I wrote this post about a year ago, but it may be useful to you:
Greetings fellow Mustachians,
My wife and I have been reading the site for almost a year, but have held back from posting until now. Just this past weekend we concluded the process that eliminated our debt, downsized our house, and moved our family to a more walkable neighborhood. All things we wanted to do before we started reading MMM, but were re-motivated to do by what we saw on the site. We were so excited to find ourselves natural mustachians when we discovered the world of mustachians. Here is a breakdown of how we lived (pre-mustachian with mustachian tendancies), how we’re currently doing, and where we are headed.
First, a little background. We are a family of dad, mom, and 3 yr old son. We live in one of the most expensive parts of the country, the Washington, D.C. area, and are currently stuck here until FI is achieved. Wife has stayed home with our son since he was born, but will be doing some consulting in the near future, as well as going back to work part-time when he goes to kindergarten.
Almost five years ago we bought a house that we thought would be a good place to raise a child. We paid $475K for it, taking out a mortgage for $415K. Over the course of the time we owned the house it required $115K worth of work, half of which I did myself, half of which we had to hire folks to come in and help us out. In order to achieve that, we depleted our savings, and took out a HELOC, which (until the houses sale) maxed out at $75K. The house was in a place where we could walk to very little, and had to drive to work or even to the metro (subway). (Although, two years into owning the house, I got a new job that I could walk to (3 miles each way), which helped my health a lot!) My wife and I had, combined, student loans of approximately $70K when we purchased the house.
Doesn’t sound too Mustachian, does it? Of course not. We did it because we thought that our kid would need a house, that I would love doing the house reconstruction (which I initially did), and that it would give us some roots after having moved about a lot before that.
Despite the debt situation that this choice of home ownership was forcing upon us, we were increasing our net worth by an average of $50K per year on a modest salary. None of this is attributable to home value, as the value of the house went up less than the cost of refurbishing it combined with the cost of selling it. We maxed out our retirement contributions, paid extra on the mortgage, eliminated my student loan (at 6.5% interest it was ridiculous) and lived frugally (although quite well!) everyday in between. (Ideally, we should have been paying off the debt faster and investing less in my 401K and our ROTHS, but we felt good about taking big bites out of everything and were focusing on a balanced approach.)
Now, for where we are. Over the course of living in the house we realized it was way too big, way too much work, and not in the location we wanted to live (in terms of walking or biking to what we find important). Therefore, we sold the house, moved into a sufficiently sized 2br 2ba apartment in a location that is walkable to a grocery store, the metro, and is much closer to my son’s preschool. In the process, we cut our expenses over $2K a month. Not bad, right!
Even better, though!
With the sale of the house, we paid off the HELOC and the remaining student loans, leaving us DEBT FREE!
Now we are no longer paying interest on any debt, have an emergency fund if it’s needed, and are able to continue maxing out my 401(K), our ROTH’s, and even have a little left over to buy some Vanguard Total Stock Market Index Fund (VTSAX) on a monthly basis. The best part is, this in no way takes away from the opulent living we get to experience every day.
Our new apartment is next door to a library from which my son loves to check out tons of books, a public park where he can ride his bike and play on a playground, free gas grills, and a free community pool where we can dip our toes or swim on hot days. Oh, and did I mention, we’re right next door to a Trader Joes, a Whole Foods, and a very infrequently patronized by us Peet’s Coffee?
We were initially concerned that moving out of a house and into an apartment would be too much of a shock for our son, but it turns out he loves it. He likes to play in his sandbox on the balcony, stare out at the passing trucks (that we only hear when out on that balcony), and walk by the trash dumpsters every time we enter or leave the building (There is a nicer entrance, but he wants to pass the dumpsters, so we pass the dumpsters).
All in all, we’re quite happy to be debt free, not have a money pit sucking our savings dry, and living in a comfortable and walkable community near the things that bring us free joy.
Thank you, as a community, for helping inspire this change in our lives.
Best,
Jeremy
