Building a new house, financial discussion

[disykat]

I'm going to "rain" once again. I had another thought. When the boys first started playing, we tried to start them in the habit of playing in their room with the bell of their instruments pointing into their closet. That worked pretty well to insulate sound. However, they wanted to be in the main area of the house with us.

Even now, when my 19 year old is home, he brings his trombone out into the main room, sets up his music stand, and plays away. When my 21 year old comes, he might play guitar quietly in his room, but his trumpet also seems to require the main room. Apparently musicians like an audience. At this point, I enjoy it, but they're only home occasionally!


So, think about your kid's habits. Are they more likely to play privately than mine?

Also, in defense of the idea of moving. If your kids have good educational opportunities nearby and might be likely to continue living at home during college, your plan does make sense. For us, that wasn't a possibilty and we knew we would be paying not only tuition, but living expenses elsewhere.

 

[momz]

I'm going to "rain" once again. I had another thought. When the boys first started playing, we tried to start them in the habit of playing in their room with the bell of their instruments pointing into their closet. That worked pretty well to insulate sound. However, they wanted to be in the main area of the house with us.

Even now, when my 19 year old is home, he brings his trombone out into the main room, sets up his music stand, and plays away. When my 21 year old comes, he might play guitar quietly in his room, but his trumpet also seems to require the main room. Apparently musicians like an audience. At this point, I enjoy it, but they're only home occasionally!


So, think about your kid's habits. Are they more likely to play privately than mine?

Also, in defense of the idea of moving. If your kids have good educational opportunities nearby and might be likely to continue living at home during college, your plan does make sense. For us, that wasn't a possibilty and we knew we would be paying not only tuition, but living expenses elsewhere.

Rain rain go away. Doing my sunshine dance.

My kids will not play their instruments in their rooms. They have little rooms to begin with. The piano, of course is not in their rooms, although DD has an electric keyboard up there. We have tried to get her to play the viola upstairs and that turns into such drama, "you don't like my playing! You don't want me to practice?" blah blah blah. of course we deny these accusations and acknowledge that this is her way of manipulating us into letting her have her way. But this battle is exhausting and is played out day after day after day.

It is impossible to do anything when instruments are being blared in our house. The sound interfers with hearing the Tv, talking on the phone, even having conversations. Do you KNOW how loud a viola is? The guitar is not so bad.

Living at home during college is very very possible. There are several very good colleges and universities in our city, both public and private. And this has played into our conversations. In fact if they go in-state, it will likely be right here in our own city. If they go out of state, scholarships are a necessity no matter what. And honestly, what are the odds of that? Not many kids get wonderful scholarships like that. And we certainly will never qualify for need based assistance.

 

[arthur06]

I am not a bug Suze Orman follower, but I do follow Dave Ramsey.

His recommendation would be to pay off your spa, student loan and car first. (in that order as well)

You have a fabulous income. I would recommend that you only pay the minimum on your house payment and pay off those 3 items. With your income you should be able to pay that stuff off in 6 months or less.

Also, you said that you are putting 15 percent in your 401k. Do you know if you have a Roth or Traditional 401k? If it is a traditional I would recommend that you put in only the amount your employer will match and put $11000 a year into a Roth IRA. ($5,500 per individual) and that will grow tax free.

Really I would try to eliminate all your bills except for your mortgage before you make a house change.

 

[eliza61]

everyone keeps saying that the kids will be gone soon?

Where are these kids going? at 13 it maybe at least 10 years before any thought of moving.

My 23 year old just finished college and is still living at home. My 21 year old is still in college and will be home for easy another 2 or 3 years.

Now I would move myself (I just moved lol a year ago so how could I vote other wise) but I'm probably not the person to ask as I "downsized" to a 2800 square foot townhome.

 

[BigAlsGal]

Three years till you own your home! That's awesome! Think of all the money you would have if your home was paid off. All that money you could put in retirement. College funds. Savings. Travel. Remodeling!

If there's any part of you that thinks you could deal with your situation for a few years more I would.

 

[aprilchem]

At $26k in debt I wouldn't move, especially since you're behind on retirement. We make close to what you make & are on track for retirement with about $350k but are 8 years younger than you. I would focus on paying off debt, beefing up retirement, and adding to the college funds aggressively.

