Thursday, December 30, 2010

Project 30: Cutting housing costs or We're moving!

When making plans to move back to America, my parents very generously offered to let us live with them for as long as needed to get on our feet.  Without that support, moving back to the U.S. at this time would have been possible, but extremely difficult and much more expensive.  However, both of my adult younger siblings still live at home, so space is pinched.  Also, some unforeseen setbacks on the parents' basement renovations meant that the room where we were supposed to stay was not ready.  So for my first month back, I was without my husband, without a job, sleeping on a pull-out sofa in a high-traffic part of my parents' very packed and full home.  Talk about stress:  Looking back, it's a miracle there was no murder!

Luckily, my parents, siblings, and I have all grown up enough in our relationships that we not only survived this period, we actually had some fun.  Min Gi and I considered staying there longer to save up some more funds before moving out even after I got a job.  It might have been worth the temporary stress to be able to be on steadier financial ground.

Then I got a job offer about 60 miles one-way (80 minutes with no traffic around the heavy-traffic DC beltway away).  The decision to move out made by the fact that I was unwilling to endure this commute.  This gave us a week to find a house and move before my job began.  Not much time to find the most economic options.

In my investigation of the area, the difference between a live-able 1 bedroom apartment and a 2-bedroom townhouse was about $200/month.  So we went with the townhouse, although the rent was an uncomfortable 30% of my gross income (I hadn't gotten a paycheck yet...there was the mistake).  I figured we could swing it for a few months on just my salary and then Min Gi would find a job and we'd be fine.  We moved in, set up house, and were happy and optimistic about life.

When the paychecks began to come, the sticker shock for couples medical insurance premiums, teacher union fees, mandatory pension contributions, and taxes was overwhelming.  Furthermore, teacher salary is complicated by the fact that we are 10-month employees.  In my district, we have the option of spreading that to 12-month pay (which I took for my first year until we could put our own plan in place to save), but the way my district balances pay is that they don't take into account that the only deductions that will come out in the summer is taxes--so my pay is disproportionately smaller during the school year.

Although rent at the townhouse was 30% of my gross, it was a completely unacceptable 60% of my take-home.  Then, there were utilities.  Sure, we could survive on that (with no fun budget at all), but I want to pay off my debt, save for growing our family and emergencies, fully fund our retirement, and save for my husband's future business.  We didn't even have the wiggle room in the budget to save up for a plane ticket for Min Gi to visit his family in 2011!  I started to get stressed.  Again.  Stress like this is bad.

Back in November, when we realized this wouldn't work, and that just moving to a smaller apartment wouldn't solve the problem since it wouldn't make a big enough impact on our overall housing costs, we talked and decided we could handle a roommate.  We sent out feelers to our friends in the area if any young person was looking for a room in the area so that we could move them into the extra bedroom and split some costs.  No dice.  We posted an ad on craigslist and got a few responses, but the cats were a dealbreaker for many people.  I started to lose hope of getting relief for this situation.

Then, a friend of mine from theater, Dav (that's like Dave, but without the "e"), who lives in the same city as we do with a married couple in a small house, sent out an e-mail that his roommates had gotten jobs in Kansas and were moving out, but that he didn't want to leave the house and so was looking for new roommates.  Min Gi and I met with him last night to check out the space (and then we all went out to a nice Mexican restaurant to chat) and decided we're going to take it.  Our current lease requires 60 days notice and a fee (which is less than the discount we got on the rent when we initially moved in for being such awesome potential tenants, so it all works out), so we will move in mid-late February.

Financially, this is huge.  Our rent will go from $1325/month to $875/month and Dav's share of the house includes all utilities, including internet and basic cable (which is more than what we have now... we currently use free wireless where we can find it).  This is a savings of almost $600/month for us.  The house is about the same size as our townhouse, but all one floor.  It's a single family house with a small backyard (yes we can garden!) and since Dav's lived there for two years already, there are no huge quirky surprises you sometimes get with a new house.  It's in a better location for living (walking distance to a grocery store and some retail areas), though about two miles further from my work.  Even better--most of the furniture in the house belonged to the departing couple, so Dav needs furniture anyway!

On a personal front, I know Dav well and know he's an easy guy to live with and he knows me (he even reads this blog--hey, Dav!) so he knows our situation well.  It's actually a big win for both of us as he finishes school to try for a promotion and we continue to adjust to life in America.  Min Gi is excited to have someone else to practice English with and go drinking with sometimes.

People who are not us (like my parents and some of my friends) think we are crazy.  It's funny actually.  They think we cannot possibly "sacrifice privacy" as a young couple or live in a small space together, but we know this is the right choice for us.  If you're going to get ahead in America, you really can't play by usual American rules.  We have already eschewed many of the consumerist trappings of shopping as a hobby that is typical here.  Now, it's time for bigger changes.  Dave Ramsey likes to say "Live like no one else so later you can live like no one else," and I think this is what he meant.  It's about making unusual cost-saving, counter-cultural choices in the short term so that you are not forever shackled to debt like typical American consumers.

So... I don't think I'll make much progress on the get out of debt goal in January or February with the early moving penalty fee and truck rental costs.  But I would consider this huge decision to be a first step towards meeting my ambitious financial goal in the Project 30.

It's exciting for us.  As Min Gi said, "Moving to a new place is like an adventure!"  Onward and forward...

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