Author Topic: Help me make the right choices now to set up my families future !  (Read 2903 times)

dividendpig

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Hi All,

I have been a lurker in this forum for a couple years now, just recently joined and have made a couple posts now.. Im at a bit of a crossroads in life and would like some guidance- a what would YOU do type of thing ..

Heres a quick rundown of my situation...
I used to work a job I absolutely loathed in the auto industry. Im 30 YO now and worked their for 9 years. Ive recently made a change to a 100% commission based career, and while my happiness is up significantly, my earnings are down substantially. Compounding the issue is the fact that my wife is currently off on parental leave which makes the lower income an even tighter squeeze. We own a large home with all the bells and whistles, purchased while I still made the big money .. Its becoming clear to me now we just cant afford it anymore. I have no problem downsizing and the wife seems to be on board too.

We have about $100k in savings between the two of us, all in equities at the moment ( wife is 26) . With the potential sale of this home, after all expenses are paid out, we would walk with about an additional 100k.

Im wondering at this stage in our lives where to go from here.. Im excited about the prospect of lowering our costs and getting back to saving alot.. just not sure if we buy a smaller home, or even rent.. But the thing about the 'R' word is that I feel I would be judged by my family, and get all kinds of sympathy for selling our near 500k home and suddenly renting.. I know i know I shouldnt care what others think but the optics of it do kind of embarrass me. But ive been so stressed lately I am starting to feel the walls close in..

So sorry for the ranting but my question is.. if you were in this situation, what would YOU do??

Any responses would be greatly appreciated! !

Cheers

KelStache

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Re: Help me make the right choices now to set up my families future !
« Reply #1 on: November 29, 2016, 09:03:30 AM »
I would use this rent vs. buy calculator to see how the math works out.  Personally, I would prefer the freedom of renting unless I really loved the house and location.

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

I know it seems embarrassing now, but honestly just do what's right for you and your family - other people will get over it.  My husband and I moved in with roommates after having our own place which felt embarrassing at first, but hey, I just tell people that the apartment is bigger/nicer, there's always someone to hang out with, and we save $450 a month!  Reframing it always helps, so maybe you can tell them that you want the freedom to travel or that you're saving for baby's college - whatever you think will go over well :)

dividendpig

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Re: Help me make the right choices now to set up my families future !
« Reply #2 on: November 29, 2016, 09:07:00 AM »
I would use this rent vs. buy calculator to see how the math works out.  Personally, I would prefer the freedom of renting unless I really loved the house and location.

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

I know it seems embarrassing now, but honestly just do what's right for you and your family - other people will get over it.  My husband and I moved in with roommates after having our own place which felt embarrassing at first, but hey, I just tell people that the apartment is bigger/nicer, there's always someone to hang out with, and we save $450 a month!  Reframing it always helps, so maybe you can tell them that you want the freedom to travel or that you're saving for baby's college - whatever you think will go over well :)

Thank you for your response :) I know I care way too much about what others think and I need to change that.. Im jsut a little embarrassed because of where others in my family are at in life.. my parents are building a huge custom cottage after years of hard work and they totally deserve it.. as the oldest of 3 I just feel like a loser having to sell my home basically out of necessity .. It sucks but it is what has to be done !

KelStache

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Re: Help me make the right choices now to set up my families future !
« Reply #3 on: November 29, 2016, 09:37:13 AM »
Im jsut a little embarrassed because of where others in my family are at in life.. my parents are building a huge custom cottage after years of hard work

Assuming you're at least 20 years younger than your parents it's unfair to compare yourselves to them  -you've got a long road of savings ahead, and by taking this first step I'm sure you will have even more savings when you're their age.

I just feel like a loser having to sell my home basically out of necessity ..

It's not out of necessity - it's a choice (and a good one I might add).  Your wife could go back to work and pay for childcare, you could take your old job that you disliked, and you could live paycheck to paycheck with no retirement savings.  Those are all choices that people make, but you have to pick your priorities. 

FrugalFan

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Re: Help me make the right choices now to set up my families future !
« Reply #4 on: November 29, 2016, 09:45:34 AM »
I agree with KelStache, don't decide without doing the math first. Where I live, it is better to buy, but in a lot of other places in Canada, it is better to rent.

If someone questions your decision, you can tell them you'll have an extra 100k in the bank, or your wife wants to spend more time with your baby, or you have a job you now love, which is more important than a big house, or you want to travel. You just have to be confident that you are making the right choice and express that confidence when talking to people. It will likely all be forgotten within days of the initial announcement, so it will only feel weird at first. 

dividendpig

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Re: Help me make the right choices now to set up my families future !
« Reply #5 on: November 29, 2016, 10:15:50 AM »
I agree with KelStache, don't decide without doing the math first. Where I live, it is better to buy, but in a lot of other places in Canada, it is better to rent.

If someone questions your decision, you can tell them you'll have an extra 100k in the bank, or your wife wants to spend more time with your baby, or you have a job you now love, which is more important than a big house, or you want to travel. You just have to be confident that you are making the right choice and express that confidence when talking to people. It will likely all be forgotten within days of the initial announcement, so it will only feel weird at first.

