Author Topic: Daycare, Housing, Lifestyle Inflation  (Read 1704 times)

3for3

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Daycare, Housing, Lifestyle Inflation
« on: March 16, 2018, 08:23:39 AM »
We have three little kids (4,2,2) in daycare which accounts for half of our monthly expenses. We live in a small, pleasant home in the perfect neighborhood. It is 1.5 miles to DH's office/daycare and 2.0 miles to my office. My husband bikes the kids to daycare in a cargo bike and we can walk to grocery stores, cafe's, the high school and can see our kids future elementary school from the driveway. A perfect walkable neighborhood where homes are sought after and sell fast.

Our neighbor's home is going on the market. It NEEDS WORK but it has good bones, a better mountain view, and is larger than our home (+1,500SF). Our current home is great for three little kids and we would be happy here through the elementary years, but once we have three teenagers I suspect this home will get tight. It is already snug as its mid-century design did not include much closet space and there is no basement.

The neighbors house is expected to sell in "as is" condition for $400K. Being the neighbor I know it needs a roof, sewer lateral, new kitchen, new garage doors, new floors.....more?..... A similar sized move-in-ready house in the neighborhood sold for $690K. Our house is appraised at $375K now and we might get $400K if we update the circa 1960 kitchen. We bought this house 11 years ago for $230K. The neighbor bought her house in 2006 for $320K.

If we buy the neighbor's house I would want to stay in our current home until the renovations are complete. Three little kids is not practical in a construction zone. And, with two working parents, it would be in the best interest of our marriage and parenting to minimize DYI.

The thing is that with the daycare cost, buying a mortgage is not prudent. We typically have about $500 left each month after fully funding retirement accounts. We could drain our non-retirement investment with down payment plus carrying the house/reno while the kid are in daycare. But, when the twins turn 3 (Jan) our daycare cost will decrease by $700. When our DD goes to kindergarten (Sept '19) our daycare cost will reduce by and additional $900.

We could function in our paid off home until the kids are thorough the elementary school and build our savings. This is DH's preferred course of action, he HATES home improvements and would rather do outdoor things with the kids. But I keep thinking about the "opportunity" to get into a home that will appreciate and suit our needs over the long term. But rationally, buying a house we may need in 8 years seems like flagrant life-style inflation, especially considering we could bank an additional $3500/mo. Convince me that DH is right and this is not the right time for a "fixer upper investment." 
 

couponvan

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Re: Daycare, Housing, Lifestyle Inflation
« Reply #1 on: March 16, 2018, 09:06:18 AM »
I found that once the kids reached iPhone age (10) their space needs decreased SIGNIFICANTLY.  I wish I'd stayed in our smaller starter home.  Seriously, the kids use that phone for everything - entertainment, communication, education, alarm clock, intercom, and so on.  It takes up a 4-6" space.  As teenagers, they aren't growing out of their clothes as quickly as toddlers.  Their clothes, while larger, take up less space.  Basements are dark and no one ever goes down there.  I could easily remove 1/2 of our home and never miss it. 

The garage is the one area that should be larger.  How much would it cost to increase the size of your garage? (Kidding/not kidding)

The bigger house has to be heated and cooled. You have to pay property taxes on it. Renovations cost more since they're a larger square footage.

As soon as you finish with that daycare cost, keep putting it into a college fund, not a bigger house. Trust me. You can come back in 14 years and thank me.  I WISH someone had given me that advice.  We have an almost fully funded retirement, and barely any college savings compared to what it's going to cost.  You're going to have 3 in college at the same time.

I agree with your DH on this.  You will not need that house in 8 years.  You will probably feel more like you need it in 2-4 years....

zhelud

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Re: Daycare, Housing, Lifestyle Inflation
« Reply #2 on: March 16, 2018, 09:26:34 AM »
I found that once the kids reached iPhone age (10) their space needs decreased SIGNIFICANTLY.  I wish I'd stayed in our smaller starter home.  Seriously, the kids use that phone for everything - entertainment, communication, education, alarm clock, intercom, and so on.  It takes up a 4-6" space.



