you want to be debt-free? What would your ideal life look like? How would you spend your time? What kind of home would you have that meets your family’s needs?

How long do you want to work? How long does she want to work?

Why Colorado? Just because you are both familiar with it? If you are not happy in WI, why not? Surely, it’s not just the age of the inhabitants, but the lack of things you enjoy doing? I mean, if everyone in town was 70 years old, but your hobby was contract bridge, and you could play bridge three times a day with various groups of 70 year old card sharks, you’d be in a good place. Or if you lived around those 70 year olds, but your hobby was hiking and kayaking in nearby forests and rivers, and you had a steady source of 70 year old babysitters, whoo-hoo, you are golden! But that doesn’t seem to be the case.

How about this, agree together to pay off all your CC debt while you are getting your house on the market, BUT – in the meantime, start having these discussions about what you want your future life to look like. Then, rather than making like a homing pigeon winging instinctively back towards Boulder, consider other LCOL communities that could provide jobs, friends in similar life circumstances, and opportunities to do the things you enjoy doing. Or if Boulder is where you want to be, but you can’t afford a house there… rent!

Years ago I had a friend who was dissatisfied with his life. No partner, his job was blah, the usual. He was always saying that if things were not better in one year, he was "moving to California." Finally, in the gentlest way possible, I asked if moving to California was going to fix what he was unhappy about? In California did they hand out boyfriends and fascinating jobs? If not, perhaps he should try to find a boyfriend and a better job right where he was. He laughed, but agreed that I was right, California was not a magic fix... and neither is Colorado.

It would take about $11,000 to pay off the two smaller credit cards. Could you sell the motorcycle off and knock off those two cards? You could frame it that a debt-free future with for your family is worth the sacrifice of an expensive toy.

[rachael talcott]

I'm going to be a bit of a contrarian.  You have a job that pays well and allows you to live anywhere.  You're not happy in WI, and you're spending a lot on housing to live there.  If you can sell the house and break even, there's not much keeping you there.  But why move to Denver/Boulder? Why not pick a low cost of living area to hunker down until you get your finances under control?  You can buy a house in flyover country for $80K.

There are many threads about converting your spouse to mustacianism.  The general advice is to talk through shared goals and run the math of how you might meet those goals together.