Money might be able to buy happiness, but should it?
March 6, 2015 10:38 AM Subscribe
My spouse and I have fallen in love with a rental home on the other side of town. Problem: we have over 1 year left in our lease. We're wondering whether or not it's worth breaking our lease.
Moving expenses and lease breaking fees are about equal. Together they add up to about 1/2 of our (recently slightly diminished) savings.
Pros of moving:
- Better neighborhood. Ours current apartment community isn't horrible, but right outside of it has a pretty high crime rate.
- Fenced in yard for our dog. Hopefully for our garden and grill we don't have yet too.
- Closer to a majority of our friends and other extra curricular activites.
- Bigger house. About 1k sq ft bigger.
- House is in better condition (newer roof/appliances/water heater, better insulation, etc.) than our current apartment.
- No more maintenance problems that we're experiencing with our current apartment. Right now the rental company refuses to fix things until they're very bad, and then half-asses the fix. For example, recently our toilet was leaking so they replaced the wax ring, but didn't bother to seal it any further or make sure it was even. So now it wobbles and the wax is breaking again less than a month later.
Cons of moving:
- Lease breaking fees. Moving expenses we'll have to pay eventually anyway, but we will have planned better for them. That's a lot of money that we have but we're not sure we want to spend.
- House is actually about 1 room too big for us.
- The drive is a little bit further to work. This is a little bit of a pro, as a coworker has show interest in carpooling anyway.
Do you think it will make us happy enough for the costs?
Additionally, I'd rather not dip into savings, given how much of our savings it is, to do this. If we took out some sort of loan we could have it paid off in about a year with little to no financial hardship as far as our monthly income comes. Typically this money would go toward extra payments on my student loans, though, so we're missing out there. Is putting this on a credit card or taking out a personal loan a horribly bad idea?
Moving expenses and lease breaking fees are about equal. Together they add up to about 1/2 of our (recently slightly diminished) savings.
Pros of moving:
- Better neighborhood. Ours current apartment community isn't horrible, but right outside of it has a pretty high crime rate.
- Fenced in yard for our dog. Hopefully for our garden and grill we don't have yet too.
- Closer to a majority of our friends and other extra curricular activites.
- Bigger house. About 1k sq ft bigger.
- House is in better condition (newer roof/appliances/water heater, better insulation, etc.) than our current apartment.
- No more maintenance problems that we're experiencing with our current apartment. Right now the rental company refuses to fix things until they're very bad, and then half-asses the fix. For example, recently our toilet was leaking so they replaced the wax ring, but didn't bother to seal it any further or make sure it was even. So now it wobbles and the wax is breaking again less than a month later.
Cons of moving:
- Lease breaking fees. Moving expenses we'll have to pay eventually anyway, but we will have planned better for them. That's a lot of money that we have but we're not sure we want to spend.
- House is actually about 1 room too big for us.
- The drive is a little bit further to work. This is a little bit of a pro, as a coworker has show interest in carpooling anyway.
Do you think it will make us happy enough for the costs?
Additionally, I'd rather not dip into savings, given how much of our savings it is, to do this. If we took out some sort of loan we could have it paid off in about a year with little to no financial hardship as far as our monthly income comes. Typically this money would go toward extra payments on my student loans, though, so we're missing out there. Is putting this on a credit card or taking out a personal loan a horribly bad idea?
Best answer: Is putting this on a credit card or taking out a personal loan a horribly bad idea?
Yes! Do not take on debt to move from one rental to another. Who cares if it's nicer, bigger, in better condition than your current house? You don't own either house. You just need somewhere to live, and you have one. Stick it out for the rest of your lease and then figure out what you want to do. I'm a renter and I approve this message.
posted by ThePinkSuperhero at 10:51 AM on March 6, 2015 [15 favorites]
Yes! Do not take on debt to move from one rental to another. Who cares if it's nicer, bigger, in better condition than your current house? You don't own either house. You just need somewhere to live, and you have one. Stick it out for the rest of your lease and then figure out what you want to do. I'm a renter and I approve this message.
posted by ThePinkSuperhero at 10:51 AM on March 6, 2015 [15 favorites]
Yes, taking on credit card debt or any kind of debt unless it is absolutely necessary is always a bad idea. I once read somewhere that there are three things that it is OK to make a choice to go into debt for: education, a mortgage (this is not a mortgage as it is a rental), and a car loan. Debt is awful. Debt is stressful and scary and annoying and has a ton of negative emotions associated with it and has very little upside. Don't go into debt unless you have to. Unnecessary debt is downright foolish.
