Sharp Curve Leaving Expat Life & a Baby?! - Suggestions for Sanity?

[EcoCanuck]

Hello All,

A bit of a vent and looking for some guidance.

After about three years abroad we are now considering returning home. Our hand has forced itself as we are now expecting our first child and we want to be with friends and family during this major change in our lives. We were successful very quickly which is great but we were expecting a longer process, based on recent family and friends own attempts, and to be able to work and save for a longer period. We are very happy and thankful (and hopeful) that things have gone and will go smooth.

I'm a planner and originally my wife and I had agreed that we would stay a year after the birth as there is no comparison to the financial benefit of this plan. Enter pregnancy and that option was removed rather quickly (which I always assumed was a strong 90% likelihood of happening but I was hoping (financially) that it wouldn't).

Now I'm faced with the prospect of returning home with both of us unemployed, about to have a baby and as soon as a job is secured buying our first home. I'm stressed and doing my best to control that to help minimize additional stress for my wife. Did I mention this is our first child?   ......................

Thus we enter the crunch years... we have a good start with a decent downpayment but much of our success has been undermined by the fact that the real estate market has been unsustainably hot in a wide berth around proximity to our family and potential employment. We left because employment opportunities were limited, wages stagnated for decades, and they look like they will continue to be. So where do we go from here?

Current Plan
1. Not overbuy on our home with the idea to keep it our home for 5-7 years (however the debate with my wife is that for a few hundred $$ more a month on our mortgage we could buy a home we can stay in for 20 years, I'm on the fence about it).

2. Pay the 20% downpayment to avoid the extra insurance (100% happening and can be done for both options considered above).

3. Put approximately a years worth of expenses in a TFSA as cushion (fear - of job not paying enough to cover all expenses and to help reduce our stress and settle in)

4. My wife and I will both apply for jobs and the more successful of the two of us will take the job and the other will stay home. I'll have a head start applying for jobs as we will be back a few months before the birth and she can have all the time she needs to recover (3, 6,9, 12 months+). I would prefer to be the SAHP for a variety of reasons but also because I would be the more willing of us to take up a part time job on the side for an income boost.

5. Potential option - We both take the first year off together, live with parents, and take the first year to bask in this experience and provide support to each other. Financially...well, house prices go up 7%-10%. If parents cosigned we might be able to buy and rent it out otherwise I think one of us would need a job to be approved for the mortgage but more research is needed in this.

Any suggestions or recommendations on the above plan and recommendations for surviving the crunch years?

The other factor is I'm about to take a huge psychological blow as my income and thus ability to save for a retirement is about to take a serious hit for the next 3-5+ years. There is no comparison to the income we were able to earn while away and now we will be trying to save $1 here and $5 there while on a single income. We're not extravagant people but when I calculate our upcoming expenses its troubling to see how much I need to earn before even putting anything in to savings.  It's not so much a pride thing its more a practical thing and seeing ER/FI slipping off in to the distance. The idea of working for another 35years does not sit well.

Cheers to all! All advice welcome on the crunch years or first child suggestions :)

EcoCanuck

[11ducks]

Firstly, congratulations! It's a different phase of life, and your priorities may change for a little while (family closeness over finances), which is natural, and okay. You won't have babies forever.

The benefits of scrimping and saving during the crunch years really become apparent as your kids get older- We survived on poverty-level wages until my son was in school (and I finished college), and now I make a decent wage I can save a lot. The habits you develop will put you in good stead for the future.

I would be cautious about moving in with parents, unless they are absolutely awesome and you are all fully on board. First year with a baby is a time for a couple to grow into being a family. That can be sometimes hard to do with your parents in the room next door, though it works for some people. Regardless, good luck! You're in for an awesome adventure!

[Cassie]

Wow-lots of changes all at once. I would just take it a step at a time, move, job hunt etc and see what happens. Also you need to come up with a budget based on what you think you will likely earn and have to pay for things.  I advise against living with the parental units too with having your first baby. They may try to give you well meaning advice, etc which can be annoying if you do things differently then they did.

[lbmustache]

Now I'm faced with the prospect of returning home with both of us unemployed, about to have a baby and as soon as a job is secured buying our first home. I'm stressed and doing my best to control that to help minimize additional stress for my wife. Did I mention this is our first child?

Deep breath, and congratulations!

I think you are stressing about too much, and will be too overwhelmed either with unemployment/new job and a new baby. I am a planner by nature too and like to map things out well in advance. My recommendations:

Breathe again.

Move back.

Either RENT an apartment for live with your parents. You probably don't want to deal with house hunting and the stress it brings alongside a new (first!) baby. Hopefully you have a decent relationship with your parents and it won't be too stressful.

After settled into new job and life, figure out what kind of house you want. I think either the 5-7 year plan or 20 year plan sounds good to me - if you are in an area with rising market values then you would be ok either way (obviously better off with the 20 year plan, but that requires a lot of planning like how many kids you want, what neighborhood, school, etc.).

