two kids, stressed, want bigger house, don't track spending

[getmoneyeatpizza]

Life situation: Our family of 4 (36,39,3,6) is doing fine but feeling cramped in a 2 bedroom house in the city with no yard and tough on street parking. We like our school district as we were redistricted (a change from a case study three years ago) Housing prices around us are skyrocketing and we're worried we’ll never get into a bigger house with a yard. We are tired and stressed out. We both work full time, our kids are wild, and we spend a lot of time traveling to and taking care of a family member. We don’t track spending and just put things on automatic  to save.

Adding to the drama my wife and I went under contract on a house and pulled out (wife’s decision based on neighbors) based on a contingency. The day since the offer until a week ago I’ve had major anxiety issues. Basically I was immediately regretting the decision to place the offer (below asking) and have it accepted (reasons in my head against purchase: fear it was too expensive 545k price and $2700 mortgage, $1300 higher than current mortgage, a non mustachian move, we won’t be able to retire early now, I really let my anxiety about money grip me, etc) and then almost immediately regretting walking from the contract (reasons for purchase: worried prices will just keep going up, wanting to give my kids a backyard, parking space, more bedrooms and daylight, chill out about money and live a little, inventory so low one won’t come up again, we didn’t face a bidding war but now maybe we will, we probably could afford it, should have just sold existing house and use a small portion of that money to float us if needed until 2nd kid goes to school in 2023 etc.)

I’m seeking advice on my housing / financial strategy forward and maybe my mental health / anxiety issues.

More background:
A Link to the sell or rent post. That I made when we went under contract. https://forum.mrmoneymustache.com/real-estate-and-landlording/sell-or-rent-case-study/msg2843066/#msg2843066
Link to the case study post 3 years ago. Historical info https://forum.mrmoneymustache.com/case-studies/2nd-baby-on-the-way-doing-ok-but-expenses-going-up/msg2720171/#msg2720171

Gross Salary/Wages: Now 163,000 (for 2020 spending 155k plus stimulus checks $2400 and $3400)

Retirement / pre tax (yearly)
457: 39k
Trad. IRA: 12k
Pretax pension 1: 4426
Pretax pension 2: 3727
Brokerage: 800 into VTSAX (after tax)
Health Insurance: $3036
Employer contribution: 1k

FSA: 600 recycled below - not in total
Dependent care: 5000 recycled below - not in total
Adjusted Gross Income: 100k for 2020

Taxes:
SS: 9579
Medicare: 2240
Federal income:4927
State income: 4493

Current expenses:
Mortgage: 16900

$1408 total, P: $311.64 I $591.44 Escrow payment:
$350.78 (one year home insurance: $1481) approx. Rate 3.75 (could refi to a 2.875 for 20 yr for an extra $2600 rolled in, would take 9 months or so to be worth it)

Utilities: 2100
Electricity: 1620
Daycare and afterschool care, summer camps) 22,300 current, had a gap during covid - goes to 14,400 per year this fall, will save about 7900 (Adding in afterschool care but not including additional summer camp costs)
Student Loan: $0 (forgiven)
Cell phone: 852
Mandatory life insurance: 260
Car insurance: 870

This is 2020 spending on “variable things” (mostly credit card spending here)

Dining: 3900 (a lot yes, we purposefully used some of stimulus checks to support local restaurants)
Gas stations: 2310 (almost $600 in tolls, drive a lot to see family)
Health care: 600
Groceries: 7900 (a lot yes, hair on fire for sure)
Gym: 600 (852 in 2021 though this should pay for itself in afterschool care savings - not factored in above, i don’t fully understand)
Merchandise (amazon, clothes, kids stuff, outdoor gear, new mattress, kind of a catch all for all the other things I couldn’t categorize): 5850
Cabins camping: 450
Home repair labor and materials (by me and others): 4600 (mostly one time fixes, should only be 800 this year)
I have 144,210 based on this fall’s expenses (15k figure for daycare, $800 for home repair estimate) Increased child tax credit will also give me an extra $2600 this year.

Assets:
Pension cash out value: 82k
Vanguard roth and trad: 152k (target date 2050)
457: 440k (88% stock index 12% bond index)

House: 184k equity estimate
Car: 10k
Cash: 77k (was going to be for closing on house)

Total $ assets: 751k
With house: 935k
Car left out

(With the current 61k yearly savings at 5% return I have us hitting a 2 million stash in ten years)

Liabilities:
175k left on mortgage.

Advice needed / questions:
Can I afford a 500k plus house? I think yes, I think in retrospect I just should have stopped obsessing over renting and sold my existing house and taken a small buffer out (20k or so) for improvements and to buffer me until 2023 if I needed it. And then stash the rest of the 140k or so in target date 2050 or VTSAX or something.

We are OK to stay in our house for a bit (yes, I need to re-read the stoic MMM post and possibly that book). Also need to deal with my anxiety and thinking about the past (unhealthy thoughts: why didn’t we buy another house in the past 6 years).

