Author Topic: Reader Case Study - Young New Family & ER  (Read 4533 times)

bikerdood

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Reader Case Study - Young New Family & ER
« on: January 13, 2014, 07:47:27 AM »
Income:  Me:    74k + 5% 401k company match --> ~78k
  Wife: 65k

Current expenses: 
 
  Pets:                   100$/mo

  Cell phone:          200$/mo (know at least I can switch to Virgin mobile $30/mo plan - will talk to wife :) )

  Rent:                  1100$/mo (utilities included)

  Car:                    100$/mo (hardly ever drive and wife's car is paid off - just gas + insurance)

  Public transit:       100$/mo (betw both of us - besides, baby on the way so may be biking less)

  Food:                  400$/mo (all luxuriously organic delicious raw ingredients - wife cooks incredibly, hardly eat out ever)

  Gym:                   70$/mo (my dumbness: 30$/mo work gym + 40$/mo golds gym - I know I need-to/can cancel both - wife & I are very active, race bikes - I can work out at home np)

  Restaurants/bars: 100$/mo 

  Internet/tv:          0$ - we like podcasts & music

  Baby:                   300$/mo (not at the moment but projected from MMM's post on the cost of raising a baby)

Assets: 
  13k in old 401k
 9.5k in new 401k
    6k in Roth IRA
    1k in brokerage

Debt: 
  ~140k of wife's student loans

Specific questions:
  Preamble: I know there's some kruft in the above - cutting gym memberships and lowering the phone bill - but it seems to me we're pretty on target.  Moreover, my work as a software developer means I could probably score a new position of approx 90k pre-tax very soon.  Our only goals are happy family and ER.  I'm picking your brains to optimize for this in the context of:

  (a) living very close to my parents (daycare!)
  (b) possibility of wife working part time (unknown at the moment - but increasing)

Our options as I see them:
  (a) Wife and I can continue to rent at about 3 mi from work for 1100k
          Advantages: our own space w baby
          Disadvantages: rent $ not equity, if not daycare then extra commute to drop off/pick up baby from my parents

  (b) Wife and I could move in with my parents about 7 mi from work for sharing of food/bill expenses, cooking, etc
          Advantages: built in daycare, ability for wife to pay down her student loans
          Disadvantages: ?unknown? ease (from a getting-along standpoint) of moving back w my parents as we're having a baby; my parents are still very hands on and I could foresee wife/baby/I not having as much autonomy as we might like
         
  (c) Wife and I could (supposing we're approved for mortgage, find something, etc etc) buy a 2 bedroom condo for up to 300k close (at most 1 mi) from my parents so that we have the benefit of building equity AND still get the built in daycare of my parents' place


Option B seems the most sensible to me and it smacks of the complainypants fears that might just need to be addressed head on with communication and a ton of gratitude for my parents providing that option...

That being said, what do you think????? 

iwasjustwondering

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Re: Reader Case Study - Young New Family & ER
« Reply #1 on: January 13, 2014, 07:57:56 AM »
Do your parents want to provide daycare?  Every day, all day?  My parents help me out a lot with my kids, but they sometimes have doctor's appointments or just want to go do something fun.  Is this really something they want to do?  If so, and you and your wife are OK with it, then it sounds great.

How does your wife feel about moving in with your parents?  I don't think objecting to this arrangement while the two of you are learning how to become parents is really a complainypants thing.  If she's on board with moving in, I say go for it, but if not, take her concerns seriously.  She is going to need to feel confident and capable as a mother, and if living with the ILs will make that harder, then I wouldn't do it.

SunshineGirl

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Re: Reader Case Study - Young New Family & ER
« Reply #2 on: January 13, 2014, 08:04:45 AM »
I'd vote for staying where you are and making it work. Keep your privacy and own family unit intact. 

bikerdood

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Re: Reader Case Study - Young New Family & ER
« Reply #3 on: January 13, 2014, 08:05:19 AM »
Do your parents want to provide daycare?  Every day, all day? 