[MsPeacock]

+1 on renting and not jumping into buying a house with so many changes gong on. It is hard to appreciate just how many ways a baby will change your life (even for us planners who think we have it all figured out). Having a baby does not nessesitate purchasing a home. Babies, in fact, need very few things or space, as it turns out.

[pbkmaine]

+1 on renting and not jumping into buying a house with so many changes gong on. It is hard to appreciate just how many ways a baby will change your life (even for us planners who think we have it all figured out). Having a baby does not nessesitate purchasing a home. Babies, in fact, need very few things or space, as it turns out.

Rent for a while. And read this:

http://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

[Dee18]

Rent.  I was in something of a similar situation years ago with my first child.  I ended up renting the first year and was do glad I did. Home ownership requires way more time than renting and there are many more incidental expenses.  I would avoid living with parents.  You and your spouse will have enough to decide about how to do things without other adult opinions in the house.

[ysette9]

Perhaps this is non-negotiable but I will bring it up anyway. Do you absolutely have to return home? Having a 2-year-old myself I understand wanting to be near friends and family having a kid. On the other hand, I quickly tired of having those same people around me and finally had to draw a line and kick people out of the house because they were more stress than help. Also, nothing makes it easy to make new friendships like having a young baby in common. We made so many new friends through the various new parent support groups we attended. Two years in and we are still hanging out with these people. Could you consider having family come for extended visits when the baby is born and stay where you are for another few years to FIRE or at least really pad those investment accounts?

[EcoCanuck]

Thanks on the congratulations :) we haven't made the official announcement yet, we will be doing so in two-ish weeks.

11ducks / Cassie - I agree with you about living with the parents. We get along fine but it's not an ideal scenario at all. There's a good chance that we'll have a quick trial run of it at first due to circumstances out of our control however we'll be able to shift pretty quickly. They will be about a lot no matter what we do... for good and bad :)

lbmustache - Breathe - I gave similar advice to my wife pre and post the baby news. It's a lot. I know. Right now I'm taking it one step at a time and trying to organize all the variables. I'm stressed but the stress is more due to all of the uncertainties (more so to do with the baby and all of the tests and after that being responsible for a life and..... wow). The other factors I can handle as we have a good cushion and a good support system back home. We have a pretty good idea of what we're looking for in a home. After the baby the job situation is the biggest variable.

MsPeacock / pbkmaine / Dee18 - Rent.... Yes, it is definitely an option. The challenge I/we have with renting is that house prices are going up quickly. 5%-7% is likely conservative and could be as high as 10%+. This means that if we choose to rent for a year the houses that we're interested in would now be $30,000 to $40,000 more expensive. That eats dramatically in to our savings. One idea that we've played around with is to buy and try and rent it for a year to at least stop the financial bleed and gain the equity. If we go down this road then we still need to handle maintenance and other factors so why not just live in the house?

I re-read the rent vs buy article by MMM. I've looked at the expenses in spreadsheets and they come up fairly similar but they are general estimates. The difference is equity in a house or investments multiplying and which system do I have more faith in? I know my wife leans more towards a house as its more tangible and more of an emotional investment. Myself I could be convinced either way especially when I consider commuting times.

ysette9 - It's fairly non-negotiable. I'm still pushing to stay (100% financial motivation as everything else is better back home). Before the pregnancy we talked about exactly what you suggested - paying for families flights and spacing out their visits. This was 100% our idea. It very quickly dissipated when we visited local doctors and hospitals. The quality (IMO) was fine but it wasn't as safe and secure as home is perceived to be, then you toss in the friends, family etc. She would be fairly isolated if we stayed and I worry about her becoming depressed, even after making new friends here, shes always been a strong family person. It's tough. On one hand we would be ahead financially dramatically relative to going back but our quality of life would be much higher in the short term. I keep telling her that future us will be cursing current us in 10-15 years when instead of being FI we're another 10 years away if all things go well (general estimates).



Things are still up in the air and there won't be any firm decisions for a few months. I'll continue to scour the boards and research and support my wife. Current and future EcoCanuck will continue to battle it out.

 Thanks for the advice everyone.
EcoCanuck

[okits]

Congratulations on the upcoming baby!

For your situation, as with everything in life, something's gotta give.  You can't have the 20-year house you want and be close to family (but where employment prospects are limited and wages stagnant) and have a SAHP and FI as though your expenses didn't just jump while income dropped.  So far all your wants point to delaying FI, which is fine as long as you both accept this set of priorities. 

From what you've said so far it sounds like your best bet to continue your pace to FI would be to sacrifice the house (rent something inexpensive as your long-term plan or live with parents and share expenses) or both of you work outside the home (if you can get jobs with opposite shifts then one of you will always be home to care for baby.  Tiring, but do-able, and no daycare costs.  Otherwise, pay for daycare but end up with more income to save, at the end of the day.)

As things take shape hopefully you and your wife can reach an agreement on what to prioritize.