Not ER but No job

[livingalmostlarge]

So we've been talking more about the future and ER is not going to happen because my DH won't have it happen. But we are going to take a leap in two years and move without a job no matter what. We are shaking the dirt off our feet and just leave where we are to where we want to be.

One next year my DH gets a month sabbatical so we are going to try and live somewhere for a month and get job interviews. If we get a job offer we move sooner. If not we move summer 2016. Why? Our oldest will be done with kindergarten moving into first grade. I think it's a good time to move kids wise.

Two my DH has acknowledge it's possible he's not going where he needs to be career wise and it's time for a change. 9 years and one promotion isn't exactly climbing the ladder. And while it's well paying job he loves his resume is weak, his words not mine. If he were to get laid off the chances of getting another job in the same field are slim. So we'd be stuck in a city we don't love with potentially more bills than we'd like.

He's decided a career change is probably in order and doing something wit more flexibility location job wise and just getting another job. He's always assumed he'll make less money (not necessarily true) and work more hours (again not necessarily true). My thought is if we move somewhere cheaper we may need less to live on. I've been preaching that since January of this year.

But we were recently approached with a house purchase offer and so we started to look at SFH where we are. Honestly we can't really buy anything we would want for $900k at the top end of our budget. We went to see a house this weekend that was listed for $749k 3bd/3ba 1700 sq ft on 3400 sq ft lot. Bidding war and likely to go for $825k. It just got put on market on Tuesday and had an offer that day, but the owners wanted more so they refused the offer and said they were waiting until 12 noon on Monday after the open houses. Before the open houses they have 3 home inspections and 2 written offers.

Since this is our second weekend of open houses I was willing to concede about not moving out of our city but my DH had a strong dose of what we could really afford. And the truth is we'd have to move a lot further out and a lot longer of a commute than 30 minutes (current commute) to buy a house instead of our townhouse.

The reality is that our family life will suffer to get a home we want in this city either stress from overbuying or commuting 1-2 hours each way. If we lose a job we could easily face losing our home. So my pointing out that a cheaper COLA "early" retirement is the way to might make sense.

I'm no longer saying ER, rather I'm saying we can take jobs paying as little as $60k/year to survive, what our current burn rate is without savings. However that includes $2500/month on PITI, and the cost of living in general where we are is so high that our $2500/month living expenses might be $2k elsewhere or even less.

And the reality that our current townhouse is being offered for $750k, we owe $390k now is a little absurb. That we potentially could buy a home cash with the equity from our house or with a very small manageable mortgage. That would mean what we really need to make to live is half of what we do now.

Yes we wouldn't be saving for retirement or college if we make $60k, but I'm banking that we may not need to save more for retirement that what we have since I project we'll have $600k for retirement in 2 years and while this move would possible nix all possibilities of ER, I think it's worth it. And in theory we could save for retirement if we didn't have a mortgage payment but diverted the $2500/month to savings?

I know ER would be great and possible if we stay put, but at the same time I don't want to live in a townhouse forever. I don't want my DH commuting 1 hour each way every day either. So something has gotta give. A very rich friend who ER at age 44 told me "at your price point in real estate (under $1M) you can't have everything. And perhaps it's not the place for you." I love her by the way and I know she's giving me great advice period.

Would people do this? Is it crazy?

 

[jclarksnakes]

Would people do what?

 

[brewer12345]

WTF?

Move. You are in a place where the real estate precludes ER for all but the most extremely wealthy.

 

[Katsmeow]

It is hard for me to even answer this, because where I live the houses you are talking about would be much cheaper and houses that cost $1 million are rare. Real estate is so local.

I remember talking on a house related site a few years ago about our then house which we had paid a little over $500k for. A person on the site referred to our house as a starter house! But, where we live that was in the top 5% of prices and we had 4500 SF, two double garages, a guest house, a pool and almost 3 acres for that. In their mind, a $500k house was a teeny tiny starter home. So, we came from different places.

Even when our family income was around $300k a year I wouldn't have bought anything close to a million dollars. I guess we could have gotten approved for it (at least our mortgage broker said so) but that kind of price for a house just seemed insane.

