Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

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Topic Author
Electrified
Posts: 55
Joined: Thu Oct 28, 2021 10:37 am

Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

Scroll down for a two-year update!

Original Post

I am considering moving my family from an HCOL area to a VHCOL area, taking out a mortgage in the process, and am seeking the collective wisdom and advice of this forum about whether such a move is a good idea.

Background Info and Current Expenses:
  • Partner and I are in our upper thirties with stable jobs.
  • We have three kids, all under the age of five, and do not plan to have any more. All kids are currently in private school/day care, at a total cost of about $85k/year.
  • We now live in a smaller place in a HCOL area but want to move to a larger place in a VHCOL area. We believe the move will substantially increase our family’s quality of life.
  • HHI is currently about $375k/year gross, but will likely soon drop to about $325k–$350k/year gross in order to obtain better work-life balance.
  • We max out three tax-advantaged retirement accounts every year and also receive from one employer an additional annual retirement account contribution of about $20k–$25k, so are currently putting approximately $80k/year into those accounts. (I did not include that $20k–$25k employer contribution in our HHI.) We will continue to max out the contributions even if our HHI drops.
  • We contribute $1k per kid per month into 529s, for a total contribution of $3k/month.
Assets:
  • We do not have a mortgage and could probably sell our current place for about $1.36M.
  • Collectively, tax-advantaged retirement accounts currently total about $1.1M.
  • 529 balances total about $165k. We plan to use the 529 funds for college and graduate education starting in about thirteen years.
  • Other cash: about $50k.
Liabilities:
  • $70k remaining on an auto loan at 1.99% to be paid over the next 4.5 years (~$1,350/month).
  • All credit card balances paid off fully every month.
  • No other debt.
Impacts of Move on Financial Picture:
  • A slightly larger house in the VHCOL area we are considering will likely be about $2M. Although generally averse to debt, we feel that taking out a mortgage could be worth it in order to obtain the better quality of life offered by the VHCOL area.
  • Property taxes and home maintenance in the VHCOL area would be more or less the same as what we currently pay.
  • We plan to put our kids in public school upon moving to the VHCOL area, which over time would free up the $85k/year that we currently spend on private school/day care. These funds would be reallocated to the monthly mortgage payment. The oldest child would start public school immediately upon moving the VHCOL; the remaining two would join in the next two to four years.
Questions:

1. Assuming a $2M house in the VHCOL area, do you think we can afford this move?

2. If yes, how much would you finance?

3. Along the same lines as question 2, would you divert any of the proceeds from selling the current place to paying off the auto loan and/or augmenting current cash holdings?

4. Would you make this move if you were in my shoes, and why or why not?

Thanks in advance for your advice.

----------------------

Two-Year Update

Thought I would provide an update to my original post. We ended up making the move to the VHCOL area and could not be happier from a quality-of-life perspective, even though there have been a few things that have not gone according to plan:

1. Due to a confluence of factors, we have pretty much given up (at least in the short term) on buying a house. Between higher interest rates and housing prices, as well as lack of inventory, it seems financially unwise for us to buy a house right now, even though we are very happy with the particular part of the VHCOL area in which we decided to rent. To generalize, if we were to buy the home we currently rent, our monthly housing expense would roughly double. It's just not realistic right now. Moreover, the home we currently rent is not anything special and would likely require several hundred thousand dollars in renovations in order to modernize it. This, of course, has resulted in a tremendous (for us) amount of liquidity, which I have also grown accustomed to. The more I think about it, the harder I am finding it to part with that liquidity just to own rather than rent. I simply do not want to own here bad enough, even though I am fairly certain we will remain in this area for many years. For that reason, I am also starting to wonder whether we will be lifelong renters going forward, which is something I never imagined after owning our place in the HCOL area from which we moved.

2. We chose the particular part of this VCHOL area in part based on the great reputation of its public schools. Our experience so far, which is admittedly limited to one-and-a-half years of public school for only one child, has left us less than impressed. The issue is mainly large class size, which results in less attention on any one particular student, including our child. Consequently, we are again considering private schools (surprise!), which will come along with much smaller class size and more abundant resources. While this dilemma somewhat undermines our original reasons for moving to the VHCOL area in the first place, the financial implications of switching back to private (likely through high school) do not seem as daunting given the liquidity mentioned in point 1 above. If the tradeoff is sending all our kids to private school in exchange for renting rather than owning, we are OK with that.

So, despite these two issues, we would no doubt make the choice we made again. Our work-life balance is essentially excellent, and we relish daily the improved quality of life this location provides.

On the financial side of things, not too much has changed. We continue to fund our 529s, which I know was somewhat a hot-button issue after my original post, and have about $225k therein as of today. We now have no debt due to eliminating the car loan. Our net worth is roughly the same as before we made the move due to the recent downturn (as it seems is the case for most on this forum), even if we have managed to accumulate more assets within our tax-advantaged accounts in the meantime. I am somewhat optimistic about market returns in the near future. Slow and steady wins the race, I suppose.

To make this actionable, any feedback (e.g., what to do with the major liquidity in taxable, a good chunk of which is currently in TQQQ (gasp!); being lifelong renters; going back down the private school path, etc.) would be greatly appreciated.
Last edited by Electrified on Sun Dec 03, 2023 10:05 pm, edited 2 times in total.
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bampf
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by bampf »

I think you can take on $600K in debt with your savings and income.
I question the need for any more money at all in the 529s. I have three kids and I can't see how you would need anymore unless they are going full boat IVY and even then, its problematic.

Can you? Absolutely. I might even do something like that if it were me. The one thing I might caution you about is buying a house for $2MM. Thats a lot of bones to try and resell for if things go south. That being said, pretty hard to go south giving your current assets and income.

1. Yes
2. No idea
3. No
4. Yes probably.
Nescio
JBTX
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by JBTX »

I am not sure how moving to a vhcol area improves quality of life, especially for kids.

(Edit: see my later post, in OP's situation the move makes sense)
Last edited by JBTX on Mon Dec 06, 2021 8:45 pm, edited 1 time in total.
jerrysmith
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by jerrysmith »

JBTX wrote: Mon Nov 01, 2021 3:28 pm I am not sure how moving to a vhcol area improves quality of life, especially for kids.
That's where I am on this as well. What's so much better about this new area?
MAKsdad
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by MAKsdad »

Electrified wrote: Mon Nov 01, 2021 2:13 pm Questions:

1. Assuming a $2M house in the VHCOL area, do you think we can afford this move? Afford? Yes, I think so.

2. If yes, how much would you finance? I would certainly roll all the proceeds from the current home into the new home, and take out a mortgage for the difference.

3. Along the same lines as question 2, would you divert any of the proceeds from selling the current place to paying off the auto loan and/or augmenting current cash holdings? re: car loan, probably not. re: adding to cash? Probably not, but why do you think that's important?
The answer might be relevant


4. Would you make this move if you were in my shoes, and why or why not? Who can say. It's impossible to know what "quality of life" improvements you're really talking about. It's inside information that only you and your family can justify. The move is doable though.

