Author Topic: LONG COMMUTE- What is the best path to take to get out?  (Read 2735 times)

JJA92563

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LONG COMMUTE- What is the best path to take to get out?
« on: July 08, 2015, 12:21:17 PM »
Hello All-  New to the forums but over the last few months I have started to read a few MMM blogs (reading as many as I can now) and read a Dave Ramsey Book last week- so I am starting to turn the ship around so to speak.  We are currently working on paying off our debt, but I wanted to present our housing situation to see what you guys would do in our situation.

Purchased our home in Dec 2011

Owe- 255,000
Appraised 2 months ago- 350,000
Mortgage- 1272
Ins/Tax- 500 (per month, not impounded)

My office is 35 miles away- Ive been with my company 12+ years
Hers is 55 miles away- Shes been with her company 7+ years
Distance between the two is 12 miles
Situated between the two is an area with good schools and semi affordable homes, but more than the area we currently live in.

At the time of purchase we were eager to get into the market and get a great deal on a house that sold 5 years prior for 500k.  Now the drive is killing us, and worse we have lost any resemblance of a life on weekdays.  We carpool together and bring our daughter (her preschool is near work) but we are basically gone 12 hours a day and have to rush in the evenings to cook and then get to bed.  In addition all the costs for cars, etc- Not a good situation.

So here we are, living in an area that we love, is considered CHEAP for the general part of the state we live in, but totally insane for where we work and earn our income.  Together our yearly income is 180k, and we do not want to find new jobs in our area and to be honest the job market is completely different.

I have thought about 2 options but would love to hear what you all think and would recommend:

1. SELL HOME and BUY a CONDO in the area between our offices. 

Condos are around 350k-400k.  (Some older homes are around same price).  Homes comparable to ours are north of 550K and we realize that downsizing could be a blessing in disguise.

2. SELL HOME and RENT in the area between our offices. 

Rent for CONDOS is approx 2000-2400
Homes are about the same for older or Upwards of 3000 in several cases
Apartments are 1600-1900

Either option is going to be more expensive per month when compared to our current mortgage but will obviously save a ton in time commuting/fuel/etc.  I guess what I would like it know is- is it better to rent and focus on clearing debt and eliminating commute or worth it to buy something small for more than what our house is now but be able to sell later and continue to focus on paying off debt?

Not sure if it matters but our current debt load:
49k- 2 Cars (selling mine which will eliminate 26k plus 13k profit from parts on it- my hobby and Im confident in these #'s.  Will use 13k to buy a 5-6k car and use the rest for debt)
17k- SBA Loan
20k- Student Loans (Was at 70k)
7k- Credit Cards  (was 12k last month, will be paid off in 2 months)

Thanks in advance!  Looking forward to implementing what we learn here and from the blogs.

-J

kamille

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Re: LONG COMMUTE- What is the best path to take to get out?
« Reply #1 on: July 08, 2015, 01:28:11 PM »
Hi there! I know your question about renting or buying is based on financial concerns. I was just wondering how familiar you are with the area you want to move in? If you aren't too familiar, maybe renting in the area would be a good first step and then this way you will also get to know what places you would like to live by. Have you lived in a condo before? You may prefer renting first just to see how it will be for your family and weigh it against the pros and cons of a single family home. Sorry if this doesn't help, I wasn't sure if you've looked at moving from that angle yet.

KCM5

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Re: LONG COMMUTE- What is the best path to take to get out?
« Reply #2 on: July 08, 2015, 01:47:22 PM »
If you're planning on staying at your jobs and they seem secure, remember to factor in selling costs if you're considering buying a condo and would one day buy a house. Personally, I would buy an older house in the new area but I'm not big on newer houses and I like to have a yard to garden. It's really about what you want. Do you want to live in a condo for a long while? Have you lived in one before and enjoyed it? If so, get a condo. But regardless, make your decision with the future in mind.

And your commute sounds terrible! Good plan on fixing that!

frugaliknowit

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Re: LONG COMMUTE- What is the best path to take to get out?
« Reply #3 on: July 08, 2015, 01:58:23 PM »
I would sell the house, then rent until all debt was cleared, an emergency fund were established and a chunky down payment were available.  Even then, renting until you are sure of where you want to live in the community is wise.  There is no rush to buy.

JJA92563

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Re: LONG COMMUTE- What is the best path to take to get out?
« Reply #4 on: July 08, 2015, 03:07:45 PM »
Thank you everyone for the thoughts, my mind is spinning with ideas already. 

We do know the area quite well- we even lived there before we were married.  Basically, there are 4 cities within a 10 mile radius from work and 1 is super expensive, 1 is less but good schools/neighborhoods and in between our offices, the other 2 are not good areas with horrible schools.  Plus they are not that much cheaper and on opposite ends geographically so one of us would still have a 30+ minute commute with traffic.

I would sell the house, then rent until all debt was cleared, an emergency fund were established and a chunky down payment were available.

This seems like wise advice... I guess my hang up is going from owning to renting, but in the end we can use what we make off the house to clear slate and save full bore to start over and be better off later with a better quality of life.

KCM5

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Re: LONG COMMUTE- What is the best path to take to get out?
« Reply #5 on: July 08, 2015, 03:20:45 PM »
Did you say above that renting would be more expensive than buying? If that's the case, I don't see the value in renting if you're going to buy anyway and can use the equity in your current house for a healthy down payment. Since you know the area and plan to stay, there doesn't seem to be much of a reason to rent.

JJA92563

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Re: LONG COMMUTE- What is the best path to take to get out?
« Reply #6 on: July 08, 2015, 04:25:20 PM »
Did you say above that renting would be more expensive than buying? If that's the case, I don't see the value in renting if you're going to buy anyway and can use the equity in your current house for a healthy down payment. Since you know the area and plan to stay, there doesn't seem to be much of a reason to rent.

Renting a condo would be about $2000
Renting apartment would be about $1600 on low end

Assuming we walk away with 75k from sale after closing costs (100k equity) and purchase condo for up to 379k with 75k downpayment and closing paid in cash.  My calculator is showing per month:
Mortgage- $1465
Ins- $75
Tax- $333

TOTAL- $1873 without HOA

HOAs in the area are $125-$200. I wouldn't buy anything with higher HOA then that.

To answer the earlier questions- We have lived in a condo before, but not with a child.  Most in the area have small backyards, ALL have 2 car garages, pools/playgrounds, and that price range is for 3bd units.  We currently have .25 acres and we literally never use it.   I pay 80 for a gardener and besides BBQing on my patio out back or washing cars in driveway, we have learned that we are not yard people. 

PS- We have $15k in an emergency fund.
« Last Edit: July 08, 2015, 04:32:04 PM by JJA92563 »