This post is for Cait, who previous expressed an interest in hearing about what was going on when I said I was planning on making some changes.
I’m selling my house.
I’ve been doing some major soul searching over the last little while. When I bought my house little over three years ago, I was in a bit of a different mindset. I had mentally plotted out where I saw my life going; I expected I’d get married and have kids. In my mind, a 3 bedroom home made sense because it was something I saw myself growing into in the near future. Never mind that my relationship at the time was tumultuous at best and damaging at worst, I wanted to plan for the future. Through rose coloured glasses that’s where I saw my future going. I made a mistake.
There were a few other reasons why I purchased as large a home as I did. Carting around as much stuff as I had, I honestly thought I needed the space. That and I felt that if I ever needed to sell the place, a three bedroom home would be easier to sell to a family than one with two bedrooms.
At the end of the day though, I was living in the future. Much like paying for wants on credit when the money isn’t available, I mortgaged what I thought was my future. Living by myself, I don’t need nearly the amount of space I have, and decluttering my things over the last couple years has made me realize that.
Selling a house is not a cheap endeavour, and it’s not a topic I’m taking lightly. This move has the potential to cost me up to $20,000, once you factor in the costs of moving, realtor fees, lawyers, etc… Rest assured I will be doing my homework before I step forward.
My plan at the moment is to downsize to a 1 bedroom condo with a purchase price below $200,000. Optimally I would like it if all said and done my next mortgage was in the range of $100,000 after applying the equity from my current home. Condo fees are obviously an important consideration here, but given that my current total utility costs are in a similar range to condo fees, I don’t see it being an issue in terms of affordability.
Making this move will open up a lot of possibilities for me. Having a much smaller mortgage at my current income opens up the possibility of paying it off early; imagine being mortgage free by 35 or earlier. Alternatively, I could take the difference and start investing more aggressively. I could completely max out my unused RRSP and TFSA contribution room within a couple years. I could do more travelling. I could make career moves that require a pay cut without the fear of not being able to pay my mortgage. If interest rates went up appreciably, I wouldn’t be in a bind. I can easily take a 3% increase in my mortgage rate right now, but imagine being able to take 13% rate increase without worrying. A 6 month emergency fund based on my current expenses would go a hell of a lot farther if my fixed expenses were lower.
I suppose I should be clear on something here; I still hope that marriage and kids are in my future. I don’t ever foresee myself giving up on marriage, and until I hit menopause or a doctor tells me I’m SOL, I hope to have children. But that is not my present situation. If and/or when that time comes, my plan is to turn the condo into a full time rental property rather than selling it. If I have it paid down far enough I’d like the income from that property to go towards buying another one. Being a landlord doesn’t generate entirely passive income (leaking toilets don’t fix themselves), but it’s a good start.
The sale itself won’t occur this year, but rather in the summer of 2014. There are still some things that I need to finish in my home before I would consider it market ready. Tackling those projects is the plan for this year. I’ve already made a (hopefully) comprehensive list of tasks that need to be finished, ranging from installing flooring transitions between the rooms, to replacing a bathroom sink, to installing a door to the basement, to building a step off of the back porch. The Boy and I took my list of projects to a hardware store a couple weeks ago and started pricing everything out. The goal for this year is to get everything finished, and most importantly, pay for it in cash.
It’s going to be a busy year.
Recommended Reading: Time to Buy New Shoes