Thanks in advance for your advice.
bradinsky
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by bradinsky »

Just curious as to how life is better in a VHCOL area versus just a HCOL area? Not trying to be wise but just fascinated.
CoastLawyer2030
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by CoastLawyer2030 »

Electrified wrote: Mon Nov 01, 2021 2:13 pm 4. Would you make this move if you were in my shoes, and why or why not?
I will let smarter people than I am tackle the numbers, but I wanted to jump on this point.

When I first started my career, a partner at my law firm -- whom I absolutely loved -- gave me some pretty good insight. He had two brothers, one who lived in Seattle, and the other in Phoenix. He and I live in a very small rust belt town in NE Ohio. I asked him why he stayed and he said something like this:

"Eventually your kids get to an age that no matter where you live, your life revolves around your kids. Doesn't matter where you are, you will be driving your kids to baseball practice, dance lessons, birthday parties, etc. Choose where you like the people."

As a parent of two, it's hard for me to overstate how accurate this advice has proven to be.

So, I view the idea of this improving QOL. Perhaps there are some hyper regionalized hobbies that you would enjoy with your family. But day to day life is markedly similar in most places, with a few variations in between.
Topic Author
Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

Thanks for your replies, everyone.
bampf wrote: Mon Nov 01, 2021 2:24 pm I question the need for any more money at all in the 529s. I have three kids and I can't see how you would need anymore unless they are going full boat IVY and even then, its problematic.
The short answer on this is a high likelihood of grad school for all three kids. We are big believers in higher education. I do not plan to continue to contribute to the 529s at the current rate forever, but it makes me feel more secure to frontload adding to those accounts as much as possible. Perhaps it would even be worthwhile to take some house sale proceeds and superfund the 529s now, enabling me to take my foot off the gas on the monthly contributions and free up more money for the mortgage payments, if needed.

For this:
JBTX wrote: Mon Nov 01, 2021 3:28 pm I am not sure how moving to a vhcol area improves quality of life, especially for kids.
and all the other quality-of-life-related questions. The three main answers are: 1) weather (our current HCOL area is a stay-inside-six-months-of-the-year kind of place, while the VHCOL area is sunny year-round); 2) proximity to family; and 3) the VHCOL area has an abundance of natural beauty and outdoor activities, which our family really enjoys, while our current HCOL area has essentially none.
MAKsdad wrote: Mon Nov 01, 2021 3:34 pm
Electrified wrote: Mon Nov 01, 2021 2:13 pm
3. Along the same lines as question 2, would you divert any of the proceeds from selling the current place to paying off the auto loan and/or augmenting current cash holdings? re: car loan, probably not. re: adding to cash? Probably not, but why do you think that's important?
The answer might be relevant

Holding on to more cash would simply be to increase our emergency fund and allow us to sleep better at night.
CoastLawyer2030 wrote: Mon Nov 01, 2021 3:50 pm
Electrified wrote: Mon Nov 01, 2021 2:13 pm 4. Would you make this move if you were in my shoes, and why or why not?
I will let smarter people than I am tackle the numbers, but I wanted to jump on this point.

When I first started my career, a partner at my law firm -- whom I absolutely loved -- gave me some pretty good insight. He had two brothers, one who lived in Seattle, and the other in Phoenix. He and I live in a very small rust belt town in NE Ohio. I asked him why he stayed and he said something like this:

"Eventually your kids get to an age that no matter where you live, your life revolves around your kids. Doesn't matter where you are, you will be driving your kids to baseball practice, dance lessons, birthday parties, etc. Choose where you like the people."

As a parent of two, it's hard for me to overstate how accurate this advice has proven to be.

So, I view the idea of this improving QOL. Perhaps there are some hyper regionalized hobbies that you would enjoy with your family. But day to day life is markedly similar in most places, with a few variations in between.
I appreciate your advice. I agree on life revolving around kids; we are already there. But my view on this is that our kids' lives would also be even better by virtue of living in a place with year-round great weather and having access to all the activities that location provides. The alternative—staying in our HCOL area—limits the kinds of outdoor activities that will be available for our kids.
mervinj7
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by mervinj7 »

Electrified wrote: Mon Nov 01, 2021 2:13 pm Questions:

1. Assuming a $2M house in the VHCOL area, do you think we can afford this move?
Yes.

2. If yes, how much would you finance?
$750k. Max out mortgage interest deduction.

3. Along the same lines as question 2, would you divert any of the proceeds from selling the current place to paying off the auto loan and/or augmenting current cash holdings?
Yes, see above.

4. Would you make this move if you were in my shoes, and why or why not?
Yes. Weather, outdoor activities, and education are very important to us as well.

Thanks in advance for your advice.
JBTX
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by JBTX »

Electrified wrote: Mon Nov 01, 2021 2:13 pm I am considering moving my family from a HCOL area to a VHCOL area, taking out a mortgage in the process, and am seeking the collective wisdom and advice of this forum about whether such a move is a good idea.

Background Info and Current Expenses:
  • Partner and I are in our upper thirties with stable jobs.
  • We have three kids, all under the age of five, and do not plan to have any more. All kids are currently in private school/day care, at a total cost of about $85k/year.
  • We now live in a smaller place in a HCOL area but want to move to a larger place in a VHCOL area. We believe the move will substantially increase our family’s quality of life.
  • HHI is currently about $375k/year gross, but will likely soon drop to about $325k–$350k/year gross in order to obtain better work-life balance.
  • We max out three tax-advantaged retirement accounts every year and also receive from one employer an additional annual retirement account contribution of about $20k–$25k, so are currently putting approximately $80k/year into those accounts. (I did not include that $20k–$25k employer contribution in our HHI.) We will continue to max out the contributions even if our HHI drops.
  • We contribute $1k per kid per month into 529s, for a total contribution of $3k/month.
Assets:
  • We do not have a mortgage and could probably sell our current place for about $1.36M.
  • Collectively, tax-advantaged retirement accounts currently total about $1.1M.
  • 529 balances total about $165k. We plan to use the 529 funds for college and graduate education starting in about thirteen years.
  • Other cash: about $50k.
Liabilities:
  • $70k remaining on an auto loan at 1.99% to be paid over the next 4.5 years (~$1,350/month).
  • All credit card balances paid off fully every month.
  • No other debt.
Impacts of Move on Financial Picture:
  • A slightly larger house in the VHCOL area we are considering will likely be about $2M. Although generally averse to debt, we feel that taking out a mortgage could be worth it in order to obtain the better quality of life offered by the VHCOL area.
  • Property taxes and home maintenance in the VHCOL area would be more or less the same as what we currently pay.
  • We plan to put our kids in public school upon moving to the VHCOL area, which over time would free up the $85k/year that we currently spend on private school/day care. These funds would be reallocated to the monthly mortgage payment. The oldest child would start public school immediately upon moving the VHCOL; the remaining two would join in the next two to four years.
Questions:

1. Assuming a $2M house in the VHCOL area, do you think we can afford this move?

2. If yes, how much would you finance?

3. Along the same lines as question 2, would you divert any of the proceeds from selling the current place to paying off the auto loan and/or augmenting current cash holdings?

4. Would you make this move if you were in my shoes, and why or why not?

Thanks in advance for your advice.
Typically I could never recommend buying a $2 million house unless really high income. But given your response on quality of life issues, and ability to avoid $85,000 in private schools, taking out $700k or thereabouts to bridge the difference in home prices seems like a no brainer. So yes I would do it.