I just want to have a plan if the perfect house comes up and this time feel confident in the decision. But at the same time I want to relax and enjoy my current situation and stop obsessing over the next step.

I’m worried about housing prices continuing to skyrocket and not being able to afford a new one. I’m worried about Inflation eating away my 77k. And wanting a strategy if rates go up (adjust down payment higher or pay off more aggressively maybe). On the other side, At least I have a house now and if it goes up in value similarly to others I shouldn’t lose out too much. We will also have more money when my 2nd goes to school in 2023 (that will save about 8k year). And more money this year at least due to Child Tax Credit (2600 extra this year). And my wife also got a 10% raise for an 8k gross raise over last year.

Where should I keep this 77k while we decide? I was thinking the highest yielding money market I can find for now.

Should I refi? It will pay itself off in 9 months. I honestly don't know when/if we'll move. We could be here another 5 years or the perfect house could come available next month.

Regarding new savings, I was thinking about stacking more savings into a checking account only for house downpayment, basically forcing myself to pay a fake higher mortgage for now.

If we do buy another house, I’m pretty solid on selling our current house. Then the question is what do we do with the $160,000 in proceeds?

Short term goals: Enjoy life, reduce stress. Eventually get a bigger house. Go on vacations. Track spending better.

ER goal: Nothing firm at this time other than as at minimum I don’t want to work a day longer than my pension eligibility when I am 59. If I retire early I have to take my pension at 67 or take the cash out value. Otherwise hope for a buy out. Other goals are just to save enough money where if we move or one of us loses a job that we’ll be OK for a while or one of us can just work part time. Also, we've had some very generous grandparents put lots in the 529s. Thanks for reading this took a long time to put together.

[chicagomeg]

OK, I'll bite. Here's my high level eyeball. Your income is $163,000. Your total annual expenses, including retirement savings, taxes etc. are $144210. So there's about $19,000 annually difference. You're asking about taking on a mortgage that increases your annual expenses by $15,600. I don't see any mention of the increase in property taxes in your new home. I don't see any cash savings monthly that can go towards periodic home expenses as they crop up except a meager $800 annually.

Yes, you can afford the house. No, you cannot afford the house along with your current lifestyle. Spend a few months tracking your spending more carefully & getting that down and reevaluate. Stop panicking about getting priced out--you're still better off in a too small house that you can afford than in credit card debt, which seems like where you'd end up with your spending habits if you bought the bigger house.

[former player]

I haven't gone through the money part of the case study yet, because the thing that jumps out at me is not that you are in a money crunch but that you are in a time crunch and it is the time crunch that is the immediate problem.

Two of you work full time.  You have two children, who are spending most of their time in daycare, school, after school care and summer camp rather than with their parents, and who you describe as "wild".  And with all of that you say you spend a lot of time travelling to and taking care of a family member.

Honestly, I'm not surprised at your anxiety levels but I think you are displacing your real problem, which is your family's time crunch, and your worries about money and housing frankly are either not a problem (your financial situation) and either not a problem (your current house might be fine) or a problem which is solvable (buying a new house, which you can afford).

I would like to know more about the family member you are spending so much time on.  I think you need to look at other options for this person (for instance, getting other family members to take over, or getting them to pay for care) and refocus you and your wife's time and energy and attention on each other and your kids.  At the moment you are just trying to do too much and it isn't working for you.  By all means look at where you are spending your money and align it to your priorities, but first you need to look at where you are spending your time and energy and align that to your priorities.

[MDM]

Gross Salary/Wages: Now 163,000 (for 2020 spending 155k plus stimulus checks $2400 and $3400)

Retirement / pre tax (yearly)
457: 39k
Trad. IRA: 12k
Pretax pension 1: 4426
Pretax pension 2: 3727
Brokerage: 800 into VTSAX (after tax)
Health Insurance: $3036
Employer contribution: 1k

FSA: 600 recycled below - not in total
Dependent care: 5000 recycled below - not in total
Adjusted Gross Income: 100k for 2020

Taxes:
SS: 9579
Medicare: 2240
Federal income:4927
State income: 4493

- You are getting close to (maybe inside) the range over which the tIRA stops becoming deductible.  If that is the case when you file next year, just recharacterize the non-deductible amount to a Roth contribution instead.
- The federal withholding looks high, but that depends on how much advanced Child Tax Credit you get.
- You may be better off in 2021 not using the childcare FSA, but getting the dependent care credit instead.

[getmoneyeatpizza]

Thanks all.

The care and visiting is for an in-law with a terminal disease. This is probably only going on for another 6 to 9 months max. This is absolutely going to continue until this person passes. It is stressful, but worth it.

Good catch on TradIRA. I think our AGI will be something like 108k in 2021, putting us over the 105k mark.