So I read what your saying and I want to say move to somewhere cheaper so you don't need to spend $800k on a 1700 SF house on a tiny lot (my mind boggles at the mere thought).

Yet, of course, I know that the big thing that keeps people in those kinds of areas tend to be family and friends. I don't say jobs because jobs are easier to change than are family.

Anyway, I find it hard to answer because I wouldn't buy a house for $800k when we were making $300k a year let alone if we were making $60k.....

 

[daylatedollarshort]

Why don't you sell your townhouse now when prices are likely at the top of a bubble, rent and then both look for a job some place cheaper? I wouldn't have moved at your stage in life unless at least one of us had a job lined up along with a detailed budget for the new location. I am not a jump and the net will appear kind of person.

If you live in the Bay Area, and especially the South Bay, that area is especially vulnerable to boom and bust housing and job cycles. You are wise to hope for the best but prepare for the worst - layoffs and the real estate bubble bursting.

There is also some good information on the Thomas Stanley blog (The Millionaire Next Door) along the lines of what you have touched on in your post, regarding income, home price and wealth building:

Avoiding The Money Pit

"Most of the self-made millionaires I have studied have one thing in common: They were able to build wealth precisely because they never lived in a home or neighborhood environment where their domestic overhead made it difficult for them to build wealth. And building wealth begins and ends at your home address."

"There are nearly three times more millionaire households (1,138,070 versus 403,211) living in homes valued at $300,000 or less than there are millionaires living in homes valued at $1 million or more. The data strongly indicate that this ratio of "wealth-building productivity" is inversely related to the market value of one's own home as well as those of one's neighbors."

 

[2B]

I've had several "opportunities" to work in California. One came during a period of unemployment. The pay was no higher in Ca than Texas but the cost of living was outrageous between the cost of housing and taxes. I decided I was better off unemployed in Tx than working in Ca. Of course, I was FI at the time so being employed was a choice.

You didn't say what you two do for money. Your working background is probably the best indication of how difficult it would be to transplant yourselves. I don't know any companies that grant sabbaticals so it sounds like your DH works for some sort of educational or governmental agency.

 

[daylatedollarshort]

Another option would be to just go with the one hour commute and shoot for ER as soon as you can pull it off. One hour commutes each way are pretty common where I live and the home prices are still pretty high even out in the 'burbs. But if we had taken big salary cuts to live in a smaller town along the way I don't know if we we would have been able to retire 10 years early as well as pay for college. Taking mass transit, using van pools or telecommuting some days might make the commute easier. If just your husband has the long commute and you can work at home or find a job outside the city that might help.

Your kids will get more expensive as they get older, need cell phones, eat more, start driving, need car insurance, etc. so you have to plan for that increase in your budget, too.

 

[livingalmostlarge]

Nope it's a private company not academia or government. We are moving from East to West because we want to be closer to family. A lot of this move is ME. It's the fact I don't like where we live and when we married and moved DH promised to move back. It's been a long time and I want that promise kept. I don't mind giving up ER, but I worry that we are jumping into no job.

But at the same time like Katsmeow said I worry about buying an expensive home and losing a job and being stuck. Dollar we're looking at selling. Didn't even expect to break even. However we hesitate because if we do land a job offer a relocation package is likely.

Like I said we are trying not to live to our income and have always done so. We aren't big spenders period, but the nature of our housing prices has caused us to spend more than we would like.

 

[Derslickmeister]

The long commute is an absolute killer. Take it from me, I've been doing a 84 mile commute for the past twenty years and have hated every mile of it. When the kids are young you miss out on a lot of their activities stuck in traffic. You are so wiped out once you do make it home all you want to do is have dinner and go to bed. You can't be a part of the community because you have to leave the house at 5 am to beat traffic, and when you do finally get back home, see above . Now I know what they mean by "bedroom community". Why did I do it for this long? Once the DD started school I had no choice, friends had been made, routines established, etc... We would always talk about moving at different stages in her school life; from Elementary to Middle, from Middle to High school, on and on, but we never could pull the trigger. So here I am, twenty years later regretting the extra years, that's right, actual years of my life, spent sitting in traffic so we could save money on housing costs, costs that if I took the time to actually compute would probably be dwarfed by the time and money spent on that damn commute. While the actual financials for someone in CA (especially the Bay area) might make sense, the physical and mental toll and loss of community relationships do not. Just MHO...

