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Should I stay or move?
Old 04-03-2016, 04:41 PM   #1
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Should I stay or move?

Hello, I'm a middle-aged single person on fixed income living in a condo in U.S. that is worth about 180K. HOA (assoc) fees are about $500 a month.

Property taxes + HOA fees are eating me alive.

However, have substantial savings ($480,000 +) due to an inheritance. Am on a fixed income (disability).

I calculated that my income is about $551 a month lower than my expenses. This equals to a loss of about $6624 a year.

If I stay here, I'll have lost almost $100K by the time I reach age 62. (thinking of age 62 as magic age to be eligible for a reverse mortgage) So by age 62, I'll have <$400K left. By age 80, will have a little over $250K left in savings

I know this is ridiculous to be calculating to the last dollar, because there is no way of knowing how much further my health will decline.

I know my choice is to stay or to move. The only thing tying me to this state is my wonderful Dr and others on my health team. The property taxes/cost of living are high in the city I'm living in. But it is too scary to move, thin social supports outside of health care team.

Just wondering if you are in my shoes, what would you do?

I know this forum deals mainly with finances but interested in feedback on moving, stress of such and balancing different factors when making such a big decision.

What is the difficulty right now is not being able to deal w/ moving stress / unfamiliarity alone; at the same time I know I'm being drained.

Would reverse mortgage help me @ age 62 if in worse financial position than if I stay put?

Thx for any feedback

PS. Where I am living is not very healthy but can't find a healthier place in my budget (long story)

Edit: The HOA prohibits renters for less than 1 year lease. I have most of savings in stock mutual funds currently
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Old 04-03-2016, 05:29 PM   #2
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What do the 500 a month in fees cover? Is it pie-in-the-sky like pools and such, or does it include things like water bills, cable TV insurance and such.

You should see if your state has a program for discounts or tax deferrals for disabled persons. The question of moving has a lot of different components to it and I can't really give an opinion with your limited information.
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Old 04-03-2016, 06:03 PM   #3
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Like ivinsfan said, it's hard to know what to suggest because there are so many factors involved.

Could you sell the condo and move someplace nearby, that would cost less? If you didn't have the $500 in HOA fees and everything else was the same (not likely), your income and spending would almost be equal and you could keep the same doctor. I am envisioning you in a 1950's 1100 square foot single family home that cost $150K, if such are available at that price in your town and if the property taxes on it would be reasonable. You would have to hire someone to mow. Another option might be to rent an apartment if rents are low enough, although you might be really stuck if/when rents went up. Basically it would probably help your financial worries a lot if you could get your cost of living down a bit further.

As for the non-financial side, moving is a lot of hard work unless you can get help to do it. Since your social supports are thin, you would probably have to hire someone to pack and unpack everything and move you. Moving is very psychologically stressful for some of us although others are cool as a cucumber when moving. It would probably really help if you had established a stronger social network, but that is easier said than done.
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Old 04-03-2016, 06:15 PM   #4
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No matter where you go, there will be expenses. Why not get a roommate?
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Old 04-03-2016, 07:29 PM   #5
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I was in a similar situation once where I was spending more than my income. I moved to a lower cost state and incidentally made more money with the new job when I moved. I would have moved even if I didn't make more money. I just couldn't see continuing to spend more than my income.
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Old 04-03-2016, 07:50 PM   #6
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Since you mention your disability and health concerns, how about starting your research on other locations in lower cost of living areas that have good reputations for quality and / or cost of care? I'm sure you could talk to the professionals on you medical provider team to get some suggestions. You might also consider other variables like climate, access to good public transportation and other things that would be able to make a positive impact on your quality of life. You already see the need for a change, take the time to research your needs and options so you can make this decision from a position of strength.

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Old 04-03-2016, 08:23 PM   #7
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Well how are you investing your inheritance?


If you invest it in an appropriate mix of stocks and bonds index funds and withdraw 2% each year you would have at least an extra $9600 per year to add to your income and will cover your shortfall. The inheritance should continue to grow and should not be depleted (through growth in your stocks and any reinvested dividends/interest you do not use) though you will experience volatility (just leave it alone even if your balance drops).


You will only deplete you inheritance if you leave it in a bank account earning nothing.
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Old 04-03-2016, 08:33 PM   #8
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If you like living in your condo and if it meets your needs, I would stay put.