Already signed up for 5000 in dependent care for this year.

Our kids are at daycare or school 8:15am to 4:45pm, hopefully that's not too much Our current home is certainly fine, our kids just have to share a room (they like it for now) and don't have a backyard. Occasionally we have to walk a block to where the car is parked or I have to double park and drop off kids and wife and before I go park the car on another block. We have parks close by we can walk to. Neighborhood kids play on the sidewalk together sometimes.

Property tax was included in potential new mortgage payment figure. Property tax would increase from 3600 to 6000 or so a year.

"Wild". My kids can play hard all day and not get tired. They are a lot to handle.

[MDM]

Already signed up for 5000 in dependent care for this year.

The IRS will allow a one time change for future paychecks.  Your employer may or may not have modified its plan to allow that.

[scantee]

I haven't gone through the money part of the case study yet, because the thing that jumps out at me is not that you are in a money crunch but that you are in a time crunch and it is the time crunch that is the immediate problem.

Two of you work full time.  You have two children, who are spending most of their time in daycare, school, after school care and summer camp rather than with their parents, and who you describe as "wild".  And with all of that you say you spend a lot of time travelling to and taking care of a family member.

Honestly, I'm not surprised at your anxiety levels but I think you are displacing your real problem, which is your family's time crunch, and your worries about money and housing frankly are either not a problem (your financial situation) and either not a problem (your current house might be fine) or a problem which is solvable (buying a new house, which you can afford).

I would like to know more about the family member you are spending so much time on.  I think you need to look at other options for this person (for instance, getting other family members to take over, or getting them to pay for care) and refocus you and your wife's time and energy and attention on each other and your kids.  At the moment you are just trying to do too much and it isn't working for you.  By all means look at where you are spending your money and align it to your priorities, but first you need to look at where you are spending your time and energy and align that to your priorities.

I agree with this sentiment. It seems like you are using the idea of a bigger house to paper over deeper issues in your life. Not that wanting a larger house is wrong necessarily - some of your grips with your current house seem warranted - it just isn’t going to solve all of your problems. I suspect you’ll just trade the anxiety you have now with the new anxiety of caring for a larger and more expensive home.

If I were you, I would not buy the bigger place but would instead try to have you or your spouse downshift for a couple of years until both of your kids are in school. This should bring the pace of your life down a bit. You’ll lose some income but you should be able to save a bit on child care. Your stash is decent so if you have to pull back a bit on savings for a couple of years that seems like a worthy trade-off for your sanity.

[zolotiyeruki]

Here are a few things that stood out to me:
--You have a fantastic savings rate
--You spend way too much money for a family of 4.  $650/mo for groceries, with little kids, is absurd.  (if the kids were teenagers, all bets are off!)
--Your kids don't need their own rooms.  In fact, IMO, your kids are better off sharing a room.  We used to have all 4 of our boys sharing a room.  It's fine.
--This one may be uncomfortable:  How much of a financial impact would you sustain if only one of you worked?  You're in the 22% tax bracket, and paying massive amounts of money for childcare.  Is your income split evenly, or does one of you earn significantly more than the other?  When you consider FICA, federal income tax, state income tax, and childcare, what is the net hourly rate for the lower-earning partner?  For the sake of exploration, let's say one of you earns $100k and the other earns $65k, and assume 5% state income tax.  You pay (7.5%+22%+5%)*$65k = $22k in taxes, plus another $22k in childcare and camps, which leaves you with a net of $21k/year for a full-time job.  And giving up quality time with the kids, and probably eating out more than you should, and have way more stress than you want, and less energy.  Downshifting might be an even better option.
--You have a lot saved in tax-deferred accounts, but relatively little in accounts that would be available penalty-free if you retired before age 59.5.  If your early-retirement plans include retiring before age 59.5, you'll need to make sure you have enough saved in taxable accounts and Roth contributions and rollovers to cover your first few years of retirement while you build your Roth Pipeline.

[ysette9]

First, I’m sorry you are struggling with so much. Covid and two little kids and two careers and now a terminal family member- that is a ton of stress. Would pulling back temporarily be in the cards for either or both of you?

That said, we have three little kids of normal energy levels and have spent this past year in a townhouse with no yard. It is HARD. We are buying a house with a yard and we are really looking forward to having that space for them to play. And we live a block away from a park. But it is so much more work to get everyone out together and go to the park and then microsupervise the littlest one to make sure he doesn’t hurl himself off the highest playground tower or run into the road. At our old house I could just send them outside into the fenced back yard that I knew the environment was appropriate for the age of my kids.

I don’t have an answer for you necessarily but I sympathize. This shit is hard.

[getmoneyeatpizza]

Thanks all.

I don't think either of us would entertain leaving our jobs for a bit. Our work is not that stressful. We do get lot's of time with kids and I feel like that balance is appropriate. As sad as it is to say, when the family member passes some stress will also eventually be lifted then.