And you say that you have savings that will cover it. Remember that debt is not just what it costs - you pay interest. With a credit card or even with a loan, that interest is not insignificant. If this is something that you want to do and you have savings to cover it, I'm not sure why you would take on debt. And "savings to cover it" means that you have at least 3 to 6 months of expenses left over in savings after taking out the money to pay for this, which I am guessing is not the case. And that is your answer.
Debt is so common in our society and it is so toxic. Don't do it! You will regret it when you're paying it off later and you have to drive farther to work because the carpool thing didn't work out and your heating bills are a lot higher because you're paying to heat 1,000 more square feet that you don't even really need. You know what you're going to do with that extra square footage? You're going to buy more stuff to fill it (that's what most people do, anyhow). And... with that? Comes more debt. Once you start, it's hard to stop - most of my friends that are in debt say things like, "Well, I'm already $100k in debt, what's another hundred bucks?" when they buy something, and I always think to myself, "Well, it's not really a hundred bucks because of compounded interest," and then I feel like a jerk, but the point is: debt is bad. It will make you unhappy. Don't bother with it unless it's necessary.
posted by sockermom at 10:54 AM on March 6, 2015 [2 favorites]
And you say that you have savings that will cover it. Remember that debt is not just what it costs - you pay interest. With a credit card or even with a loan, that interest is not insignificant. If this is something that you want to do and you have savings to cover it, I'm not sure why you would take on debt. And "savings to cover it" means that you have at least 3 to 6 months of expenses left over in savings after taking out the money to pay for this, which I am guessing is not the case. And that is your answer.
Debt is so common in our society and it is so toxic. Don't do it! You will regret it when you're paying it off later and you have to drive farther to work because the carpool thing didn't work out and your heating bills are a lot higher because you're paying to heat 1,000 more square feet that you don't even really need. You know what you're going to do with that extra square footage? You're going to buy more stuff to fill it (that's what most people do, anyhow). And... with that? Comes more debt. Once you start, it's hard to stop - most of my friends that are in debt say things like, "Well, I'm already $100k in debt, what's another hundred bucks?" when they buy something, and I always think to myself, "Well, it's not really a hundred bucks because of compounded interest," and then I feel like a jerk, but the point is: debt is bad. It will make you unhappy. Don't bother with it unless it's necessary.
posted by sockermom at 10:54 AM on March 6, 2015 [2 favorites]
You should not put this on a credit card. They have incredibly high interest rates, even if you could put it on a credit card. And realistically, most landlords will not be willing to charge credit cards, and the few that do have a 2% to 5% processing fee or charge them as cash advances (high and immediate interest!!)
I would not move. You don't have guarantee that the new rental place will be long term, or that they won't raise rent even higher. You also have no guarantee that your situation will be the same (job, family, etc) for a long time. And you don't have guarantee that the new landlord would be any better with maintenance.
In addition, I think of rental houses as a commodity. That specific house may not be on the market again next year, but other similar houses will. They might be more expensive, but then you wouldn't have to 1. pay to break your lease and 2. pay interest on the money you're spending to move or the student loans you're not paying off.
Honestly, I think you should bundle the moving cost and the lease-breaking cost into your cost-to-rent this place. If you amortize those costs over the term of your potential new lease, would you be willing to pay that per month in rent for the new place? (e.g. If lease breaking is $2400 and moving is $1200, then add $300/month to the rent amount. Would it still be reasonable then? Also, don't forget additional utilities/chores for living in a larger house.) If so, go ahead. If it's too expensive, then don't do it.
posted by ethidda at 10:54 AM on March 6, 2015 [1 favorite]
I would not move. You don't have guarantee that the new rental place will be long term, or that they won't raise rent even higher. You also have no guarantee that your situation will be the same (job, family, etc) for a long time. And you don't have guarantee that the new landlord would be any better with maintenance.
In addition, I think of rental houses as a commodity. That specific house may not be on the market again next year, but other similar houses will. They might be more expensive, but then you wouldn't have to 1. pay to break your lease and 2. pay interest on the money you're spending to move or the student loans you're not paying off.
