Hmmmm.... dusting off an old thread in my deliberations on super strategy post fire.
However, what caught my eye here was Urbanista's contemplations.
I don't know what Urbanisata finally decided, but I can offer some perspective as 7 years ago we were in the same position, struggling with a long commute which was impacting heavily on our health and our marriage.
After much deliberation We took the plunge and forked out for a $1.4M house, taking on a $1.0M mortgage at the time. Eek.
Mind you, this was before my thoughts of FIRE..... I doubt I'd make the same decision again, but let me share how it panned out....
Ultimately we got lucky and the decision was a big winner
- the house is now worth around $2.1M, so we won the financial gamble, but I wouldn't expect any real cap gains for the next 7 years so this is an aberration for anyone thinking of doing what we did.
- having an extra few hours at home every day had a very positive impact on my health, our marriage and our social lives. For me this has been a far more important outcome than the financial outcome. It made a HUGE positive difference to our lives.
If I had my time again I would still have relocated but to a cheaper house or apartment.
Having the monster mortgage hanging over me has weighed heavily at times. I am the primary earner, and if I lost my job we wouldn't have been able to service the loan in any way. At the time we purchased, i rationalised this saying it doesn't matter because if I lose my job we won't need to live close to the city and we can sell quickly due to the desireability of the property we purchased. So we will just sell and move back to the burbs. Whilst this is true, it is also true that the day you lose your job the last thing you would want to deal with is losing your home as well. We could also have rented it out to service the loan and lived cheaply somewhere on DWs income until I got a new job. I had all the answers, but the debt still weighed on me. I really didn't like it being there at all!
As it turned out, I didn't lose my job but instead my earnings continued to surge upwards and the mortgage is no longer a financial concern. We hit that sucker hard, and we became moustachian.
Today's concern is that we have done so well with our saving in the past 7 years that selling the house is now a quick path to FIRE.
We don't need a $2M home when a $700K home anywhere else in Australia would be more than fine. The only problem is that the ridiculously expensive house has become our home, and we love it there. We are at the heart of everything. Our friends are mostly in walking distance and our lives don't require us to travel more than about 5kms away very often. We are involved in a local sports club and don't want to break that tie. We are living temporarily OS but can't wait to get back to our life in Sydney.
Making the decision to sell up for FIRE is not proving easy, and saving an extra $1.4M to stay living in our house is a ridiculous notion. No way!!!
So, the moral of the story is be careful. You could lose big if the financial side bites, and even if you win (like we did) it could still end up that you will need to sacrifice something down the line.
In our case the decision is to either sacrifice our present (preferred) way of life that we love to FIRE, or to keep working for maybe 8 more years.
We would have achieved FIRE quicker by not relocating, but we may not have still been married to enjoy it together.
We are contemplating a 3rd option, which is to FIRE but target to earn a part time income equivalent to the additional rent of living in our expensive home ie: ($2.1M - $0.7m) x3.5% = $49K. The problem is that this rent charge alone is a lot. Not exactly easy and free part time work.
Today we can't decide. The decision becomes a real one from next June when we hit our " sell up and leave Sydney immediately FIRE number". We have no idea what to do.