Great question!  My parents are Brazilian (our family = very tight nit) and retired.  They would honestly prefer it.  The thought that I should have ever moved out from home ever was tough enough to convince them of.

How does your wife feel about moving in with your parents?  I don't think objecting to this arrangement while the two of you are learning how to become parents is really a complainypants thing.  If she's on board with moving in, I say go for it, but if not, take her concerns seriously.  She is going to need to feel confident and capable as a mother, and if living with the ILs will make that harder, then I wouldn't do it.

Good point.  This is all so new that I think she's still figuring out how she would feel.  One thing we're considering is moving back for a month while we're still renting and before baby is born just to see how it might work out.  Some other complicating details are wife's dog that she adores and whether parents would be welcoming.... to be explored...

Cromacster

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Re: Reader Case Study - Young New Family & ER
« Reply #4 on: January 13, 2014, 09:21:42 AM »
You've laid out a pretty generic spending vs income with a couple scenarios. 

What is your take home after withholdings?  How much are you actually saving? What payments are you making on that loan?  What is the loan interest rate?

You don't say how long you have been working, but for your income level, the amount you have saved suggests that you're are spending more than you say, you haven't been working for very long, or you are just making the switch to being more mustachian.

Where are you located?  300K for a 2bd condo seems ridiculous to me, but again location.  Do you have anything saved for a down payment?  Renting isn't bad, it allows you to invest your money elsewhere.  Even if you have equity in a home, you still need to live somewhere.

As far as living with the parents goes..I guess its a personal matter to discuss with your wife and parents.  If it works for you guys go for it I guess.  It would allow you to stache away alot of money very quickly with your incomes.  Sounds like you've considered some of the struggles, like the dog, and maybe doing a trial run.  That said would I do it? No I wouldn't.

bikerdood

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Re: Reader Case Study - Young New Family & ER
« Reply #5 on: January 13, 2014, 09:44:17 AM »
What is your take home after withholdings?  How much are you actually saving?

My take home after witholding is 62,400, wife's is approx 46800.  So total take home after witholding is 109,200.
 
What payments are you making on that loan?  What is the loan interest rate?

I'm converting the wife to being mustachian... their are several loans with varying interest rates ranging from 3 to 7%.  We're keeping separate finances... I need to ask exactly how much wife's paying on the loans but the goal would be to reduce our joint spending as much as possible and so that she can use the vast majority of her takehome toward her debt.

You don't say how long you have been working, but for your income level, the amount you have saved suggests that you're are spending more than you say, you haven't been working for very long, or you are just making the switch to being more mustachian.
I'm 25 and have been working for 2.5 years.  I first started reading MMM about 8 months ago so the conversion is fairly recent.

Where are you located?  300K for a 2bd condo seems ridiculous to me, but again location.  Do you have anything saved for a down payment?  Renting isn't bad, it allows you to invest your money elsewhere.  Even if you have equity in a home, you still need to live somewhere.

That's a good point.  300k is our max.  More likely we can be looking at 250k.  We both work in downtown Washington DC and would be looking to buy (for the sake of parents=daycare) in Silver Spring, MD.  I'll look in the other surrounding neighborhoods to see how much lower we can get that. 

As far as living with the parents goes..I guess its a personal matter to discuss with your wife and parents.  If it works for you guys go for it I guess.  It would allow you to stache away alot of money very quickly with your incomes.  Sounds like you've considered some of the struggles, like the dog, and maybe doing a trial run.  That said would I do it? No I wouldn't.