You cannot take the $480,000 with you when you die. So do not be depressed/resentful/upset that you are spending/depleting the inheritance if it is enabling you to stay in the condo. Be thankful that you have the inheritance to improve your standard of living. So spend it.

Be glad that you will still have $250,000 left by the time you are 80. For many people, that is a significant amount of money. An amount that for many would be a source of peace

Personally, I would spend down the inheritance to about $100,000 before falling back on a reverse mortgage. I see the reverse mortgage as a last resort or safety net -- something to be used later in life -- not at 62. Retaining the equity in your home/condo as long as possible would give you more options later in life when your health/living situation might need to change.

Good luck.
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Old 04-03-2016, 10:04 PM   #9
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Another thing to consider is the financial condition of the HOA. Do they have enough reserves? I got rid of a condo a few years ago due to their mismanagement. The association/board wanted to keep fees low, but every time something came up, they hit us with special assessments. Not long after I sold, they assessed the owners over $4K each for new roofs. If it is tight for you now, you can be certain it can get worse.
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Old 04-03-2016, 10:44 PM   #10
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Get reverse mortgages out of your head. They might have been good for some folks when interest rates were about 4 or 5 percent or more, but at almost zero, you'd now be getting screwed on a reverse mortgage deal. I don't see that changing anytime soon.


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Old 04-03-2016, 10:45 PM   #11
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Also take a look at the fees you are being charged for your investments.
2% fees charged by those big name investment companies are a lot higher than Vanguard funds (typically around 0.20%)
And on nearly 500K investments, that works out to $10,000 / yr in fees and is more than the condo expense you worry about.
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Old 04-03-2016, 11:01 PM   #12
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There are many good suggestion listed above.

Other than moving, do you have any other ways you could cut your budget?

Or can you make some extra money from home without jeopardizing your current disability income? I do lots of little odds and ends stuff like credit card sign ups and get paid to apps, and the extra income combined really adds up. There are many good ideas for extra income you can make from home and without a job on forums like Reddit (like the beer money thread) and Fatwallet finance.

Also have you exhausted all options for government aid - housing help, food, and utility assistance?
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Old 04-03-2016, 11:03 PM   #13
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You don't say where you are, but if your city real estate structure will support it, why not sell the condo and move to an apartment? All this of course depends on real estate trends and balances.

In my city it is usually easy for an older person to secure subsidized housing. Sometimes these projects even have so-called market rate apartments that are really priced way under market, but you do not have to qualify financially. Also, for many outright subsidized places you might well qualify. The age cutoffs vary.

I think that you should definitely hang on to your medical team and whatever other support structures you have. I think moving cities would likely be very negative, though clearly some others have put forth a different idea.

I saw what happened to many older or sick people when urban renewal came to Boston's North End. Not good for anyone with stressed health.

Ha
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Old 04-04-2016, 06:12 AM   #14
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To the OP - maybe you should take more risk to earn more $$$ on the inheritance?
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Old 04-04-2016, 04:30 PM   #15
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Thanks for the feedback everyone! The HOA fees only cover water and snow removal, common area upkeep, roof repair, etc. There is no clubhouse or other amenities though don't really need any. There is also an upcoming assessment, plus possible increase in HOA, which would tack on about $71 more a month if I average the assessment into the rest of the costs - so, $571 total/mo plus about $280/mo in property taxes.

I'm investing as much as I can in Vanguard stock/bond funds and ETFs and leaving about $20K for emergencies and other expenses. So with this factored in, I'm still losing about $551/mo.

As far as housing help, I'm not sure if I would be able to get any, since my assets are high. I am leaning against moving out of state at the moment because fairly sure I would not be able to handle the stress. However, just curious, is there any catch with states that have extremely low property taxes, e.g. West Virginia, Alabama, etc? I can't believe the difference in rates and would think a lot of people would jump at the chance of living somewhere with very low taxes thus low monthly expenses.
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Old 04-04-2016, 04:34 PM   #16
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Quote:
Originally Posted by jqrz View Post
Thanks for the feedback everyone! The HOA fees only cover water and snow removal, common area upkeep, roof repair, etc. There is no clubhouse or other amenities though don't really need any. There is also an upcoming assessment, plus possible increase in HOA, which would tack on about $71 more a month if I average the assessment into the rest of the costs - so, $571 total/mo plus about $280/mo in property taxes.

