Author Topic: When should we (my family of 5) move out of my Dad's basement?  (Read 7547 times)

drewnobi

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When should we (my family of 5) move out of my Dad's basement?
« on: February 25, 2015, 11:16:49 AM »
I've been stalking the MMM site for a while and I thought I would ask the forums about my situation. Here is a step by step recap:

Lost my job about 2 years ago (I was a college professor).
Didn't pursue a national search (I am in a field with very few jobs).
Wanted to be closer to my parents (mom is in a nursing home, dad is all alone in a huge house).
Moved my family (wife, 3 small kids) into my father's 1500 sq ft basement in his suburban home.
2013-2014 school year, I worked a tutoring/teaching job in hopes of transitioning into K-12 education (very low pay).
Ended up landing a higher ed support job for $65K/year, started in August 2014.
Wife does not work outside of the house.
Still living with Dad, interpersonal situation is fine, space situation is fine, 40 mile round trip commute not so good.

Dad is not charging us rent, so we are paying $1000-$1500 a month onto about $22k in CC debt, we have $1000 in savings. Starting in May, we have agreed to pay Dad $400/month to cover expenses, which will give us $1100 or so each month to save/pay down debt.

Our plan is to buy a house in the Summer of 2016 (~15 months from now). Once we get down to just one credit card (probably May of this year) we were going to start splitting between saving and paying down the card, combining the savings with next year's tax return for a hopeful $10,000-$15,000 down payment.

Of course staying put for another year would yield a higher down payment/less debt, but my dad is waiting (very patiently) for us to move out so he can sell his monster house and get a smaller, more retirement friendly house (he's not retired, but is working toward it). Also there are the interpersonal challenges of us wanting our own space (we've always been on our own) and not wanting to live in the suburbs and do the commute. I could also easily bike to work if we could move closer in to the city center.

TL;DR
Should we continue to live in my Dad's house for longer than the next year to accumulate more savings for a down payment?

Does this sound like a good plan to this forum? Any suggestions?

edit: removed home state
« Last Edit: February 25, 2015, 03:10:37 PM by drewnobi »

RexualChocolate

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #1 on: February 25, 2015, 11:26:13 AM »
No one can answer this but you. You already don't operate at peak financial capacity with a non working spouse, so there's no way to know what suggestions are relevant or feasible.

Purely economically, you should live at your father's house for below market rent as long as you can and apply all savings towards the credit card. At 65k a year you should also get rid of that CC debt in less than 12 months. I'd go ahead and dump the savings into it as well. If you're getting a tax return with that level of CC debt, thats nuts, go ahead and raise your exemptions so you can prepay the CC faster.

Buying a house is not a good idea unless you stay there >5 years or so. You'll need a higher payment to avoid PMI unless you have veterans status.

lise

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #2 on: February 25, 2015, 11:26:31 AM »
Regardless of financials, the fact that you know your Dad is waiting patiently should be the signal to you that you should move out as soon as you can.  You need to consider his financial well being as well as your own. 

RFAAOATB

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #3 on: February 25, 2015, 11:31:18 AM »
I would reframe this and have your dad sell the house to you and all live there as a multigenerational house.  You may not be married to the location and the commute is a bitch, but you will miss out on the benefits of kids having grandpa close by and both of you having smaller houses instead of sharing a bigger house means you all live in a smaller house.

And if there's still a mortgage on that house, find out if you can send some more bucks on top of the 400 to paying that thing down.

LadyStache

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #4 on: February 25, 2015, 11:31:48 AM »
If your dad had planned to stay put, I would tell you to continue staying in the basement longer. The fact is that you're majorly inconveniencing him and you should consider his financial interests since he's been kind enough to let you stay with him rent-free for so long. Move out as soon as possible.

LadyStache

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #5 on: February 25, 2015, 11:34:04 AM »
I would reframe this and have your dad sell the house to you and all live there as a multigenerational house.  You may not be married to the location and the commute is a bitch, but you will miss out on the benefits of kids having grandpa close by and both of you having smaller houses instead of sharing a bigger house means you all live in a smaller house.

