Source
r/personalfinance•
edikit

Are we about to make a poor financial decision?

Housing

Where we live is an exceptionally difficult rental market. About a month ago, after literal years of scanning listings every day, my boyfriend and I finally found a condo that is superior to our current apartment in every way imaginable, for a decent price relative to this area. We were both initially very excited about it and eager to move in, but it was still in escrow. Escrow has finally closed and we were given the lease to review today. But with more than a month to mull over the decision, I'm having major doubts.

$3500 will be due upon signing the lease (rent + deposits). We'll also owe $1625 for our current rent on the same day. A washer/dryer isn't included, so that'll be at least another $1000 (I don't want to compromise on quality for price). Moving costs will be around another $1000-$1500. After all is said and done, we'll probably have spent $8000-$10000. For the record, ongoing rent will be $500 more than what we're currently paying at $2100.

None of this is something that we cannot strictly afford, but it is a very large sum of money to think about spending all at once for something that isn't an investment. I feel like I should have processed this long before the day we're being asked to sign the lease, and I actually feel really bad about it, but it kind of just hit me hard with the timing of everything. We weren't sure when escrow was going to close, but I wasn't expecting to have to pay everything on the same day that our current rent is also due.

I've also been thinking about the opportunity costs. $500 more in rent is $500 less in savings every month. That $8-10k is also coming straight out of our eventual down payment fund. With this move, even though our living situation will be pretty drastically upgraded, I estimate that we're setting ourselves back likely several years toward being able to buy a house.

Our current lease, being an apartment building, is also basically indefinite. We're month-to-month and can stay here for the next 5 years if we wanted. With this new lease, it was mentioned in passing that the new owner might want to move in after our lease is up. Given the incredibly difficult rental market, that's concerning.

The downside to staying here is that, well, this place sucks. Pretty badly. But it's cheap (for the area) and allows us to save quite a lot every month. If we budgeted very strictly, we could probably have our down payment in a year. 2-3 years tops if we're more lenient. Still, this place really sucks and I worry that we won't find another opportunity like this one if we do find ourselves in a "last straw" situation.

Is there an obvious right choice here? Am I being stupid and blind about a certain aspect of this? I'm honestly a bit overwhelmed now that push has finally come to shove.

Edit: For some reason I can't see anyone's comments right now. I've gotten the notifications for them, but not seeing them in the thread. Just want to let you know that I'm here and active, just waiting for comments to show up.

In the meantime, I thought I'd provide our current financial situation if it helps give context at all.

Current savings: Roughly $35k

Monthly take-home earnings (after taxes): Roughly $6k

Current rent: $1.6k

Monthly expenditures (excluding rent): Roughly $1.5k-$2k

Posted Apr 30, 2019, 3:05 AM UTC · edited

214
Frashizzle•

From the numbers you've given, it sounds like a bad decision. Obviously. I mean, you know that; that's why you posted it here.

There's nothing intrinsically wrong with spending for luxury, if you can afford it. You haven't posted the rest of your finances here, but you're obviously thinking you can't afford it (or can't afford it and also do X,Y,Z in the future).

I also don't know what the fuck you're talking about on the washer/dryer. Outside of the automotive and electronics industries, the washer/dryer industry is the biggest scam on the planet. Five year old ones are higher quality than new ones, and you're a fool if you pay more than $100 for each.

2
edikitOP•

I've updated OP with our finances:

Current savings: Roughly $35k

Monthly take-home earnings (after taxes): Roughly $6k

Current rent: $1.6k

Monthly expenditures (excluding rent): Roughly $1.5k-$2k

It's legitimately not an issue of technical affordability, but rather an issue of whether or not it's wise given the pros and cons of each situation. I'm certainly leaning toward not moving now, admittedly, but I've been stuck in my head about this whole situation for a month now. Actually, for over a year now. I'm a huge self-doubter, to the point now that I'm not sure if my doubt is actually justified or if I'm just sabotaging myself because I'm afraid to take a risk.

Regarding the washer/dryer, I'd like large capacity, front-loading, GE-certified machines, and would appreciate having that 10-year warranty. I wasn't seeing anything new for less than at least a few hundred dollars each, and those were bare-bones.

0
Frashizzle•

Well, it seems like you can afford it. The moving decision is just a matter of how much you value the luxury. There's not a magic pill that's going to make it seem like a good idea. It's not. But the question is do you like it enough. Do you like it enough to justify the expense? That is a question only you can answer.

Regarding the washer/dryer, I was just joking with my original comment. That is not very important in your financial lives. ... But old fashioned top-loaders are cheaper and better though.

1
edikitOP•

Hold up... are you telling me that reddit can't give me all the answers? :( I have to think for myself? >:(

Kidding aside, I appreciate the perspective. Sometimes it just helps to hear from someone who's not so close to the situation, y'know?

