What’s 10 minutes worth?

With a new baby on the way my wife and I have started to consider/look at at our lifestyle. Things are about to change so it’s got us talking about what we would be willing to give up.

Our biggest cost like most is our mortgage and whilst we have good cash buffers and my income to support it whilst the wife doesn’t work we are just not sure of the long term impact of a decent sized mortgage. Also my wife doesn’t earn very much so it’s likely she will be off for quite a while given the cost of childcare.

So we have just started to look at our surrounding suburbs in no more than a 10minute drive radius. We are only looking at fairly straight swaps in terms of house quality. Our search has found a couple of suburbs which we believe would be suburbs we would live in.

This is what we discovered 10 minutes is worth:
PROS
- A saving of approximately 300k
- An extra 200 sq+ (An actual backyard)
- Less public transport options but in the right pockets (where we would only consider) actually being closer to a train and a quicker commute into the CBD

CONS
- Less cafes and restaurants
- Less quality private schools
- Just generally what we would consider less desirable NOW! (I say now because things like parks don’t yet excite us).

Then there are a bunch of things we consider neutral. As an example we would be closer to some friends and family but further from others.

Our biggest driver is obviously cost and what 300k of saved interest means for our families future. The other consideration is what that saving would allow us to do in terms of investing.

So back to my actual question(s)
Firstly who has done this and what can you share about your experience both good and bad?

Secondly who has been in this position and not done this and what can you share?

Just generally other things we should consider?

 

For a start, consider the cost of the actual swap.

Getting your property ready for sale
Staging?
Agent sale commission
Legals

Then

Legal purchase fees
Inspection fees
Stamp duty
Actual moving costs (and the inconvenience)

These will almost certainly cost $50K, and could be much more. I’ve heard Victorian stamp duty is quite high.

Then you also have the emotional cost. This is your PPOR, are you happy there and do you really want to move?

Work out your actual saving. In this time of super low-cost interest rates, how much per week would you save on a lower mortgage?

Timing - is now the time to downsize? In percentage terms, a rising market is usually the best time to change to a cheaper property.
Marg

 

Congrats mate, in the same scenario now. 300k is a big chunk to swipe away and I'd consider it, less repayments will definitely help now and speed up long term investing. As long as you like the area, you could easily try renting for 6 months or a year first as an option.

We looked at alternatives as well, smaller home around the area but I just like it here to much. Decided to decrease our expenditure where possible for now, put solar in, chopped up 2 years worth of wood for heating, sold off anything that can bring us cash like spare cars that aren't used, not upgrading anything for some time.
And added additional income on the side.

Going to one wage is difficult but it won't be like that for ever, your mrs will have opportunities to earn again soon and your a smart guy that I'm sure will continue to increase your earnings. So cashflow might be influencing your decision now, but in time you won't have that problem. Unless you have 3-4 kids then you're stuffed.

 

Congrats!

Find out what childcare costs where you currently are, and where you're looking at moving. They vary significantly.
And work out how much you'll be out of pocket after the child care subsidy.
We both work full time, so the little one goes to an early learning daycare, which she absolutely loves. We're about $20k out of pocket each year for her, but we bring in more than staying at home, and she's learning so much more than we would know to teach at these young ages. It's been super beneficial every which way.

Also, that $300k loan difference becomes $250k after costs. We did consider all that when we had our kid, but thank goodness we didn't leave. Our financials may be 3 years behind now compared to if we had moved, but we know we are so much happier. It's the one thing we haven't compromised on.

 

Firstly, congratulations! It's going to rock your world in every way !!!! I speak from very recent and current experience, as we just had a baby girl 5 months ago .

As others have noted - this isn't a permanent state of affairs. Your wife will not be outside the workforce forever .... would you have considered moving and saving 300K if you were not expecting a child?

Whatever you decide, you and your wife are the only ones who can make the decision about what you consider best for your family.

 

Here is another perspective.
We did the opposite - one two year old and a bub on the way. We moved closer to the cbd and into a much nicer home. Best thing we ever did. I counted the cost of child care vs returning to work and it would not have made any difference - I worked for a bank and had the advantage of Maternity Leave back in the day (unpaid). Being in the nicer leafy family-friendly suburb meant so much better quality - for socialisation, schools, shopping centres, lower crime (non-existent) etc.

We went from having the mortgage almost paid off to having a mortgage about three times bigger than what it was to start with. Yet we still managed to reduce the new mortgage to nothing in another 17 years, paying for (humble) family holidays and swimming lessons and an almost new car, all on a single income for the next twelve years.

 

I agree with Euro in that only you and your wife can make this decision. Once that baby comes though your entire world and priorities will change.

For us personally - although all of the above makes sense, leaving a further 10 minutes away for us makes a big difference and its worth the $300,000 savings. So although some things make sense on paper - its a different story in reality.

