New 2016 Budgets

hoffse · February 2016

I think it's worth considering all options, especially since @lbonga is in one of the most expensive cities in the country. However, I agree that moving is a huge deal. There are thousands of dollars of transaction costs associated with it, and it would mean finding new jobs.

We took the opposite approach of some on this board and intentionally paid more money for a smaller/not updated house to be closer to town. We could have saved $100K on our house by moving out 10 miles, but with the way traffic works here it would have added at least an hour to each of our days. That means either longer days (and our days average ~12 hours in the office already) or less time spent in the office, which we would have to make up on weekends. It works out to more than a month of billable time, and that's huge.

After living with it for 18 months, I would make the same choice 100 times over again. The lifestyle upgrade of having a decent commute is worth more to me than what I am spending for a more expensive house. In fact, I would pay twice as much as I currently pay to be this close, because it makes our lives so much easier. There are also perks like being in a neighborhood with sidewalks and being able to easily/safely walk to the movies, restaurants, the gym, a nice grocery store, etc. We would lose that if we moved to the suburbs.

The other option to lower our housing costs would be to take a job outside of the city so that the cheaper houses are closer. However, that pay cut would be in the neighborhood of $80K/year if you combined both of our salaries. We come out way ahead by working downtown, even if that means our housing is more expensive to make the commute manageable.

I think it's worth going through the thought experiment, but relocating for very cheap housing isn't always the answer.

short+sassy · February 2016

hoffse said:

I think it's worth considering all options, especially since @lbonga is in one of the most expensive cities in the country. However, I agree that moving is a huge deal. There are thousands of dollars of transaction costs associated with it, and it would mean finding new jobs.

We took the opposite approach of some on this board and intentionally paid more money for a smaller/not updated house to be closer to town. We could have saved $100K on our house by moving out 10 miles, but with the way traffic works here it would have added at least an hour to each of our days. That means either longer days (and our days average ~12 hours in the office already) or less time spent in the office, which we would have to make up on weekends. It works out to more than a month of billable time, and that's huge.

After living with it for 18 months, I would make the same choice 100 times over again. The lifestyle upgrade of having a decent commute is worth more to me than what I am spending for a more expensive house. In fact, I would pay twice as much as I currently pay to be this close, because it makes our lives so much easier. There are also perks like being in a neighborhood with sidewalks and being able to easily/safely walk to the movies, restaurants, the gym, a nice grocery store, etc. We would lose that if we moved to the suburbs.

The other option to lower our housing costs would be to take a job outside of the city so that the cheaper houses are closer. However, that pay cut would be in the neighborhood of $80K/year if you combined both of our salaries. We come out way ahead by working downtown, even if that means our housing is more expensive to make the commute manageable.

I think it's worth going through the thought experiment, but relocating for very cheap housing isn't always the answer.

Good point! And I'm over here cracking up because, although I might have moved 1500 miles away for more affordable housing, I have always spent more money on rent...now on a mortgage...to live in the heart of the city instead of in the suburbs.

In fact, my H and I were looking at house in East NOLA as a possible fix/flip a couple weeks ago. $75K (though it needs work), 2100 sq. ft. (twice as big as my side of my duplex)...with a big Jacuzzi tub in the master bath and a huge walk-in closet. Such an awesome house and I was salivating! For a few minutes I thought about what it might be like to move to that house and rent out my side of my duplex. But then I'd be 30 minutes from my f/t job and 30 minutes from my p/t job...and that's without rush hour traffic. No way!

Even visions of Jacuzzi tubs and walk-in closets couldn't make up for that kind of inconvenience and extra time in my week, lol.

lbonga1 · February 2016

brij2006 said:

@lbonga1 It really depends on what your priorities are at right now before I can give you some recommendations....
Does your FI work?
If not, does he not work because of his medical condition? If so, can he apply for disability due to this?
Is the car line item a car payment? If so, what's the total amount owed on it?
Is it a high priority to purchase a home?
You also state FI. Do you intend to get married any time soon? If so, when? Reason I ask, it's not advisable to go into purchasing a home with someone you are not contractually tied to.
You also state schooling. Is this you that is in school? How is that being paid for? How much longer do you have? What is the potential for growth with it?

Sorry to have so many questions.

I think we're used to living in a smaller home. Our current place is 930 sq. ft., and it really doesn't bother me. We have a park literally 50 ft. from our back patio, plus another park, a grocery store, a Target, and the public library all within walking distance. As the kids get older, I'm sure it'll start to feel tight, but by then we should be able to upgrade.

To answer your questions @brij2006, my FI was working but had to stop due to his medical condition. When he's sick he's basically incapacitated, and it happens very randomly. He's currently in the process of applying for disability; he actually applied once before and was denied, but I can't remember why.

The car line item is for my lease + gas for both of our cars. FI's car is paid off, but it's getting old (just passed 200k miles). We use his car for space when we need it (Honda Pilot), and mine for efficiency (Mini Countryman). I owe about $12k on mine and was planning to keep it for as long as possible. I hate buying/selling cars.

It's our highest priority right now to save up to buy a house. It makes more sense here to own vs. rent, especially since rent tends to go up about $100/yr. FI's parents are also planning to gift us money for a down payment, and I anticipate having enough total by the time I am finishing school, which works out well because I can get a better idea of where exactly we want to buy. We're planning on getting married before buying, but we're not going to have a wedding. We'd rather put the money toward other goals. We've been in a relationship for going on 9 years, so we feel married already

I am the one in school right now. I am currently completing a graduate certificate program, but once I complete 3 classes I can apply to change to the Masters degree program. It will take about 2 more years to complete, a bit less if I don't end up getting accepted to the Masters track. My mom is loaning me a majority of the cost at 1% interest. If I am accepted into the Masters track, I can apply for scholarships. I have a BA in business, but I switched to software engineering because I'm more interested in it, and there's a higher potential for finding a much higher paying job. My salary will likely double what it is currently. I make about $54k gross, and we have a small side business that brings in another $6k.

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