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Mrs. R and I are getting ready to move for the 6th time in 9 years of marriage. Even by my transient standards, that’s a lot of moves.
Some people hate moving. I’ve heard of people sticking with a crappy house or boring neighborhood just to avoid moving. The boxes! The packing! Getting everything organized! Changing your life!
True, moving is a lot of work. But I actually enjoy it.
Moving forces me to think about what I want to keep and I can do without. I’m forced to consider what I want my life to look like in terms of location, living space, and culture. In a sense, I’m choosing my destiny. And if I choose poorly, I can just move again. There’s a freedom to it. It can even be exciting.
Here’s the list of our moves:
2008 – East Coast apartment to East Coast apartment: From one apartment to another in order to get DirecTV and the NFL Sunday Ticket (needed a south-facing balcony). Yes, that’s why we moved.
2009 – East Coast to Denver, CO: Work assignment.
2012 – Denver back to East Coast: Work assignment.
2014 – East Coast rental house to East Coast apartment: We didn’t like our suburban house or our landlords after a tree almost killed me during a storm (long story).
2015 – East Coast apartment to foreign country: Work assignment.
2017 – Foreign country to East Coast apartment: Work assignment.
2020 or so – hopefully moving again!
Much of my financial planning energy right now is going toward the move. I alluded to this in my latest money check. Here’s what we’ll need to do over the next few months, along with cost estimates.
Unfortunately, this means I’ll need to put a lot of my savings plans on hold until the end of the year. That’s life. No one should cry for me and I’m not complaining.
I should address the elephant in the room here, which is that rental price of $4,000 per month. How in the world is this reasonable? Well, first let me tell you a little about our area and then I’ll tell you more about our apartment.
We had a few priorities when choosing where to live. These priorities were non-negotiable.
- Short commute. Commutes in our area can be up to an hour each way in traffic if you live in the burbs, leading to 11 hour workdays, less time with family, and general misery. Our commute will be 15 minutes.
- Close to a good school. We will be able to walk to our kids’ public elementary school, which is Spanish-English immersion.
- Walkable to good food and activities. We’ll be able to walk to the grocery store, to restaurants and coffee shops, and to the subway.
Right off the bat, there are only a few neighborhoods meeting all these criteria. It turns out we’re not the only ones who want to live in such a neighborhood, and this is reflected in the cost of living. I’m not going to give away where we live, but here are some data for our zip code according to Trulia:
So it looks like we’re right in line, even slightly under, the average monthly rent.
What do we get for $4,000 per month? Again, I’ll list the non-negotiables.
- 2 Bedroom, 1200+ square feet, with a decent layout. Our apartment is a 2BR + Den clocking in at 1246 square feet. The layout uses space well. Some modern apartments have weirdly curved walls and such that make them difficult to arrange.
- Gym and pool in the building. The pool is outdoors but will come in handy for the kids during the summer. The gym will come in handy for me.
- Garage parking. 2 spaces will run us $175 per month. Indoor parking is great in winter.
- Intangibles. These are not necessarily non-negotiables, but they are factors that are difficult to measure, like the culture (is it full of rowdy yuppies?), the quality of construction (are the walls paper thin?), and building management (are they responsive?). Our building scored well on these points.
There are a bunch of other amenities — like free coffee, a “cyber lounge”, convenient package and dry cleaning delivery, etc — that are also included.
I admit, $4,000 per month is a huge number. To make sure I wasn’t insane, I Googled “How much should I spend on rent?” The rule of thumb is no more than 30% of household income.
It turns out, $4,000 is only 18.5% of our monthly income, so you could say we’re being frugal. Hardy hoo hoo.
You might say, “Hey Rich, with that monthly payment, you could easily buy a house!”
Sure. Let’s say I did that.
According to an online mortgage calculator, we could have the same monthly payment for a 30-year $640,000 loan, assuming we paid 20% down on a house worth $800,000. What would we get? Prepare to be amazed:
I am not joking. This house, in my zip code, is on the market for $790,000. It’s not on a great street, it’s not walking distance to school. You’ll be shocked to know there’s no pool in the backyard. And no “cyber lounge.”
Housing prices in my area are grossly overvalued. Even if we found something decent, I wouldn’t want to put all my spare money toward a down payment for the privilege of paying $450,000 in mortgage interest over the next 30 years. Owning a home isn’t always a financial benefit.
I understand my circumstances are unique. I have a career that carries the possibility of moving around, which can make owning a home more of a hassle. Even so, I think many people are realizing that the American Dream doesn’t need to include home ownership and a white picket fence (or chain link monstrosity). Renting has some distinct advantages.
What do you think about all this, Penny? What are the advantages of owning vs. renting that I might be missing out on? Is it more than a practical matter — as in, is there an importance to having geographic roots?
Feel free to riff on this however you’d like, I’d be happy to discuss more if you’re interested.