I second this- I have 2 teens now and all they want to do is sit in the kitchen or living room (near each other) looking at their phones or playing/working on the computer. In fact we are just about to have a giant yard sale because they haven't played with a single non-electronic toy in at least 2 years. Glad I didn't buy a bigger house!

Laura33

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Re: Daycare, Housing, Lifestyle Inflation
« Reply #3 on: March 16, 2018, 09:33:40 AM »
Ditto.  The profusion of toddler toys is the worst.

Rule #1 is to make do with what you have until it doesn't work any more and you can afford something different.  You are in neither position -- especially with only $500 extra every month and a huge remodeling necessary before it's even habitable.  I carried two mortgages for 13 months with a lot more slack in the budget than that, and trust me when I say that you really, really don't need the stress; I have also done major renovations, and you don't need THAT stress either.  I cannot imagine piling both stresses together on top of everything else you have going on. 

If the neighbor's house appreciates over the next 8 years, so will yours; you don't need to move to gain that.  If you do need something in 8 years, trust that you will find something then.  This isn't your dream house, it is a house, and there are always more of those.

formerlydivorcedmom

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Re: Daycare, Housing, Lifestyle Inflation
« Reply #4 on: March 16, 2018, 09:37:32 AM »
I agree 100% with @couponvan .

When I remarried five years ago, betweeen us we had three kids aged 3, 5, and 6.  I had a 2000-sq ft house.  We thought that might be too small as they aged, so when we had to move to a different city, we upgraded to a 3000-sq ft house.

For a few years, the whole house seemed full.  This is mainly because we had too much stuff.  Way too much stuff.  We did a huge decluttering last year, and we're actually trying to live more mustachianly now (no more mindless consumption). 

Right now, the kids are 8,10, and 12.  When the girls' friends come over, they hang out in one of the bedrooms.  When boy's friends come over, they cluster around the video game consoles.  When it's just us..the kids read, play on their tablets, draw, watch tv, play outside.  None of that takes a lot of room.

We have too much space.   We are seriously considering moving to a house with a smaller living area and a bigger garage.  That would save us a few thousand dollars a year in taxes and utilities and we wouldn't give up anything in terms of quality of life.

Morning Glory

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Re: Daycare, Housing, Lifestyle Inflation
« Reply #5 on: March 16, 2018, 10:02:50 AM »
One of my biggest mistakes was to buy a house before my old one was sold. I did it because we really loved our new house, and I wanted to remodel the bathroom in the old one before selling it, but didn't want to live in it during the remodeling since there was only one bathroom. We could handle both payments + remodeling costs just barely. We closed on the new house in June and moved in immediately. What I didn't account for is that my contractor for the old house flaked out and I had to find a new one, which took up most of the summer selling season. Then we had to heat the house all winter so pipes wouldn't freeze (and of course it was a record cold winter). We tried to rent the house but the city wanted all kinds of expensive nonsense  to bring it up to rental code (e.g the stairs were too steep and windows not big enough).  Plus we had to go over there all the time to shovel snow and clean up footprints from "lookers " (we left a key with a neighbor so she could shut the lights off if they got left on, which happened a lot). Finally by March we took the first lowball offer we got just to get out from under it.

If I had it to do again, I would have gotten a hotel for a week while the bathroom was redone, then listed the house for sale, then bought a new one after it sold.

So if you really want the new house, my advice is to sell your old one (or make sure it is up to rental code), and then live in the new one while you are remodeling.

seattlecyclone

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Re: Daycare, Housing, Lifestyle Inflation
« Reply #6 on: March 16, 2018, 10:12:59 AM »
Sounds like now isn't an ideal time to take this project on. There will be other houses for sale in your neighborhood when the time is right, if you even get to the point where you feel you need a larger one.

3for3

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Re: Daycare, Housing, Lifestyle Inflation
« Reply #7 on: March 16, 2018, 12:17:31 PM »
These are excellent points about the flaws of lifestyle inflation and the benefits of a small family home. Your thoughtful responses are going to save me stress, time, carbon frootprint, and cash. I appreciate that.