 

[ivinsfan]

I find your post a little hard to understand, mainly because of the way you keep interchanging the pronouns I and We.

So you are a family with at least 2 children under the age of 5. Your DH's job is to bring home the paycheck and your job is SAHM and running the house, is that correct? Do you have any plans to rejoin the workforce or were you hoping to go from SAHM to ER? This does make a big difference in any ER plans.

If you are really set on leaving the area in 2 years, why are you going to real estate open houses? I don't know of anybody set on ER that would buy and sell a house with a 2 year time frame.

Your budget numbers for the 60K a year job seem very back of the envelope. You need more then a 60K job to actually bring home 60K. Also, even a paid-off house doesn't run for zero dollars a month, so no, your entire 2500 dollar house payment would not be used to pay other bills. The first thing suggested by everyone on this forum is to know your monthly numbers in detail, before doing any spending projections.

Your comments about your DH "not going to let ER happen" and the fact you say you're the one who is pushing the move because he promised you a return to your home area someday, make me think this issue is more then about money and houses, maybe this isn't a good time for your family to pull up stakes, just because you want to.

So I wonder....

Do you want to stay in the current area indefinitely and upgrade your house,
keeping in mind your DH's commute?

Do you want to move, realizing that with lower pay and a growing family you both might end up holding down paying jobs until you hit SS payments?

Do you want to stay where you are in the same home and make a major push together towards real ER, which would let you relocate with no money worries and peace of mind?

Reading your OP and your comments later on this thread, I don't really know what you are trying to accomplish. It's hard to give any kind of an opinion under these conditions.

 

[NW-Bound]

Speaking of housing costs in CA, it was the main factor in my brother leaving a prominent company in Northern CA. In the Phoenix suburb, he could and did get a McMansion of 4,000 sq.ft. for 1/2 the price of what he would pay for a 1,800 sq.ft. home there. Yes, his pay was a bit higher in CA, but not worth the extra expenses.

Recently, they wanted him back and even offered a stock grant (not options) with the value in the mid 6 figures. After thinking about taxes and other factors, he declined.

 

[daylatedollarshort]

Nope it's a private company not academia or government. We are moving from East to West because we want to be closer to family. A lot of this move is ME. It's the fact I don't like where we live and when we married and moved DH promised to move back. It's been a long time and I want that promise kept. I don't mind giving up ER, but I worry that we are jumping into no job.

But at the same time like Katsmeow said I worry about buying an expensive home and losing a job and being stuck. Dollar we're looking at selling. Didn't even expect to break even. However we hesitate because if we do land a job offer a relocation package is likely.

Like I said we are trying not to live to our income and have always done so. We aren't big spenders period, but the nature of our housing prices has caused us to spend more than we would like.

Where you aspire to live should really be a shared vision with your spouse. If you don't have that, where you live isn't your biggest concern. It is hard to tell from your post what your husband wants to do and whether or not you work outside the home or he is the only breadwinner.

Your current house may not be your ideal, but it sounds like it is affordable and your husband has a high paying job he may not be able to replicate anywhere else. Plus if you stay you could retire early and his (and yours?) Social Security benefits would be based on high salaries. There is a big difference between getting higher end SS benefits for one or two, retiring early and then being able to live where you want, or working until 65, getting lower end SS benefits and being confined only to tighter budgets / lower cost of living areas for the rest of your lives. You both have to decide together what works for your family, and it never hurts to spend a lot of time planning and running detailed different job / different location budgets, thinking long term, planning for retirement (early or not) and taking a highly analytical approach to your decision making process.

 

[livingalmostlarge]

Nope I've waited to work outside the home again after kids because he's said for four years we're moving. We are moving near both families not just mine. He loves what he does but he's one layoff from not working in what he does.

daylatedollarshort absolutely I'm completely analytical and running a ton of numbers. Waiting 10 more years here we'd have in retirement savings at least $1.5M and I know we'd be set to retire on our current budget. That isn't even counting our home equity or taxable accounts. And we'd be 44 and 46. BUT I don't want that. I want to move.

