Finally Taking the Plunge!

[HarryStache]

I'm a longtime reader and forum lurker.  I am a 30 year old construction professional living in a small town of about 20,000.  My wife is currently a SAHM.  We have two preschool-age children and would like to have another. After salary and bonus, I make a little north of $100K per year.

Two years ago, we moved from within walking distance of my office to a few miles outside of the city.  We traded our low-mortgage, low-maintenance, 1,500 sq. ft. home for a new construction dream home on 10 acres and 2,600 sq. ft. (plus a big, fat mortgage!).  Almost every waking hour not spent at work is spent on keeping up our property.  It is beautiful, but it has become a burden to have no life outside of home / land maintenance.  Add to that the higher mortgage, utilities, upkeep, and other costs associated with a bigger house, and I was ready to call it quits.  Between my wife and I, we only have around $12,000 each in our respective Roth IRA's, and I have around $6,000 in my employer's 401K.  We have around $20,000 in an emergency fund.  So as you can see, a lot of our money hasn't been going to where we would like it to go.

After taking an amazing family vacation a few weeks ago, we spent a lot of time talking about how great it would be to be mortgage-free and financially independent so that we could see and do many more great things with our family.  We had an all-night financial "state-of-the-family" discussion.  We both decided that we wanted to call our mistake, sell our dream home, and move back into our old neighborhood.  We have about $150,000 in equity in our current home, and if it sells for what we are comfortable with then we will be able to purchase our next home with either cash or a very low mortgage.  All of our costs will go down, including transportation, utilities, maintenance, etc.  I will be able to bike to work, run home for lunch, and have more time for family fun.  We live in an area full of outdoor adventure and we are only 90 minutes away from two international airports (one in each direction), so there are things to do all around us.

All this to say, I'm thankful for this forum and am excited about our journey!

[Secretly Saving]

That sounds like a great plan especially since all the factors are known to you - you know you like the old neighborhood, you know what your day will look like, you know the costs associated with living there etc.  I'm glad you went on that vacation and came out with a new plan for financial independence.  It'll be great!

[prognastat]

I'm a longtime reader and forum lurker.  I am a 30 year old construction professional living in a small town of about 20,000.  My wife is currently a SAHM.  We have two preschool-age children and would like to have another. After salary and bonus, I make a little north of $100K per year.

Two years ago, we moved from within walking distance of my office to a few miles outside of the city.  We traded our low-mortgage, low-maintenance, 1,500 sq. ft. home for a new construction dream home on 10 acres and 2,600 sq. ft. (plus a big, fat mortgage!).  Almost every waking hour not spent at work is spent on keeping up our property.  It is beautiful, but it has become a burden to have no life outside of home / land maintenance.  Add to that the higher mortgage, utilities, upkeep, and other costs associated with a bigger house, and I was ready to call it quits.  Between my wife and I, we only have around $12,000 each in our respective Roth IRA's, and I have around $6,000 in my employer's 401K.  We have around $20,000 in an emergency fund.  So as you can see, a lot of our money hasn't been going to where we would like it to go.

After taking an amazing family vacation a few weeks ago, we spent a lot of time talking about how great it would be to be mortgage-free and financially independent so that we could see and do many more great things with our family.  We had an all-night financial "state-of-the-family" discussion.  We both decided that we wanted to call our mistake, sell our dream home, and move back into our old neighborhood.  We have about $150,000 in equity in our current home, and if it sells for what we are comfortable with then we will be able to purchase our next home with either cash or a very low mortgage.  All of our costs will go down, including transportation, utilities, maintenance, etc.  I will be able to bike to work, run home for lunch, and have more time for family fun.  We live in an area full of outdoor adventure and we are only 90 minutes away from two international airports (one in each direction), so there are things to do all around us.

All this to say, I'm thankful for this forum and am excited about our journey!

Sounds like a good plan. Sounds like you tried it our and determined that as nice as the bigger house is it just means more costs and maintenance and not what you wanted after all.

I would say this is a good plan, less time spent on maintaining your house, earning money to pay for the house and traveling to and from work the more time you have to spend either working towards retiring, spending more time with your family or both.

Now just to minimize the loss of the switch to and back from the house.

[Cryocash]

It is great to hear! More people getting the light bulb shining brightly in their brains! To have a SO that's on the train with you will be a great help too!

[FireHiker]

Welcome! We also made the "buy the big dream house" jump and I regret it. I love the neighborhood, but we could still be in the neighborhood with a smaller house and half the mortgage. You are so lucky to be on the same page as your spouse!! My husband is pretty willing to work on cutting our spending and increasing our savings, but he isn't as convinced on the benefits of downsizing the house (at least not yet). Best of luck!

[Trifle]

Nice job Harry! Very happy story. :)

[Retire-Canada]

Congrats! Do it!