Our salaries are fairly equal so we'd take a big hit if either left their job. Childcare drops this fall from 22300 to 14400. And then down to 8200 a year in 2023,

We both have 457s both if either retires early can access that immediately upon leaving employment

Neither employer choose to increase the dependent care above 5000 this year. If that changes I will certainly take advantage of it.

[MDM]

Neither employer choose to increase the dependent care above 5000 this year. If that changes I will certainly take advantage of it.

You may be better off in 2021 not using the childcare FSA, but getting the dependent care credit instead.

In other words, if your employers will let you stop contributing to the childcare FSA you will come out ahead by getting more from the credit than you save from the deduction.  Try the case study spreadsheet if you want to verify that.

[Morning Glory]

Hi. I don't think a bigger, more expensive house will decrease your stress. It will just be more cleaning and mowing and maintaining the equipment and more room to put even more stuff and weekends spent cleaning up the yard instead of ever doing anything fun... I know from experience.

I'm not trying to be rude, but the 5850 on merchandise per year might be why your house feels too small. Give it a good declutter and see how you feel.

[getmoneyeatpizza]

@MDM I did fill out the spreadsheet but perhaps I did it wrong.

I just updated to look like:

# Children <18: 2
# Children <13: 2
# Children <6: 1

Is that right? Previously, I only had 1 in under 13 and 1 in under 6. This changes my federal tax to negative 4073.  It now has the correct CTC at 6600 too.

If I list 4992 (max whole number) in childcare FSA it lists a Dep. Care credit of 5504. The sheet also lists my AGI as 95k which seems off as we'll make more in 2021 than 2020 when our AGI was 100,200.

I'm using this is google sheets, so hopefully that works OK.

[MDM]

If I list 4992 (max whole number) in childcare FSA it lists a Dep. Care credit of 5504. The sheet also lists my AGI as 95k which seems off as we'll make more in 2021 than 2020 when our AGI was 100,200.

I'm using this is google sheets, so hopefully that works OK.

Below is from a quick attempt to replicate your numbers, with some guesswork along the way.  It's unlikely to be "correct" but may be useful to you for comparison to your actual numbers.  It does reproduce the $5504 given a $4992 input as quoted above.  If you reduce the $4992 to $2500 (assuming you could stop childcare FSA deductions for the rest of the year), the credit increases to $6750 - is that what you see also?

It's too bad the charts don't work in Google Sheets (see Any Google Sheets knowledge?) but it appears the straightforward calculations are the same.

Paycheck frequency:	Annual	Annual
Paycheck Items	Earner #1	Earner #2	Annual
Gross Salary/Wages	$100,000	$63,000	$163,000
Pretax Health/Dental/Vision Ins.	$3,036	$0	$3,036
Healthcare FSA	$600	$0	$600
Daycare FSA	$4,992	$0	$4,992
FICA base salary/wages	$91,372	$63,000	$154,372
Traditional 457 plans	$19,500	$19,500	$39,000
Pre-tax pension contribution	$4,426	$3,727	$8,153
W-2 Box 1	$67,446	$39,773	$107,219
Employer Match	$1,000	$0	$1,000
Subtractions for AGI	Annual	Annual	Annual
Traditional IRA	$3,000	$3,000	$6,000
1040 AGI			$101,219
Other Specific Investment Types	Annual	Annual	Annual
Roth IRA	$3,000	$3,000	$6,000
Payroll Taxes	Annual	Annual	Annual
Social Security	$5,665	$3,906	$9,571
Medicare	$1,325	$914	$2,238
Income Taxes
Federal tax	-$3,368	2021, MFJ, std., 2 dep	-$3,368
State+local tax	$4,470	GA state calc'n	$4,470
Total income taxes	$12,911		$12,911
	Monthly
Add Health + Daycare reimb.	$466	0	$5,592
Income before other expenses	$7,325		$87,900
Monthly Average Expenses		Comments
Mortgage	$903	Input to Item. Ded.	$10,837
Property Tax	$382	Input to Item. Ded.	$4,584
Home/Rent Insurance	$123		$1,481
Car Insurance	$73		$870
Childcare	$1,639	Input to Child Care credit	$19,667
Dining (Lunch/Dinner/Etc.)	$325		$3,900
Electricity	$135		$1,620
Fuel/Public Transport	$192		$2,304
Gas/Oil for heating	$40		$480
Groceries	$658		$7,900
Household; Maintenance	$383		$4,600
Life/LTD Insurance	$22		$260
Medical (Doctor, Hospital, etc.)	$50	Input to Item. Ded.	$600
Miscellaneous	$488		$5,850
Phone (cell)	$71		$852
Sports/Recreation	$38		$450
Non-mortgage total	$4,618		$55,418
Total Expense	$5,521		$66,255
Total to invest	$1,804		$21,645
Summary:
"Gross" income	$13,583		$163,000
Income taxes	$1,076		$12,911
After-tax income	$12,507		$150,089
IRA+401k/403b/TSP/457	$2,125	$2,125	$51,000
Living expenses	$5,774		$69,291
Pension contributions	$679		$8,153
After-tax investable	$1,804		$21,645