My DH is happy where we are location, but isn't satisfied with our living situation. And since we went open house shopping he is not at all satisfied with what we would have to spend to get what we would want in a house. To buy a SFH we would either have to acquire a long commute or not get a house he'd be willing to settle for.

This reality check has made him reconsider relocating to a cheaper place. I personally don't believe he'll make as little as he thinks I think he's undervaluing himself and not fully understanding that living in a LCOLA doesn't mean salaries are proportionately 50% cheaper. Doesn't work that way or whatever it is.

So we could take a large paycut and still be fine. If we didn't save a penny for retirement again I think if we worked until 62 we'd still be okay. But if we moved and paid cash for a house all the extra money would be going to savings.

So there is benefit and cons to everything. Right now the main thing is running numbers to see. And i've start shopping both rentals and homes where I think we'd move too. And I know we could get a house we'd like cash. And if we had a small mortgage (under $300k maximum) we'd have a house that was a dream house.

So my thoughts are planning for two years ahead makes sense.

 

[livingalmostlarge]

Nope I hope to go back to work part-time. I would like to now but it keeps getting pushed back as DH has an interview and we hoped to have moved already.

I was willing to concede and give up the idea of ER or moving. My DH won't ER he said he cannot imagine not working. He needs a job to define him. He doesn't want to retire early even if we stayed put.

Because of this I said we should look at moving into a SFH and leave our townhouse behind. I talked to realtors and got an offer to move and we started to look at houses. My DH and I were still sticker shock at prices we'd have to pay to stay where we are housing wise. So Derslicker gets the commute and we began to discuss looking further out and DH commuting 1 hour minimum.

But that makes my DH unhappy the idea of spending 2 hours in the car or longer on public transit. So we have to spend more on a house because he won't compromise on commuting time. That means homes within a certain location and we'll compromise on the house. He wasn't thrilled with what we could afford. Hence the conversation about moving instead.

Right now we live on $60k budget and that's with half going to a house. If we make a lot less we pay a lot less taxes. I believe if we moved we could live on a $60k job but realistically I don't think he'll be making that little. Nor would I if I went back to work.

I am wondering is it worth giving up ER to move cross country? I believe based on our saving habits and LBYM we will still be able to ER, just not as early if we stayed put.

But if we stayed put we still wouldn't ER because my DH doesn't want to ER. He has trouble picturing life without work. He also has trouble imagining how we would manage without large salaries. We would likely have millions in the bank and he'd still be working. We'd be swamis.

So have people done this? Given up ER for a move? Worked until SS?

According to numbers if we didn't save another penny for retirement and just worked another 20 years until 54 and 56 we'd have $2M using a ROI of 6%. I believe this would more than adequate for an ER. Now staying put and saving for 10 years @ our current rate we'd have $1.5M and more taxable savings too. So we'd be "done" at 44 and 46 but m DH wouldn't give up his job in 10 years maybe on 20.

So should we do it?

 

[NW-Bound]

About the high housing cost in CA, I feel compelled to add this post before someone points out that there must be some reasons why the demand for housing, hence the cost, is higher there.

Yes, CA does have attractive qualities, else it would not be so crowded. I have told this story about a cousin of mine before. They sold their relatively modest home in the LA area at around the housing bubble peak, moved to Texas and got a big brand new home with cash and still had money to buy all new furniture.

Well, they lasted perhaps a year before the wife complained of "boredom", and they sold everything to move back to LA. Lucky for them, the housing bubble burst and they were able to buy another home without serious loss of equity.

So, some people like myself do not like the crowding of big cities there, but cannot afford to live in more upscale towns, while there are plenty of people who like the busy city life. To each his own, I guess.

 

[daylatedollarshort]

Nope I hope to go back to work part-time. I would like to now but it keeps getting pushed back as DH has an interview and we hoped to have moved already.

I was willing to concede and give up the idea of ER or moving. My DH won't ER he said he cannot imagine not working. He needs a job to define him. He doesn't want to retire early even if we stayed put.