Thanks again all for the responses , I guess part 2 of this question, supposing we go through with the sale of course, would be what would you folks do with that influx of cash? Like I said we already have about 100k in equities currently, mostly indexed but some individual stocks as well . And the thought of adding more $$ to that makes my mouth water to be honest.. where would u guys stick the funds ?

FrugalFan

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Re: Help me make the right choices now to set up my families future !
« Reply #6 on: November 29, 2016, 10:36:24 AM »
Do you have an investment policy statement? Mine would say to max out all RRSP and TFSA room that you can and put the rest in our taxable account. I follow a 3-fund Canadian Couch Potato indexed portfolio (VAB, VCN, and VXC). Lump sums usually come out ahead, but with the markets this high I would probably put it in on a regular schedule over 3-4 months.

DrMoneyTails

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Re: Help me make the right choices now to set up my families future !
« Reply #7 on: November 29, 2016, 11:06:07 AM »
I agree with what was said before.
I think lots of people love to say how they really don't care about anybody else's opinion, and kudos to those who truly live by that mantra. I occasionally say the same thing, but I know that at this point in my life I do care about what some people have to say.
I also know what embarrassment feels like. I like to examine the physical aspects certain emotions have on my body (how fear of speaking in public makes my hands shake, how being humiliated makes my eyes tear up, etc) and being embarrassed freaking sucks - whenever I am questioned about something that embarrasses me, my face gets red and feels like it's on fire, I stutter and then I try too hard to justify myself..
That being said, I think we both know it really doesn't matter what anybody else thinks - just run the numbers, and do the best for you and your family. Lost of people will cast a judgement but they will do so no matter what route you choose to follow. And they will forget about their judgement as quickly as they were to form them.

mxt0133

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Re: Help me make the right choices now to set up my families future !
« Reply #8 on: November 29, 2016, 11:17:03 PM »
I find it hard to believe that someone can really not care what anybody thinks, unless they are really anti-social and are hermits of some sort.  For me when people say, "you shouldn't care what other people think" I take as to not let what other people think influence your actions.  I mean when I moved across the county and my mother was upset, I cared about what she thought, but I still did it anyway.

So for you, recognize that yes some people will initially think that you are not doing so well financially, which technically you are because you took a pay cut.  But your happiness is up and you wife is able to stay home with you child instead of working. You recognized that you have a house that is too big and want something more that fits your family which at the same time costs less and less time consuming to maintain.  It's a no brainer that most rational people would make the same decisions.


RedwoodDreams

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Re: Help me make the right choices now to set up my families future !
« Reply #9 on: November 30, 2016, 12:29:20 AM »
Wow, 200k net worth at your young ages is fantastic!

This move buys you freedom, flexibility to truly do what you want (wife can continue to stay home, etc.), and you won't be up at night feeling like the walls are closing in anymore. Life's too short to live that way. Nobody else has to be up at night sweating, so do what's best for you. Let the stash grow, and then see what your options look like. Selling a house now doesn't mean you've failed at life and you'll never own another one.

It means 200k growing in the background while you're enjoying life!

chasesfish

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Re: Help me make the right choices now to set up my families future !
« Reply #10 on: November 30, 2016, 04:44:03 AM »
I understand the challenges of renting.  I did it for a year and hated it, mainly because of the lack of control and the person thought of "I'm just past this".

I don't know what your options are, but can you buy a smaller house for now then convert it to a rental later?  In hindsight I wish I would have just cashed out a small rental last time and not rented.

KBecks

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Re: Help me make the right choices now to set up my families future !
« Reply #11 on: November 30, 2016, 05:17:00 AM »
Figure out your career first.  This commission job should not be low money forever, right?  So this squeeze is temporary.  If you are in commission and you are not doing well, you're going to need to find another job.  So throw yourself into making this job into your career if it's something that you enjoy doing and you are good at.   Do not throw away 5 years at low pay.  Figure out how to make this work better, and do it in the next two years.  Are other people able to make good money in this profession?  Maybe get a mentor to work with. 

Then do your budget and figure out if the house fits in or not. 

AZDude

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Re: Help me make the right choices now to set up my families future !
« Reply #12 on: November 30, 2016, 08:52:42 AM »
Forget about other people. Kelstache had it right. Your parents are much older and probably saved for 20+ years before building that cottage. If they had instead lived paycheck to paycheck while ringing up debt for those 20 years, they would be living with you right now.

A smaller home pays dividends in more than just smaller mortgage/rent payments. Smaller utility bills. Less time spent doing cleaning and maintenance. Etc, etc, etc...

Plus less stress is never a bad thing. With baby on the way, you need to simplify your life for a couple of years until everyone settles in.

dividendpig

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Re: Help me make the right choices now to set up my families future !
« Reply #13 on: November 30, 2016, 09:30:12 AM »
Wow, thank you all again sincerely for the thoughtful and positive responses !

Im so glad I found this community of like minded folks, as I dont have any in my 'real' life to talk to about this kind of stuff !

Havent made a decision yet, but responses like the ones im seeing now make it all the more clear.. Having approx. 200k working for me at my age will be a great thing!