I was thinking about this at first, but OP is far from work and his dad presumably no longer works, so if they were going to do a multigenerational house, it would make more sense to purchase one closer to where OP works. And ideally it would be a 2-family house so everyone feels like they have their own space.

former player

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #6 on: February 25, 2015, 12:52:29 PM »
I'm sorry to hear that your mother is in a nursing home.  That has to be hard on you and your father.

You don't say much about your father's financial position: if he is paying nursing home fees for your mother he is likely looking at a current or future financial squeeze.  It's also possible that his need to sell the house is more urgent than he has been letting on, given that he has obviously felt the need to help you out in your own difficulties and may not have wanted to make an urgent need to sell obvious to you.  Similarly, his request for money to cover expenses could be because he needs the money or it could be a hint to you to get your act together and move out pronto.  Also, you should have been paying your credit card debt off more quickly than you have been: a $65k job with no housing expenses should have left you a lot of money to play with for the last six months, so $1k or $1.5k per month to debt looks a bit pathetic.

You need a plan to move out of your father's house asap, and your plan should be to rent as cheaply as you can as near to your place of work as you can.   Once you have a plan you may be able to have an open and honest discussion with your father about his situation and what he is planning to do.  And you and your wife need to apply mustachian principles to every penny that you spend.    And as has been said: sort your tax deductions out.  It sounds to me as though you are relying on the Revenue to act as your savings bank, which alone tells me that you are not where you should be in managing your money.

Buying a house is a pipedream for the moment.  Get your financial house is order first.  And you are a grown man with a wife and three kids: stop mooching off your dad.

drewnobi

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #7 on: February 25, 2015, 02:38:40 PM »
Thanks for the responses so far. I should give some of the nuance about my Dad's situation. He 66, still works full time, and has a part time job (which he plans to work into retirement). Unfortunately, he is not financially ready to retire just yet. I don't know much about his retirement savings. Insurance, Medicare and SS handle most of my mom's bills, my dad is taking SS, which is not the wisest I know. He is not put out by us living there to a large degree, other than delaying him selling the house, which he does not have a lot of equity in. (at least I come by my poor financial history honestly).

We have considered the idea of buying the house, or at least paying him market rent, but it seems best to part ways as soon as is reasonable. The $400 is to ease this idea that we are starting to mooch. I choose not to pursue a national search for a job when I lost one, and chose to move closer to family, something that can't be objectively quantified. Living with Dad gave me a chance to restart career wise, and now my kids are totally comfortable going to see my mom, which is priceless. Living with him is really not that bad for any parties, from an interpersonal standpoint. Financially, I'm getting both messages from the responses so far. Stay as long as you can, leave as soon as possible. Again, our plan is leave in 15 months. Maybe that's a fair compromise?

Nobody needs to remind me that I'm a grown man, I remember that every day. I landed the best paying job I've ever had. We have been earnestly applying these principals to our life. We just discovered MMM, but have been following a Dave Ramsey cash budget, debt snowball, etc. and my wife and I are working through lots of history and issues around money, and we are on a good trajectory towards being more stringent.

Oh yeah, I am claiming 6 allowances on my W-2, should I do more? Also wife is not going to work full time for a couple more years til 2.5 y/o is in school. She does work very minimally part time and is open to other ideas.

frugaliknowit

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #8 on: February 25, 2015, 03:03:08 PM »
Echo Lise.

As far as buying a house, one step at a time.  You are "digging yourself out of do-do" (I've been there...), so cool your jets and pay off debt, accumulate cash first.  I would rent until it is financially comfortable to buy.

drewnobi

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #9 on: February 25, 2015, 03:19:15 PM »
Another idea we have had is to buy somewhere "together", that would be cheaper for both parties. A place with a MIL attached or something. He could rent from us? Maybe after we get together a DP?

Eric

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #10 on: February 25, 2015, 03:39:23 PM »
You can't afford a house.  Period.  So stop thinking about it.  You're in major debt.  You're barely putting anything towards it despite living rent free.  You need to figure out why/how you're spending so much money first.  Then pay off all your debt.  Then build an emergency fund.  Then build a proper down payment of 20%.  And then and only then can you think about buying a house.

Consider posting a full Case Study (see sticky post at the top of this forum) to let us help you fix your spending.  If nothing else, it will help you actually see where all your money is going, because the impression given in your first posts here is that you have no idea.