How much mortgage? Obviously at least $700k to bridge the difference. If you could get competitive rates I’d probably bump up my liquidity, and have enough to max out ibonds in the coming years. You can put in $25k each year between you your spouse and tax refund, and $35k if you have an RLT.

I wouldnt pay down a 2% car loan when inflation is running at 4-5%.
Trader Joe
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Trader Joe »

"Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?"

No, never.
dukeblue219
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by dukeblue219 »

Trader Joe wrote: Mon Nov 01, 2021 6:48 pm "Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?"

No, never.
I'll give the opposite response. There's nothing I'd rather spend money on than quality of life with family.

Money alone doesn't do that, and can even make it worse, but if the area you want to raise your family in costs more, then go for it. OP has the means to do it. What's more important - dollars in the bank or year round memories in the outdoors?
Mike Scott
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Mike Scott »

You have large enough net worth to FIRE if you really wanted and you are considering buying a $2 million house with debt... you might make it work but you do have other choices.
JDonaghy
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by JDonaghy »

seems pretty to easy to sell 1.35M house with no debt and buy a 2m house and have a mortgage, esp if saving on the school costs

Sounds like you want to move to Los Angeles

I was wondering about the rationale and why you think VHCOL qol will be better, but i would also move for better weather and to be closer to family. I'm same age and similar situation re: weather. This isn't the warm up for life this is it...

I'd probably up your cash position. If you aren't paying the school costs, I may be tempted to put like 30% down, take a mortgage on the rest. you wont even notice a change in total monthly spending. Of the proceeds I'd start with thinking abut like 10% cash, intermediate bonds 20% and invest like 70% of total in stocks...then you can pay down the mortgage a little faster if you want. Or just bump up your cash cushion a bit and put all the money down to minimize the mortgage and start saving extra $ into brokerage account...really depends on how your job situation is affected by move too and if you want more liquidity
marcopolo
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by marcopolo »

bampf wrote: Mon Nov 01, 2021 2:24 pm I think you can take on $600K in debt with your savings and income.
I question the need for any more money at all in the 529s. I have three kids and I can't see how you would need anymore unless they are going full boat IVY and even then, its problematic.

Can you? Absolutely. I might even do something like that if it were me. The one thing I might caution you about is buying a house for $2MM. Thats a lot of bones to try and resell for if things go south. That being said, pretty hard to go south giving your current assets and income.

1. Yes
2. No idea
3. No
4. Yes probably.
You can't see how three kids going to college could chew through $165k?!?

Our kids went to an in-state school, we had ~35k of expenses per year. Using that number, x4 years; x3 kids, comes out to $420k. One can spend significantly more, even without going to Ivy league.

Working the other way, $165k/4/3 = ~$14k/yr. Yes, one can find schools at that price point, but it does limit the options quite a bit.
Once in a while you get shown the light, in the strangest of places if you look at it right.
fortunefavored
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by fortunefavored »

This is not a financial choice, it is a lifestyle choice. You make plenty of money, no plans for early retirement, et cetera.

Of course you can do this if you want to. In 20 or 30 years you'll laugh about a mere $600-750K.
marcopolo
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by marcopolo »

Electrified wrote: Mon Nov 01, 2021 2:13 pm I am considering moving my family from a HCOL area to a VHCOL area, taking out a mortgage in the process, and am seeking the collective wisdom and advice of this forum about whether such a move is a good idea.

Background Info and Current Expenses:
  • Partner and I are in our upper thirties with stable jobs.
  • We have three kids, all under the age of five, and do not plan to have any more. All kids are currently in private school/day care, at a total cost of about $85k/year.
  • We now live in a smaller place in a HCOL area but want to move to a larger place in a VHCOL area. We believe the move will substantially increase our family’s quality of life.
  • HHI is currently about $375k/year gross, but will likely soon drop to about $325k–$350k/year gross in order to obtain better work-life balance.
  • We max out three tax-advantaged retirement accounts every year and also receive from one employer an additional annual retirement account contribution of about $20k–$25k, so are currently putting approximately $80k/year into those accounts. (I did not include that $20k–$25k employer contribution in our HHI.) We will continue to max out the contributions even if our HHI drops.
  • We contribute $1k per kid per month into 529s, for a total contribution of $3k/month.
Assets:
  • We do not have a mortgage and could probably sell our current place for about $1.36M.
  • Collectively, tax-advantaged retirement accounts currently total about $1.1M.
  • 529 balances total about $165k. We plan to use the 529 funds for college and graduate education starting in about thirteen years.
  • Other cash: about $50k.
Liabilities:
  • $70k remaining on an auto loan at 1.99% to be paid over the next 4.5 years (~$1,350/month).
  • All credit card balances paid off fully every month.
  • No other debt.
Impacts of Move on Financial Picture:
  • A slightly larger house in the VHCOL area we are considering will likely be about $2M. Although generally averse to debt, we feel that taking out a mortgage could be worth it in order to obtain the better quality of life offered by the VHCOL area.
  • Property taxes and home maintenance in the VHCOL area would be more or less the same as what we currently pay.
  • We plan to put our kids in public school upon moving to the VHCOL area, which over time would free up the $85k/year that we currently spend on private school/day care. These funds would be reallocated to the monthly mortgage payment. The oldest child would start public school immediately upon moving the VHCOL; the remaining two would join in the next two to four years.
Questions:

1. Assuming a $2M house in the VHCOL area, do you think we can afford this move?

2. If yes, how much would you finance?

3. Along the same lines as question 2, would you divert any of the proceeds from selling the current place to paying off the auto loan and/or augmenting current cash holdings?

4. Would you make this move if you were in my shoes, and why or why not?

Thanks in advance for your advice.

If moving to the more expensive home would eliminate/reduce the private schools expenses, I think you come out ahead.

The higher housing costs builds equity, the private school tuition is an expense that you will not get back.

It seems like a common trade-off people make all the time, but the more expensive home in a good school district so you don't have to pay for private school.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Watty
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Watty »

Electrified wrote: Mon Nov 01, 2021 2:13 pm 4. Would you make this move if you were in my shoes, and why or why not?
No, in fact I did just the opposite.

When I was about 30 I moved from a high cost of living area(Bay Area) to a lower cost of living area where at that time housing cost maybe a fifth of what it would have cost in the Bay Area.

The quality of life was also a lot higher, at least for the things I was interested in.

I consider that to have been one of the best decisions that I ever made, but it is just me.

When I was living in the Bay Area was that some of older coworkers had grown up kids that were well into their 20s who were still living with them and that was not always a good situation. The problem was that they did not have high paying jobs so they could not afford an apartment even with roommates.

I have moved around and I am retired now in Atlanta where housing in most of the suburbs is still reasonable(but going up!) and you can get a nice house for in the $300s and $500K will get you a McMansion in many areas. Housing downtown and in some prime areas can be a lot more expensive. My son is doing well in his career and was easily able to afford to buy a nice house about ten minutes from us which is especially nice since we can frequently see our grandkids. Virtually all of my son's high school and college classmates who stayed in the area were able to afford to buy nice houses when they were in their 20s.

We also know someone who has a son who is severely dyslexic and barely graduated from high school. At one point he was working at a chain muffler shop which is a good honest job but I am sure that it did not pay a lot. Even on his income he was able to afford to buy a small older house in a marginal but not terrible area.

