Life Changes
2012 has been a big year for our family. We heralded the new year with the birth of C. Something I haven't mentioned here is that M started a new job shortly after that. (I haven't shared that news on the blog, because it has been a long process of telling everyone that we need to tell before I felt we could really "go public".) That means we will have a move coming up this summer, and that means finding a new preschool for N, maybe some new violin students for me, and possibly buying a house for the first time.
We won't be moving far from home. M's new job is about an hour's drive from our current location. He is now working for a company that builds and maintains online classes for high school students. He was already teaching two sections of AP Music Theory online for this company while teaching in the public high school at his previous job. When he saw a job opening in this company, he applied for it, and they "made him an offer he couldn't refuse". This meant leaving his teaching position mid-year and some disappointed kids among his students, but we really felt it was the best move for our family. Among the perks of this new job are five weeks paid vacation per year, the option of working from home on snowy days (or, like this Monday, days that Grandma is in Florida and Mama needs a hand with the child care!), and a straightforward, 9-5 job that he can leave at the office in order to be fully present with his family when he comes home. He's really a whiz on the computer, too, because everyone at work seems to be very impressed with what he is doing and he feels valued and appreciated. I am so thankful that he is happy in his work and more available to our family. These past months have been so wonderful, despite M's daily two-hour commute. It's only going to get better once we move!
As for me, when we move I'll be the one commuting-- but since I only work two days a week, it won't be that bad. I'll be keeping my current youth orchestra job and studio of private students through next school year. I just don't see myself having the time to establish a new studio before the beginning of next year, and we can't afford for me to not be teaching for very long. I'm actually looking forward to a weekly outing; I don't mind driving!
I've tried a bit to look into new schools for N, but it has been hard because we don't have an exact town in mind where we'll be moving. We could live any number of places that would be very close to M's job. It's all going to depend on where we can find the best deal on housing, and that decision is taking us some time.
This is the first time since we've been married that we've had enough money in our savings account to think about buying a house. However, we're having a hard time deciding whether to use that money to put down on a house or just pay off some debt with it. Since we've been married, we've tread the balance between using our extra money to pay off debts and putting it in a savings account. We're in a much improved situation debt-wise than we used to be, but we're by no means debt-free. Our debts include a loan for our Honda van, and a sizable amount of student loan debt. This puts our current debt-to-income ratio at about 17% (17% of our gross income goes toward our debt every month). Given our current savings and debt-to-income ratio, the research I've done tells me that we have enough to put a 20% down payment on a house in the price range of $110,000 to $150,000. Most of you that are from New England know that you can't buy much house for that around here. After some searching in the area we'll be moving to, however, we have seen some viable housing options in that price range. Oh, but there is one more caveat: we would have to yank out M's teaching retirement to contribute to our down payment. Yanking that money early means paying penalties, plus having it heavily taxed.
Those of you that have been through this know that if you have less than 20% to pay as a down payment, you have to purchase what they call mortgage insurance. As M put it, it's like they're saying "Since you can't afford to buy a home, please purchase insurance so you can pay us MORE money for the home you can't afford." Anyway, it just seems like a waste of money to us, and from what we've researched, it could add up to an additional $100 to our monthly housing payment. We'd like to avoid that.
So here's the pros and cons:
If we buy a house:
- It will probably lower our monthly housing payment considerably, if we can find a house in our price range and get a decent rate on the mortgage. (Since we need at least two bedrooms, the monthly payment on an apartment won't go below a certain threshold for us.)
- The lowered monthly payment means that there will be more room in our monthly budget for paying off other debts more quickly.
- We'll be using our savings to buy a home, instead of wiping out our savings to pay down debt and starting from scratch on saving for a house (it will take us at least four years to save enough for a down payment again... and with the kids starting school it may not be possible for us to live as frugally as we have been... basically getting all of their clothes for less than $100 per year and stuff like that)
- Everyone says it's a "good time to buy"... there are good deals on the market and rates are good.
- We'll be first-time homebuyers, and they get lots of perks.
- We will no longer have this imaginary cloud over our heads... you know, the "you're wasting your money by renting and you need to get some equity by owning a home and you need to be living the American dream" cloud. Know what I mean?
If we don't buy a house, and continue renting:
- We can roll M's retirement over into another retirement account, and with that amount saved we won't have to worry about saving much more for retirement, ever.
- We can pay down our debt. Not only will we be closer to our dream of being debt-free, but we will also have tons more room in our monthly budget to save more money.
- We'll be paying less in interest over our lifetime by paying down debt early.
- We'll lower our debt-to-income ratio, which will give us more buying power when we do decide to purchase a home.
- We won't get stuck with a foreclosure or a fixer-upper (many of the houses in our price range are either one of these two), after having depleted our savings, and have no money to spend on the necessary repairs.
It's a lot to think about, isn't it? Sorry to bore you all and share a lot of personal information, but I'd like to ask for your advice, dear readers! Since it took me and M about three months of comparison shopping to decide which washing machine to buy, I can't imagine how we'll make this decision! If you've been through the home-buying process, or have any advice to offer, feel free to leave a (short) comment below. If your advice is lengthy, please send it to me in an email: blog.everything.nice@gmail.com
I know we probably need to talk to a "real" financial advisor, so we may do that. But I don't mind hearing advice from my friends and family too!
Thanks everyone! Happy Friday!
