Author Topic: Relocation Advice  (Read 1992 times)

Rover12

  • 5 O'Clock Shadow
  • *
  • Posts: 8
Relocation Advice
« on: March 26, 2017, 02:15:57 AM »
I'm a long time reader, first time poster because I find myself in a bit of a pickle... My partner and I live in rural New England where utility costs are high, winters are bitterly cold but the cost of living is relatively low. We are in our early 30s and hoping to start a family soon. Our net worth is about $350,000 and we have another $50,000 equity in our house. I work in health care and have been supporting us while my partner has been finishing her PhD. Our plan for the last few years has been to save 50% so that I can at least go part time when we start a family and not be as stressed about saving for the future. Honestly, I would love to never HAVE to work in my profession again.  I will always make about twice what she will make as a college professor though. If we stayed in our current area, we could have our house paid off in about 8 years and I could completely retire by 40. I would hope to start my own business and do some slow travel in the summers to visit family and friends when my partner isn't teaching. My partner truly loves what she does and anticipates working for at least the next 15-20 years.

My partner has gone through the final interview process at an ideal teaching position in California. My concern stems from the massive increase in housing cost in the area (about 3-3.5x higher than where we currently live) and taxes and what that means for how much longer I need to work and also what happens to the equity in our house if we move.

To be clear, there is no offer on the table, but this being a 3,000 mile move to such a different area and with some big goals in the coming years, it's something we're thinking about ahead of time. This area has the walkable/bikeable vibe we're really looking for that would allow us to cut down to one or no cars and epitomizes the eco-friendly lifestyle we''ve been talking about for a few years (otherwise I would say forget it). I have run some numbers and we could rent a 1BR/1BA apartment for a "reasonable" amount of money and continue to save about 50% of our income for the first year or two.  While I lilke the challenge of downsizing considerably, I worry about needing to work full time if we ever want to buy or rent a bigger place. My salary will likely go down if we move out there, but it could be partly made up for in my partner's full time salary. There is work being done in this area for faculty housing that is more affordable, but this would mean we would forever live in a condo. It's not the worst thing in the world, but I am more of your "handyman, aspiring-woodworking, gardener" kind of person and that makes me a bit anxious.
 
Without yammering on forever, here are my questions:
1. Should I be worried about the capital gains of our current home equity in moving to an area where I know we can't afford a down payment on a $600,000 house in the first year? (without tapping into investments)
2. Does anyone have experience moving to an area where there are some great things happening, but you may need to work longer to be able to afford to live there, thus prolonging some of the benefits of part time or self employment you've been anticipating? Insights?
3. How to make my spread sheets more accurate while only having an idea (based on my profession's national organization) of what my salary would be and how we could make this work should it come up?

I look forward to hearing everyone's suggestions. Thanks in advance!



deborah

  • Walrus Stache
  • *******
  • Posts: 8781
  • Location: Australia or another awesome area
Re: Relocation Advice
« Reply #1 on: March 26, 2017, 03:01:54 AM »
If you are planning to move there for a few years, work out how you could be happy there. If you need to live in a condo, are there community gardens you could have? community places where you could do your woodworking? Ways to do the other hobbies/pastimes that make you and your partner happy?

You don't sound committed to Maine, so where do you plan to live in the long term? It may be best (financially) to sell the house, invest, and rent.

Karsh

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Re: Relocation Advice
« Reply #2 on: March 26, 2017, 07:48:02 AM »
On the subject of capital gains, as long as you've lived in your house for at least two of the last 5 years, you can collectively exclude up to $500,000 of capital gains on the sale of your primary residence. There really shouldn't be any tax consequences for selling your existing house.

spokey doke

  • Pencil Stache
  • ****
  • Posts: 513
  • Escaped from the ivory tower basement
Re: Relocation Advice
« Reply #3 on: March 26, 2017, 09:17:02 AM »
While it is good to plan ahead, and something you can't really resist thinking about in your shoes...the really big question is where you will actually end up.  The academic job search process is a very strange beast, and while I wish you the best of luck, it can really be a crap-shoot.  And that applies to not only where you get a position, but whether the work there (or anywhere) will continue to be the same satisfying work that you fell in love with in graduate school.  All of which to say is that you should continue to be open to possibilities and not get too set on specifics for the long term (or at your stage, the short or medium term).

Again...best of luck, that is an exciting stage of life

Dee18

  • Handlebar Stache
  • *****
  • Posts: 1620
Re: Relocation Advice
« Reply #4 on: March 26, 2017, 01:38:44 PM »
You might consider these two issues separately:  whether you want to live there and the potential increase in time to FIRE.  If you would enjoy living there, I'd say try it.  If not, recognize that this is not a financial choice, but a lifestyle preference.  You have a great nest egg already that can continue to grow.  I'd frame the financial issue as: could you live on your wife's salary in 3 or 4 years when you have a child?

Rover12

  • 5 O'Clock Shadow
  • *
  • Posts: 8
Re: Relocation Advice
« Reply #5 on: March 28, 2017, 06:38:21 PM »
Thanks for the insights and info about capital gains taxes. Ultimately, I think it comes down to the fact that I think we would be happy in either location.There is much more of a community vibe in California, but Maine has more of the cabin/lake feel that we like.  We are hoping wherever she gets her first job, we will stay long enough for her to get tenure at minimum (7 years typically), so no move is permanent, but I would like to not have any move be ridiculously expensive. I guess I will leave it up to the universe and we'll make the best decision with the info we have. Thanks again for all the feedback.

Aunt Petunia

  • Pencil Stache
  • ****
  • Posts: 903
Re: Relocation Advice
« Reply #6 on: March 29, 2017, 08:41:41 AM »
Healthcare salaries tend to correlate pretty closely with cost of living. I have heard the pay in California is great, but the working conditions are not so good (lots of lawsuit-happy assholes). This may speed up your time to fire though. Are there any big  fancypants hospitals in the area? A lot of times they will pay for your moving expenses.

frugaldrummer

  • Pencil Stache
  • ****
  • Posts: 693
Re: Relocation Advice
« Reply #7 on: March 29, 2017, 12:15:41 PM »
She worked this hard to get her PhD and has been fortunate enough to find a tenure-track academic appointment?  I don't think you have a choice (unless she gets other similar offers from other universities.)  What part of California is it? 

And ditto what the previous poster said - your salary might be higher in California as well, offsetting some of the increased costs.