In considering the move be sure to consider what it will be like for your kids if they want to live near you when they grow up in the very high cost of living area.

It would be good to consider just what it is about the VHCOL area that appeals to you and to consider if there are other lower cost of living areas which have some of the same attributes.
stan1
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by stan1 »

Electrified wrote: Mon Nov 01, 2021 5:27 pm and all the other quality-of-life-related questions. The three main answers are: 1) weather (our current HCOL area is a stay-inside-six-months-of-the-year kind of place, while the VHCOL area is sunny year-round); 2) proximity to family; and 3) the VHCOL area has an abundance of natural beauty and outdoor activities, which our family really enjoys, while our current HCOL area has essentially none.
Sounds like San Diego County or maybe Southern Orange County.

Sure, with your paid off house you can afford to sell and move.

$2M budget will still get you a nice house in a suburb with the best public schools.
FoolMeOnce
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by FoolMeOnce »

Electrified wrote: Mon Nov 01, 2021 5:27 pm For this:
JBTX wrote: Mon Nov 01, 2021 3:28 pm I am not sure how moving to a vhcol area improves quality of life, especially for kids.
and all the other quality-of-life-related questions. The three main answers are: 1) weather (our current HCOL area is a stay-inside-six-months-of-the-year kind of place, while the VHCOL area is sunny year-round); 2) proximity to family; and 3) the VHCOL area has an abundance of natural beauty and outdoor activities, which our family really enjoys, while our current HCOL area has essentially none.
Those are all great reasons to move. I would put just about all the proceeds from selling your current house toward the new one, maybe holding back some extra cash if you want a bigger EF. And some cash for furnishings and other upfront expenses upon moving.Though ending private school tuition immediately for one kid will let you build up that EF, and saving on two more kids down the line might even make this a financial wash, depending on how long they would've stayed in private school in your current location.

Good luck with the move!
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bampf
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by bampf »

marcopolo wrote: Mon Nov 01, 2021 7:16 pm
bampf wrote: Mon Nov 01, 2021 2:24 pm I think you can take on $600K in debt with your savings and income.
I question the need for any more money at all in the 529s. I have three kids and I can't see how you would need anymore unless they are going full boat IVY and even then, its problematic.

Can you? Absolutely. I might even do something like that if it were me. The one thing I might caution you about is buying a house for $2MM. Thats a lot of bones to try and resell for if things go south. That being said, pretty hard to go south giving your current assets and income.

1. Yes
2. No idea
3. No
4. Yes probably.
You can't see how three kids going to college could chew through $165k?!?

Our kids went to an in-state school, we had ~35k of expenses per year. Using that number, x4 years; x3 kids, comes out to $420k. One can spend significantly more, even without going to Ivy league.

Working the other way, $165k/4/3 = ~$14k/yr. Yes, one can find schools at that price point, but it does limit the options quite a bit.
Sigh. OK. Fine.

In state tuition for a 4 year stem degree at the University of Colorado Boulder is about $15K a year. Ask me how I know.
OP stated he has approximately $55K per kid 14,15, and 16 years before they start their first year.
You don't deplete the 529 the first year, at best you deplete 1/4 (1/6th assuming grad school) for tuition.
Growth of the S&P 500 in the last 10 years would have seen that $55K turn into $250K.

So, can I see how OP can deplete the $55K per child 15 years from now? Sure. It would require room, board, books, computers, 6 years of higher education and mediocre returns over the next 15 years.

Now, OP contributes $1K a month per child. For the next n years where n is a function of age of child and distribution during university years.

To make the equation work the following must be true or partially true:

You must assume all three kids don't get scholarships, ROTC, etc..

You must assume all three kids go to expensive top tier schools.

You must assume all three kids go to university.

You must assume that all three kids go to graduate school.

Finally:

OP has a boat load of money already at 35. OP could literally cash flow the kids education at top tier in state university. Ask me how I know.

Given those circumstances, I don't know that I would contribute any more to a 529. I certainly question the need. Could I have been more precise? Sure. But then I would have missed out on this fun exchange of information that we have seen dozens of times before. Think carefully before you overfund your 529s. It wont kill you but you may not need it.

--Bampf
Nescio
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by marcopolo »

bampf wrote: Mon Nov 01, 2021 8:17 pm
marcopolo wrote: Mon Nov 01, 2021 7:16 pm
bampf wrote: Mon Nov 01, 2021 2:24 pm I think you can take on $600K in debt with your savings and income.
I question the need for any more money at all in the 529s. I have three kids and I can't see how you would need anymore unless they are going full boat IVY and even then, its problematic.

Can you? Absolutely. I might even do something like that if it were me. The one thing I might caution you about is buying a house for $2MM. Thats a lot of bones to try and resell for if things go south. That being said, pretty hard to go south giving your current assets and income.

1. Yes
2. No idea
3. No
4. Yes probably.
You can't see how three kids going to college could chew through $165k?!?

Our kids went to an in-state school, we had ~35k of expenses per year. Using that number, x4 years; x3 kids, comes out to $420k. One can spend significantly more, even without going to Ivy league.

Working the other way, $165k/4/3 = ~$14k/yr. Yes, one can find schools at that price point, but it does limit the options quite a bit.
Sigh. OK. Fine.

In state tuition for a 4 year stem degree at the University of Colorado Boulder is about $15K a year. Ask me how I know.
OP stated he has approximately $55K per kid 14,15, and 16 years before they start their first year.
You don't deplete the 529 the first year, at best you deplete 1/4 (1/6th) assuming grad school for tuition.
Growth of the S&P 500 in the last 10 years would have seen that $55K turn into $250K.

So, can I see how OP can deplete the $55K per child 15 years from now? Sure. It would require room, board, books, computers, 6 years of higher education and mediocre returns over the next 15 years.

Now, OP contributes $1K a month per child. For the next n years where n is a function of age of child and distribution during university years.

To make the equation work the following must be true or partially true:

You must assume all three kids don't get scholarships, ROTC, etc..

You must assume all three kids go to expensive top tier schools.

You must assume all three kids go to university.

You must assume that all three kids go to graduate school.

Finally:

OP has a boat load of money already at 35. OP could literally cash flow the kids education at top tier in state university. Ask me how I know.

Given those circumstances, I don't know that I would contribute any more to a 529. I certainly question the need. Could I have been more precise? Sure. But then I would have missed out on this fun exchange of information that we have seen dozens of times before. Think carefully before you overfund your 529s. It wont kill you but you may not need it.

--Bampf
So, like I said, it is possible, but limits your choices.
Your solution had pretty much 1 choice.

I don't disagree that one could find a way to pay for a college education without further saving on 529. What seemed hyperbolic was:

"I can't see how you would need anymore unless they are going full boat IVY"

It does not take much of an imagination to see how more might be needed.

Not all states have that kind of affordable high quality school. Ask me how I know.

kids could decide to go out of state or to private school

Unlikely to keep 529 in 100% equities the entire time.

Unlikely to get return like last 10 years.
Once in a while you get shown the light, in the strangest of places if you look at it right.
59Gibson
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by 59Gibson »

I would not. I've lived in a HCOL area and experienced the opposite, so moved to mcol. I prefer owning my time. You can afford as long as you're ok working your high paying jobs til mid /late 50s at least.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by protagonist »

JBTX wrote: Mon Nov 01, 2021 3:28 pm I am not sure how moving to a vhcol area improves quality of life, especially for kids.
+1
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by inverter »

Sounds like you should go for it!