Filing Status	2	1=S, 2=MFJ, 3=HOH
# Dependents	2
# Children <18	2
# Children <13	2
# Children <6	1
# Children for EIC	2
	Adult #1	Adult #2
Age	36	39
AGI	$101,219
Std. Deduct.	$25,100
Act. Deduct.	$25,100
Taxable	$76,119
1040 Tax	$8,736
Dep. Care credit	$5,504
Non-refund. CTC	$6,600
Tax after n-r credit	$2,136
Net Tax	-$3,368
Mtg. Int. (approx.)	$6,497	1000000
State tax	$4,470	GA
Prop tax	$4,584
Item. Deduct.	$15,550
Version	V21.09

Loans:	Orig. Prin.	Orig. Length	Curr. Prin.	Yrs left	Rate
Mortgage	$195,000	30	$175,000	24.85	3.75%

[NorthernIkigai]

Hi from another stressed working parent of two lively children in the same age ranges as yours. I also tend to obsess over the next step in life.

We live quite happily in an apartment, so I guess I don't really get the whole "we need a yard" thing. But I am more or less actively looking for our next apartment, as two bedrooms (and definitely the one bathroom!) is starting to feel a bit tight, even without much of a shopping habit. (Unfortunately, we also don't have much of a decluttering habit... So basically what is there, stays. Until we have to go through it next time we move.)

Since you are currently in a very stressful, sad, but temporary situation with your family member, I'd suggest leaving the house hunting until that situation is resolved. As you have mentioned, you are already invested in the housing market with your current house, so even if it goes bananas in the meantime, that should also benefit the value of your current house. I'd just decide to drop that one huge thing of all the things to think about and take care of and worry about for now, and then "allow myself" to start thinking and looking again when you have the capacity for it.

In the meantime, you might want to tinker with tracking your spending (but only if you think it will make you less and not more anxious), which will give you more confidence in your finances once the time comes to pull the trigger on a house.

[svosavvy]

I wish you all the best with everything really, but, particularly with your terminal in law.  I really agree with the above posters that mention it sounds like a time crunch going on.  I think you have it right that once your immediate family situation resolves you may find you have clearer vision.  I have found in the past when I am in a total overwhelm fog situation I try to make less decisions not more.  It really does sound like the whole house thing would just add anxiety not lessen.  Did your SO have a deep relationship with this family member?  This will be especially difficult for them (goes without saying) and essential time.  Are they getting the support they need.  I think we all fall victim to the fomo from time to time.  It is probably cliche, but, really these things all move in cycles.  One of the big things during the 08-09' financial crisis was that it was a liquidity crisis.  There was lots of inventory but the credit market was literally frozen shut.  Buyers with cash ruled big time and that was literally only like 12 years ago and it lasted for a few years then changed.  Now as you know we are swimming in an ocean of liquidity so everybody has money to bid at the auction.  I think you have it right that instead of chasing this house you work on making sure you have your stuff really together so you can hit it out of the park on the next one.  The housing market may stay hot and it could be a struggle for awhile.  I like an old Warren Buffett quote that goes something like: the market is like a pitcher on the mound constantly throwing you pitches.  You can't strike out by not swinging.  The only way you strike out is by swinging at bad pitches.  You can let a thousand great pitches go by you and you will be ok.  You will eventually find that fat pitch and then crush it.  Houses are a big deal.  You will find one that the stars align on I'm sure of it.  It will have that yard, and it won't cost too much as to make you stressed out.  I recognize you are in the city and close to your supports jobs, daycare, etc.  Have you considered getting out into the outer outer (cheaper) suburbs or dare I say it rural.  I live in a 3 bedroom house on 30 acres and it is worth a fraction of what you are talking about.  We are lucky our city is small and drivable.  I can be there in under an hour.  I doubt the kids have cemented really firm relationships yet at their age.  Congratulations on the "wild" children btw, they are the best kind.  I bet they will grow into real genuine folks.  You can move those numbers around all you like, but, you will know it when it's right.  As a member of the anxiety club the woulda coulda shoulda will always be there.  I like to think about what I have right now when that strikes.  Had I made one of those wo co sho choices I wouldn't have had the opportunity and privilege to have what I have now.  What I have now is awesome and it sounds like that for you too.  Best wishes.

