DINKs to SINKs: Sell or stay in house?
Life Situation: My husband and I are newly married and currently live in an urban area in a house we love, and we have no children. I am about to go back to school, graduating in mid- to end of 2018 depending on which (if any) programs I am accepted. During this time, we will be living off his income only. I calculated that we will be just above "breaking even" if everything stays the same. I save most of my total income, and he has been saving 10% of his salary in 401k, and purchasing company stocks for other savings.
FI is the ultimate goal, so we would like to be able to be as close to saving 50% as we can.
Income: Pre-tax, his salary + bonus (eligible for 20% bonus on his salary, of which he usually gets 90% or more) is just under $100K. Because I'm not sure of the exact figure, here's some supporting info to help work backwards...
Right now, he takes home (post tax) $1876 bi-weekly. This works out to $48788 of salary alone. There is also a bonus paid out in Q1. 10% of his income (bonus and salary) goes into his 401k, 10% goes towards purchasing company stock at a 7% discount (so instant profit if you buy and sell back at market price). However, these figures are with him in his current tax bracket (single). It hasn't updated withholding. Even though we are married, I am still working, so our taxes are working out to about the same. In reality, our taxes will become slightly less when I quit my job in July. No state taxes here, just USA federal tax. Also, these figures already include pre-tax deductions for HSA and what he pays for his health insurance (but not mine).
Other than retirement funds which are growing, we have no other potential income sources. We are trying to airbnb, but at best I would guess we could pull $70/nt for weekends only based on our area. I haven't even listed my income here because we are shortly going to be without it. My savings acct makes about $15/mo.
tl; dr: Assume that we are living on $49,000.
Current budget:
Mortgage & utilities, including mobile phones: $2630 (about $1500 of which is Principle, $130 is phone, $125 is mandatory HOA fees/water bill, $200 is utilities of gas/electricity/internet, and the rest is interest and misc home maintenance)
Transportation: $451 ($250 gas, $175 insurance on two cars, $26 for registration)
Food & dining: $325 ($175 groceries including household needs, $150 dining out which will take some effort - we are in the habit of going out too much)
Health & fitness: $35 (out of pocket costs, personal like haircuts, and fees for things like O-course racing. Gym membership is covered by his company)
Pet care: $40 (including supplies and vet fees - healthy young cat who hasn't been sick since he came home from the shelter two years ago. I save a bit extra for checkups and potential emergency)
Shopping: $60 (including clothing, home furnishings, and miscellaneous cash. I may be underestimating since I spend about $50/mo just on my clothing alone, pre-marriage. We shop everywhere from Goodwill on half-price clothing days to going to Express/Loft/Banana/Old Navy/Target and using coupons.)
Entertainment: $167 (including $65 per person for allowance, and $37 for entertainment - we rarely spend it all. We would count things like movies/rentals, sports, concerts, bowling, museums towards this. Personal allowances should cover birthdays/Christmas, but right now this is feeling pretty tight.)
Travel: $0 budgeted monthly, but the 2 "extra" paychecks per year will probably go towards travel. Our family is in 7 locations (3 countries), sp it is a large portion of our budget. I am quite good at point-mongering and would guess that's an extra $200/yr at least in added value, which is about half or most of a plane ticket on Southwest...
Savings goals: Next month we have $0 budgeted for things like new laptop, car replacement, extra retirement contributions.
Giving: $35
Other misc: $25 including Amazon Prime, annual credit card fees
Assets:
House is currently valued at around $450K.
His sports car is valued at around $19K.
My car is worth about $5K.
We have several retirement funds (401k and IRAs) with a total of maybe $50K.
I have money in a 529 set aside for my school which should almost entirely cover tuition & fees & books.
We have about $30K in savings accounts.
We have about $10K in our checking accounts.
Liabilities:
Mortgage has $257K remaining (30 yr) @ 3-4%(??)
No other debts.
The problem is this: we definitely want to at least be able to stay in the positive - that is, keep contributing to the 401k and don't dip into our savings at all. The house (mortgage + HOA + property tax) is a giant drain on the budget, and transportation department isn't great either. For the house, it's a 3BR, 3.5 bath which is way more space than we need - so we are trying to AirBNB the spare bedroom. We are also considering a roommate if we can find one, though we don't love this idea as newlyweds. I'm considering downsizing, but I don't know much about costs of selling a house & moving. The house has gone up in value almost $75K since he purchased it 3 years ago. With the move/sell costs, and the fact that we don't really know where I will be for school (it could be just under 60 miles away, could be close as 5 miles)....I just can't figure out how a move would really be that beneficial.
His job is currently 23 miles from the house in the suburbs. We love the house - the view of downtown, the things within walking distance, the green space, the natural light, the gas heating/stove - but we would be OK with living in the suburbs, too. However, again the problem: would it even be "worth it" to pick up and move to a cheaper place, if we're not even 100% sure where that should be?
I'm having trouble pinning down the exact benefit if we assume:
- The house sells for $450.
- We use a realtor.
- We buy a different house for, let's say, $250K
- We possibly have to move again in a year.
Bottom line:
What can we do to reduce costs, and how can we estimate the financial benefit of downsizing/moving to a different neighborhood (it is unlikely we can get a safe, in working order house in our area for $250K)? We are afraid that we would struggle to get an airbnb off the ground (though we're trying in the meantime) and that we can't find a roommate (plus, we would need to vacate the room of...stuff), otherwise those are more tempting short term solutions.
We are also thinking it's about time to sell the sports car, which gets ~60mi/day put on it and the insurance is expensive.
Thoughts? How did you convince your spouse to downsize their lifestyle? What would make a difference for us?