Feeling Paralyzed with Financial Decisions
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Anonymous
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I know this board is ultraconservative, but I need some financial feedback. DH and I currently have an HHI of $400 a year. We have a high mortgage for which we have a $4500/month PITI. We live close in to DC, where we both work and the commute is good. We have two kids who will start school in two years. We are doing fine on this income and contribute fully to retirement, 529s, etc., and spend a lot on extras (cleaning service, lawn service, etc.). We have two kids and childcare is $1600/month.
But I just can't do this anymore. I'm the primary earner and literally every day I feel like I'm going to have a heart attack I'm so stressed out at work. An opportunity has come up for me to take a government position, but I would earn no more than $160k, which would cut our HHI to $240k - almost in half. I tell DH every day that I can't do this job anymore, and he just shrugs and says that I should go ahead and quit and take the lower paying job and that we would be fine and would just "cut back" spending, or else move. When I run the numbers I don't know how we could pay that mortgage. But when I look at real estate and interest rates, there is nothing that seems workable with a reasonable commute and good public schools where we could spend less. We would be going to a 3.5% mortgage to a 4.6% mortgage, and would have far less buying power, and would probably have to live over an hour away, and then would lose our current low-cost childcare (nearby family members). Has anyone ever been in a similar situation and have any words of advice? |
Anonymous
| Life is trade off. You want to have it all and you can't. Either continue to take the beating, or cut back and move. End of the day, it's that simple. |
Anonymous
| Yolo |
Anonymous
| I had a similar situation when my kids were 3 and 5. I had an opportunity to go in house and go from 325k to 150k. I wanted to do it SO bad but also had a montage that was too high (3800) and similar living expenses. DH is a professor and makes 110k BUT does all the drop offs, pick ups, days off, and gets reduced summer hours and a sabatical every 7 years. In other words he wasn't moving. So I turned down that job but we made a 3 year plan. We lived SUPER lean, sent kids to our OK public and put everything we could on our mortgage. While we weren't able to pay it off we were able to pay it was down (to about 285k) and refinance and have a payment of 1650.00. Then I took a similar in house position (making a bit more, 182k) and we all lived happily ever after. My advice is to pick a date in the future and work towards it. We not only attacked our montage but paid off the last of our loans, our car note, and really let go of dry cleaning, lawn car, cleaning people, pea pod, etc etc. We felt way more flush when I actually switched to my low paying job and "the trial period" was over! |
Anonymous
| How much equity do you have in your current home? Can you manage the mortgage for a couple of years by reducing retirement/529 contributions? Then your childcare needs would be less and you can look at moving again. Where are your jobs? You should be able to live closer than an hour out on $250k hhi. |
Anonymous
| You can’t sustain that mortgage on that hhi. So look to move first. And it would be better to have a lower piti anyway. Is he opportunity really onenin a lifetime? If one came there will be another. How about you work for one more year. Sock away every extra penny and cut down your lifestyle now and pay off as much equity as you can or save for a new down payment. |
Anonymous
Mortgage not montage LOL...strange phone correct |
Anonymous
| One's health is priceless. You have support from your spouse. Ease back. You will find some savings in lower taxes and being a bit more available. Usually a year to three years in government in your field makes you more marketable - so there's that too. Good luck. Take care of yourself! |
Anonymous
+1 And consider moving. On $240K HHI, there is no reason to live an hour away. OP, what are your parameters for where you need to live vis-a-vis family and childcare? If you cannot move, can you have a basement area in which you can do e.g. Airbnb? |
Anonymous
Wow that is awesome PP!! Did you use any kind of budgeting tool to help you such as YNAP or Quicken? I am a different poster but this is motivating me also! |
Anonymous
| I get you feel like you are stuck at work, but are you actively looking for another job? You shouldn't frame this as either you stay at your 280k job or you take the 160 job, no other options. Can't you look for any other number of opportunities or jobs where the salary would be more in line with what you currently make? |
Anonymous
| If you take the job, your new mortgage-to-income ratio would be 22.5% -- that is not excessive. You would not need to move. That would just be trading the job stress for commute/childcare stress. |
Anonymous
| LOL @ "paralyzed"... Drama much OP? |
Anonymous
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OP, you can take the lower paying job and keep your mortgage. You will need to cut back on some spending and maybe some saving, especially in the short term, but it will be fine. It is really important not to kill yourself with work. Would the new job lower your expenses in any way (health care premiums, transportation benefit, other benefits, etc.)? Can you negotiate extra vacation to save money on summer camp when your kids are school aged? Or flex your schedule to start early and skip aftercare?
For reference, our HHI is $275k. We do not spend lavishly, but aren't super frugal either. While our mortgage is lower than yours ($3200), we also put $2500/month in 529s. This is important, but discretionary, and we'd cut it if needed. We spend $1000 per month on aftercare/camp. Could lower that by shifting our schedule if we absolutely needed to. We also have $1500-$2000 that we don't spend/month that ends up in discretionary investing, home projects, etc. Look carefully at your spending, there may be a lot you can cut. |
Anonymous
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There is no question that you need to change jobs ASAP. Your health is your most valuable asset and source of happiness, OP. The rest will fall into place. And it's great you have your partner's support! |