Apologies for the harshness, but hopefully some of these facepunches will be a wake up call.

RFAAOATB

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #11 on: February 25, 2015, 03:40:13 PM »
Another idea we have had is to buy somewhere "together", that would be cheaper for both parties. A place with a MIL attached or something. He could rent from us? Maybe after we get together a DP?

Sounds good.  Just for fun can you let me day dream on Zillow on your behalf, such as What house value/equity you're currently in, house budget you're looking for, what suburb you're in now, and what city you're working in?


drewnobi

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #12 on: February 25, 2015, 03:59:09 PM »
Consider posting a full Case Study (see sticky post at the top of this forum) to let us help you fix your spending.  If nothing else, it will help you actually see where all your money is going, because the impression given in your first posts here is that you have no idea.

Apologies for the harshness, but hopefully some of these facepunches will be a wake up call.

Did you see my second post? I don't have it all together obviously, but we have been working a cash budget since August, and I do know where it went. Maybe my first post was a little bit misleading. I'll look into the case study guidelines, as I am obviously open to advice. My wife and I did Ramsey's Financial Peace in the fall and we've made lots of strides. Is $200/month kindergarten unreasonable? Giving 10% to charity? Y'all are super hardcore, which is what attracts me to this site, but trust me, we've woken up!

NoraLenderbee

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #13 on: February 25, 2015, 06:10:09 PM »
Congratulations on waking up and making improvements. At this point, though, you don't have enough money to buy a house, and you won't in 15 months, unless real estate is extremely cheap where you live. You need to get out of debt and build up your emergency savings more before you can think about taking on a house. Houses need things--there are always things that you want to replace when you move in, or you need furniture, or snow shovels, never mind repairs--the down payment is just part of the money you will spend in the beginning.

What are rents like in your area?

caliq

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #14 on: February 25, 2015, 06:21:17 PM »
Consider posting a full Case Study (see sticky post at the top of this forum) to let us help you fix your spending.  If nothing else, it will help you actually see where all your money is going, because the impression given in your first posts here is that you have no idea.

Apologies for the harshness, but hopefully some of these facepunches will be a wake up call.

Did you see my second post? I don't have it all together obviously, but we have been working a cash budget since August, and I do know where it went. Maybe my first post was a little bit misleading. I'll look into the case study guidelines, as I am obviously open to advice. My wife and I did Ramsey's Financial Peace in the fall and we've made lots of strides. Is $200/month kindergarten unreasonable? Giving 10% to charity? Y'all are super hardcore, which is what attracts me to this site, but trust me, we've woken up!

I am personally of the belief that 10% to charity is not necessary or helpful when you're in a precarious financial position yourself.  You're living with your father, rent-free, and have 5-figure credit card debt.  In all honestly, it sounds like you're one bad break from needing charity yourself (as in, where would you be without the current living arrangements?).  A lot of people are reluctant to touch the charity stuff, especially because for Dave Ramsey types, it's often tithing -- but I'm not religious and I've never had a problem saying something controversial ;)

Throw that 10% to your credit cards and re-evaluate when you hit a net worth of zero.  It's frequently described around here as 'putting on your own oxygen mask first.'

As for the other stuff, I think previous posters are right - you should post a full case study.  And seriously reconsider buying before you're really ready (I'm currently stuck in a house we weren't ready for and trust me it really sucks).  And probably sit down and have a very up front and open conversation with your dad to evaluate the best solution for all members of your family :)

drewnobi

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #15 on: February 25, 2015, 09:22:23 PM »
I'm definitely not a "Dave Ramsey" type, but his class was at the very least something my wife and I could do together to focus on finances. I'm certainly ready to not give that 10% for a time.

So, to sum up:
1. Don't buy a house.
2. Be very conscientious with the dad situation, been doing that-we have good communication.
3. Financial reasons to stay with Dad, moral/ethical reasons to move out.

Renting: rent for a 3 bedroom starts at $1000 or so, for a dingy apartment. More reasonable houses are $1200. We could also cram into a 2 bedroom. It complicates things that we have 2 dogs.

I pitched the idea to Dad that we stay put, and actually "flip" the living arrangements, so that we have the master and bedrooms upstairs, and he has basically a 1500 sqft apartment downstairs. This would be a nice sensible set-up. We would split the mortgage with him (about $1000 each). We'll see what he says...