Because of this I said we should look at moving into a SFH and leave our townhouse behind. I talked to realtors and got an offer to move and we started to look at houses. My DH and I were still sticker shock at prices we'd have to pay to stay where we are housing wise. So Derslicker gets the commute and we began to discuss looking further out and DH commuting 1 hour minimum.

But that makes my DH unhappy the idea of spending 2 hours in the car or longer on public transit. So we have to spend more on a house because he won't compromise on commuting time. That means homes within a certain location and we'll compromise on the house. He wasn't thrilled with what we could afford. Hence the conversation about moving instead.

Right now we live on $60k budget and that's with half going to a house. If we make a lot less we pay a lot less taxes. I believe if we moved we could live on a $60k job but realistically I don't think he'll be making that little. Nor would I if I went back to work.

I am wondering is it worth giving up ER to move cross country? I believe based on our saving habits and LBYM we will still be able to ER, just not as early if we stayed put.

But if we stayed put we still wouldn't ER because my DH doesn't want to ER. He has trouble picturing life without work. He also has trouble imagining how we would manage without large salaries. We would likely have millions in the bank and he'd still be working. We'd be swamis.

So have people done this? Given up ER for a move? Worked until SS?

According to numbers if we didn't save another penny for retirement and just worked another 20 years until 54 and 56 we'd have $2M using a ROI of 6%. I believe this would more than adequate for an ER. Now staying put and saving for 10 years @ our current rate we'd have $1.5M and more taxable savings too. So we'd be "done" at 44 and 46 but m DH wouldn't give up his job in 10 years maybe on 20.

So should we do it?

I don't think there is a correct answer. It really depends on what is important to you and your husband. Moving to a city where you have family and there is a better pay to housing cost ratio is a valid option. Also, if you have been living on one income but move to a cheaper location where you could lose the mortgage and you are on board with working, that is a second income you could put in the bank. You might even be better off. I would look at how can you move and become financially independent as well?

Could you go back to school and do nursing or something high demand? Get a government job with a pension? You have a lot of options. I just would just try to move toward greater financial security, and not buy a more expensive house on one income with potential layoffs in the future.

There are some books you might find helpful - Living on Less Than You Think, Retire on Less Than You Think and Retiring on a Budget that all have material on the advantages of living in locations with lower cost of living or better salary to housing ratios. Forbes also has this article in a similar vein -

http://www.forbes.com/sites/joelkot...ties-where-a-paycheck-stretches-the-farthest/

 

[ivinsfan]

My take after your last two posts, is that you and your husband need to do a lot more talking in regards to money and lifestyles issues. I did manage to figure out that you are 34 and 36. I suggest you do nothing drastic for awhile and try to rank both of your want and desires.
If you can't come to an agreement, try to keep the option that gives you the most flexibility, which is keeping his current job and staying in your current house. Maybe a great job for your DH will come up in the area you wish to relocate to and the decision will be easy.Simply guessing as to salary and employment possibilities in your new area isn't very productive.The difference between paying cash for a new house in the relocation city and buying one that requires another 300K mortgage is a huge factor. I don't think you have many details ironed out between the two of you. And as they say, the devil is in the details. As for ER, you can't make anyone quit work and retire any more then you can make them work when they don't want to.

Talk, talk and then talk some more. Talk is cheap and doesn't have unintended money consequences...

 

[haha]

About the high housing cost in CA, I feel compelled to add this post before someone points out that there must be some reasons why the demand for housing, hence the cost, is higher there.

Yes, CA does have attractive qualities, else it would not be so crowded. I have told this story about a cousin of mine before. They sold their relatively modest home in the LA area at around the housing bubble peak, moved to Texas and got a big brand new home with cash and still had money to buy all new furniture.

Well, they lasted perhaps a year before the wife complained of "boredom", and they sold everything to move back to LA. Lucky for them, the housing bubble burst and they were able to buy another home without serious loss of equity.

So, some people like myself do not like the crowding of big cities there, but cannot afford to live in more upscale towns, while there are plenty of people who like the busy city life. To each his own, I guess.