2
LordPhartsalot•

I commend you for totaling up *all* of the expenses of your proposed new place, and it does sound like a chunk of change.

But in the end you'll have to decide between the fancy new place and saving, and it's your choice. Most of the people on this sub would lean towards the saving side.

When my wife & I were saving for our first house, we lived in the cheapest crappiest apartment we could find, as long as the neighborhood was relatively safe, in order to save up. And by crappy I mean the basement of a small house with uninsulated walls where the inside of the windows had visible frost every winter morning. But it worked and we bought our first house sooner rather than later. So, you know, I'm on the side of keeping the not-quite-nice place for a while longer.

2
edikitOP•

Thank you for your perspective. :)

That's the mindset I've been trying to keep, but it does get draining sometimes trying to keep things in perspective. I think I get so worked up over this place sometimes, but maybe it's not as bad as I make it out to be in the grand scheme of things. It's fairly safe and it's a roof over our heads, after all.

I guess I'm also feeling kind of rotten for expressing interest for so long, even up until the last email, only to say after everything that we don't want to move forward. Feels kinda crummy.

1
[deleted]•

[removed]

1
HonkinSriLankan•

Living in a shitty apartment for 2 more years until you buy house would be my reco.

It sounds like there's a strong real estate.market in your area so I can't imagine home ownership is a bad investment.

But I don't know how shitty we're talking here, if it's a safety issue that would be a different story IMO.

1
edikitOP•

Certainly, I don't see the market here waning in any foreseeable future, and I project the next decade or so will see a surge of growth in this area as our airport has plans to expand direct flights to large markets.

As for the level of shittiness, I'm not in fear of my life or anything like that, I feel pretty safe walking around at night, but there are some unsafe elements. Break-ins, theft, drug issues, that sort of thing. More-so though, it's that the building is kind of falling apart and the property manager refuses to do anything about it. Termites are undoubtedly a thing, though they vehemently deny it. The washers/dryers are broken 90% of the time. People leaving literal feces in the hallways. Lots of structural wood rot. Things like that.

1
LividLunch•

How are you coming up with $8-10k to move? I'm only adding up $6k, of which, $2100 is rent and $1400 is a deposit that will be returned?

  • $3500 in first months rent + security deposit?
  • $1000 washer dryer
  • $1500 moving costs

The current rent, you have to pay no matter what, so it's not part of the moving cost.

Instead of paying movers $1500, can you move yourselves or with some hourly help off craigslist or lugg for only the big pieces?

Will you be getting a deposit back from current apartment, to offset the security deposit you are putting down here?

The double rent isn't ideal ~ can you negotiate a later start date with the new place? Even just 2 weeks cuts a chunk of rent cost out.

Your old place sounds awful if there is literal shit in the hallways. I think you've inflated the cost of the move though, so I vote for moving!

edited to fix formatting

1
edikitOP•

So the original plan was to give our current landlord notice and sign the new lease to begin afterward, with minimal overlap. But because escrow took longer than anticipated, we'd be paying rent for an entire month for both places at once. I did ask if they could work with us on the move in date, but they were pretty adamant about the owner wanting someone in ASAP.

I'm not super optimistic about getting our current deposit back, given what I've heard from past tenants. I don't want to bet on getting the deposit back for the new place, either. Plus, the pet deposit portion ($500) is already nonrefundable.

We've decided to go with professional movers this time around because the last two moves we made, we tried the DIY approach and suuucked. :) It's worth the money IMO for the piece of mind alone. One less thing we'd have to worry about.

I'm also giving ourselves a little wiggle room so that we're not caught off guard if an unforeseen cost comes up (our bed frame, for example, very well might not survive the move, given its current state ahaha...). Essentially, in the month of May, we'll be dropping $8-$10k that I don't anticipate recouping. Maybe I'm wrong to classify it all as moving costs, but it's money spent either way.

Our current place is undoubtedly pretty awful though. Though to be completely fair, I've never seen shit in the halls with my own eyes, we've just gotten several notices addressed to all tenants.

1
actualsysadmin•

If you'd have enough for a downpayment in another year, why move now? That just seems silly. Unless you plan on it taking longer. Though, I wouldn't buy a house with someone I wasn't married to. Legally speaking.

1
edikitOP•

If we were able to save every extra penny for the next year, we could do it, but I do think realistically it will be longer. However, the main reason we want to move now mostly has to do with the condition of our current apartment and the rarity of this opportunity. I worry that if we pass this up, we won't find another opportunity like it, and I don't know if I want to stick it out at this place for another 1-2 years.

1
sockalicious•

Is there an obvious right choice here?

Yes: don't move, go on that tight budget you mentioned, and buy a home as soon as you can. There are other choices, but given your goals and considered from just a personal finance perspective, they're obviously wrong.

1