Honestly, I think you should bundle the moving cost and the lease-breaking cost into your cost-to-rent this place. If you amortize those costs over the term of your potential new lease, would you be willing to pay that per month in rent for the new place? (e.g. If lease breaking is $2400 and moving is $1200, then add $300/month to the rent amount. Would it still be reasonable then? Also, don't forget additional utilities/chores for living in a larger house.) If so, go ahead. If it's too expensive, then don't do it.
posted by ethidda at 10:54 AM on March 6, 2015 [1 favorite]
Things I would want to think about before I could give an answer:
How long of a lease can you get on the new place? Are you planning to save up to buy anytime soon? Or is this a market in which people rent for life because owning is unrealistic for most?
What's the difference in rent? Heating costs -- potential place is bigger -- will be more cost?
posted by girlpublisher at 10:57 AM on March 6, 2015 [1 favorite]
How long of a lease can you get on the new place? Are you planning to save up to buy anytime soon? Or is this a market in which people rent for life because owning is unrealistic for most?
What's the difference in rent? Heating costs -- potential place is bigger -- will be more cost?
posted by girlpublisher at 10:57 AM on March 6, 2015 [1 favorite]
Can you sublet your current place?
posted by cotton dress sock at 11:05 AM on March 6, 2015
posted by cotton dress sock at 11:05 AM on March 6, 2015
Response by poster: I can't sublet.
Rent will be $5 cheaper. No real gain or loss in that department.
The lease is a typical 1-year term. I am 95% certain that, given the circumstances of the owner, the house will be a rental for at least the next 5 years. It's likely that if they continue having someone renting they will keep it there for even longer. I forsee my spouse and I continuing to rent for at least 3 more years.
My husband is planning on getting a credit card anyway. He doesn't have one of his own and is looking to start building his credit apart from mine. We know that it will hurt his credit temporarily to have the decrease in available credit. I am also aware that most rental fees can't be handled by credit, but we can offload a number of our bills to this card to even it out. I do get the general feeling from everyone that this isn't a great idea, though.
posted by Krop Tor at 11:21 AM on March 6, 2015
Rent will be $5 cheaper. No real gain or loss in that department.
The lease is a typical 1-year term. I am 95% certain that, given the circumstances of the owner, the house will be a rental for at least the next 5 years. It's likely that if they continue having someone renting they will keep it there for even longer. I forsee my spouse and I continuing to rent for at least 3 more years.
My husband is planning on getting a credit card anyway. He doesn't have one of his own and is looking to start building his credit apart from mine. We know that it will hurt his credit temporarily to have the decrease in available credit. I am also aware that most rental fees can't be handled by credit, but we can offload a number of our bills to this card to even it out. I do get the general feeling from everyone that this isn't a great idea, though.
posted by Krop Tor at 11:21 AM on March 6, 2015
Does your lease specify a lease-breaking option and a fee for it?
Most states and leases default to: you must pay rent for the entire lease. If for some reason you leave early, the landlord must -try- to find another renter, but you are still on the hook for rent if s/he does not.
Even if you can, this is still not a good idea.
posted by Dashy at 11:33 AM on March 6, 2015
Most states and leases default to: you must pay rent for the entire lease. If for some reason you leave early, the landlord must -try- to find another renter, but you are still on the hook for rent if s/he does not.
Even if you can, this is still not a good idea.
posted by Dashy at 11:33 AM on March 6, 2015
I'm not going to say that taking out a (low-interest) loan for this is a terrible idea. It's not smart, but it's not a lot dumber than paying cash. (consider 0% credit cards, since you've got a plan for how fast you'll pay it off). The real question is not how you come up with the money, but should you? In your list of pros, consider how much you're really willing to pay for those bonuses.
Also consider the hidden expenses - some of those "pros" actually cost you money. A place to put a hypothetical grill? $70-300 to buy a grill. 1000sf larger? $500 for extra sofa, $500 for guest bed, $500 for extra curtain and rugs and crap that you'll inevitably buy to fill the space.