 

10 minutes drive during peak hour or it is the same where you are (10 minutes can be over 8km away)? Can you give us the actual suburb you are in now and where you are looking to go so we can help a bit more?

 

@albanga congrats mate. I had a baby girl about 5 months ago and all I can tell you is that you will come to love parks and swings.

I'm now pushing her on the swing at 730am in the freezing mornin while she's grinning away at her salve dad.

Get ready for it mate. Its coming!

 

If anything, those would be pros for me!

 

@euro73 @Sackie Congrats to you both as well! That’s fantastic news!
Must be something in the PC water but I am also having a baby girl

 

Thanks so much for all the fantastic replies.
We know it’s only a decision we can make but always great to hear what others have done and learn from their experiences.

Just some other things I missed. The 300k is after costs. The price difference is actually 350-400k.

We also live in a townhouse. We built it and it’s stunning but there is little backyard. Probably one of the best decks you will ever see but Zero room for any kind of kids play equipment.
TBH though the backyard doesn’t worry me too much. It’s more the inside that also hosts 2 dogs (1 a 45kg golden retriever) and a cat.

 

I subdivided the land and built the townhouse we live in. I wish we had an emotional attachment but anyone who has gone through this process will understand it’s hard not to loathe the house at times. Haha

TBH emotion with a house is something I have never seen first hand. When mum sold her house which she had all us 3 kids in and raised us all over 30, I thought she would be upset. 4 years on I still ask her abut it and she said it’s the best thing she ever did and doesn’t miss it in the slightest.

 

Firstly congratulations. As others have said be prepared for your life to change dramatically in a good way! I've always maintained that kids are 90% **** hard work but the 10% remaining makes up for the rest completely.
Our biggest issue was that dramatic drop to single income. It hurts no matter how much you 'plan' for it. But you do find yourself going out less, breakfasts, late dinners and drinks etc really do become a thing of the past. But they will come back. Your friendship circle also greatly decreases but you gain new friends in similar situations. For us the wife is now returning to solid work after almost 5 years of sporadic employment. It did feel like things were on pause for some time however we did move forward albeit slowly.
I also back others when they say find a good daycare. The scheduled day and interaction really helps with their development. The structured learning these days in care is amazing. It's no longer just a child-minding business.
In terms of housing don't get too caught up on what will and won't suit a young family. Your perceptions will change over time. For us we packed up from our brand new PPOR, shifted 2000kms Nth to a regional city for work and now rent a small 3 bedroom home. My 2 girls (4 and 1.5) share a bed and room and absolutely love it. Their favorite toy at the moment is a box from a printer I bought over the weekend and their biggest decision each week is what park they'd like us to take them to.
We own IPs elsewhere and have a rough 'plan' as to where we'd like to end up. But right now we are just maintaining our flexibility and giving them 'experiences'. I will say be prepared to become more determined and driven. I found I gained more 'purpose' in life after kids and all my decisions are now made with their best interests at heart.
FYI we did all this before turning 30.

 

Perhaps “emotional” was the wrong word.

There is a huge difference between moving because you want to, as in your mum’s case, or moving because you have to. Just look at the reports of the unhappiness of home owners whose properties are resumed and they have no option but to move. Or people displaced for financial reasons.

From your initial post, it appeared that you were trying to talk yourself into moving for financial reasons.

So how happy are you and your family with your present PPOR?
Do you actually want to move?
Dies your wife really want to move?
Marg

 

It’s a great question and TBH I’m torn.
There are elements of where we currently live that we really don’t like.... but these could change. For example we really dislike the double story as it’s never used. However when our daughter gets older she will no doubt love it.

I also loathe my commute to work. I’m close to the CBD but the pocket I’m in means I need to walk/tram/train and never get a seat. This could be reduced greatly by driving to the station but that’s just another cost as we would need a second vehicle.

My wife is impartial. She likes the area we live in but isn’t overly attached. Her greatest fear is no longer being able to holiday every year

 

Our neighbours have just taken off their roof to accommodate a 2 storey addition.
Its been raining....
Their new baby is about 5 days old.
They can't stop smiling!
I really do wish them well!

 

Ha. Maybe this time next year, the last thing she will want to do is "holiday".

 

With three, and at one stage at one each at three different schools, I can say school location really matters. You will get tired of driving to the “right school” (indeed even if you can get junior in) really, really quickly.

Also, selecting the “right” school, aligned to junior requirements/interest/aptitude is essential. Get involved with the school, it’s an excellent experience and they (the school) will appreciate it. Almost no parents take the time.

Living close to school, and appreciating yours are years away, a (high) school where they can walk or get public transport is essential in my view. Can you afford to not leave for work until after 8am and then be home before 3pm?