Author Topic: Should we move?  (Read 3789 times)

powersln

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Should we move?
« on: August 23, 2015, 08:47:34 PM »
Income: 90k per year
Family: Wife stays home with our two small kids
Current House: Worth $85,000, owe $29,000
Debt free other than the small mortgage.
Net Worth: ~125k
Age: 28

My current commute is 54 miles round trip.  We are looking at a house that is within walking distance (< 1 mile) from work.    The asking price on the house is $319,000 (All homes close to work are in this price range).   According to MMM's True cost of commuting article (relevant quote below), it should be a no brainer to move.   However, it scares me to take on that much debt if I'm the sole income earner and I lose my job.   What do you think?   Am I being too risk adverse?

"In other words, a logical person should be willing to pay about $15,900 more for a house that is one mile closer to work, and $477,000 more for a house that is 30 miles closer to work." ~MMM http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/

Kaikou

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Re: Should we move?
« Reply #1 on: August 23, 2015, 09:59:56 PM »
What field do you work in? Why do you fear layoff?

What if you cut your expenses way down so that you pay off the house faster. Pick up a 2nd job or side hustle. Rent before buying?

If you move to that area and did get let go, are there already companies close to that area rather than the area now?

StockBeard

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Re: Should we move?
« Reply #2 on: August 24, 2015, 09:55:24 AM »
1) Consider renting for a few months to see if you really like the benefits?

2) I once read some advice that you shouldn't take a mortgage that's more than 2 years worth of your salary. That's 180'000 for you, meaning you'd have to put all your net worth (and some) as the initial payment... so definitely not great. But that doesn't paint the whole story. As you mentioned, you need to consider how much you'll save a year in commute costs, and how many years you're thinking of staying there.
(Is there some family that could help you put the initial down payment, with a very interesting interest rate? I know not everyone has wealthy parents,  but my parents helped me significantly with my first down payment on our condo, with a loan at 0% interest, which helped a lot, obviously.)

SunshineGirl

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Re: Should we move?
« Reply #3 on: August 24, 2015, 10:14:41 AM »
While the commute sucks, I would not trade a nearly paid-for house with one costing that much.

backyardfeast

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Re: Should we move?
« Reply #4 on: August 24, 2015, 10:49:46 AM »
I second caution.  This isn't just a financial decision (you're not a single renter working for a while and saving money by moving however temporarily), it's a lifestyle decision for your whole family.  So...is your whole family stuck out in the burbs and would everyone benefit from the close-to-work location by getting to spend more time together and take advantage of all the (presumably urban centre) city have to offer?  How significant is a paid-off house to your RE plans?  Will your wife need to work at some point and would she also have a commute? 

In our case, we have long commutes.  But the once the mortgage is gone, DH can pretty much instantly retire and then we know this is the area we want to retire in.  It's where we want to live and where we would want to raise our kids if we had any.  We did the urban MMM thing for years, and emotionally, it's just not for us anymore.

You're pretty close to having the house paid off, what difference will that make to your lives and FIRE plans vs having a big mortgage payment in the budget?  Will your number of years of having to do that commute drop?  If you've got another 15 years of commuting either way, then moving is indeed a no-brainer, because you'll get to spend so much more time with your family over those years.  The question about job loss is important too.  If you lost your job, are you more financially secure in your current location with low housing expenses?  Or are all the abundant job opportunities in the community you're commuting to now and it would benefit you and your wife to be closer to them?  Which option feels more resilient?

MayDay

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Re: Should we move?
« Reply #5 on: August 25, 2015, 10:33:48 AM »
I'd move if you like the close area, especially if there are other jobs nearby.

If your company is the only game in town, I would be more careful. 


crispy

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Re: Should we move?
« Reply #6 on: August 25, 2015, 10:51:06 AM »
I'd stay put.

Axecleaver

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Re: Should we move?
« Reply #7 on: August 25, 2015, 12:32:23 PM »
You should think about this in terms of real (or total) cost, which is what that article was trying to address in the first place. To buy a 320k house you'll need 20% down - do you have 64k available as a down payment? Plus another 3-8k for closing costs? If not, you'll need to pay for PMI, which is incredibly expensive. A more expensive house will generally cost you more in other ways, too. More taxes, more maintenance, more furniture to put in it. Will there be other expenses that change if you move?

It's also on the edge of your affordability - if you put 20% down, you'll finance 256k plus escrow. Rule of thumb is 2.5x income, or about 225k on a 90k gross income.


Brilliantine

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Re: Should we move?
« Reply #8 on: August 25, 2015, 01:56:01 PM »
Yes, move.
Sell the house. Sell the car. Rent walking distance to work.

dess1313

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Re: Should we move?
« Reply #9 on: August 25, 2015, 02:10:20 PM »
While yes you would cut the cost of your commute, it would make it much more expensive in other ways.  even just the added cost of a mortgage would make it harder, and you'd save a lot less.  And then you would pay WAY more in taxes. And all the fees of selling.  And depending on the condition of the new house, it could need work, or have surprise expenses you'd leave yourself strapped for cash because of the move.  Unless this move would make it better for you and your family in other ways than just your commute time, i would stay put and save up a bit more first. 

Instead can you cut down your commute by carpooling, or getting a more efficient car?  Can you still look for a place to move to thats maybe 2 or 3 miles out and less expensive?  and yes how stable your job is a huge factor.  Even the most stable of jobs can have issues, or if you had health issues, it would leave your family strapped to a huge mortgage.  I had a stable job but 5 months off work due to illness decimated my emergency fund and left me strapped.  Id stay where you are for now.  This doesn't sound like just the right house for you.  Keep looking for something more in your budget range if you want to continue with this idea

frugaliknowit

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Re: Should we move?
« Reply #10 on: August 25, 2015, 02:23:12 PM »
Too much house and thus overhead for your income.

If you want to live closer to work rent ~ 20% or less of gross income (about $1500 per month).

Frugal D

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Re: Should we move?
« Reply #11 on: August 25, 2015, 02:25:09 PM »
Am I being too risk adverse?

*averse*

This is just a nitpick of mine. People mix up the two too often.

I know the commute must suck, but I'd stay put. Once you finish paying off the mortgage your options will open up and you can re-evaluate. You might decide you don't need your current job anymore and can find something closer.