Hey all,
I'm looking for some level-headed conversation about a decision my family and I are contemplating.
Our current housing situation: a beautiful, luxurious 3 bedroom 1400 square foot house on a postage stamp lot in the middle of a just-ok subdivision in Indianapolis. Current house price: ~130K. We've been working like mad to pay that sucker off and should have it wrapped up in about 4 months. This house was our 5-year house and we're coming up on 5 years about that same time.
What's good:
1) House price! Nowhere else can you get a house that you genuinely like for as cheaply as we have and still have good job opportunities. Indianapolis rocks! I've also put a bunch of time and effort into fixing up this house the way we wanted it and I'm ALMOST done....sigh. ;)
2) Our current neighbors. We genuinely love our next-door neighbors on every side. That's rare.
3) Almost paid off! We are really looking forward to putting our savings into rocket-booster mode.
What's challenging:
1) Kids, and working from home. I recently changed jobs and now I work from our third bedroom/office. I built a killer murphy bed and the space is perfect. No complaints about that, it's great. However, I am on the phone a lot and with a 3 year old (and potentially more kids down the road), the noise level makes it challenging to maintain a professional environment. On a scale of 1-10, this problem is a 3 or 4. Not a deal breaker.
2) Kids, and no room to roam. This hits my childhood memories. My daughter has nowhere to just run around and be a kid unless we take her somewhere (we try to do this regularly, but you know kids and their incessant energy. I want to encourage it all the time!). On the farm growing, up, I was happily kicked outside by myself many days. I'd like to be able to do the same for her. Scale of 1-10, this one is a 6, increasing to 7 or 8 with age.
3) Crime is encroaching. This one is debatable, depending on your fear mongering state. A couple times a year, someone in our neighborhood gets their house or cars broken into. It's clearly kids from around the area, but it scares the residents and my family. With me working from home, my wife and daughter are generally safe, but it gives me pause about the long term viability of staying here. We live in an area between a rough area and a nicer area, but the rough area is growing in this direction. Scale of 1-10, this is a 7.
Our potential opportunity:
We've found a 5 acre parcel with an old farmhouse on the edge of the adjacent rural county. It's closer to many of the things we do regularly (church, in-laws, friends). The house itself isn't as awesome as the one we currently love and given that my wife and I are project people, we'd likely be spending the next 10 years fixing the place up. Reset button on our honey-do list. Sigh. ;)
What's good:
1) The property! It's a long, narrow lot, but there's lots of room to roam. We met the next door neighbors and I don't anticipate any troubles there. My daughter would be free to run around, along with any other kiddos that come along.
2) HUGE brand-new pole barn. Instant workshop, weight room, and potential office space (it's unfinished but plumbing, electrical, etc is all connected). This barn is huge. All metal, so long-term maintenance should be minimal. There's a smaller barn original to the farmhouse that is in decent shape and could immediately host chickens, which thrills my wife to no end.
3) Forever house. We're ready to have a settled mindset with respect to housing, and our current house was never considered a forever house. If we bought this one (or whatever next one we buy), it'll be with that long-term mindset.
What's challenging:
1) The house itself. I don't know enough yet about the maintenance condition, but it looks like it will need some help. It's old, which means there are unknowns. Just off the top of my head I see about 10-15K in maintenance. On top of that, the layout is f.u.n.k.y. A major renovation is not out of the question down the road, especially if it's our forever house. Think tearing roofs off, adding vertical space, relocating a kitchen. I'm not a construction guy so this is outsourced and expensive. Minimum 50-60k? Probably more, maybe someone here knows.
2) The need for different equipment. It's got a one acre lawn, which means a push-mower becomes challenging. Feel free to challenge me on this one and call me a wuss. The long driveway and access to barns means that somehow a plow needs to happen. Logically a larger property is more expensive to maintain, so increased COL.
3) Money: The asking price is 2x what our current house costs. Just lowered, but in the upper 200K range. Takes our savings rate (projected) from 46-47% gross/66% net to about 42% gross/60% net. Higher maintenance costs, as I would now have three structures to deal with. Likely higher utility costs. Puts early retirement back several years, as the included equity in the savings rate doesn't produce income. This part makes me sick to think about, as I've really struggled with how slow it seems to be to get anywhere in the savings realm.
That's probably enough to start. Here's the real issue: We have two distinct dreams that are not compatible. On the one hand, we want to have as low a COL as possible and we are SO CLOSE to paying off this house. On the other hand, our dream is to have a place like that and give our family a place to be established and a sense of permanence. Financially, they lead us down different paths.
The good news is that this is a win-win decision: we’re in a great place financially, have plenty in savings/surplus each month, and neither of these decisions put us in a bind financially.
So how do you make these decisions? Do you ruthlessly deny yourself for the sake of long-term goals? Do you go for the dreams, knowing they set you back on ER goals?