[BicycleB]

supporting the less stress by fewer decisions idea, and the bigger house won't solve things idea.

i don't think this is the last time to buy housing at these prices anyway.

most of all, the time with in-law is your rarest resource, support your spouse (and self, and kids) by continuing that where possible

[getmoneyeatpizza]

OK. So takeaways are 1)track spending 2) chill out to extent possible

What about these questions:

1) where to stash 77k til we are ready to buy a house?
2) should we refi? refi to a 20 year gets u from 3.75 to 2.875 saving 5 years to pay off and boosts the principal payment $200 a month right away. I think it rolls in $2600 in closing costs to the loan (hence 9 months to pay off). it keeps the monthly cost the same.
3) where to stash an any extra money, investment order says taxable but not sure whether to save more to a downpayment since housing prices are going nuts.

[svosavvy]

The best I can come up with for

1. Online savings account yield .4% best I see. I think you can also shop around to these banks. Some offer a promotion. I am doing one right now with BofA new account where I deposit 50k and don't touch it for 3 months they pay me $300 promotion. Not bad.  No penalty if you have to make a move just don't get the 300.  Trust me that money is gone when the 3 months are up cause that yield is awful.  I know Amex, cap one, discover doing 0.4%.  I know that's horrible but is what it is.  Have found money markets are basically paying nothing and then you pay expense ratio on top of that.  If a MM goes up its because people are buying the shares.  So that's false appreciation unless you are looking to speculate.  I speculate all the time but not with money needed at the ready.

2. I think that refi idea is a low risk decision.  Like you said it's a win if you stay even just a year.  Sounds like the down side is low if your dream house pops up in less than a year.  If you can't let this current house you are lusting after go then this move just complicates your life more. 

3. On this one it's tough.  I would say you can get your (contribution) money back out of these accounts but would have to pay taxes and show that money as income.  Sometimes you have to do what you have to do during big life decision times.  A new house totally qualifies as this.  You also should not throw off your long term retirement plans waiting for the perfect house.  Consider increasing your access to credit.  More unspent credit in your report also has the benefit of juicing your score. That way you won't be cash laden, but, still have the capital to make the move you want.  Everybody wants to extend credit.  It sounds like you eventually want a 1/2 mil house. 20% down payment is 100k.  You already got 77k. Get some badass no fee credit cards.  Coming up with 23k is easy.  Don't wreck your investment plans by sitting on too much cash.  Also don't invest any money you might need in less than 10 years.  Be realistic about it though, both of you are high earners.  Dream house comes up, scrimp and save for 6 months or a year.  after the deal is done.  Best of luck. 

[svosavvy]

One more thought:  It is a space time continuum thought:

How about instead stressing 2021 numbers we make the 2022 plan:

This is where frugality is a superpower and gets you to warp 9.  Haha yes my theme today is Star Trek not baseball.

You are both high earners, what if you did a Greenfield assessment of you saving potential for 12 months.  Here's how it would go: let go of this house deal. Do your refinance.  Commit to not even looking at a house for a year.  Sit down do a budget doesn't even have to be hardcore.  In the end add your 77k to your potential future savings possibilities 12 months from now.  I mean what if you were able to sock away like 30-50k in the next 12 months.  You would still have a life. "wild" kids love parks and camping and that totally doesn't break the bank.  You could have 127k to put toward that house 12 months from now.  Heck maybe even more.
Have a great day.

[Morning Glory]

I think the refi is a good idea. I'm not sure what to do with the cash, I'm actually looking for higher yield savings options myself. You could put 10k each for you and spouse into I bonds if you don't think you'll need it for a year.

[legalstache]

I'll echo others who've said that you have a time problem, not (primarily) a house problem. I'd recommend making concrete changes to try to work on your mental health/anxiety. I don't think buying a more expensive house will help with your anxiety. In fact, it will probably increase it.

What works for everyone is different. For me, a short yoga/meditation practice after my kid goes to bed each night has actually been incredibly helpful with my anxiety. I tried a few different things before landing on that, but I'd really encourage you to try to find something to work on that area.

[getmoneyeatpizza]

@MDM I finally see what you are saying with the FSA vs the childcare credit. It looks like I'll lose $2147 by participating in the FSA. It's crazy because the employer goes from July 1 to June 30th for the annual selection. So there was no way I'd know they'd pass the ARP this year last Spring and there's no guarantee that the currently underway FSA will be harmful January 2022 to July 2022.

Is it worth the bet that canceling this calendar year's 6 months will offset whatever the law is in 2022?

[MDM]

Is it worth the bet that canceling this calendar year's 6 months will offset whatever the law is in 2022?

Great question - unfortunately I have no idea what congress will or won't do regarding 2022 tax law.  For that matter, I'm not sure they're done fiddling with 2021 law....

[getmoneyeatpizza]

OK here’s my plan:

I just logged into wifes accounts to update the asset numbers. I also maxed out our IRAs for the year since I had all that cash. Current stache is actually 798k. Just barely under a $1 million NW when you include house equity.

Doing this deep dive into the tax spreadsheet, budget and expenses has been super helpful. After looking at the FIRE numbers I am encouraged at what’s possible.