Even with such a hair-on-fire debt situation?  Wife would be able to free up almost 500$ aditional to throw down on the loan... were those 140k inexistent I wouldn't be so tempted.  On the other hand - and I left this out because it's not guaranteed - wife will likely get a pretty big (60-100k) settlement from an accident last year that would take out a big part of her debt.  Since it's not guaranteed, of course, I'm not figuring it into the numbers.

historienne

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Re: Reader Case Study - Young New Family & ER
« Reply #6 on: January 13, 2014, 12:59:09 PM »
Just wanted to give an example of the extended family living together that is working out well.  My parents moved in with us to take care of our daughter.  In this case, it is not a permanent arrangement (they will be here for 6 months), but it is working out well so far.  They do full-time care for her, but it is not too much to do when split between them.  My mom also does about 75% of the cooking (I do the rest).  We share laundry and other household tasks.  Yes, there are times when all the closeness is a bit much, but overall I am so thankful for their help that it is easy to overlook the downsides.  That said, I do think it's dependent upon the individual personalities involved.  My husband gets along very well with my parents.

bikerdood

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Re: Reader Case Study - Young New Family & ER
« Reply #7 on: January 13, 2014, 01:06:37 PM »
historienne, great to hear from you!!

I actually grew up with extended family - unfortunately in that case it didn't work so great between my parents.

I do believe it's possible, personalities pending.  Great to hear it works in your case :) .  I really think it'll end up being the best solution in so long as we can work that out.

Thegoblinchief

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Re: Reader Case Study - Young New Family & ER
« Reply #8 on: January 13, 2014, 02:37:39 PM »
I couldn't handle it, but I recently designed a house for a couple that was building a brand-new house for them and one side of family - said they loved living together.

If you think it might work, you could try it for a month or two, but I definitely wouldn't do it on a permanent basis until you're SURE. Otherwise you risk offending your parents for being nice enough to open their home, then being (a few months or a year later) "yeah, this isn't working".

On the condo front, I have a lot of friends in that area who really, really struggle offloading condos. Even nationwide, condos typically sit on the market for much longer than houses do. If you're staying in the DC area long-term, great, but keep that in mind before buying a condo.

ch12

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Re: Reader Case Study - Young New Family & ER
« Reply #9 on: January 13, 2014, 08:45:43 PM »
     
  (c) Wife and I could (supposing we're approved for mortgage, find something, etc etc) buy a 2 bedroom condo for up to 300k close (at most 1 mi) from my parents so that we have the benefit of building equity AND still get the built in daycare of my parents' place


I love my parents, but Option B would be if literally there was no other choice. I hope that it wouldn't come to that - and that's with a separate part of the house that's mother-in-law quarters that would keep us separate.

I'd really advocate for getting a house within a mile of your parents' house. I plan to lean on my parents for a bit of childcare, and I know how much childcare costs. If "building equity" is really important for you, then go for it - but I will say that I'd prioritize paying down her massive student loans before adding the stress of a mortgage to your monthly cash outflow. My 2 cents.

SunshineGirl

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Re: Reader Case Study - Young New Family & ER
« Reply #10 on: January 14, 2014, 08:03:45 AM »
Can't you just rent closer to your parents?

rockstache

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Re: Reader Case Study - Young New Family & ER
« Reply #11 on: January 14, 2014, 11:13:01 AM »
Just wanted to give an example of the extended family living together that is working out well.  My parents moved in with us to take care of our daughter.  In this case, it is not a permanent arrangement (they will be here for 6 months), but it is working out well so far.  They do full-time care for her, but it is not too much to do when split between them.  My mom also does about 75% of the cooking (I do the rest).  We share laundry and other household tasks.  Yes, there are times when all the closeness is a bit much, but overall I am so thankful for their help that it is easy to overlook the downsides.  That said, I do think it's dependent upon the individual personalities involved.  My husband gets along very well with my parents.

I can't tell your gender from this post, and I don't like to make assumptions, but I have seen often that living with your parents works best if the mother and daughter live together, and not mother in law and daughter in law as suggested by the OP. It's stereotypical of me to say that, and it's only based on anecdotal evidence, but I could live with my mother way, way before I could live with my MIL, and honestly, I wouldn't live with either unless there was absolutely no choice.