I've long lurked the forum but am posting for the first time. I have a dilemma. It is a very good dilemma to have of which I am aware and grateful.
My wife and I are each high income earners (Me: 240K, She: 80K) and have recently paid off a large student debt that has been hanging over our heads for the last 10 years and that we have been paying down very aggressively for the past 2. We are now set as follows: we are each W2 employees with good benefits and chances to advance our positions, though she likely has a greater potential for salary growth. Each of our positions is quite time consuming, leaving little time for side hustles and not nearly as much time for family and intellectual/philosophical growth as we would like. We currently contribute maximum annual allowances to a 457, 403B, and Trad IRA (me) and a SIMPLE IRA (her). We have also started an HSA this year and plan to max that. We are saving $8400 total into two 529 accounts for our sons (ages 8 and 3). We have no consumer debt. Our kids are in a good public school system and will remain so throughout. 2 years ago we purchased an older house for 350K (we currently owe 320K) with the plan to complete a large renovation. This is our only source of debt. Our annual spending, minus the mortgage, is not as frugal as it could be (probably close to 75K). We have made strides to reduce this and I could see it improving more in the coming year.
Our dilemma is how to proceed with our house. The renovation bids have come back much higher than expected. We hoped we could complete a total renovation/expansion for 400K and the lowest bid we have found is for 550K. We have been shopping this aggressively amongst local builders. We have been open to reducing our asks and expectations. Still not moving the needle enough. We have a variety of options including proceeding with the renovation, knocking down the existing structure and building new (which we could build smaller, more efficiently, and more cheaply according to contractors we have talked to) or any host of much more frugal options including turning this into a rental property and simply buying something newer and cheaper. We love the neighborhood and school system we are in, so our preference would be to stay at this location if possible. Because of recent infrastructure improvements in the area we expect the property value to continue to increase which, historically, it has done consistently.
Our current net worth is around 500K. Our goals are not to be entirely FI any time soon. We both enjoy working but would love the flexibility to cut back to half or 3/4 time at some point (or at very least to say no to ever-expanding expectations at work). Additionally, I am very curious about the idea of quitting my W2 and starting my own business (in the same field), though until this point in my life I have not been terribly entrepreneurial. We don't have big spending plans in our future. We enjoy travel, but it is not a primary motivator for us. We are, for all intents and purposes, home bodies so devoting a larger portion of our income to this correlates well with what we value. With that said, I am unhappy with the diversity of my investment vehicles and would like to start a taxable investment account or being to purchase rental properties. Spending too much of our income on our home could limit those opportunities.
I would love any and all feedback on ideas for how to proceed, errors in my thinking, or over-looked opportunities. We have the luxury of time and a newly available source of income that has previously been dedicated to student loan repayment. Thanks in advance.