Starting now and in 2022 I will put $10k min yearly (bi monthly transfers) into a taxable brokerage 5k into a house fund. Worst case, i.e. If my fat budget stays the same (I’ll try to reign in the groceries and merch) In 2022 I’ll have 22k extra, In 2023 I’ll have 29k extra, 2024 33k extra.

I’ll chill out on the house for now. Though, it's not clear to me that not getting that more expensive house would affect my FIRE date because I could have kept the 61k savings per year and would have taken the proceeds from the sale of my existing house and dumped $160+ plus into the market while only putting 10% down on the new house.

It looks like I can FIRE in 8 or 9 years assuming a 5% growth and the current 61k saved each year. The additional 10k plus each year doesn’t seem to move the needle much on the date. At a minimum I hope it will prevent lifestyle creep.

I’ll drop the 50k house fund into a the citi bank account that gives you $700 or some other bank acct bonus.

Employer will not let me change the Daycare FSA. I will keep an eye on 2022 tax changes and see if childcare credit will remain high

Truebill is what MMM uses to track spending so I will give it a try

[MrThatsDifferent]

Good plan if it will work for you. The other posters commented on your extreme spending, what’s the plan for that? Also, what’s your plan for addressing your mental health concerns? Have you investigated counseling or therapy?

[getmoneyeatpizza]

1) Already signed up for therapy
2) gonna stop churning and go to one rewards credit card and track all spending through truebill with monthly goals.

[Loud Noises]

I haven't seen this mentioned yet:

Don't worry about saving up a brand new down payment for your next home.  It makes you too cash heavy and introduces artificial scarcity which is probably stressing you out even more.  Simply do a refi now... even one at a slightly higher rate than "best" (via negative points) that pays off from day one... and also open a HELOC. 

That HELOC can be your instant source of down payment whenever you do decide to buy.  Then your 77k cash can be invested now, as it should be.  This idea of saving up a down payment of cash but also trying to decide what to do with 160k in home equity later is ignoring that it's all fungible.  Your current home is your down payment.  That HELOC would be paid off as soon as you sell your current place.

[getmoneyeatpizza]

Thanks that's very helpful. I would like to get that money invested.

Assuming 5% growth of stache per year it shows a year faster FIRE even if I had bought the big house and spend $1300 more a month instead of saving $15k more a year bc that 170k equity could go straight into the market.

what do you mean, a refi that pays off from day one? I'm doing on now 2.625 interest 20 yr. only $510 in loan costs so pays off in 3 months. I feel like thats a great rate. $200 extra principal per month and about $50 less than current payment. Prepaids and escrow seem high though, should I roll those fully into the loan cost?

EDIT: Any recommendations on where to get a HELOC? And what amount? Should I just get it for as much as possible, just in case? I don't think I'd need more than $120k for a down payment.

[zolotiyeruki]

That HELOC can be your instant source of down payment whenever you do decide to buy.  Then your 77k cash can be invested now, as it should be.  This idea of saving up a down payment of cash but also trying to decide what to do with 160k in home equity later is ignoring that it's all fungible.  Your current home is your down payment.  That HELOC would be paid off as soon as you sell your current place.

Wouldn't OP potentially run into a debt-to-income issue, when going to purchase the new home?  I know that the last time we moved, we bought the new home before selling the old, and we just barely slid under the bar in terms of payment-to-income.

It's definitely something worth looking into, though.

[getmoneyeatpizza]

I'll research a little but are the implications and calculations here?

If 120k if too much, I would have at least liked to be able to HELOC an extra 50k to get to 20% had I known about this and set it up in time.

[Loud Noises]

Wouldn't OP potentially run into a debt-to-income issue, when going to purchase the new home? 

Running very rough numbers, it would appear that carrying both mortgages would keep this person well below any DTI limits. I did a quick calculation and came back in the high 20s. Many lenders will approve as high as 46%, I have seen.  Shouldn’t remotely be a problem.

[Loud Noises]

what do you mean, a refi that pays off from day one? I'm doing on now 2.625 interest 20 yr. only $510 in loan costs so pays off in 3 months. I feel like thats a great rate. $200 extra principal per month and about $50 less than current payment. Prepaids and escrow seem high though, should I roll those fully into the loan cost?

EDIT: Any recommendations on where to get a HELOC? And what amount? Should I just get it for as much as possible, just in case? I don't think I'd need more than $120k for a down payment.

3 months is close enough!  What I do is take a rate penalty, sometimes called moving up the rate table, to increase the loan credits. Set it up so the credits cover all costs rather than rolling them into the loan. Of course pre-paids are different since you’d owe them anyway.  But in your example, you might be able to get something like  $1k extra in lender credits in exchange for 1/8% higher rate… no different than paying an extra $1k to lower it by 1/8%.  Lenderfi has done this for me several times now.

