My husband and I live in the suburbs of a major west coast city. We own a home that is valued at $320,000. The house is 1200 square feet with one bathroom. We owe $178,000 on the home and pay $3100 in taxes and $600 in insurance per year. We paid $280,000 for the home ten years ago. Similar houses would rent for $1700 per month in our area.
We make a combined $170,000 per year. He makes $55,000 working at a job that is 20 miles from our home. He drives to the transit center that is 5 miles from our home and takes the bus. He can work during his bus ride. I make $120,000 working 28 hours per week. My job is 10 miles from home.
We own two cars that are fully paid for. One is a 2008 and the other in a 2009. They both have low miles. We spend about $200 per month on gas.
We pay $2500 per month for a very good child care facility that is 3 miles from my work. We have a four year old and a one year old.
We have $200,000 in retirement funds and $30,000 saved for our kids college. We have $260,000 in cash savings. The real estate market we are in is very competitive right now. To purchase a "forever house" would be a $550,000 purchase.
We are evaluating two scenarios:
Pay off our current home now. Stay here for two years to save up a down payment for a bigger home. Once we purchase a bigger home, use our current home as a rental to create passive income
Purchase a bigger house now as prices will continue to rise (projected) because of a large influx of well paid jobs at big companies in our area.
My husband and I are at odds over this. He wants to buy now, I want to stay put and save. I am having a hard time justifying the large payment required for the upgrade. It is a delicate issue as I am the breadwinner. I am not interested in working more to earn more as I value my time more than additional income at this point in my life.
What would MMM do? Are we missing another good scenario we should consider instead?