We won't be moving far from home. M's new job is about an hour's drive from our current location. He is now working for a company that builds and maintains online classes for high school students. He was already teaching two sections of AP Music Theory online for this company while teaching in the public high school at his previous job. When he saw a job opening in this company, he applied for it, and they "made him an offer he couldn't refuse". This meant leaving his teaching position mid-year and some disappointed kids among his students, but we really felt it was the best move for our family. Among the perks of this new job are five weeks paid vacation per year, the option of working from home on snowy days (or, like this Monday, days that Grandma is in Florida and Mama needs a hand with the child care!), and a straightforward, 9-5 job that he can leave at the office in order to be fully present with his family when he comes home. He's really a whiz on the computer, too, because everyone at work seems to be very impressed with what he is doing and he feels valued and appreciated. I am so thankful that he is happy in his work and more available to our family. These past months have been so wonderful, despite M's daily two-hour commute. It's only going to get better once we move!
As for me, when we move I'll be the one commuting-- but since I only work two days a week, it won't be that bad. I'll be keeping my current youth orchestra job and studio of private students through next school year. I just don't see myself having the time to establish a new studio before the beginning of next year, and we can't afford for me to not be teaching for very long. I'm actually looking forward to a weekly outing; I don't mind driving!
I've tried a bit to look into new schools for N, but it has been hard because we don't have an exact town in mind where we'll be moving. We could live any number of places that would be very close to M's job. It's all going to depend on where we can find the best deal on housing, and that decision is taking us some time.
This is the first time since we've been married that we've had enough money in our savings account to think about buying a house. However, we're having a hard time deciding whether to use that money to put down on a house or just pay off some debt with it. Since we've been married, we've tread the balance between using our extra money to pay off debts and putting it in a savings account. We're in a much improved situation debt-wise than we used to be, but we're by no means debt-free. Our debts include a loan for our Honda van, and a sizable amount of student loan debt. This puts our current debt-to-income ratio at about 17% (17% of our gross income goes toward our debt every month). Given our current savings and debt-to-income ratio, the research I've done tells me that we have enough to put a 20% down payment on a house in the price range of $110,000 to $150,000. Most of you that are from New England know that you can't buy much house for that around here. After some searching in the area we'll be moving to, however, we have seen some viable housing options in that price range. Oh, but there is one more caveat: we would have to yank out M's teaching retirement to contribute to our down payment. Yanking that money early means paying penalties, plus having it heavily taxed.
Those of you that have been through this know that if you have less than 20% to pay as a down payment, you have to purchase what they call mortgage insurance. As M put it, it's like they're saying "Since you can't afford to buy a home, please purchase insurance so you can pay us MORE money for the home you can't afford." Anyway, it just seems like a waste of money to us, and from what we've researched, it could add up to an additional $100 to our monthly housing payment. We'd like to avoid that.
So here's the pros and cons:
If we buy a house:
- It will probably lower our monthly housing payment considerably, if we can find a house in our price range and get a decent rate on the mortgage. (Since we need at least two bedrooms, the monthly payment on an apartment won't go below a certain threshold for us.)
- The lowered monthly payment means that there will be more room in our monthly budget for paying off other debts more quickly.
- We'll be using our savings to buy a home, instead of wiping out our savings to pay down debt and starting from scratch on saving for a house (it will take us at least four years to save enough for a down payment again... and with the kids starting school it may not be possible for us to live as frugally as we have been... basically getting all of their clothes for less than $100 per year and stuff like that)
- Everyone says it's a "good time to buy"... there are good deals on the market and rates are good.
- We'll be first-time homebuyers, and they get lots of perks.
- We will no longer have this imaginary cloud over our heads... you know, the "you're wasting your money by renting and you need to get some equity by owning a home and you need to be living the American dream" cloud. Know what I mean?
If we don't buy a house, and continue renting:
- We can roll M's retirement over into another retirement account, and with that amount saved we won't have to worry about saving much more for retirement, ever.
- We can pay down our debt. Not only will we be closer to our dream of being debt-free, but we will also have tons more room in our monthly budget to save more money.
- We'll be paying less in interest over our lifetime by paying down debt early.
- We'll lower our debt-to-income ratio, which will give us more buying power when we do decide to purchase a home.
- We won't get stuck with a foreclosure or a fixer-upper (many of the houses in our price range are either one of these two), after having depleted our savings, and have no money to spend on the necessary repairs.
It's a lot to think about, isn't it? Sorry to bore you all and share a lot of personal information, but I'd like to ask for your advice, dear readers! Since it took me and M about three months of comparison shopping to decide which washing machine to buy, I can't imagine how we'll make this decision! If you've been through the home-buying process, or have any advice to offer, feel free to leave a (short) comment below. If your advice is lengthy, please send it to me in an email: blog.everything.nice@gmail.com
I know we probably need to talk to a "real" financial advisor, so we may do that. But I don't mind hearing advice from my friends and family too!
Thanks everyone! Happy Friday!
Just my personal gut reaction...pay down the debt. I know that stinks in some ways, but you would be so free in so many ways without THAT cloud over your head. Jon and I are desperately trying to do the same...and we have huge student loans too. I say if you can do it, do it. You can always put that 17% extra toward a house payment in a few years. I understand it's a big decision, and wouldn't think less of you at all if you bought a house, though! With your family that's a big need in a lot of ways too!
ReplyDeleteWow this is a big question... definitely interesting to me... unfortunately I am running in a dozen directions right now and can't even think straight much less stay caught up with blogs and type intelligent comments. Maybe after this weekend I will share a few thoughts with you. (Although my husband would probably have better things to say about this than I!) In the meantime I just wanted to say, I'll be thinking of you. Big opportunities on the horizon no matter what you end up doing! It's very exciting about M's job... sounds great.
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