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Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/30/19 at 3:55PM UTC
in
Money

Deciding whether to buy a bigger home

I recently made an offer on a home that's much more expensive than where we currently live. My housing costs will triple if we make the move and while I'm making great money now, I'm worried about all the what-ifs. I'm a self-employed freelancer with a steady client base but who knows what could happen if a recession hits. Or if I were to get hurt and not being able to work. If anyone else has gone through a similar decision, how did you decide what to do? I want a nicer home because we really just don't love the one we're in now but I don't love the idea of spending so much money.

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LEANNE TOBIAS
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4.05k
Investment real estate/sustainability
08/02/19 at 12:05AM UTC
What percentage of your income will be spent on housing if you make the move? If it is significantly above 30%, I would think twice, unless you have substantial savings. In addition, it is prudent to have at least 6 months of expenses in savings or other investments as a financial cushion, in the event of job loss. Finally, is there another wage earner in your household, or is it just you? My own feeling is that it’s smart to have a good backup plan before dramatically increasing your expenses.
Anonymous
08/01/19 at 5:26PM UTC
You mentioned purchasing land for a “hobby farm”, typically land used for farming is set at a different tax level than residential tax rates. Where we live (also rural) anything 5 acres and over can be considered ag instead of residential. With the farm you can further offset costs by selling any goods you grow (live stock, meat, eggs, food, flowers etc.) at a farmers market or road side stand. A lot of things can be written off when u have a farm. Above I believe you had stated that there was a second structure that could be rented out, this would be perfect to help offset how much you are spending on your mortgage or other increases of expenses (bigger house higher utilities, is there a barn that needs electricity, water increase for live stock or fields). I know becoming a landlord can be scary but if they are in a separate area on the property it could help to off set costs and also it may help if the renter is willing to help take care of land/livestock if that is all new to you. Yes your finances can change but worst case scenario is you end up selling the home down the road but have taken the opportunity to live a dream and make memories for you and your child(ren). I’m sure it was scary to go freelance when you first started as well but it seems you are successful. Also you can get insurance that would cover all expenses if you became ill or injured yourself and couldn’t work so that is something else to take into consideration.
Anonymous
07/31/19 at 4:36PM UTC
I think this has a lot to do with how you've budgeted and saved historically. Do you have a solid nest egg that you feel will support you in case business slows down? Broadly speaking I think optimize the things that are important to you, identify the price point required to buy those things, and see what's available for that price. For example I was willing to pay more for location and square footage, but not for high end features. So I optimized around price per square foot in my neighborhood of choice and now am really happy with the decision!
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/31/19 at 4:43PM UTC
This is great insight, thanks for sharing it. We're paying for the location and land (the houses are on 3 acres) more so than the house or its features. It's 20 years old but needs some updating. My biggest sticking point has been the mortgage payment but you've given me something else to think about.
Anonymous
07/31/19 at 4:46PM UTC
Absolutely! A few other things to consider: If needed, are you able to sell part of the land to offset your costs (in a worst case scenario)? Location is very important to maintaining value in most areas. Also, you may want to have a contractor take a look at the updates required and give you a sense of the cost. If it's just cosmetic, the costs can be affordable- but plumbing/electric/foundational costs can be astronomical.
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/31/19 at 4:50PM UTC
No, I don't think the land could be divided based on where it is. But maybe. And I was definitely planning to have the house inspected from top to bottom, beyond the regular home inspection to look for roofing, hvac, plumbing issues, etc.
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Anonymous
07/30/19 at 7:40PM UTC
If you love spending time at home and you're planning to stay at least five years, then sure, sounds like you're making a good choice. If, however, you're someone who travels often, or, likes to spend a ton of time outside of the home I don't think it's worth it. But, that's my perspective as a former homeowner, now happy renter. If something does happen to your income, would you be comfortable taking on roommates or Airbnb guests to offset the cost? That's always something to think about too!
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/31/19 at 4:42PM UTC
That's a good insight to offer. The house does have a second home on the property (1300 square feet) that could be rented. But that has its own implications so I'm not sure what the best way to go is.
Lea Fichter
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171
Recruiting for Camuto Group (Designer Brands)!
07/30/19 at 7:40PM UTC
I almost bought an expensive home, but we backed out at the last minute because the inspection came back with a ton of issues. We wound up buying a home that was $100k less. 4 months after we moved in, I found out I was unexpectedly pregnant. We are SO happy we bought the less expensive home because daycare in our area is about $17k per kid per year. If we had the more expensive mortgage, we would have been in big trouble. Make sure your mortgage isn't going to cause you a financial hardship if your freelance work dries up for a bit, or something else happens. You really never know!
