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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: EarthSky on May 27, 2012, 10:41:32 AM

Title: Seeking advice on timing of selling home (long-ish)
Post by: EarthSky on May 27, 2012, 10:41:32 AM
Hi.  I have been on the Simple Living Forums for some time, but only just discovered this site.  Love the practical advice I've read so far!

My situation:  I have been in my current home for 7 ˝ years.  My previous position paid well, so I was able to afford the monthly mortgage.  I was laid off 16 months ago, and have finally found a position, but at 72% of my previous salary, and a longer commute (35 minutes vs. the previous 10 minutes).  I am not at all attached to the house (it’s circa 1950’s ranch, 1656 sq ft, fair condition; not 'under water' but I'll be lucky to break even in a sale), but do have emotional attachment to the large yard, older trees, etc., because my children have enjoyed the space so much.  Through very limited spending and some help from the Restoring Stability program for hardest hit areas, the mortgage has remained current :)
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I would like to downsize to continue to live more simply and to get a better handle on my other debt (not from frivolous spending, but major life events – spouse who contributed almost no $$ due to unaddressed mental health issues and very poor money management skills, resultant divorce with court costs, cross-country moves, child with special needs, etc.), and preferably live closer to the new job.   I apologize in advance if my kind of dilemma has already been talked and analyzed to death on the forum (feel free to direct me to another thread if that’s the case), but here goes…. My questions:

 – Do I buy again (but smaller and significantly less $$), or rent until I have a better handle on the future?  (Having 2 school-age kids plus a college kid who drops by on holidays, and 2 dogs make renting a small apartment/condo or living in a tiny house not very practical at this time)
 - After 5 years of advocacy and battling the public school system, both of my children (one very academically gifted; one very challenged with mild autism and several co-occurring disorders) finally could get what they need if I stay put, or close to this neighborhood.   How do I weigh the important education piece against the cost savings and smaller/simpler lifestyle option?

Appreciate any insight you can provide, including good questions that will help me navigate the decision-making process.  I’ve been preparing to put the house on the market for several months (doing repairs, simple upgrades, purging & packing, etc), and yet I haven’t put a ‘stake in the sand’ by putting the ‘for sale’ sign in the yard.   I suspect it’s the emotional aspects that are the hardest, and as a single parent, I don’t have a partner with whom I can talk through this and get support.  I may just need some encouragement or a good ‘kick’ to move ahead!

Thanks!
Title: Re: Seeking advice on timing of selling home (long-ish)
Post by: James on May 27, 2012, 11:51:57 AM
We should probably have more information to offer advice...


What is your income and your mortgage payments? 


Are you able to cut spending in other areas, such as cable, phone, etc?  (I assume not since you have been struggling, just checking)


Do you have a cheep high mpg car for the commute?  What are your rental or other housing costs likely to be if you move closer to work?


How old are your younger two kids?  Are you traveling a lot other than work?  (Is everything else close to home except for your job?)


Mostly I think it comes down to hard numbers, so I think you need to find out for sure what your options are if/when you sell.  It's going to be stressful either way, but having a solid plan based on more info will help a lot.
Title: Re: Seeking advice on timing of selling home (long-ish)
Post by: kolorado on May 27, 2012, 06:10:17 PM
We just moved last month from NJ to CO selling a house we lived in for our entire married life. The emotional stuff was very hard and we also just broke even on the sale. You know what though? My kids are fine, great even with the move. I adjusted fine too and I even like our rental house a lot.
From everything you posted, it makes a ton of sense for you to sell and buy something smaller closer to your new job. Even though you said you could "afford" the higher payments when you had a better job, the fact that you no longer can at 72% of your old income and the fact that you say you've had help in the past is a huge red flag that you couldn't afford the house at that level of pay either.
We're on the low end of the income spectrum. However, should something have happened to our one low income, we could have still comfortably made the payments at 50% of the former income level. That's because our savings rate has been 30% or higher for years. Frugal skills I've learned and honed would allow me to trim the extra 20% off in crisis mode. That means we could take an income hit of a staggering percentage and the only way we'd feel is the inability to put more money in the bank.
I know all that sounds braggy but I hope you might find it a bit inspirational. It's completely possible to retrain your mind to reject conventional advice and make your own radical decisions about money and how to live.
Forget everything the lenders tell you about what you can afford. Your mortgage, taxes and all utilities combined should never exceed 30% of your income unless you're paying down extra principle.
Commit yourself to lowering your household spending to at least 75% of your new income so you can bank the rest. With a smaller place and shorter commute you will be well on your way to meeting those goals.
Title: Re: Seeking advice on timing of selling home (long-ish)
Post by: HeidiO on May 28, 2012, 05:04:27 PM
I would consider renting, if you can find a place that is closer and less expensive.  It sounds like after all the stress of the last several years, you could use a break.
Heidi