If you're talking about a known payment of, say, $200/month to pay off the credit card/loan/etc if you do this, ask yourself if you'd rent that place for $200/month more in rent fees. i.e. your current rent is $900/month, the house rent is $895/month, but you'd really be paying $1095 for the privilege of living there. Is it worth it?
posted by aimedwander at 11:34 AM on March 6, 2015 [1 favorite]
Also consider the hidden expenses - some of those "pros" actually cost you money. A place to put a hypothetical grill? $70-300 to buy a grill. 1000sf larger? $500 for extra sofa, $500 for guest bed, $500 for extra curtain and rugs and crap that you'll inevitably buy to fill the space.
If you're talking about a known payment of, say, $200/month to pay off the credit card/loan/etc if you do this, ask yourself if you'd rent that place for $200/month more in rent fees. i.e. your current rent is $900/month, the house rent is $895/month, but you'd really be paying $1095 for the privilege of living there. Is it worth it?
posted by aimedwander at 11:34 AM on March 6, 2015 [1 favorite]
Another idea: if it really is 1 bedroom too large for you, what are your chances of finding a roommate to take that third bedroom for at least as much as your loan payment?
posted by aimedwander at 11:36 AM on March 6, 2015
posted by aimedwander at 11:36 AM on March 6, 2015
It may be harder to rent in the future if you've broken a lease.
posted by miyabo at 11:57 AM on March 6, 2015 [1 favorite]
posted by miyabo at 11:57 AM on March 6, 2015 [1 favorite]
Best answer: Although I wouldn't take out a loan to do it, or put it on a credit card, I'm going to say you should move.
Life.Is.Short. Being happy with your home nest is a BIG DEAL and if you can afford it, I say you should do it. Figure out how much total this move will cost, lease breaking fees and moving. Divide it by 12 months, and only you will know if that monthly cost over two years is worth it to you. (Add the moving costs because that's part of it.)
posted by raisingsand at 12:11 PM on March 6, 2015 [3 favorites]
Life.Is.Short. Being happy with your home nest is a BIG DEAL and if you can afford it, I say you should do it. Figure out how much total this move will cost, lease breaking fees and moving. Divide it by 12 months, and only you will know if that monthly cost over two years is worth it to you. (Add the moving costs because that's part of it.)
posted by raisingsand at 12:11 PM on March 6, 2015 [3 favorites]
I would do it, but I am an unapologetic house-renter and would be immensely happier in a house than an apartment.
posted by Lyn Never at 12:15 PM on March 6, 2015
posted by Lyn Never at 12:15 PM on March 6, 2015
I don't know you obviously, but if one of you doesn't have a credit card yet, I'm guessing you are young-ish and starting out in life. If so, you might want to take some time and come up with a solid financial plan for you and your partner before you increase your housing costs (and the answers above saying that renting a house will mean more costs are correct, unless you want to keep rooms in your house empty for dance parties!).
Home is important, but so is having a solid foundation -- do you have safety nets in place like an emergency fund? Once you've got that solid foundation, moving to a nicer rental will be a reward for that hard work.
Only two things would change my mind that you should build up your financial plan and savings before moving: (a) if your current rental is unsafe or untenable; (b) if you are in a tight market where a house like the one you are in love with is VERY hard to find for rent.
Most of the time, real estate love is a lot like any kind of love. There are plenty fish in the sea, and other nice houses will come up at a point where it will be a financial no-brainer to move. Breaking a lease with more than 1 year left on it is big lease to break.
posted by girlpublisher at 12:23 PM on March 6, 2015 [1 favorite]
Home is important, but so is having a solid foundation -- do you have safety nets in place like an emergency fund? Once you've got that solid foundation, moving to a nicer rental will be a reward for that hard work.
Only two things would change my mind that you should build up your financial plan and savings before moving: (a) if your current rental is unsafe or untenable; (b) if you are in a tight market where a house like the one you are in love with is VERY hard to find for rent.
Most of the time, real estate love is a lot like any kind of love. There are plenty fish in the sea, and other nice houses will come up at a point where it will be a financial no-brainer to move. Breaking a lease with more than 1 year left on it is big lease to break.
posted by girlpublisher at 12:23 PM on March 6, 2015 [1 favorite]
It is amazing how much money gets sucked up by moving into a bigger place. More furniture, random crap like curtains and shades (and you don't realize that decent shades are like $26 apiece until you have to buy them!), grills, lawn furniture.
Also, has this house been a rental house before? If not, I wouldn't assume that the house's current condition will be the same always. Absentee landlords can be bad about maintenance just like apartment management folks can be.
