The Money Mustache Community

Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: SinnFianna on January 12, 2015, 01:16:14 PM

Title: Moving closer to work! Please advise!
Post by: SinnFianna on January 12, 2015, 01:16:14 PM
My wife, two children, and I currently live in a 1900sq ft home that we purchased for $230,000 6 years ago and it would be listed now at $300,000. We purchased the home because of the low price and despite the fact that it came with a 40 min commute (one way) for my wife and an hour commute (one way) for me. The commutes and the separate careers led to the purchase of two cars. One financed $586/month, one leased $274/month. After reading "The true cost of commuting" on MMM I have finally come to the realization that the commute to work is costing me tens of thousands of wasted dollars per year. I realize now that I must cut the commute and move to a neighborhood that is closer to our workplaces. The problem is that the average house price for a home in that "Big City" area is between$490,000-$600, 000. That said, does it make more sense for me to acquire a house with a significantly higher mortgage while eliminating the cost of the commute and one car? I would be able to walk to work and the cost of gas would drop from $400 a month to less than $100. Furthermore I would sell one of my vehicles, freeing up another $593. Not to mention the stress that would be lifted off my shoulders as I would have more time to spend with the kids. Shouldn't the thousands of dollars of savings and the newly acquired time more than justify the difference in mortgage? I cant help but feel afraid of purchasing a house that costs double that of my current home? Any and all advice would be greatly appreciated as I looking to move within the next six to twelve months.

Some details

Income: $120,000

Current debt expenses: Car 1: $586/month financed at %0 interest, Car 2: $274/month Leased, Current mortgage: $230, 000 or $635/bi weekly $1270/month (Property taxes included)

Title: Re: Moving closer to work! Please advise!
Post by: dandarc on January 12, 2015, 01:24:50 PM
Sounds like a no-brainer to me - getting 1.5 hours back per day will be huge for you.

You don't have to buy at the top of that price range, and no reason to be in hurry on the home-buying front - find a deal, then make your move.
Title: Re: Moving closer to work! Please advise!
Post by: SinnFianna on January 12, 2015, 01:37:30 PM
The time lost has been the biggest factor. Especially since the birth of our kids. Thanks for the reply!
Title: Re: Moving closer to work! Please advise!
Post by: dandarc on January 12, 2015, 01:51:27 PM
Wasn't 100% clear, but you'd be moving closer to work for both of you, right?
Title: Re: Moving closer to work! Please advise!
Post by: frugalfedmom on January 12, 2015, 01:57:26 PM
Will the move shrink your wife's commute too? If so, then definitely a no-brainer. How much extra do you have left over now after monthly expenses? Getting rid of one car and walking to work will free up close to $600/month which is a lot, plus the physical/emotional relief of getting extra time with the kids seem like it'd be worth the tradeoff with the higher mortgage.

What do you plan on doing after your other car's lease ends though? If you have enough to buy a car in cash then, it wouldn't really matter, but if you have to finance/lease another car, that wouldn't be ideal. If you can afford it and depending on when your lease ends, wouldn't it make more sense to keep the car you financed? After you pay it off, you won't have to worry about car payments until that car dies.
Title: Re: Moving closer to work! Please advise!
Post by: frugaliknowit on January 12, 2015, 02:14:04 PM
While it makes sense, some concern:  Your mortgage will be 3.8 times both your incomes if double what it is now.  A bit steep?  Can you downsize your square footage?  Are the public schools ok where you will be moving to?  What will your income and expenses look like overall?
Title: Re: Moving closer to work! Please advise!
Post by: RangerOne on January 12, 2015, 03:33:04 PM
Echoing the last comment.

490k-600k is a huge shift. You must be in a similar area to me. I am in San Diego a living inner city in a "nice" neighborhood for a 3-4 bedroom house jumps to about 500k or more much like you are stating. Even at 20% down the new mortgage+ tax and insurance will be around 2,500 dollars a month which is double what it is now.

Does the commute really get 100% offset by that move, or will this cost you a bit more monthly? Does selling your house leave with 20% or more to put down on the new place while leaving you enough cash or other assets to deal with up front moving and maintenance costs? Could keep up with the new mortgage if one of you went jobless for an extended period? Is it easy for both of you to find work so there isn't a major risk of either of you going jobless for too long. Is there a fall back? If you do run into hard times could you rent anything locally for less if you had to sell the house at a bad time.

If the answer to those questions are all yes then maybe this move would be a viable alternative.

Are there any alternative neighborhoods where you could drive maybe 10-15 mins our bike that are still closer but maybe 100k to 200k cheaper to buy? A 10-15 min commute 1 way is much cheaper and you could buy a cheap compact gas efficient car to do it. In most cities, that aren't San Francisco or New York, you can often get a decent size house inner city in a less desirable area for a bit less than the numbers you are presenting. You will almost certainly have to give up size to move to a better area. But I understand with a family that there is probably a minimum number of rooms you will tolerate.
Title: Re: Moving closer to work! Please advise!
Post by: SinnFianna on January 12, 2015, 04:02:44 PM
The move would bring us both close to work in Cambridge Ontario. For my wife, she could easily walk to her work within 10 minutes. I would have to drive 15 mins across town. The lack of one car would offset a large amount of the higher mortgage as well as the fuel cost would be significantly lower. There are other neighborhoods nearby but they would be less desirable and would lack the school where we would like our children to go. I should mention that the homes in this neighborhood are probably significantly pricier due to it being a Historic district. The homes are quite old around 100 years or so but are well up kept. I should also mention that the property taxes would be higher. From $3600 now to $5000 in the new neighborhood.
Title: Re: Moving closer to work! Please advise!
Post by: dilinger on January 12, 2015, 05:14:07 PM
Yes, move closer to work.  However, $600k for a place with a Walk Score of only 44 (Cambridge, Ontario) is waaaay too much, in my opinion.  I would look for someplace with higher walk scores that would allow your wife to walk, and you to take public transit, car share, car pool, and/or bike to work.  That would give you a huge amount of flexibility, potentially even dropping both cars (freeing up $1260/mo, not even including insurance or maintenance costs).

I don't know how old your kids are, but living in a more walkable community means that their activities will be planned in places that are convenient to get to, as opposed to birthday parties, team sports, and practices that assume and require driving.  Owning no cars is a completely different mindset from 1 car, and well worththe cost of a $600k home.