I will work up a case study in the meantime.

Argyle

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #16 on: February 25, 2015, 11:26:28 PM »
$200 a month for kindergarten?  You have a hair-on-fire screaming debt emergency here, and that's $2000 per year.  What interest rate is your credit card?  You are effectively paying that interest rate on the $2000 that's going toward kindergarten and not toward debt.  Are the public schools terrible where you are?  Kindergarten is a pretty low-stakes time of schooling.  Unless your kid is in physical danger, most kindergartens are probably okay.  Are your other kids in private school too? 

drewnobi

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #17 on: February 26, 2015, 09:22:23 AM »
$200 a month for kindergarten?  You have a hair-on-fire screaming debt emergency here, and that's $2000 per year.  What interest rate is your credit card?  You are effectively paying that interest rate on the $2000 that's going toward kindergarten and not toward debt.  Are the public schools terrible where you are?  Kindergarten is a pretty low-stakes time of schooling.  Unless your kid is in physical danger, most kindergartens are probably okay.  Are your other kids in private school too?

CCs are on a no interest balance transfer through September of this year.

The kids are NOT in private school, no way! We just happen to live in a district where they charge $200 a month for kindergarten. :( I think kindergarten is non-negotiable anyways.

Unique User

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #18 on: February 26, 2015, 10:27:13 AM »
Ended up landing a higher ed support job for $65K/year, started in August 2014.
Wife does not work outside of the house.

Dad is not charging us rent, so we are paying $1000-$1500 a month onto about $22k in CC debt, we have $1000 in savings. Starting in May, we have agreed to pay Dad $400/month to cover expenses, which will give us $1100 or so each month to save/pay down debt.

I agree with other posters to hold off on buying a house.  Is the $22k the only debt you have?  Also, you mention you have a $65k salary which should be a take-home of at least $4k a month, but you are only paying $1k to $1.5K toward that debt when you have no housing expenses.  Is there a reason that is all you can throw at it each month?   

RunHappy

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #19 on: February 26, 2015, 10:35:04 AM »
$200 a month for kindergarten?  You have a hair-on-fire screaming debt emergency here, and that's $2000 per year.  What interest rate is your credit card?  You are effectively paying that interest rate on the $2000 that's going toward kindergarten and not toward debt.  Are the public schools terrible where you are?  Kindergarten is a pretty low-stakes time of schooling.  Unless your kid is in physical danger, most kindergartens are probably okay.  Are your other kids in private school too?

CCs are on a no interest balance transfer through September of this year.

The kids are NOT in private school, no way! We just happen to live in a district where they charge $200 a month for kindergarten. :( I think kindergarten is non-negotiable anyways.

If your wife is not working outside the home, can she homeschool and save this $200/month for other uses?

pagoconcheques

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #20 on: February 26, 2015, 11:17:30 AM »
Quote
Giving 10% to charity?

Stop it.  Please.  This has to go until you're out of the red.  You are de facto receiving charity in the form of free/heavily discounted rent from your father.  As your dad is showing you, charity begins at home.  It may be helpful to sit with your wife and come up with a plan for deferred giving once you are financially stable if that charity is really important to you.

If you feel strongly about contributing to your charity of choice (church that requires tithing?), find a way to volunteer or donate time (tutoring perhaps?) to that community. 

Having been a long-term host to financially distressed relatives more than once over the years, let me just say that I hope you and your wife are doing a lot of work around the house and yard. Also, the hardest thing about long-term "guests" is the loss of privacy--make sure you, your wife, and your kids know that certain parts of the house are completely off-limits.  If your dad is preparing to sell the house in the near future, help him get it into condition by painting, repairing, yard work, etc. 

Rein1987

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #21 on: February 26, 2015, 11:26:26 AM »
Did you see my second post? I don't have it all together obviously, but we have been working a cash budget since August, and I do know where it went. Maybe my first post was a little bit misleading. I'll look into the case study guidelines, as I am obviously open to advice. My wife and I did Ramsey's Financial Peace in the fall and we've made lots of strides. Is $200/month kindergarten unreasonable? Giving 10% to charity? Y'all are super hardcore, which is what attracts me to this site, but trust me, we've woken up!