At best, you come ahead by getting more equity in your house over time. At worst, you can move away whenever you'd like. Go for it!
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bampf
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by bampf »

marcopolo wrote: Mon Nov 01, 2021 8:39 pm
bampf wrote: Mon Nov 01, 2021 8:17 pm
marcopolo wrote: Mon Nov 01, 2021 7:16 pm
bampf wrote: Mon Nov 01, 2021 2:24 pm I think you can take on $600K in debt with your savings and income.
I question the need for any more money at all in the 529s. I have three kids and I can't see how you would need anymore unless they are going full boat IVY and even then, its problematic.

Can you? Absolutely. I might even do something like that if it were me. The one thing I might caution you about is buying a house for $2MM. Thats a lot of bones to try and resell for if things go south. That being said, pretty hard to go south giving your current assets and income.

1. Yes
2. No idea
3. No
4. Yes probably.
You can't see how three kids going to college could chew through $165k?!?

Our kids went to an in-state school, we had ~35k of expenses per year. Using that number, x4 years; x3 kids, comes out to $420k. One can spend significantly more, even without going to Ivy league.

Working the other way, $165k/4/3 = ~$14k/yr. Yes, one can find schools at that price point, but it does limit the options quite a bit.
Sigh. OK. Fine.

In state tuition for a 4 year stem degree at the University of Colorado Boulder is about $15K a year. Ask me how I know.
OP stated he has approximately $55K per kid 14,15, and 16 years before they start their first year.
You don't deplete the 529 the first year, at best you deplete 1/4 (1/6th) assuming grad school for tuition.
Growth of the S&P 500 in the last 10 years would have seen that $55K turn into $250K.

So, can I see how OP can deplete the $55K per child 15 years from now? Sure. It would require room, board, books, computers, 6 years of higher education and mediocre returns over the next 15 years.

Now, OP contributes $1K a month per child. For the next n years where n is a function of age of child and distribution during university years.

To make the equation work the following must be true or partially true:

You must assume all three kids don't get scholarships, ROTC, etc..

You must assume all three kids go to expensive top tier schools.

You must assume all three kids go to university.

You must assume that all three kids go to graduate school.

Finally:

OP has a boat load of money already at 35. OP could literally cash flow the kids education at top tier in state university. Ask me how I know.

Given those circumstances, I don't know that I would contribute any more to a 529. I certainly question the need. Could I have been more precise? Sure. But then I would have missed out on this fun exchange of information that we have seen dozens of times before. Think carefully before you overfund your 529s. It wont kill you but you may not need it.

--Bampf
So, like I said, it is possible, but limits your choices.
Your solution had pretty much 1 choice.

I don't disagree that one could find a way to pay for a college education without further saving on 529. What seemed hyperbolic was:

"I can't see how you would need anymore unless they are going full boat IVY"

It does not take much of an imagination to see how more might be needed.

Not all states have that kind of affordable high quality school. Ask me how I know.

kids could decide to go out of state or to private school

Unlikely to keep 529 in 100% equities the entire time.

Unlikely to get return like last 10 years.
The OPs numbers turn that $55K into $250K in 10 years. This is 15 years. Or more. Or less. And no additional contributions.

You paid full ride at another school and it was $140K.

My "solution" doesn't give you one option. My solution wasn't a solution. I questioned the need to continue to fund.

I was imprecise and perhaps a bit hyperbolic, although why would you use that word in polite discourse?

I don't question your imagination. Why question mine unless you are trying to score points? I was imprecise in my language, but my point holds.

My point, precisely stated, is that OP may not need to fund more.

Peace.
--Bampf
Nescio
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Metsfan91 »

Electrified wrote: Mon Nov 01, 2021 2:13 pm
Questions:

1. Assuming a $2M house in the VHCOL area, do you think we can afford this move? --Yes

2. If yes, how much would you finance? --You didn't say how much you have in taxable (non-retirement) account. Assuming you are selling your current house first, I'll put $1M down and borrow $1M.

3. Along the same lines as question 2, would you divert any of the proceeds from selling the current place to paying off the auto loan and/or augmenting current cash holdings? - No. Auto loan is 1.99%. I won't pay it off. I'll invest.

4. Would you make this move if you were in my shoes, and why or why not? -- Yes, for the quality of life improvement. It matters.
"Know what you own, and know why you own it." — Peter Lynch
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Watty »

One thing that has not been mentioned is that the reality of living in a different place may be a lot different than what your expectations are.

If you move you might want to rent for the first year.

That will also give you a chance to see how often actually do the things that attract you for a higher quality of life. For example you might think that you would like living near the beach but end up only actually going to the beach a few times a year.
Electrified wrote: Mon Nov 01, 2021 2:13 pm ....three kids, all under the age of five....
...
The short answer on this is a high likelihood of grad school for all three kids.
That could happen so you might want to be prepared for that possibility but calling it a "high likelihood" is more than a bit optimistic.

Unless you are moving to the mythical town of Lake Wobegon where are the kids are all above average then you need to be prepared for your kids and your life to take unexpected twists and turns.
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Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

Mike Scott wrote: Mon Nov 01, 2021 7:00 pm You have large enough net worth to FIRE if you really wanted and you are considering buying a $2 million house with debt... you might make it work but you do have other choices.
I appreciate the optimism, but I do not think FIRE is an option (or even a possibility) for us right now, although we are doing what we can to lower expenses (believe it or not). I just feel that at this time in our lives our expenses are inevitably only increasing. We are also fine with continuing to work to fund those expenses.
JDonaghy wrote: Mon Nov 01, 2021 7:12 pm This isn't the warm up for life this is it...

I'd probably up your cash position. If you aren't paying the school costs, I may be tempted to put like 30% down, take a mortgage on the rest. you wont even notice a change in total monthly spending. Of the proceeds I'd start with thinking abut like 10% cash, intermediate bonds 20% and invest like 70% of total in stocks...then you can pay down the mortgage a little faster if you want. Or just bump up your cash cushion a bit and put all the money down to minimize the mortgage and start saving extra $ into brokerage account...really depends on how your job situation is affected by move too and if you want more liquidity
Fully agree. And as for liquidity, it is obviously no fun to feel cash-strapped, which we just may if we put down as much as possible. (That is actually how we sometimes feel in our current place after paying cash.) But despite that, and the historically low rates, we would probably lean toward a lower liquidity level to take some risk out of the housing side of the equation, even if it means that our AA is strongly tilted toward real estate. I think that is a price we are willing to pay to be in our desired location.
fortunefavored wrote: Mon Nov 01, 2021 7:20 pm Of course you can do this if you want to. In 20 or 30 years you'll laugh about a mere $600-750K.
I hope so, and you are probably right. But we are still hesitant to take on a mortgage after not ever having one. It was the same way we felt guilty about taking a car loan, although in retrospect I now more strongly feel that 1.99% was cheap money and ultimately a good choice for us.
marcopolo wrote: Mon Nov 01, 2021 7:21 pm
Electrified wrote: Mon Nov 01, 2021 2:13 pm
. . .
The higher housing costs builds equity, the private school tuition is an expense that you will not get back.
Strong point.
Watty wrote: Mon Nov 01, 2021 7:21 pm
Electrified wrote: Mon Nov 01, 2021 2:13 pm
. . .
. . .

