Author Topic: Start anew or stay and stick it out?  (Read 2886 times)

ikaikamute1

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Start anew or stay and stick it out?
« on: April 28, 2015, 08:49:56 AM »
Would you stay or would you tuck tail?

Life Situation: Married with a nine year old daughter.

Gross Salary/Wages: Before any deductions - $120,000.00 (but will change if we move to Eugene, OR and I would anticipate an income starting there around 75k annually).  Take home after deductions is about 70 to 75k.

Retirement accounts: Spouse 401k balance: $150k.  I am currently a federal employee and have a TSP balance around $75k.  I bought back my military time so I have a total of roughly 21 years of federal service and my high 3 would be about $75k.  So if I leave Uncle Sam I would be eligible for my FERS pension at 60 years old of about $15,750.00 a year (or I can take it earlier at 57 with a 15% deduction so that would be around $13,350 a year).  Combine savings and Roth accounts equal about 20k (I know, I know).

Current expenses:  Mortgage (15 year 2.85%) balance: 251,000.00 - payment/mo - 2367.00; equity loan (15year 6.5%) balance: 71,000.00 - payment a month 785/mo.  Combined credit card debt: 25k (yup, it's toasty here, but I'll explain later). car payment 260/mo - balance owed 7500.00 (we own our other car - a 2007 camry hybrid). Yearly propane and electric runs about 2k combined (or just under 180/mo).  phone - 100/mo.  Internet - 50/mo. Insurance for car a month 89/mo. Groceries - 450 to 550 a month.  Daughter's private school - 534/mo.  We both took out a loan from our retirement accounts a little over a year ago (I still owe 17500.00 and my spouse owes 21k - payments per pay period - mine - 350/mo and hers about 225 a month).  gas for vehicle runs about 100 to 120 a month. Try to pay at least 400 a month toward credit card balance (regarding the higher balances and loans - we took out the credit/loans to spruce up the house we currently live in so that we could get the land/home up to snuff for selling.  Most of the balances have a Zero or very small finance fee into 2016 and I always intended to pay them off with the sell of the home).

Total monthly expenses:  6100.
Monthly income is about 6200 a month

Assets: TSP- 75,000.00
             401k- 150,000.00
             ROTH - 6,000.00
             Savings: 13,500.00
             Camry:  estimate 6500.00
             Home - Current estimated market value:  390k to 419k (let's just say 405.  So 405-251-71 = 83k minus some realtor/closing fees - I actually kind of worked that into the 405 figure as I believe the market will support a sale in the 415k range). 

My spouse has other significant assets with her family back in Hawaii, but I am not privy to those figures right now.    Talking money in her family (maybe her culture) is kind of a no, no for some reason so I guess we'll see how that works out when we all get to it.  When things exceed our financial arm's reach - we can call home (this is very, very rare).

Specific Question(s): So, I am 40 years old and my wife is 38.  She is a registered nurse and I work for one of those 3 letter'd agencies and some of those skills may translate over to a life in the private sector.  However, I was a nurse corps officer in the Navy and still have an active RN license as well.  I, like MMM, like working on homes and doing carpentry - I am not at his level though I can spruce up a place and build a little equity I believe.  My plan is to push reset on the debt.  I would like to sell my current home, pay off the credit card debt, move to the West Coast closer to our families and pursue another career interest there while my body/mind can still take the punishment.  I've had enough of the phones on my hip and the sacrifices my wife/daughter has had to make so that I can work and stay in this rat race.  I believe I can pay off a majority of her 401k loan, but I think I will have to take an early distribution hit on my remaining balance and just pay the taxes with the 10% penalty.  In the end, I think we will end up having about 20 to 25k, in our savings account after the moving expenses, etc once we get to Eugene, OR.  As nurses with our experience/credentials - I don't see an issue with immediate employment.  However, I do not wish to pursue that career field again and would like to get more into rental properties and management of them.  I'd like to go back to school and hopefully get hooked up with a good homebuilder/carpenter mentor and learn the trades more deeply so that I can invest in distressed properties in quality neighborhoods and then throw myself into them and build some equity.  I can always do some nursing prn, but I'd like to really start working for myself.