If you live in a cold climate, you will most likely be the one shoveling and snowblowing. The lease may also give you responsibility for lawn and landscaping. Lawnmowers and trimmers and edgers and shovels cost $$.
All of which is not to say that you can't get a house -- just that the costs of making the move may be much higher than you're anticipating.
I would save that leasebreaking money towards finding a different rental place a year from now.
posted by pie ninja at 12:37 PM on March 6, 2015 [1 favorite]
Also, has this house been a rental house before? If not, I wouldn't assume that the house's current condition will be the same always. Absentee landlords can be bad about maintenance just like apartment management folks can be.
If you live in a cold climate, you will most likely be the one shoveling and snowblowing. The lease may also give you responsibility for lawn and landscaping. Lawnmowers and trimmers and edgers and shovels cost $$.
All of which is not to say that you can't get a house -- just that the costs of making the move may be much higher than you're anticipating.
I would save that leasebreaking money towards finding a different rental place a year from now.
posted by pie ninja at 12:37 PM on March 6, 2015 [1 favorite]
Highly qualified maybe. If your current place is just horrible, and if that commute would only be increased by a bit, would do, because quality of life is important, imo - but would use savings, not debt - if:
- the rental market where you live is as tight as it is where I live, and this new place is a needle in a haystack
- you're young enough to make up the savings (sounds like it?), and, both your jobs are relatively secure and offer good enough pay to make up the savings in relatively good time
- you find a way of reducing spends for a while. Which you might want to do, if this house is lovely (and you'd like to e.g. spend your weekends on DIY projects).
(That extra room could be a workout room or home office, for under $200 at Ikea or via other creative sourcing.)
posted by cotton dress sock at 12:50 PM on March 6, 2015 [2 favorites]
- the rental market where you live is as tight as it is where I live, and this new place is a needle in a haystack
- you're young enough to make up the savings (sounds like it?), and, both your jobs are relatively secure and offer good enough pay to make up the savings in relatively good time
- you find a way of reducing spends for a while. Which you might want to do, if this house is lovely (and you'd like to e.g. spend your weekends on DIY projects).
(That extra room could be a workout room or home office, for under $200 at Ikea or via other creative sourcing.)
posted by cotton dress sock at 12:50 PM on March 6, 2015 [2 favorites]
Best answer: I might be a lone dissenter... RENT THE HOUSE YOU LOVE!!
GTFO of lease you hate and rent new house. Find someone to take over your current rental -or- remain in close contact with old landlord until old apartment rents. The laws and lease regs matter, but usually you are only responsible for the rent on your current apartment until it is legally occupied - so check into the law for your jurisdiction.
Move. Move. Move.
Snap up this great place. Don't look back.
PS - I would not put the expense on a credit card unless you are using your savings to pay it down immediately, and using the card as a way of building credit for your husband. I would pay out of pocket and be very very happy to live in new awesome home. Congrats and good luck!
posted by jbenben at 1:14 PM on March 6, 2015 [3 favorites]
GTFO of lease you hate and rent new house. Find someone to take over your current rental -or- remain in close contact with old landlord until old apartment rents. The laws and lease regs matter, but usually you are only responsible for the rent on your current apartment until it is legally occupied - so check into the law for your jurisdiction.
Move. Move. Move.
Snap up this great place. Don't look back.
PS - I would not put the expense on a credit card unless you are using your savings to pay it down immediately, and using the card as a way of building credit for your husband. I would pay out of pocket and be very very happy to live in new awesome home. Congrats and good luck!
posted by jbenben at 1:14 PM on March 6, 2015 [3 favorites]
I spent far too long being miserable in various rentals because of fear of breaking the leases and no money to move. I say go for it. Happiness with your living situation is a big deal.
posted by cooker girl at 2:08 PM on March 6, 2015
posted by cooker girl at 2:08 PM on March 6, 2015
Will utilities cost more for the larger house? If you are paying for heat or electric for AC, factor that into your budget too.
posted by never.was.and.never.will.be. at 3:37 PM on March 6, 2015
posted by never.was.and.never.will.be. at 3:37 PM on March 6, 2015
You might be able to negotiate a much lower lease break fee if you can find your existing landlord a reliable new tenant.
posted by flabdablet at 2:32 AM on March 7, 2015
posted by flabdablet at 2:32 AM on March 7, 2015
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