This post is written a few months ago, prior to the transactions of selling 1st home and buying 2nd home have taken places. Actual figures approximate estimates below & will be updated once all finalized.
Say what? DWM purchased 2 homes and sold one in 2 years? My highly esteemed mentor WCI would have shaken his head at my decision if I had asked him, which is why I didn’t this time*.
Financially, buying a home as MS4, then selling it & immediately buying a 2nd home as PGY2 are
the most financially costly and unwise moves one could take bedsides
attending medical school on 7% student loans.
Yet mentally, emotionally, & spiritually, this is the single best decision I have ever made for Mini & myself since her inception.
Perhaps Dr. Wise Money is not as Money Wise as you thought.
I hope though, for this and other major forks in the path of life, to be Life Wise.
After all, money is a means; life is an end.
- Closing costs of 1st home (BBVA doctor’s loans), May 2014: $5,733.74
- Refinancing costs of 1st home (Conventional loans), January 2015: $495
- Costs of living in 1st home, May 2014-May 2016: $25,697
- Mortgage payments: $1,088.69 for 9 months, $975 for 15 months. HOA’s: $480/ Property taxes: $3,700/ Home insurance: $720/ Rural metro: $74
- Grand total, living in 1st home for 2 years: $31,925, $1,330/mo. (Zillow zealously says my 1st home rents for $1,500/mo.)
- Closing costs of 1st home sales, May 2016: nominal**
- Closing costs of 2nd home purchase, June 2016: estimated $6,000
- Costs of living separately, June 2016 and on:
- Child care: estimated $300/mo
- Utilities & household expenditures that used to be shared to various degrees: estimated $200/mo more
- Higher mortgage due to higher LTV & more expensive home. (2nd home will be our home for at least the next 4 years. If I stay in town for my attending job, which I plan to, it will be our home forever as we don’t need to upgrade above it.)
So I basically rented my 1st home for $1,330/mo the last 2 years, then now starting over in regards to home equity and living with Mini on our own as a single parent. The financial damage is not as bad as I thought, though if it were just Mini and me 2 years ago, we would have happily lived in a $500/mo condo to save money ($830/mo à $19,920/mo) for a down payment to buy our dream home today. That is a nice chunk of down payment which I don’t have today.
The past is in the past. Let it go.
In order to come up with the closing costs & 5% down payment, I’m borrowing short term from family members and my Roth IRA. That will get me from my current debt free status to $10,747 on credit card debt (as I plan to pay my family back immediately with Chase Slate Balance Transfer check after closing on my 2nd home). I will also be down in my Roth space by $10,300, irrecoverable Roth space.
While I certainly have no qualms about carrying 10k 0% credit card debt (I used to carry 100k during medical school), I am indeed sad about losing 10k in Roth IRA space.
I can’t put price tag on the collective & individual happiness of Mini & me.
You won’t either, right?
- Mini always wanted a pool. 2nd home has a pool; 1st doesn’t.
- Both Mini & I love visiting family & friends. 2nd home allows for a permanent guest room.
- We both love meeting new people. 2nd home allows for an Airbnb room.
- We get to sing & dance throughout the house whenever we’d like.
- Mini gets to have lots of playdates and sleepovers.
- No one will say his peace & quite is disturbed by excited & giggling girls.
- I get to throw parties like I used to a decade ago! Potlucks, pool parties, movie/board game nights.
- No one will interrogate me about why I didn’t put things back in the refrigerator as they were found.
- No one will tell me to put up with his mess & wait for him to get organized for a decade (granted the 8 moves in 10 years are not conducive to staying organized.)
- I get to do chores when I want & the way I want. I won’t be told that my efforts were subpar & the chores I completed need redoing.
- I get to live a minimalist existence. Materially, I need nothing beyond some clothes, my 4 year old laptop, my iPhone & a few essential pieces of furniture.
- There will be space, not filled with stuff in my home.
- I no longer have to bear the unbearable hoarding & dumpster diving.
- Mini’s dad gets his peace & quiet. He has sacrificed a lot trying to be supportive to Mini & me. He now gets to have 1,730 square foot to himself & the serenity of our neighborhood (no sounds other than birds chirping and javelinas grunting) as he has always wished for.
What more need I say?
*I have run my major financial decisions by WCI since I met him (@ whitecoatinvestor.com) since I was a finance-naïve MS3. Not consulting WCI on something that costs more than $100 is atypical of DWM. **Mini’s nana is buying my 1st home, we are not using a realtor. I proposed to walk away with zero equity as Mini’s paternal side of family has been extremely generous with helping with the down payment and refinancing of the home.