Being able to acknowledge a mistake and correct it is a high level skill. You and your family rock. :)

[HarryStache]

Thanks everybody!  We are excited about it and our kids are young enough that they don't really care where what kind of house we live in, so it really doesn't phase them that we are downsizing.  It really has been a boost to my psyche to have my wife locking arms with me in excitement for the things FI could allow us to do.  Add to all of this the fact that I really like my job and our town.  She has already started selling and donating stuff this week, so we're off to a good start!

[Tetsuya Hondo]

Congratulations!

[Livingthedream55]

Congratulations!

I did something similar a year ago - sold the nice, big (and expensive) home which needed tons of work in a great school district once youngest finished high school and rolled over all equity (with just a $22,000 mortgage) into a gorgeous smaller, updated home in another town.

One year later - absolutely no regrets - and will be FIRE in 2 years (see ticker below) as a  result!

[boarder42]

Sounds like you're moving in the right direction.

BUT one word of caution - A mortgage at today's low rates doesnt hinder FI it actually helps it.

If you goal is financial independence please evaluate the merits fo keeping the mortgage and investing your 150k - 20% down and closing costs in the market.  From a financial independence standpoint and with todays ultra low fixed rate mortgages.  You should be able to do the math it almost always wins.

That being said if you're too emotionally invested and dont want to see the math side its not an awful choice just majorly suboptimal. in your case at the beginning of the road to FIRE with no numbers to quantify i would say 2 years extra spent working. 

Basically if you invest that 120k now vs just buying the house and investing the mortgage payment on a 120K mortgage at 4%.  in 30 years you have at 7% market returns you would have:

With mortgage: 913.5K
without mortgage: 694k

A difference of over 200k in 30 years.

[RobFIRE]

It sounds like you and family have carefully considered the pros and cons, and been honest enough to admit that a previous decision wasn't the right one, and are now making the right one. I think a lot of people assume with housing and land space that bigger is always better, but as you say, maintenance/upkeep etc. are significant effort and cost, so unless you really enjoy DIY projects they're not worth having too much of. Even in very small scale decluttering recently I have found that there is value in simplicity.

Secondly of course, is the extra cost of a larger house. I continue to be surprised by people who say what a great investment houses are, or are happy about high house prices due to the impact on their net worth. Because if you buy a place intending to live there forever so never plan to sell it again, it would be better if it cost nothing and was worth zero, otherwise any purchase cost is just money tied up that you can never use (OK, it will form part of your inheritance, but are people really thinking about just that?). Whereas if you live in a smaller lower cost place the extra money is available for investment and to provide an income.

So when I look at the overall financial position of a smaller versus a larger house, I ask myself how many years of working it would take to earn in pay after tax the difference between the two. Where I have some family in the south east of the UK that can be a £300k difference, which would take me something like 10 years to earn.

[redbird]

Hey, even if you made a mistake, that's one mistake that is not difficult to fix. Congrats to you for realizing what is best for you and your family. I hope the house sale goes well and that you find a great downsized house. :)

[MasterStache]

Sounds like you're moving in the right direction.

BUT one word of caution - A mortgage at today's low rates doesnt hinder FI it actually helps it.

If you goal is financial independence please evaluate the merits fo keeping the mortgage and investing your 150k - 20% down and closing costs in the market.  From a financial independence standpoint and with todays ultra low fixed rate mortgages.  You should be able to do the math it almost always wins.

That being said if you're too emotionally invested and dont want to see the math side its not an awful choice just majorly suboptimal. in your case at the beginning of the road to FIRE with no numbers to quantify i would say 2 years extra spent working. 

Basically if you invest that 120k now vs just buying the house and investing the mortgage payment on a 120K mortgage at 4%.  in 30 years you have at 7% market returns you would have:

With mortgage: 913.5K
without mortgage: 694k

A difference of over 200k in 30 years.

+1

First off great job on realizing lifestyle creep doesn't automatically equal happiness. Often times it equals the opposite. I am sure many of us here can attest to that (myself included).

Secondly boarder42 makes a great point about mortgage plus investing vs simply paying for a house. You could actually help your FI date by taking out a low interest mortgage. Of course there are risk involved so it's totally up to you. But something to think about.

[COEE]

Awesome!  We made a similar move last year!  It was an awesome decision for us. I walk to work most days.   It's a treat.  I was walking home from work today with my daughter, after picking her up from school, thinking how wonderfully spoiled I am.  It was windy and i was a bit cold and upset.  I looked up at a leaveless cottonwood tree with the sun shining on it and heard the sweet giggles of my daughter laughing next to me.   My soul was warmed as i realized i was in the 'good o'l days'.  But i still encouraged my daughter to walk faster.

Good luck and godspeed to you as well.