thirty years of inflation at 9%+ would actually be really bad. You'd be well positioned with the Series I and the mortgage, but aren't the 1970s years when we saw most retirement failures in modeling?
Very good point. I really meant that I'd like to lock in just the 9.6% rate for 30 years, not the inflation that goes with it! I definitely do NOT want I bonds to continue to pay such high rates. I agree that 30 years of 9% inflation would be very bad. But for now, I bonds are the best game in town for something safe. While they're still only paying 0% real, better than my savings account paying -9% real.
@NorthernIkigai - Definitely sounds worth it to drop your savings rate a bit to get some more space. <800 square feet for 4 people sounds like it might be a tad tight! Hope you're able to find something that works for you!
Thanks @Holocene! We're actually OK right now, I'm always amazed that many North Americans (even Mustachians!) seem to need so much space. But the kids are growing and it would be very nice to have at least another half bath and not just the one bathroom.
With prices for decent apartments in the size (still max 1k sq ft or so) and area we're considering starting from about 550 or 600k€, we're just patiently keeping an eye on the market and hoping for a rate rise and its effect on the market...
An update from the land of adjustable rate mortgages: A few months after I wrote this, we actually found a lovely and affordable 970 sqf apartment with everything we need. Well, we bought it, but it's not finished yet. It will be finished next summer, so we should sell our current apartment next spring some time with the caveat that we'll move out on an agreed date. We're still very happy in the current one, but that's because we know we'll be moving into a brand new one soon. If we would still be looking, we'd probably feel pretty stuck here right now.
So now we have 2 mortgages! The old one which has a current rate of 3.x% (which will go up soon again), and the new one for the new apartment (which we've only taken out partially so far) at 4.x%. Oh well, the 0.x% rates were great for the many years they lasted.
Although the cash flow looks bad at the moment, certainly with the second mortgage growing every few months, we're not worried. We'll also probably get quite a bit less for the old apartment than we had originally budgeted, since the whole market has stagnated due to the rising interest rates. But we're paying a bit less than we had originally budgeted (550--650k€) for the new apartment. And we have plenty of savings.
So we should have been selling our current (still) flat about now... We'll be doing the final inspection of the new flat this week, and can move in in about 6 weeks or so.
But now the housing market, which I described last summer as having stagnated, has simply come to a full stop. To make matters worse, the big renovation which we knew was coming at some point to the current house will start in about 6 months' time, making renting the old place out less likely and less profitable, as the flat will be unusable for a few months but we don't yet know exactly when. Maybe we'll find someone who needs to move out of their home due to a similar short-term renovation, maybe not.
Trying to sell now, when the market is a at 20+ year low in general and the upcoming renovation is scaring buyers away from this place in particular, is a fool's game. Instead, we'll be hanging on for a while waiting for the renovation to the done and the market to improve, paying more in total housing costs than what our whole monthly budget was before this moving project started. Some of it (almost half) is of course simply higher actual housing costs because we are moving to a newer, bigger place, and some are not actual costs (the principal paid on the old mortgage -- the plan was to pay this in a lump sum when we sold the place, but hey, now the lump sum will eventually be smaller).
Still, it's a crazy cash flow that will flow out for the next 12 or maybe even 18 months. I don't like it, but the market is not giving us a lot of choice and as Mustachians, we can afford if without having to worry at all.