   The plan from here on is to not spend more than 50% of what we make and to save the other 50% so that we can be retired in 10 to 15 years.  My only dilemma is:  Should I go now and get working on that dream as I see it (actually it is my wife who really wants to get back west - though I am definitely in to it) or do I suck it up another year - pay off those TSP/401K loans and hopefully get a little more money from my house (though that is a gamble given rates and how markets switch on and off so quickly)?  There may be federal jobs in that area that I can consider as well, but I really don't want to have to drive excessive distances to get to work either.  We are really hoping to reside within 1 mile to work and my daughters school limiting the need for even one car (hoping to sell the one we currently hold a balance on when we sell the home).  Mostly, I just want to get back a lot more time with my family.  I don't want to work to pay the bills, but work to enjoy the rest of my life with them.  Just typing this post has provided some clarity for me and has me leaning toward selling and getting re-started over there, but I would value anyone's thoughtful insights as to what they see may be helpful or problematic with moving forward.  Thank you all ahead of time! Finding the MMM site has been a wonderful blessing and I have learned quite a bit from all.

Best,
I

Chrissy

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Re: Start anew or stay and stick it out?
« Reply #1 on: April 28, 2015, 09:28:21 AM »
Okay, I get it.  You have nearly $400,000 of debt, but sale of the house will wipe it all out, leaving you with a positive net worth of ~$250,000.  So, you could go now.  I think the order of events is where you should focus your attention.

1) Do your research on Eugene, OR.  Find the areas and schools that are contenders.

2) Wife gets a job in one of those areas.

3) Put the house up for sale, while finding an apartment in Eugene.  Yes, an apartment.  No house until you also have some sort of income coming in whether from contracting, or a federal job, or nursing.

4) Sell the majority of your belongings, rent truck for the rest, and move yourself.  Your $13,500 in savings should cover this, and, if you don't move until your wife has a job, there's no need for additional cushion, though your credit cards would be available should something come up.  Pay off your 401k loan. 

5) Get a less stressful job in your area, and amass some cash for a down payment on a fixer-upper.


Axecleaver

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Re: Start anew or stay and stick it out?
« Reply #2 on: April 28, 2015, 10:38:00 AM »
I,

You're burned out. I was in your place in 2010 when I lived in the DC suburbs, making six figures, carrying credit card debt and saving 6% for retirement, which was a distant dream. Post-2008 crash we lost half our retirement and we'd seen homes in our neighborhood sell for 650-750k in 2008, listed for 350k post-crash and not selling, so we were demoralized.

There are 1000 wise sayings about these kinds of problems - every journey begins with a first step, the only thing you have to fear is fear itself, there is no better time than right now. Everybody goes through the fear of change. I'll tell you that moving away from the crazy rat race and back to a more rural area with a more balanced pace, has made a huge difference in our lives. We're all happier and healthier, I've had great success with a one-year old business, and we are saving 43% toward retirement now (making progress!) Our retirement date is December, 2020. If we had stayed, we'd be retiring in 2035-2040, if we had survived that long.

Get your wife's buy-in and support, then make it happen. You'll find the world outside DC to be a lot more relaxing.

ikaikamute1

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Re: Start anew or stay and stick it out?
« Reply #3 on: April 28, 2015, 12:55:26 PM »
Thanks Chrissy and Axecleaver for your responses!  Axecleaver, you nailed it on the head my friend.  I forgot to mention another dependent - Monsta the Malamute (he's nine).  So I think renting an apartment may be a little difficult, but we'll look in to it.  My wife is definitely all in for the move.  We've researched the area quite a bit and we have had family that attended university there in the past.  We want to get as close to the Crest Drive or Fairmont area of Eugene which is very near the Hospital and the Catholic school my daughter would hopefully attend (I don't really get a choice in this and if I don't spend the money my wife's parents will pay for it and I get to feel guilty, but not really).  My wife has had multiple offers for employment out there so I had her stop sending out her resume until the for sale sign is out front and the house is under contract.  I know Roseburg, OR is just a little north of Eugene and they have a VA hospital there.  It may serve as a crutch for me until I get something else off the ground.  I do intend on having a big barn sale soon and selling most of our junk so we're lean and mean for the trip West.  I will take your advice, Chrissy, and pay off the 401k loan my wife currently has and hopefully get the less stressful job to boot.  Thanks again for your supportive responses.  It's the kind of encouragement I needed.