It seems that a large majority of members here want "quiet life", usually in a suburb or exurb or even way on top of a mountain.

That may have something to do with the ER personality, because most people most places flock to the cities, and in cities that are still viable economically and with respect to social problems the in-city attractive locations are often considerably more expensive. London is maybe the primary example of that, but Manhattan, San Francisco and far-west LA are similar if lesser examples.

Ha

 

[livingalmostlarge]

NW bound and haha I prefer suburb living and privacy and space. So does my DH. When we bought we were in our 20s and chose to not buy in the city. We wanted more quiet. I grew up more rural and he very suburbs.

Daylatedollar I read you gave up your DH mega Corp job and that's sort of how I feel for my DH. Can he have a fulfilling life without what he does? I don't know I was willing to concede and stay put. But then the compromise was he'd have to commute at least an hour for us to get a house we could afford. He wasn't thrilled with that.

I guess I should add that we've amassed comfortable about towards fi and are easily on track to be done early. I do not need more schooling neither does DH. Seriously we both have PhD he has an Mba.

Ivins fan until about a week ago I had resigned myself to compromising. My DH refused to switch careers. He wasn't interested in fire. We live like people on fire but he wasn't about to do it. The devil is in the details for sure. I feel like this is the beginning of a slow play.

Right now we are at $500k retirement, $200k cash, $300k or more home equity, and debts at $2k car and $4k car low interest rate so we borrowed. Our burn rate is $60k including mortgage and $30 without. That's with hcola and stuff like $600 month heat and $200 month electric and $6 gallon milk. Just moving somewhere lower I suspect but not sure we could lower our budget by moving to a newer model energy efficient home. Or cheaper utilities and lower taxes.

So using 33x or 25x rule for amount we need to retire is $750k to $990k portfolio. Now that's without a mortgage so cashing our equity and buying a home cash for say $300k might work. We are certainly closing in fast since live on 30% what we make.

But since my DH wants to work that's a bare bones budget. I think if we both work part time we could make $30k total and have employer health care. But he doesn't want to be that worried about money and two more years of savings and planning puts us in a good position.

But moving without salary or job might mean we are giving up early retirement? Have people done that? Give up early retirement to move?

Should we? And yes a $300k mortgage only doable with a job. And something I would do if we were planning on working.

I really appreciate the link to where the paycheck stretches.

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[daylatedollarshort]

Daylatedollar I read you gave up your DH mega Corp job and that's sort of how I feel for my DH. Can he have a fulfilling life without what he does? I don't know I was willing to concede and stay put. But then the compromise was he'd have to commute at least an hour for us to get a house we could afford. He wasn't thrilled with that.

My DH was all too happy to leave full time work behind. He has all sorts of hobbies and clubs he belongs to. But not everyone is like that. Many people enjoy their work and would miss the social interactions and sense of purpose from a job.

Two people working part time each is certainly a valid lifestyle choice for many couples, especially now that health insurance does not depend on having a 40 hour a week job. But none of us here know what either one of you does for a living or where you want to live eventually to give you any specific career or location advice.

We were able to retire early by lowering our expenses with the ultimate goal of living off a fraction of our former peak incomes, too. It certainly is possible if you are frugal and LBYM. Many posters here do it though it is not that common in the general population.

Check out resources like the Consumer Expenditure Survey by region and compare your budget to the survey. That is what we did and we found a lot of opportunities to cut back, though we were initially spending much more than you are so we had more opportunities for improvement -

http://www.bls.gov/cex/csxstnd.htm

 

[livingalmostlarge]

I used to define early retirement as 45 and normal retirement at 55. Our parents did it with pensions and paid off homes and living frugally for life even now. I always imagined that we'd have to slog until at least 45 to be really secure then everything else is gravy. And we'd consider retiring at 55 because I knew we could afford it.
But reading my question about what is considered early and 55 is early I can see that. I think even if we move we could retire by 55 comfortably.

There are so any variables right now I can't control. I can only guess that we won't spend more than we are. And that we as not have a mortgage and we will only be making a fraction of what we do now.

If we move looking at savings calculators and fire I think conservatively 50 is possible.

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