In considering the move be sure to consider what it will be like for your kids if they want to live near you when they grow up in the very high cost of living area.

It would be good to consider just what it is about the VHCOL area that appeals to you and to consider if there are other lower cost of living areas which have some of the same attributes.
I do not think we will be cemented to the VHCOL area in twenty years, so there is probably some flexibility there. Good point about considering alternative areas. We can do that, but are somewhat geographically limited because we want to be within a certain distance of family members who are not moving.
Last edited by Electrified on Mon Nov 01, 2021 9:58 pm, edited 1 time in total.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Ron Ronnerson »

I think this move is well worth making. Your quality of life will improve by living in a place that has good weather, family nearby, and lots of activities to enjoy.

Financially speaking, you will be even better off. You’re spending $85k per year on schooling and your kids are young. It sounds like you have maybe 15 years or so until all the kids are off to college and spending that much on school over those years is about $1.3m. If you sell your current home, you said you think you could get $1.36m for it and a bigger place in a more expensive area would cost around $2m. Not only is the difference in home prices only half the cost of the private school for the next decade and a half, but you’ll be increasing your equity in the home with payments you make, and it’s a bigger house in a better area too!

So, for non-financial reasons, I think this move is very much worth making. However, it’s even more worth making because of the financial reasons.

1. Not only can you afford it, but after accounting for savings from not paying private school tuition for three kids for a long time, you save money by moving.

2. If the house is in California, I would put down 20% and finance the rest for 30 years in your circumstances. California is a non-recourse state, you’re only in your 30s, your jobs are stable, and interest rates on mortgages are currently quite low (below the historical average rate of inflation). I would keep a good emergency fund. Full disclosure: I am not only not debt averse, but am actually pro-low-interest debt.

3. I wouldn’t pay off the car loan that is at 2%.

4. Definitely, for reasons mentioned above.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by JBTX »

bampf wrote: Mon Nov 01, 2021 8:51 pm
marcopolo wrote: Mon Nov 01, 2021 8:39 pm
bampf wrote: Mon Nov 01, 2021 8:17 pm
marcopolo wrote: Mon Nov 01, 2021 7:16 pm
bampf wrote: Mon Nov 01, 2021 2:24 pm I think you can take on $600K in debt with your savings and income.
I question the need for any more money at all in the 529s. I have three kids and I can't see how you would need anymore unless they are going full boat IVY and even then, its problematic.

Can you? Absolutely. I might even do something like that if it were me. The one thing I might caution you about is buying a house for $2MM. Thats a lot of bones to try and resell for if things go south. That being said, pretty hard to go south giving your current assets and income.

1. Yes
2. No idea
3. No
4. Yes probably.
You can't see how three kids going to college could chew through $165k?!?

Our kids went to an in-state school, we had ~35k of expenses per year. Using that number, x4 years; x3 kids, comes out to $420k. One can spend significantly more, even without going to Ivy league.

Working the other way, $165k/4/3 = ~$14k/yr. Yes, one can find schools at that price point, but it does limit the options quite a bit.
Sigh. OK. Fine.

In state tuition for a 4 year stem degree at the University of Colorado Boulder is about $15K a year. Ask me how I know.
OP stated he has approximately $55K per kid 14,15, and 16 years before they start their first year.
You don't deplete the 529 the first year, at best you deplete 1/4 (1/6th) assuming grad school for tuition.
Growth of the S&P 500 in the last 10 years would have seen that $55K turn into $250K.

So, can I see how OP can deplete the $55K per child 15 years from now? Sure. It would require room, board, books, computers, 6 years of higher education and mediocre returns over the next 15 years.

Now, OP contributes $1K a month per child. For the next n years where n is a function of age of child and distribution during university years.

To make the equation work the following must be true or partially true:

You must assume all three kids don't get scholarships, ROTC, etc..

You must assume all three kids go to expensive top tier schools.

You must assume all three kids go to university.

You must assume that all three kids go to graduate school.

Finally:

OP has a boat load of money already at 35. OP could literally cash flow the kids education at top tier in state university. Ask me how I know.

Given those circumstances, I don't know that I would contribute any more to a 529. I certainly question the need. Could I have been more precise? Sure. But then I would have missed out on this fun exchange of information that we have seen dozens of times before. Think carefully before you overfund your 529s. It wont kill you but you may not need it.

--Bampf
So, like I said, it is possible, but limits your choices.
Your solution had pretty much 1 choice.

I don't disagree that one could find a way to pay for a college education without further saving on 529. What seemed hyperbolic was:

"I can't see how you would need anymore unless they are going full boat IVY"

It does not take much of an imagination to see how more might be needed.

Not all states have that kind of affordable high quality school. Ask me how I know.

kids could decide to go out of state or to private school

Unlikely to keep 529 in 100% equities the entire time.

Unlikely to get return like last 10 years.
The OPs numbers turn that $55K into $250K in 10 years. This is 15 years. Or more. Or less. And no additional contributions.

You paid full ride at another school and it was $140K.

My "solution" doesn't give you one option. My solution wasn't a solution. I questioned the need to continue to fund.

I was imprecise and perhaps a bit hyperbolic, although why would you use that word in polite discourse?

I don't question your imagination. Why question mine unless you are trying to score points? I was imprecise in my language, but my point holds.

My point, precisely stated, is that OP may not need to fund more.

Peace.
--Bampf
As a general rule I tend to come down where you do,don't overfund a 529. However, you can make a case that if you are in higher bracket, plus high state income tax, the higher tax savings of 529 may make it worthwhile.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by calwatch »

I would agree with the move. You certainly can afford and at the kids' ages they can maximize this benefit. Just don't let your overall spending rise to catch up with your future neighbors.
126inc
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by 126inc »

sure why not, financially its not a problem. also wouldn't HHI go up should you change jobs to one centered in VHCOL area?
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Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

Watty wrote: Mon Nov 01, 2021 9:22 pm One thing that has not been mentioned is that the reality of living in a different place may be a lot different than what your expectations are.

If you move you might want to rent for the first year.

That will also give you a chance to see how often actually do the things that attract you for a higher quality of life. For example you might think that you would like living near the beach but end up only actually going to the beach a few times a year.
We have spent a lot of time over the years in the area visiting the family members I mentioned and have always been attracted to the area, so I feel like we have a pretty decent handle on what it would be like to actually live there. We have considered renting for the first year, but I dread the thought of two moves. I guess a lot will also depend on how the housing market in the VHCOL area looks over the next few months; like everywhere else, inventory is low right now, but slowly ramping up.
Watty wrote: Mon Nov 01, 2021 9:22 pm
Electrified wrote: Mon Nov 01, 2021 2:13 pm ....three kids, all under the age of five....
...
The short answer on this is a high likelihood of grad school for all three kids.
That could happen so you might want to be prepared for that possibility but calling it a "high likelihood" is more than a bit optimistic.