I have always done this true no cost refinance anytime I can take a rate which is lower than my current one and lender credits cover all costs. It pays off from day one, and if rates drop further I do it again. I don’t worry about “resetting the clock” because when I reach the time that I don’t want a mortgage anymore, I’ll just pay it off from investments. Or who knows, maybe we’ll move at some point.  I’m not paying a bunch of money (which would otherwise be invested) for some uber low rate which I need to wait 10 years to see a breakeven from.

[joe189man]

I don’t have an answer for you necessarily but I sympathize. This shit is hard.

OP we are in sorta similar places, you have a larger stash, we make more, we have the big house and a yard, we both have crazy kids about the same age, two full time working parents and we also have no time.

We have a larger house, it is nice, i like the space and bedroom arrangement but the upkeep is a PITA and it doesnt help stress and anxiety to have to remember and think about all the stuff the house needs along with what your kids, spouse, work, friends, family, and personal interests/self care need and aren't getting the attention they deserve.

then throw trying to manage spending habits/priorities and FIRE planning in there, and oof. it gets tough or impossible. We put a lot of investing on autopilot to make it easier and are just holding on for the ride at the moment.

Here is another post that sorta fits this theme

https://forum.mrmoneymustache.com/welcome-to-the-forum/staying-the-course-122045/

I think about a quote from @Malcat in that thread almost daily - its below and out of context but i think its important to really examine our lives and make them better, which i still havent done because i am too busy or tired to make time.

I don't feel like I'm living, just existing.

I relate to this, when i read that line, oof, it stings and hits home. Sorry you feel that way

I just don't understand putting up with this.

I'm seriously disabled and many days not capable of leaving bed and not able to focus enough to even read a book. I'm stuck watching trash tv because I can barely pay attention.

*That* is just existing. And it sucks, but I have no choice.

Why would anyone choose to continue living a life that feels like that? I guess I just can't fathom an able bodied person choosing to be okay with it.

If I felt that way I would be willing to totally blow up my life and start over. With half a million dollars, OP has the capacity to do virtually anything they could imagine.

They could stop cold and spend a few years retraining in an entirely different career if they wanted to. There are so few options off the table.

No one will ever put a gun to your head and make you live your best life. You have to fight for it.

OP: what do you want your life to look like? What would "living" be like for you. Why can't you start now?

I think quality over quantity maybe useful for us both to consider, you are basically set with nearly $800k in retirement at sub 40 y/o - you could stop investing now and at age 60 and at 7% you will have $3.3 million, or $2 mill at age 53. we have more work to do on investments but could easily live on one salary.

[getmoneyeatpizza]

Thanks Joe. I agree with that sentiment. I agree with Malcat, change it if you can.

And it is worth thinking about the things we can change to improve quality and what we can't. Luckily, in contrast to that post, my job is not that stressful but it does take 40 hours a week of my time. In a few more years I may try to go part time / summers off when kids out of school.

Young kids and traveling for family now can't change. Both these will improve over time. But right now I can go to therapy, meditate and think of other ways to improve quality of life and take some personal days for now.

RE: stop investing. That is a good thought experiment, but I'm OK saving.

Saving 60k a year for me does not require any sacrifice so far. Continuing to save 60k with bigger mortgage  vs hypothetical 75k in existing house is the quality of life balance I am pondering with this post. Post this case study required me to document my spending thoroughly and look at several scenarios and see the big picture.

I'm going to be prepared now and have a good path forward, whether or not I move. Being prepared, organized and confident to make the next move will help me chill out.

[Villanelle]

I think you can afford to move.  I think that with some basic cuts, you can really, really afford to move.

But I think it is probably a bad idea.  Moving is really, really stressful.  It is a ton of work, even if you pay a lot for packers and movers to do much of the actual moving from A to B.  It seems like you are unhappy with your life and stressed out and you think a bigger house will fix that, but it doesn't sound like the things you are stressed about are because your kids don't have their own rooms or your yard is too small.

You said neither of you would consider leaving your job.  What about one of you doing a 3-6 month sabbatical?  That would buy some time, especially in light of the situation with the terminally ill relative. 

With that savings rate, I'd also consider saving less and buying some more time for yourselves.  A housekeeper, twice a month baby sitter so you can go somewhere inexpensive and just relax and recharge, outsourcing some other chores that you find the most stressful and time-consuming (grocery delivery/online shopping, yard work, buying prepared meals, etc.)  Also, counseling and someone to care for the kids during that time. 

I think those things will increase your QOL far more than an extra bedroom and bathroom and a larger kitchen space.  And again, moving is really stressful, and I suspect even more so with young kids.  Nearly everyone in my circle moves often (military) and things like sleep regression, potty training regression, failure to sleep except in parents' room or with a parent in their room all night, generally acting out, etc.--seems like having at least a couple of these is more common than not for those with young children.  That alone would make me strongly reconsider moving at a time where you are--from the sounds of it--already struggling.