I'm investing as much as I can in Vanguard stock/bond funds and ETFs and leaving about $20K for emergencies and other expenses. So with this factored in, I'm still losing about $551/mo.

As far as housing help, I'm not sure if I would be able to get any, since my assets are high. I am leaning against moving out of state at the moment because fairly sure I would not be able to handle the stress. However, just curious, is there any catch with states that have extremely low property taxes, e.g. West Virginia, Alabama, etc? I can't believe the difference in rates and would think a lot of people would jump at the chance of living somewhere with very low taxes thus low monthly expenses.
You wouldn't consider renting an apartment where you are? If not, I wonder why? It seemed important to you that you kept your health/medical/social network intact?
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Old 04-04-2016, 04:47 PM   #17
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Quote:
Originally Posted by jqrz View Post
Thanks for the feedback everyone! The HOA fees only cover water and snow removal, common area upkeep, roof repair, etc. There is no clubhouse or other amenities though don't really need any. There is also an upcoming assessment, plus possible increase in HOA, which would tack on about $71 more a month if I average the assessment into the rest of the costs - so, $571 total/mo plus about $280/mo in property taxes.

I'm investing as much as I can in Vanguard stock/bond funds and ETFs and leaving about $20K for emergencies and other expenses. So with this factored in, I'm still losing about $551/mo.

As far as housing help, I'm not sure if I would be able to get any, since my assets are high. I am leaning against moving out of state at the moment because fairly sure I would not be able to handle the stress. However, just curious, is there any catch with states that have extremely low property taxes, e.g. West Virginia, Alabama, etc? I can't believe the difference in rates and would think a lot of people would jump at the chance of living somewhere with very low taxes thus low monthly expenses.
Wow! You're right, that's a high fee for little return, and high taxes too. I agree with others, regarding renting vs. owning in your case. Unless there are no reasonably priced places available I would go with that.

As far as the catch with places with low property taxes, it's that they tend to have very little in the way of services, social or physical. If you want a safety net, it has to be paid for somehow, and taxes tend to be it. So moving somewhere with low taxes would possibly work, but you should check on what services you use and see how they rank there. Also they tend to be places with lower job opportunities, but that wouldn't matter so much if you're retired. You probably wouldn't need to worry about the school system and other services like that either. But I suspect you'd have a much harder time matching your medical support in WV or AL too, unless you got very lucky.
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Old 04-04-2016, 05:03 PM   #18
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I'm not clear if you are carrying a mortgage on your condo...if you are... do you have equity.. moving in itself is an expensive proposition including real estate fee coming and going.

Check your state for deferred property taxes for disabled homeowners. sometimes they will lower them or roll them over as liens on your property.Are condos in your development selling as it seems the HOA fees are rather high. The special assessments mean the big items like roofs aren't properly funded out of the HOA fees.
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Old 04-04-2016, 05:18 PM   #19
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However, just curious, is there any catch with states that have extremely low property taxes, e.g. West Virginia, Alabama, etc? I can't believe the difference in rates and would think a lot of people would jump at the chance of living somewhere with very low taxes thus low monthly expenses.
There are so many other factors involved in cost of living, that just looking at one (like property tax) usually isn't very helpful. You can search online for information on cost of living, at many of the commonly used websites for doing that like Sperling's BestPlaces or City-Data.com
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Old 04-04-2016, 05:56 PM   #20
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As far as aversion to renting, it's a long story. Had spinal fusion surgery and now have metal in body that reacts to strong electromagnetic fields. This has caused me to be extremely sensitive to EMF fields, pain radiates through body when exposed to high levels. Thus, I have to avoid many sources of EMF, like wifi, cordless DECT stations, cell towers, high voltage transmission lines, etc. It seems the rods and screws in my body are serving as antennae which makes problem unique in that I need a larger square footage of home to stay away from anything that exacerbates the pain (have a meter that tests this).

Anyway, this makes the situation incredibly complicated. Due to limited budget, I have to find a home that is fairly large and not too close to neighbors (as in connecting walls)--they have wireless which emits and the metal in body reacts to this for some reason. I have an ethernet connection which lowers the levels in my own home. In the city I live in, condos are the only homes that I can seem to afford unless very lucky. To get larger sq footage, i'd have to rent a house, but that seems out of reach in my high-cost area. Which leaves my choices very narrow I have to admit... Thankfully, condo is paid off ...
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