Unless you are moving to the mythical town of Lake Wobegon where are the kids are all above average then you need to be prepared for your kids and your life to take unexpected twists and turns.
I am not too worried about not being able to use all the 529 funds (as I mentioned above, we do not plan to contribute at the current rate forever, either). And even if things do not work out with higher education, we can always name a grandchild or someone else as a beneficiary. But I agree that life is full of unexpected events; we just want to save for college and advanced degrees now so as to not have to later worry about their cost.
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Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

Ron Ronnerson wrote: Mon Nov 01, 2021 9:57 pm I think this move is well worth making. Your quality of life will improve by living in a place that has good weather, family nearby, and lots of activities to enjoy.

Financially speaking, you will be even better off. You’re spending $85k per year on schooling and your kids are young. It sounds like you have maybe 15 years or so until all the kids are off to college and spending that much on school over those years is about $1.3m. If you sell your current home, you said you think you could get $1.36m for it and a bigger place in a more expensive area would cost around $2m. Not only is the difference in home prices only half the cost of the private school for the next decade and a half, but you’ll be increasing your equity in the home with payments you make, and it’s a bigger house in a better area too!

So, for non-financial reasons, I think this move is very much worth making. However, it’s even more worth making because of the financial reasons.

1. Not only can you afford it, but after accounting for savings from not paying private school tuition for three kids for a long time, you save money by moving.

2. If the house is in California, I would put down 20% and finance the rest for 30 years in your circumstances. California is a non-recourse state, you’re only in your 30s, your jobs are stable, and interest rates on mortgages are currently quite low (below the historical average rate of inflation). I would keep a good emergency fund. Full disclosure: I am not only not debt averse, but am actually pro-low-interest debt.

3. I wouldn’t pay off the car loan that is at 2%.

4. Definitely, for reasons mentioned above.
Thanks for the advice. I had not really thought about it from the perspective of the difference between the cost of private school over the long term versus the cost of the mortgage, but I like that angle. One concern is whether we would be shortchanging our kids' education in order to build equity/wealth. I know the topic of private versus public school has been thoroughly debated in other threads, but I cannot help but feel some sense of guilt that we may not be giving our kids the best shot by taking them out of the private route. I guess it really comes down to the specific public school(s) we end up choosing and the teachers our kids will have and what else we do to enrich their education.
calwatch wrote: Mon Nov 01, 2021 10:41 pm I would agree with the move. You certainly can afford and at the kids' ages they can maximize this benefit. Just don't let your overall spending rise to catch up with your future neighbors.
We will definitely have to be on guard for lifestyle inflation. Another reason to keep liquidity low and put as much as possible toward the down payment.
126inc wrote: Mon Nov 01, 2021 10:55 pm also wouldn't HHI go up should you change jobs to one centered in VHCOL area?
This is a possibility, but I do not want to rely on HHI going up (or changing jobs) when analyzing whether to even make the jump. That is also why I am planning for the likely decrease in HHI that I mentioned in my initial post. And things will just be that much better if our HHI eventually increases.
Last edited by Electrified on Tue Nov 02, 2021 8:47 pm, edited 1 time in total.
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quantAndHold
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by quantAndHold »

Personally, I think quality of life trumps all. You can afford it, and if you believe your quality of life is going to be better in the new place, I think it’s worthwhile.

As far as public vs private school, I would just pick a place with decent public schools, and put the tuition money into living your life rather than paying exorbitant school fees. Kids with parents like you are going to do well at any school they go to. Plenty of public school kids go on to elite colleges and get advanced degrees and such, and if you control for demographics, I doubt that private school really changes the odds of any of that happening.

And yeah, your 529 is funded. Stop. You don’t know that your kids are going to grad school. Even if they do, you’ll have the money to pay for it out of other accounts when it happens. My family believes in education too, but none of our 3 kids went to grad school. Overfunding their 529’s would have just left a big pile of money on the table.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Ron Ronnerson »

quantAndHold wrote: Tue Nov 02, 2021 10:37 am Personally, I think quality of life trumps all. You can afford it, and if you believe your quality of life is going to be better in the new place, I think it’s worthwhile.

As far as public vs private school, I would just pick a place with decent public schools, and put the tuition money into living your life rather than paying exorbitant school fees. Kids with parents like you are going to do well at any school they go to. Plenty of public school kids go on to elite colleges and get advanced degrees and such, and if you control for demographics, I doubt that private school really changes the odds of any of that happening.

And yeah, your 529 is funded. Stop. You don’t know that your kids are going to grad school. Even if they do, you’ll have the money to pay for it out of other accounts when it happens. My family believes in education too, but none of our 3 kids went to grad school. Overfunding their 529’s would have just left a big pile of money on the table.
I agree with all of this. Quality of life is hugely important and the 529 is already funded well enough considering how much time the money has left to grow and you can likely cash-flow any gap that may exist. Having too much in a 529 can be problematic since the money is inflexible in terms of what it can be used for compared to money in other accounts.

I agree with the comments on public vs. private schools as well but I’m a public school teacher so will recuse myself and not say anything further about that.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by WS1 »

Should you spend money to live near people you like and activities you enjoy…ummm
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Electrified
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

quantAndHold wrote: Tue Nov 02, 2021 10:37 am Personally, I think quality of life trumps all. You can afford it, and if you believe your quality of life is going to be better in the new place, I think it’s worthwhile.

As far as public vs private school, I would just pick a place with decent public schools, and put the tuition money into living your life rather than paying exorbitant school fees. Kids with parents like you are going to do well at any school they go to. Plenty of public school kids go on to elite colleges and get advanced degrees and such, and if you control for demographics, I doubt that private school really changes the odds of any of that happening.

And yeah, your 529 is funded. Stop. You don’t know that your kids are going to grad school. Even if they do, you’ll have the money to pay for it out of other accounts when it happens. My family believes in education too, but none of our 3 kids went to grad school. Overfunding their 529’s would have just left a big pile of money on the table.
Thanks for the advice and nice comments. The truth is that we do not know for sure whether the kids will go to grad school. But they may. So we will probably continue to fund the 529s for a bit, at least up to the full extent of our currently available tax benefit, but will probably start to divert anything above that amount into taxable so as to not be as restricted on those funds.

(As an aside, I just visited https://finred.usalearning.gov/ToolsAnd ... s/Savings? and ran some numbers for the three kids to go just to private colleges without any aid. The estimated total cost of attendance when factoring in education cost inflation was $1.8M. Coincidentally, the recommended savings rate using the calculator's pre-populated 7% rate of return was $3,003/month given what we have already saved. And none of this considers graduate education.)
WS1 wrote: Tue Nov 02, 2021 11:07 am Should you spend money to live near people you like and activities you enjoy…ummm
Not sure this comment really adds a lot to the conversation, but point taken. After all, what other meaningful things would you spend your money on.
Last edited by Electrified on Tue Nov 02, 2021 8:49 pm, edited 1 time in total.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by financiallycurious »

quantAndHold wrote: Tue Nov 02, 2021 10:37 am Personally, I think quality of life trumps all. You can afford it, and if you believe your quality of life is going to be better in the new place, I think it’s worthwhile.
I agree. Also, where you live definitely impacts your kids' activities, even if your life revolves around them for a period of time irrespective of location. Ski team, for example, is dependent on living in a mountain town, many of which are VHCOL, but the mountain town lifestyle is hard to beat if you love to ski, hike and bike.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by goodenyou »