Well, maybe I am religious so I do admire that you can keep this while you are struggling on your finance. I managed to living on even smaller income with tithe for years so I think you can tithe while solving your financial problems.

Besides the kindergarten and charity, what are other expenses? For example, grocery, gas, clothes, dining out, various service fee...

LadyStache

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #22 on: February 28, 2015, 03:04:22 PM »
I pitched the idea to Dad that we stay put, and actually "flip" the living arrangements, so that we have the master and bedrooms upstairs, and he has basically a 1500 sqft apartment downstairs. This would be a nice sensible set-up. We would split the mortgage with him (about $1000 each). We'll see what he says...

So family of 5 gets the majority of the house and pays $1000, while a single individual pays the same amount and gets... a basement. How is that a better, more fair situation for your dad? Would you also be paying all of the utilities, doing all of the yard work, and dealing with other maintenance issues?

Dimitri

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #23 on: February 28, 2015, 04:11:11 PM »
Maybe I'm reading something wrong but as I understand it you are earning $65K/year and have $22K in credit card debt that you are paying $1-1.5K/month on.  Meanwhile you are giving 10% of your money to charity.  And the icing on the cake is that you are living in your father's basement for free.  Yeah sure, in a couple of months you are going to start throwing poor old Dad four Benjamins a month.

I don't know if that is 10% of the gross or the net but whatever it is you can't afford it and need to stop now.  What were you thinking?  Charity begins at home.  What comes first?  Your wife and children or some charity?

I would hope that you put your family first.  Right now you aren't.  You need to act like a grown man.  Take care of your family.


Rezdent

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #24 on: February 28, 2015, 04:42:15 PM »
Hi drewnobi
First - props to you for posting the questions - it takes some badassity to throw this stuff out there.
You are getting good advice here.  It's not sugarcoated baby steps.
I agree that you aren't in a position to buy a house - whether it's your father's or any other house right now.

Your situation is precarious.  You guys are too close to the edge.
Judging from the gaps between your income and spending, I also recommend a case study exercise. Even if you choose not to post it, it is the first step in getting a handle on your lives.  Only after you look at all your spending will you be able to plug the leaks, get out of debt and build a safety net for your family.  Some of these changes will be out of you and your wife's comfort zones - but big changes will produce big results.

Living with dad poses some logistical and ethical problems.  First off, it is preventing him from bettering his situation.  Second, you need to be in a position of strength to help him.
Immediately assess and find ways to reduce the drag on him while you are there.  These may be in the form of labor or money towards expenses. Do whatever it takes to make his life easier (Lawncare, handyman work, cooking, do his laundry, make sure he has space to be alone...and yes, money)
Once you have analyzed your finances and plugged the money leaks you will have a better understanding of how to proceed.

NCGal

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #25 on: February 28, 2015, 06:50:51 PM »
Your dad`s financial situation may be tougher than you realize. Minimally, the monthly shared room cost in a nursing home is $5K a month. Many are 7 to 10K. Medicare only covers that cost if the individual is getting physical therapy and is improving. Is that the case with your mom? Otherwise it only covers medical costs. The fact that he has taken SS early may indicate he needs that money just to cover expenses. It sounds like he is too kind to do anything more than give you hints, and he may need to sell the house more than you know.

couponvan

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Re: When should we (my family of 5) move out of my Dad's basement?
« Reply #26 on: March 02, 2015, 12:12:56 AM »
We had our in-laws living with us for a year and a half. It was only supposed to be until they found an appropriate house to buy. No we didn't charge them rent, however just having other people in the house is a burden. I hope you're helping your dad out around the house and doing all the cleaning and cooking and things like that given you are living rent free. Unfortunately my in-laws didn't cook or clean, but they did chip in for half of a housekeeper every other week. When we finally asked them to move out, it was very tense and a tough time. I wish they hadn't over stayed what was originally going to be a 2 to 3 month stay. It also would've been very nice had they chipped in a reasonable amount for rent given that our house payment is over $2000 a month, not to mention the extra food and utilities. My husband didn't want to ask for the money though. I just tell him, "wait until my mother wants to move in"!

You should pay rent starting today, not May. 
« Last Edit: March 02, 2015, 12:16:10 AM by couponvan »