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Posts tagged with: Home Ownership

Moving: A Detour on Our Debt Journey

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We just hit a detour on our debt journey sooner than we expected: we’re seriously considering moving. Which kinda makes me want to cry. Or pass out.

We bought our house in 2014, and then in 2016 we bought our business in the next city over. The plan has always been to eventually move by our business. It’s nicer, safer, and the schools are awesome. Plus the commute would be a dream.

We figured a move was years away because we wanted to buy our “forever” home next, and we’re obviously in no shape financially to do that right now. Just a few weeks ago I was still thinking we wouldn’t be moving for a long time.

Moving: A Detour on Our Debt Journey

But recently reality has hit us and we feel now is the time to relocate. It’s not a decision we take lightly. I moved around a lot as a kid (I went to five elementary schools in four states), and I know firsthand how hard even a short-distance move can be on a kid.

This move is in our family’s best interest, though. Our oldest daughter is almost ten years old and in fourth grade. Middle school in this new area starts in sixth grade, and we’d like to give her time to make friends for at least one year in elementary school before we throw her to the wolves.

Could Moving Hurt Our Debt Journey?

We do worry about the financial impact of this idea. Here’s our current home situation:

Moving: A Detour on Our Debt Journey

We don’t want a higher monthly payment. This new area is more expensive, so we’ll be downsizing or downgrading in one way or another—we’ll have a smaller lot, an older home, and/or less square footage. Real estate here ain’t cheap and lots are tiny. But if it gets our kids settled in good schools in an area we love, it’s worth it to us.

This all makes our 2020 debt journey look less rosy. We’ll definitely be making fewer extra payments on our loans. If our home is valued low, we might have to save up for a better down payment. And for sure there will be the usual moving expenses. We’re not moving cross-country like we have before, but there will still be repairs, fees, and other costs.

Could Moving Help Our Debt Journey?

One thought I’ve had (that my husband hates) is that we owe $292,000 on our student loans. We could sell our home, put all the cash towards our debt, and then rent in the new area until we can buy again.

Pros: We’d cut away a huge chunk of our student loans, and we could pay them off years sooner.

Cons: We’d still be at least $92,000 in debt and very far from buying a home. Rent in the new area is expensive and climbing (even smaller homes can be $2000 a month!). This may keep us from giving our kids the stability we’re shooting for.

 

I’m meeting with a real estate agent today to figure out what our home is worth, so we’ll be able to make a more informed decision soon. But in the mean time, I’d love to hear what would you do?


Home Ownership: 1 Month Status

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We’ve now been in our new-to-us (1980s) house for just over a month. I haven’t talked much about the house since we closed, so I wanted to talk about some of the financials in the past month of home ownership.

Monthly Bills

The house is larger than our last home so although it’s too soon to tell true differences in heating and cooling costs, my guess is our new house will be a little more expensive on average. Relatedly, our home is now 100% electric (no natural gas) so that’s a bill we’ll be eliminating from our monthly budget. Our trash is now paid quarterly instead of monthly and even though we’re now receiving more service (our neighborhood does twice weekly trash pick-ups), our overall cost is actually less. We do, however, have HOA fees to pay.

Overall, our monthly bills will probably be a little bit higher than in our previous home.

One-Time/Set-Up Costs

The hidden costs of home-ownership! We knew when we bought the house we would have to purchase a refrigerator (we got ours at a great Black Friday deal because Lowes did their “Black Friday” prices for the entire month of November! Great time to buy a home!). What we had NOT realized until we moved in was that not a single window had any blinds on it. Not one. I’ve never bought blinds before. Even going the DIY-install/Home Depot purchase route, we still ended up paying over $1,000 on blinds! We also ended up needing a few smaller items (e.g., one extra bathroom = one extra trashcan, extra hand-towel set, etc.). We also bought 3 ceiling fans for rooms where they were not present (the living room + 2 bedrooms). The bedrooms were already pre-wired (but just had metal plates affixed to cover the wires), so hubs was able to install those on his own. But we had to hire an electrician to wire the living room because, living in Arizona, we HAVE to have a fan in the living room and it hadn’t been wired for one so that work needed to be done.

A great majority the walls in the house are bare. Some of the rooms, even, are bare. But I’m okay with that for now. I’m in no hurry to rush out and spend a lot more $$$ to decorate and furnish the entire home. We’re comfortable with what we’ve got and I prefer spending some time in the house to try to find a design style, etc. and to slowly build up decorative pieces vs. going to the nearest Home Goods and buying all.the.things. just for the sake of having everything immediately decorated.

All things included, we ended up spending nearly $4,000 for one-time/set-up costs (the “big ticket” items were the blinds, refrigerator, and fans/electrical wiring). Luckily, we’d been building up a stash of money for the downpayment and an extra slush fund so we had the cash on hand for these expenses. I’m thankful to YOU readers because I’d initially wanted to make a larger down payment (leaving us with less cash-on-hand), but many of you had commented that we really needed to have a good cash reserve when buying the house for just this type of situation. Having a later-than-expected closing date helped in that regard, too, because we had extra time to save the money up.

Mortgage

Our rent at our old house was $1200/month. Our current house has a mortgage payment of $950/month. When we set up the auto debit, however, we also asked for an additional $300/month to be applied toward principal. That will take our monthly payment to $1250/month. We can always change or amend the extra/surplus payment, but that’s how we’ve set it up to start. I thought it would be a nice way to build some equity in right from the start, without really “hurting” us since it’s comparable to the payment we’re already used to making.

Not having a mortgage payment due in the month of December was the greatest thing ever!! We ended up having extra money to put toward our debt payment (debt update coming Monday that I’m super excited about!!!).

So that’s how home ownership has impacted our finances on an immediate basis (i.e., initial one-time costs) and for the foreseeable future (i.e., monthly bills). Before we’d ever started house shopping I was hoping to find a place that would be somewhat similar in costs to our current standard-of-living. I didn’t want our expenses to all the sudden sky rocket. And I’m happy with our home. Although, yes, it will likely cost a bit more than our old place, it’s not so much more that it will slow down debt repayment. We won’t be “house poor” by any means. And we always have that $300 buffer on our monthly mortgage – if we find we need a little more wiggle room in the budget we can always make that auto-pay adjustment.

I’m busy baking today with the kiddos and getting laundry done and suitcases packed for our upcoming trip. I hope you all have a very Merry Christmas or Happy Holidays and I’ll see you on the other side from Texas! : )

Happy Holidays, y’all!


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