Mother Fussbudget

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Re: Start anew or stay and stick it out?
« Reply #4 on: April 29, 2015, 01:04:58 AM »
Look this over, and see if I have this right.  Spreadsheet format based on your OP. Sounds like you're really asking:  "We're planning to move to Oregon - is this the right move for us?"   
You're breaking even currently with a $100 monthly surplus.  But if you subtract your IRA loans (you *could* take your time paying those back - you're ultimately paying yourself) you have a $675 monthly surplus.

Expense:            Principle:        Rate:       Monthly:      Net House Sale:   
Mortgage         $251,000.00  2.85%    $2,367.00          
HELOC           $71,000.00  6.50%       $785.00        $83,000.00    (after house sale)
CreditCard   $25,000.00           $400.00        $58,000.00    (less CC)
Car                     $7,500.00           $260.00        $50,500.00    (less car loan)
His IRA loan   $17,500.00           $350.00        $33,000.00    (less his IRA loan)
Her IRA loan   $21,000.00           $225.00        $12,000.00    (NET after zero debt)
Utilities                                          $180.00          
Phone                                     $100.00          
Internet                                       $50.00          
Car Ins.                                       $89.00          
Groceries                                      $500.00          
Private School                               $534.00          
Gas                                     $110.00          
  Total Exp                            $5,950.00          
                                                        
Est. Total monthly expenses:              $6,100.00          
Est. Monthly income:                    $6,200.00          
                  
Stash:                  
TSP             $75,000.00                
401k           $150,000.00                
ROTH       $6,000.00                
Savings:      $13,500.00                
Camry:         $6,500.00    (not a FI 'asset')            
Home   $405,000.00    (sale value - not Stash value)            
(net sale)   $12,000.00                
                  
Stashe    $256,500.00                
(Less down payment)  $221,500
                  
OR House Down payment    $25,500.00 on a $125,000.00 house   (assuming 20% down payment to eliminate PMI)         

Hopefully this will help with the analysis.  Bottom line:  not a bad stash @ $1/4 Million plus pension.  Showing a $25K down payment - $12K net house sale + $13K savings.  Think of your home mortgage as 'forced savings' - like purchasing a bond (i.e. 3.25% for 30 years) and the interest is deductible, so don't overpay unless you're trying to get rid of PMI insurance.  With these numbers, you can afford a home for $125K.

A quick search on Realtor.com, homes in Roseburg, OR for $100K-$130K = 73 properties found. 
New mortgage 30 yr @ 3.5%:  $561/month.  Assuming expenses are about the same, you're looking at a $1,941/month.
If you can make $5,000 monthly, your new stash amount will be ~$3,000/month. 

At that rate, you could be at FI in 6-7 years with a $688K stashe - assuming a 7% ROI (the figure I use), and a 4% safe withdrawal rate. YMMV.

Exflyboy

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Re: Start anew or stay and stick it out?
« Reply #5 on: April 29, 2015, 09:51:27 AM »
A couple of things about Oregon.

1) 9% income tax.. The forms are on line so you can get an idea of how this is calculated... Its a bit painful!
2) Roseburg is SOUTH of Eugene (not North) by about 80 miles or so. Its a much smaller town based on the logging industry which is a shadow of its former self of course. Very little to do there based on passing through it on I5 numerous times. Eugene is much bigger and more diverse.
3) Check out Corvallis too.. Bigger and more vibrant than Roseburg, (but smaller than Eugene) college town with Good Samaritan Hospital which is a pretty large set up.
4) Property prices will be higher in Eugene and Corvallis as will be RE taxes.. But you can live 5 miles outside of Corvallis and pay half what you would in the City.