Thursday, June 25, 2015

Our new 5 year Plan...

Call us crazy, but were halting our retirement contributions for the next 5 years...

We know we can't live forever in a one bedroom condo with our son and pretending we can is just silly, especially with home prices in our area.

So we sat down, ran the numbers and looked at the current housing market... Given our current income and the area we live in, the only way we would be able to move into a larger place is if we significantly pay down our mortgage and have a HUGE down payment to ensure a smaller loan on a new property.

After all, 2 bedroom places are $300,000 and up for a condo barely larger than our current one.



Why 5 years?

  • In 5 years our little one will start school and we should be able to eliminate daycare and use that money for a larger mortgage payment on a larger property. Since our current mortgage is tiny (my original loan was for only 120k), we will need that daycare money since we couldn't even sell our place now and buy it again with a mortgage. 
Even with daycare eliminated, no matter how I do the math we come up short $30k-$50k

But if we take the money we would be putting toward Roth IRA's and instead send it to our our mortgage, we should be able to wipe out an additional $30,000.00 in 5 years... more with overtime, profit share checks etc... and if this happens, so we can hopefully sell our home and walk away with $150,000+ to use as a down payment on a new home which will leave us with a new mortgage of $150k-$200k which we could then afford with our income and no daycare payments.

If I get a promotion in 5 years, even better... but for now its looks like i'll be hanging our with Dave Ramsey and doing the debt elimination plan.
 


7 comments:

  1. Just curious but do you plan on having more kids and If so they do they fit into this plan somewhere?

    ReplyDelete
    Replies
    1. Right now we are thinking we are "one and done."

      My husband had a hard time with our newborn initially and he had to fight back some thoughts about hurting him...

      If we have anymore children naturally, there's going to be a very healthy gap in their ages and we would need to ask family to help out more and have ,my husband take more paternity time.... The reality is we can't afford daycare for 2 kids at the same time so unless I get a promotion, were probably 1 and done.

      Delete
  2. Would you guys ever consider moving here Texas, where houses are way cheaper, salaries are higher, and the cost of living is lower, so low that you could probably buy plane tickets more often to visit family? My first house, which was very close to town, with a garage apartment, bought only a couple of years before your condo, was $126K.

    ReplyDelete
    Replies
    1. We will plan to move when we retire to a cheaper area to live, but the problem is my job and pension.

      I've never paid into social security because i've been working with the City for over 13 years now... Which means at 55 years old, they just keep issuing me my paycheck and i stop showing up for work... Right now since i'm the main bread winner, its hard to walk away from a job like that since I don't have a degree in my field (I worked my way up to my position), so it would be hard to find something similar in another state for me...

      If I were to loose my job we would put the house on the market, move to Utah and live with family until we found jobs and took the money from this place and bought something there.

      Delete
    2. We probably wouldn't even have a mortgage if we moved to utah... or if we did it would be super cheap.

      Delete
  3. You should consider keeping your condo as a rental. Save the $30K as a down to a new place rather than paying down your current mortgage. With rent prices continually increasing, you'll be in a positive cash flow position and can use the excess towards the mortgage on your new primary residence. With a payoff date in 2033, you're 17 years away from having a very nice cash generating retirement asset.

    ReplyDelete
    Replies
    1. We'd love to, but we can't afford a $300,000 mortgage... even with rental income from our current unit.

      To just cover the monthly mortgage and HOA, we need $1,118 and I think we could rent this place for $1200 - $1250 a month so it wouldn't give us any real money beyond to help pay down a larger mortgage.... plus we'd need $60,000 for a down payment to have 20% because we can't afford PMI payments.

      Delete