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/31/19 at 4:41PM UTC
I have no other debt so the mortgage would be our biggest expense but $2400 a month is a killer to me, even though I could technically afford a mortgage payment three times that amount. I would prefer a less expensive home but we've been looking for a year and this is the first property we've been even remotely interested in. Maybe I'm too picky, lol.
Kim Beasley
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796
Administrative Professional
07/31/19 at 6:29PM UTC
Get another real estate agent and keep looking! The perfect place is out there so don't make a bad decision because you got impatient :)
Kim Beasley
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796
Administrative Professional
07/30/19 at 6:50PM UTC
I decided early on to buy what I wanted (at minimum) with the goal of staying and paying it off. GOAL ACCOMPLISHED!! Just made my last house payment 2 months ago! To answer your question, your hesitation is a sure sign you aren't comfortable with the current choice in housing, so I would say, take a step back from it. Find something not as expensive that you two love and then go for it!! Good luck!
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/31/19 at 4:40PM UTC
That is awesome! I could pay off the home we're in now in one go but I don't want to spend my money on that. We like this house but don't love it. I'm so on the fence about all of it.
Kim Beasley
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796
Administrative Professional
07/31/19 at 6:28PM UTC
2 things I think are for sure: 1) find something you both love and 2) don't spend so much money that you would lose the house if your income was cut in half . It can happen. I was laid off when the economy tanked and would have lost everything if not for my retirement money and unemployment payments. So, take the amount that you spend very seriously . Good luck!!
Kori Reffner
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21
Love working with and helping others!!
07/30/19 at 6:30PM UTC
I haven't gone through this personally but I have had friends/relatives who were in the oilfield do this. It all just depends on what is best for your family, personally I would prefer to be in a home that I am comfortable knowing my family is secure and that finances are the least of my worries. Less stress is best! I hope this may have helped you! Good luck with you decision!!
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/31/19 at 4:39PM UTC
We hate the home we're in, that's why we're even considering it. But I agree, less stress is best.
Anonymous
07/30/19 at 6:07PM UTC
I understand your fear of spending money, and also counting on freelance income for such a large commitment of recurring payments. If your bank approves you then you must be doing something really right. For me, personally, I would worry about the freelance drying up, too. That doesnt mean don't do it, it just means I've seen things go bad for others and wouldn't want the same to happen to you. I hope this doesnt come off as negative, I'm just a bit of a realist. Good luck to you.
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/31/19 at 4:39PM UTC
I feel the same way, even though my freelancing business is great now who knows if it'll stay that way? That's the worst part about running your own business, it's just too unpredictable.
Ruzana Glaeser
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950
Co-founder of brightmeetsbrave.com
07/30/19 at 5:49PM UTC
Are you a dual income family? If so, what has worked for us to ensure that we would be able to sustain living situation if we went to single income. I am not sure how single parents can address this situation, but it has worked for us. It's tempting to get a bigger house or get other loans for home improvements, cars etc. But our check point is - can we afford it if either one of us got laid off? We have emergency savings but that's for the times when both of us are laid off or are sick.
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/31/19 at 4:38PM UTC
No, I'm a single parent. My freelance income is our only income. And it's a substantial income but freelancing can be unpredictable.
Ruzana Glaeser
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950
Co-founder of brightmeetsbrave.com
07/31/19 at 4:42PM UTC
In that case, I would probably play it safe and if you have extra income now, put it towards retirement savings rather than increased mortgage payment. Tough choices, and not always the most fun to make at the moment, but if you don't need a bigger house, then why risk financial health.
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/31/19 at 4:49PM UTC
We don't need a bigger house but we were interested in having some land. Specifically, in doing some small-scale hobby farming (we live in a rural area). The housing payment would be about 10% of my monthly income but it's still a lot to me.
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MichelleS
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559
Proven Technology Leader
07/30/19 at 5:23PM UTC
Everyone's comfort level is different. I like to think of "worst case scenario" then figure out how I'd handle it. If I can figure it out in my head and I'm comfortable with the outcome - then I'll go for it. If not - then it's not the right move for me.
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/30/19 at 5:27PM UTC
I've thought about worst-case, which would be all my clients and income disappear overnight. That would be terrible but I do have a substantial amount of savings to fall back on. I'm just cheap, that's the real problem. I love to save and hate to spend, even when it's for something I truly want.
Kim Beasley
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796
Administrative Professional
07/30/19 at 6:52PM UTC
But, do you really want to eat up that wonderful savings to take care of the house during a worse-case scenario?? And start all over? Just something to think about!
Rebecca Lake
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400
Freelancer, blogger, homeschooling mom of two.
07/31/19 at 4:38PM UTC
That's what I'm concerned about. It would really make me unhappy to have to do that.
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