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Background. Bought this house 4 years ago for 892K.
Mortgage: $5350 (625K balance 30 yr fixed at 5.75%)
Sell the home and buy something (if you can) in the $300,000 or less range.
HELOC: $400 (120K balance 3.9%)
Auto: $533 (28K balance 5yr 1.9%)
Sell the car and buy a small Toyota or Hyundai.
Utilities: $470 (average)
Not sure what part of the nation you live in but we pay $38 a month for electric and about the same for gas. I bet your large homes sucks up the power to keep it comfortable. A smaller home will cost you much less
Water $125
We pay about that for water, sewer, and trash.
Sewer: $70
HOA: $120
No HOA in an older home
Alarm: $138
I think that this could be reduced as well
Home phone/internet/cable: $243
Wow, big cost here. We pau half that for the same stuff.
Auto insurance: $102
A month? Lower priced car will cut that.
cell phones: $195
For 2 phones? Kind of high. Get just the basic service. Change carriers and it should be about $40 a phone.
Kids sports membership:$400
Your kidding me right? Drop this
Gas for cars: $400
Groceries: $1500
We feed a family of 7 on much less than that, then again we cook food and are not afraid to eat beans and rice.
Going out to eat: $250
Split that in half or less. I would drop it.
Credit card: $15,500 (0% till May 2014) typically pay $1200/month
Credit card: $15,000 (0% apr)
Credit card: $25,000 (13.25%) pay $150/month
401K loan: $11,000 (paid back $400/mo at 2%)
Dump half your savings into unloading this debt.
Income: 170K-200K
401K: 158K
Cash in savings:25K
Emergency fund: 0
Dump the other half of your savings here
College savings: 0
12 pages into this and I'm concerned that OP thinks his entire problem is the house. He has yet to answer ONE question about other spending habits - why they spend $1500/mo on food, how the credit cards built up, what line budget items (cable, some of the kids activities, etc) they are willing to cut from the budget.
OP, your current house isn't the problem. It's the largest SYMPTOM of your problem --> you and your wife spend like drunken sailors!!!!
I still think you need both a financial planner and a marriage counselor.
With a single income family in your range, you need to be sure you have a $1M MINIMUM life insurance policy so your wife and kids won't have to move into a box under the bridge should something happen to you.
You need to be putting away a MINIMUM of $500/mo per child for a state school college education and $1,000/mo minimum per child for private school college.
You need to max out your 401k contributions, enroll in any sort of "mirror" savings plan your company sponsors for high earners since the 401k max is only $15k a year or so. In total, you need to be saving about $4k / mo (combo of pre & post tax) for retirement. You are WAY BEHIND for a 40-yr old with your income.
You need an emergency cash savings account with 6-12 months of living expenses (not income, just to cover your house, cars, food, insurance, etc). A one-income family needs closer to 12 months, just in case.
You & your wife need to make a monthly budget and STICK TO IT. I'd recommend going on an "all cash" diet. If your new grocery budget is $800/mo, your wife gets $200/cash each Sunday and has to stretch it out. If you don't get your spending under control, the $500k house won't help because the "freed up" $1500-2000/mo will be going right to Ethan Allen, Tory Burch, Toys R Us, or wherever else you're frittering all your money away.
I agree with Turtle Creek, especially the bolded part. The house is a symptom NOT the cause.
Cut your expenses first, and get on a budget. You might consider a consumer counseling service (a real one NOT some slick operator trying to con you into a bill consolidation loan) to help you with a budget, get you on a payment plan, and close out your credit cards.
You, personally, seem to putting all the blame on the house but it's all the other spending that's the real problem because houses tend to appreciate, so the longer you hold on to the current one, the more you should clear from the sale. The interest on your mortgage and your taxes are also tax deductible. Take care of your overspending, and you'll be able to hold the house until it's the right time to put it on the market (like early spring, 2014, so buyers can get into it right after school ends and before school begins next fall).
If you are determined to unload your home, get it sold before you commit to buying another one. Rent a house or apartment until you get your financial situation straightened away and have a good down payment.
You've been given some great advice on how to change your spending habits.
I also think you need to change how you think about things as well.
You don't make $200k+ a year, you SPEND 200k+ a year.
Right now you are about 2 months away from bankruptcy - $25,000 in savings.
And, your retirement (401k) will support your current lifestyle for about 9 months.
Unless there is a gaping hole in the roof with a tree growing out the middle of it, A half a million dollar house is NOT a dump.
The next time you "need" new Ethan Allen furniture to sit on, or marble floors to walk on, or any other large purchase, maybe you should think about how much that money (with interest) will mean to your kid in 10 years when he needs to go to college. Or, how much it will be worth in 25 or 30 years when you retire. Take a look at your social security statement the next time it comes. Do you think you can live off that?
If you don't have the cash, you can't afford it.
Do you remember what you charged for $66k on your credit cards and 401k loan that you are paying for now? What about the $120k HELOC? What did you get for that? Are you getting $186,000 worth of enjoyment out of these "things".
I have a friend who makes $400/week and is better off financially than you. Why? Because she has enough money saved to pay her bills for 6 months if she ever loses her job. And, she can get a job flipping burgers and stretch that out a lot longer. It's much easier to replace a $20K job, than a $200k job.
It's not about how much you make, it's about how much you spend.
I wish you all the luck. Major kudos to you and your wife for reassessing your situation and doing something about it.
I'm not saying selling the house will resolve everything. It will however free up about $3000 a month. No downside there!
Great that you have decided to sell the house. The one thing you definitely need to do is take over paying the bills either by YOURSELF or together with your wife. Sitting down every couple of weeks and see exactly what you owe and keeping an eye on spending.
I want you to know, you are not alone. Many people are living on credit and living check to check. Kudos for you for wanting a better life!
I have friends and colleagues that laughed when I bought a fixer-upper for the same price as most of their vehicles. Years later, I am in a really great position. Bought in the right area and have equity in my home that everyone laughed at. Some of those same people have now lost money on their "lavish" homes and are under water. A few have even sadly enough lost their homes and are either in apartments or living with family members. Again, you are not alone. I bet many people on City-Data are in similar situations...maybe not within your tax bracket, but they too are living on high interest debt!
You are blessed to have such a great salary, and your wife is even more blessed to stay home and be a full time mother. I know she recognizes this....must be nice to have such a large food budget and all that Ethan Allen furniture. She may need to be put on an allowance if she can't get it together! Communicate this with her before the move. You are the head of the household.
Cut the credit cards up now! If you can't buy something with cash, you don't need it. Get your children involved in the YMCA...classes there are much cheaper than the $400 you're paying a month! Geez, I would just pull them out of everything and just buy some of those cheap bouncy balls for them to kick around with the neigborhood kids! Whatever happened to kids playing Red Light, Green Light and Red Rover?
I hope to one day increase my salary/income, but not to buy a bigger home, or luxury vehicle. I would love to add an addition to my home, work LESS and have a nice nest egg! Oh, and the addition will be paid with cash. What good is equity if you borrow off of it? Good luck, and I hope your home sells quickly!
I'm not saying selling the house will resolve everything. It will however free up about $3000 a month. No downside there!
I'm wondering if you're pulling our leg at this point.
In the event that you're not, then maybe you can explain how somebody who is sharp enough to pull in $200K a year can be so shortsighted and thickheaded about personal finance. You keep talking about the house being the whole story when clearly (as many have pointed out) it is not and refusing to acknowledge or address all the other financial issues.
thread is getting old, broken record
hate 2 say it but the OP doesn't sound like the brightest guy
That's insulting. He's bright enough to want to change his situation.
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