We did the opposite and reached FI 15 years sooner because of it. Life is a blast as young Empty Nesters when you work when you don't have to. Our quality of life was great in a VLCOL area. Had tons of time to spend with the kids and saved a lot of money that we now enjoy at a young age.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by swaption »

I say go for it. This is your life, and I mean the meat of your life, so go live it the way you want. I live in a VHCOL area, two kids have just come through very high quality public schools. Now they are in expensive Ivy league schools, total price tag roughly $600k. I'd back up the truck on the 529, best deal around given the tax free appreciation. I think embedded in some of the replies might be some implications of some of the negatives for kids in these types of places. No doubt, that is real, but ultimately up to you in terms of the people you want to be with, the life you choose to lead, and the values you impart to your kids. Good luck!
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

goodenyou wrote: Tue Nov 02, 2021 2:26 pm We did the opposite and reached FI 15 years sooner because of it. Life is a blast as young Empty Nesters when you work when you don't have to. Our quality of life was great in a VLCOL area. Had tons of time to spend with the kids and saved a lot of money that we now enjoy at a young age.
Moving to a VLCOL area is not an alternative that we want to pursue. If we do not move to the VHCOL area, we would probably just move to another HCOL area and perhaps still put our kids in public school. And while doing so would bring FI that much closer, at this point the other HCOL area really does not offer us anything more on a day-to-day basis than what we have in our current situation, which begs the question of why go that route at all.
swaption wrote: Tue Nov 02, 2021 2:52 pm I say go for it. This is your life, and I mean the meat of your life, so go live it the way you want. I live in a VHCOL area, two kids have just come through very high quality public schools. Now they are in expensive Ivy league schools, total price tag roughly $600k. I'd back up the truck on the 529, best deal around given the tax free appreciation. I think embedded in some of the replies might be some implications of some of the negatives for kids in these types of places. No doubt, that is real, but ultimately up to you in terms of the people you want to be with, the life you choose to lead, and the values you impart to your kids. Good luck!
Sounds like you were in a pretty similar situation as me not too long ago. That is why we have been loading up the 529s so much, and as early as possible. As for inherent negatives in VHCOL areas, I think I would rather trade those for the negatives of our current setup. While it may be a grass-is-greener thing, we are familiar with the VHCOL area we are considering and have had a fondness for it for years. Can I ask how you went about choosing/finding your very high quality public schools?
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by NorCalHiker »

financiallycurious wrote: Tue Nov 02, 2021 2:15 pm
quantAndHold wrote: Tue Nov 02, 2021 10:37 am Personally, I think quality of life trumps all. You can afford it, and if you believe your quality of life is going to be better in the new place, I think it’s worthwhile.
I agree. Also, where you live definitely impacts your kids' activities, even if your life revolves around them for a period of time irrespective of location. Ski team, for example, is dependent on living in a mountain town, many of which are VHCOL, but the mountain town lifestyle is hard to beat if you love to ski, hike and bike.
This right here! I live in VHCOL, and while it's true the soccer/kid activity stuff is pretty much the same program everywhere, the other quality of stuff matters. I can get to a trail going up to 10K ft in 45 min. Beach in 15min. Take the kids hiking on a whim and have them experience a wide varierty of cultures (food, grocery stores, museums). During COVID, we biked for 1 hr every evening from our house to a great trail that's at the foothills of 5K peak every evening.

OP's nestegg seems to make the move doable. The issue I see here is people burning candles at both ends to afford housing which really reduces quality of life.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Californiastate »

Absolutely if it's financially feasible. It's hard to describe how limited the time is until your children are grown up and out of the house. It's really a short time frame in a normal lifespan. I tried to appreciate every moment while my children were younger but I'm sure I missed a moment or two. You blink and they're grown up. You only live once or twice.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by nigel_ht »

Electrified wrote: Mon Nov 01, 2021 9:51 pm
marcopolo wrote: Mon Nov 01, 2021 7:21 pm
The higher housing costs builds equity, the private school tuition is an expense that you will not get back.
Strong point.
I think this one depends on outcomes…there are some advantages to private prep for elite college entrance. Also, the quality of education can be higher than the average high quality public (as opposed to some magnets or flagship high schools).

Whether that’s worth the expenses depends on many factors…but a positive ROI isn’t impossible for a private education.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Electrified »

NorCalHiker wrote: Tue Nov 02, 2021 5:02 pm OP's nestegg seems to make the move doable. The issue I see here is people burning candles at both ends to afford housing which really reduces quality of life.
Do you believe we would be burning the candle at both ends by making this move?
Californiastate wrote: Tue Nov 02, 2021 6:08 pm Absolutely if it's financially feasible. It's hard to describe how limited the time is until your children are grown up and out of the house. It's really a short time frame in a normal lifespan. I tried to appreciate every moment while my children were younger but I'm sure I missed a moment or two. You blink and they're grown up. You only live once or twice.
Part of what I am trying to discern is whether the move would be financially feasible. But I agree that the time goes fast, as our first five years certainly have.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by NorCalHiker »

Electrified wrote: Tue Nov 02, 2021 8:05 pm
NorCalHiker wrote: Tue Nov 02, 2021 5:02 pm OP's nestegg seems to make the move doable. The issue I see here is people burning candles at both ends to afford housing which really reduces quality of life.
Do you believe we would be burning the candle at both ends by making this move?
Let's check a few numbers. You say you can sell your house for 1.36M and a prospective new house would be 2M. Assuming some transaction costs, lets call the difference 750K. A 15-yr loan @ 3% would cost you $5K/month which is easily covered by the school tuition savings. As I'm sure you've concluded, the 85K/yr you currently spend is just a massive amount. You could use the 7K/month savings from no private school to rent at the new VHCOL area to see how it plays out. If you are set on purchasing, I would probably put the entire proceeds of your old house into the new house just to keep the payments lower. Perhaps that not the most efficient use of capital, but like you, I'm debt averse.

You mention that you've already considered prop taxes, but what about state income taxes?
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by Wenonah »

Being close to outdoor activities is huge if that is what you are after. On the other hand, why are you paying for Grad School for your kids? Not many parents do that--high earners or low. By 22 your kids should be taking responsibility. They can work for a few years and earn the money, work for a company that pays for part of the degree, get financial aid, etc. And truly, shouldn't one have some world and work experience before they get a graduate degree? Take it off of the table and lessen your load. Enjoy your outdoor time with the fam.
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Re: Would you incur debt to move from an HCOL area to a VHCOL area to improve your family’s quality of life?

Post by stoptothink »

Wenonah wrote: Tue Nov 02, 2021 9:15 pm Being close to outdoor activities is huge if that is what you are after. On the other hand, why are you paying for Grad School for your kids? Not many parents do that--high earners or low. By 22 your kids should be taking responsibility. They can work for a few years and earn the money, work for a company that pays for part of the degree, get financial aid, etc. And truly, shouldn't one have some world and work experience before they get a graduate degree? Take it off of the table and lessen your load. Enjoy your outdoor time with the fam.
Constant debate on this board. In the many education threads there are parents even paying for medical school. Seems absolutely bananas to me, and I don't think I know a single person in real life whose parents paid for their grad school, but it's a common thing here on Lake Wobegon.
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