 

[MomToOne]

Suze would also deny you based on your emergency fund - she wants at least 8 months living expenses. While it may feel good that you almost have your house paid off, you really need to focus more on the emergency fund instead of that. Right now, you could be in trouble should a major life disaster hit you (job loss, illness, etc).

 

[AmyAnne]

I would agree that up-sizing at this point does not make sense. But if you have some money to put into upgrading your current home it seems like you could create a sound-proof space (at least as sound-proof as it would be in a new house) plus add some storage/organization to help with the clutter.

ETA: Just read the post about the kids preferring to play their instruments in the living room. Not sure how having a slightly bigger house is going to solve that one.

 

[gracie1]

There's no such thing as a stable job anymore.

This is so true. I was at my job for 14 years, and there was a turnover in mgmt - they were so horrible to work for I had to leave. You never know what can happen at your place of employment. I never ever expected that to happen to me.

 

[supersnoop]

I'd buy the new house with a new mortgage. With your income and other debt, you shouldn't have any trouble qualifying as long as your credit is good. Then I'd sell the old house and use the proceeds to pay off the other debt, contribute to your Roth IRA, and replenish your emergency fund.

 

[MrsPete]

I have conflicting thoughts:

Having a 17 and 20 year old, I definitely see why you want more space; however, I agree that it may not make sense, given that your kids are so close to moving out. In conjunction to those questions, I'd ask you to expand on these questions:

- How do you foresee yourselves living in your empty nest years? Do you want something along the lines of a smaller place . . . or a large house for family gatherings? How much house are you willing to support in your retirement years?

- Do you anticipate your kids will live away from home in their college years? And are you anticipating them returning home after graduation? It might be a little early for you, but I knew these answers when my kids were in high school.

My biggest concern about your plan is that you might not be able to sell your house quickly, leaving you with two mortgages. I was in that spot for a while!

Creative possibilities:

- Rent out your current house. Use that money to rent a larger house for yourself. When your kids are out on their own, you can return to your current home.

- Add on to your current house. You don't need a large addition -- just a small "away room" with plenty of soundproofing. This would cost significantly less than moving. In conjunction with this, you could add better storage and other tweaks to improve your current house.

I do agree that you have enough money to build another house, but I don't think you have enough to build AND ALSO provide a college education for your kids AND ALSO retire comfortably (at the rate you're saving).

I don't have a problem with the idea of moving to a less prestigious neighborhood. In fact, I'm doing it myself in a couple years: We're leaving a prime location in a small city, and we're moving to the country.

 

[momz]

Out of curiosity. How much do you all save from each paycheck for retirement? I've seen several of you state that our rate of saving is not enough. We are saving 15%. I was under the impression that this is more than most. We got a late start financially because of our own college costs and student loans. But at 15%, I thought we were on track. Apparently not?

 

[arthur06]

Out of curiosity. How much do you all save from each paycheck for retirement? I've seen several of you state that our rate of saving is not enough. We are saving 15%. I was under the impression that this is more than most. We got a late start financially because of our own college costs and student loans. But at 15%, I thought we were on track. Apparently not?

I think that 15% is fine, especially with a $150k income. But I would work to pay off your 3 smaller bills and become debt free other then your mortgage.

Are you putting any money into a Roth? That will grow tax free, where a Traditional 401k grows tax deferred.

I guess I follow Dave Ramseys way. As for his teachings you are doing fine, just a bit out of order.

You are actually doing better then most people, so don't take our comments to harsh.

 

[bjscheel]

Out of curiosity. How much do you all save from each paycheck for retirement? I've seen several of you state that our rate of saving is not enough. We are saving 15%. I was under the impression that this is more than most. We got a late start financially because of our own college costs and student loans. But at 15%, I thought we were on track. Apparently not?

Honestly, that is more than most. Budget Boarders are not representative of the general population I think. It's great that you are doing 15%. You are ahead of me.

We built an addition last year. I would look into building above the garage or wherever possible. We had the room to increase the footprint of the house. Originally the four of us were in 3 bedrooms upstairs real close together in a 1.5 story house. No closets or bathroom upstairs. We built on and enlarged the living room and a bedroom for us downstairs. The girls are in the bigger 2 of the 3 rooms upstairs and we made the 3rd bedroom into two big closets for them. Best thing we ever did. Being super close to your kids' bedrooms is great when they are babies. When they are teenagers, not as much.

We lived in the house while it was under construction. Of course some of the work was done while the regular outside wall stayed up. I don't remember all of the time line, but I know there was a tarp between the sections for a time.

