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Plans -- and Budgets -- Change

July 7th, 2019 at 01:05 pm

With the revelation that I'm headed to Idaho for our next assignment, I've been able to spend the last few days looking around at houses, and more generally, figuring out what our budget will look like out there. The biggest unknown right now is "WHEN" -- my current report date in Idaho is in October, but I'm requesting an extension for ~6 months while I'm deployed, so that my family doesn't have to try to move from Alaska to Idaho without me there to help (I'm hoping/presuming that it'll be approved). But I've figured out the general area we want to live, identified a few childcare options, found a university program for my wife to pursue her DPT, and worked out the (tragically long) commutes we'll have. Based on that assessment, I've plotted out a tentative budget plan for when we move to Idaho, and I'm making some changes to our current budget to get us ready for the move.

The biggest issue is that we want to have as small of a mortgage as possible, then once we've got it, we're going to hammer at it to pay it off ASAP. I'm looking at houses around $300k, and shooting for having at least $150k available in cash for our downpayment.

At present, I've got ~$75k in cash/money market readily available that I'm allocating to the downpayment. I have $7k more in I-Bonds that I'll eventually cash out, and $35k in taxable investments that will be cashed out over time as well (waiting for LTCG status on recent purchases). So out of current assets, I've got about $112k ready for the downpayment.

- I've redirected our monthly investments going into stock mutual funds to instead go into our money market fund. Likewise, I've turned off dividend reinvestment.
- I've redirected additional savings for home repairs on our current house, diverting it as well to the MMF
- I'm going to stop the extra principle payments on our current mortgage, and again, divert that into the MMF.
In all, over the next 7 months we should be able to put an additional $23k into cash savings for the downpayment.

Finally, with all of the TDYs that I have/will be doing over the next 8-9 months, if I keep my expenses under control, I should be able to save at least $10k-$12k in per diem.

For those quick with math, I've got about $145k either available or forecasted. That last $5k....I'll have to see where I can scrimp & save to make it. Might not be possible, but we'll see. $150k DP is the goal, and I'll shoot for that.

The good news is that none of this takes into account the sale of our current home. For the sake of minimizing what will almost certainly be a stressful time, I don't want to count on the current home selling before we buy our next one. But once I get home from my deployment, we'll be getting our house on the market for sale, and I'm expecting that we should be able to net $100k-$110k from the sale of the house. Whenever that happens (whether before or after we're into the next house), that entire sum will go straight at the new mortgage. What remains of the mortgage (maybe $50k), we should be able to knock out in about 2 years. And at that point, we'll be 100% DEBT FREE!!!

One last nagging question remains -- a part of me is asking why I want to unplug the $35k of investments for the downpayment, when I could just leave them in place and (hopefully/presumably) continuing to grow.... I already have plenty to avoid PMI, and the eventual sale of our current home will help things along alot. It's coming down to an emotional vs. intellectual decision. Emotionally, I'd prefer to lock in my investment gains and protect them so that the money is available for the downpayment. But intellectually, if I leave the investments in place, they're always still there that I can reach over at any time to totally knock out the mortgage... So as time goes on, I'll have to see exactly what I end up doing....

5 Responses to “Plans -- and Budgets -- Change”

  1. creditcardfree Says:

    Those intellectual vs emotional decisions can be tough when it comes to investments. At least you are aware of both components and only you can know for sure which is the right one. I would expect as you get closer you might have a better read on it all. Good luck with the deployment! I'm pretty sure dependents have up to 12 months after orders to move, would that help out if the extension isn't approved?

  2. rob62521 Says:

    Personally, I would hate to take everything out of investments, even if it meant paying off your home sooner, if I read your blog right.

  3. Dido Says:

    Given the recent inverted yield curve (often signaling a recession in the following six to 18 months, protecting that money to keep it available might be a rational and not just emotional decision. This is a short-term expenditure so it’s wise to keep it conservative.

  4. Lucky Robin Says:

    What's more important to you? The investments or not carrying mortgage debt?

  5. kork13 Says:

    Lucky Robin, that's a great way to look at the issue. Interestingly, I think the answer for DW & I are diametrically opposed -- I value the freedom from debt, and she values letting the investments grow. She's normally the one to make decisions emotionally, so this role-reversal is a curious aberration. As I see it, with the mortgage gone, we can easily build up our investments again, and even faster than ever before, because our home will be paid off. I'll have to talk it over with her... But I think that she'll be okay with selling the investments with the knowledge that we can build them back up quickly.

    And Dido's point about the market being at a high point, with the market's fundamentals looking questionable, definitely reinforces my desire to seek some security with that money... Decisions are hard. LOL

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