 

[TwoMisfits]

Out of curiosity. How much do you all save from each paycheck for retirement? I've seen several of you state that our rate of saving is not enough. We are saving 15%. I was under the impression that this is more than most. We got a late start financially because of our own college costs and student loans. But at 15%, I thought we were on track. Apparently not?

Since you started later and since you are used to a pretty high standard of living now (since $150K in Indiana probably goes pretty far), I'd honestly be saving at least $28.5K in retirement each year (maxing 1 401K and both Roth IRAs for you and your husband - it would be more if both of you have 401Ks) AND whatever you can then comfortably put into college savings - so, $1K-$5K per kid...at a minimum.

We make slightly less than you, in a higher cost of living area than you (I don't live in OH anymore, with more family members...and I save that $28.5K and $3-$5K in college savings per year with a goal to have my mortgage paid off right as my 1st hits college (we are off by 2 years on this goal)...we live in a townhouse and we won't be moving, even though we can, b/c we never want to be house poor or to trade off our house for our future or our kids' future...

 

[StitchesGr8Fan]

15% is great, but since you got a late start you have some catching up to do.

We've got a calculator at work for our 401K that shows how much $ is worth in 10-20-30 if you invest it and get 8% back. It's amazing what $1k can grow in to if you invest it and let it sit for 20 years.

 

[Darcy03231]

everyone keeps saying that the kids will be gone soon?

Where are these kids going? at 13 it maybe at least 10 years before any thought of moving.
My 23 year old just finished college and is still living at home. My 21 year old is still in college and will be home for easy another 2 or 3 years.

Now I would move myself (I just moved lol a year ago so how could I vote other wise) but I'm probably not the person to ask as I "downsized" to a 2800 square foot townhome.

I can't answer for anyone else, but with my children:

DS #1 went to college in state, but a bit over an hour away. He ended up renting an apartment with a bunch of other kids. He got a part-time job in that area during the school year and they offered him full-time during the summer months so he stayed in the apartment through the summer. Did the same thing every other year. He ended staying in the same school to get his Masters (full scholarship). Upon graduation he got a job offer in the area and an offer to teach one to two classes a semester at the University. So he never moved back home after college.

DD#1 went to school out of state. She also ended up getting a part-time job in the area and got an apartment with some other girls. She ended up meeting a young man in that state (who she ended up marrying this past September). She never moved back, even for summers, once she left.

DD #2 went to school locally and stayed home. She planned it out so she graduated in three years with a major and a minor (took summer classes). She had a job offer before she graduated and moved out at 22. While she was living at home through college, between her work and school schedule she was home just to sleep. Pretty much the only rooms in the house she used were her bedroom, the bathroom and the kitchen.

DS #2 moved out at 20 and moved in with his girlfriend. He did a year of community college and didn't like it or do well. He still doesn't know what he wants to do. He's working full-time.

 

[aprilchem]

Out of curiosity. How much do you all save from each paycheck for retirement? I've seen several of you state that our rate of saving is not enough. We are saving 15%. I was under the impression that this is more than most. We got a late start financially because of our own college costs and student loans. But at 15%, I thought we were on track. Apparently not?

We save about 22%, I think. I save 24% (15%, plus my employer matches with an additional 9%). DH saves 15% from his paycheck. Plus we have an additional ROTH IRA that we contribute to on top of that.

We have a good income, though, and we live pretty far below our means, so we have a lot to save. My goal is for us to have $3 million in retirement at age 67, so that we can live off the interest and never have to touch the principle.

 

[Lilliputian]

Other issues aside, I wouldn't move down in neighborhood unless I were trying to significantly cut costs. There are too many factors that could end up being an issue. It sounds like you're thinking about new construction in a lower value area--that's very high risk. You don't know which way the neighborhood will go. An established neighborhood has some advantages because you can see the direction it's going. Also, a lower value house will be constructed with lower quality materials. You may have to do so many upgrades and repairs that your savings vanish.

 

[mefordis]

For those who say their kids are nearly out of the house so it wouldn't be worth it to upsize the home, I'm just curious, what ages would the kids have to be to make it worth it to upsize?

We are set to expand our current home and the kids are 6 and 11. Would that be an age range in which you think it would be worthwhile?

As for the op, I see 13 as being pretty young still. Lots of years left at home, imo.