Selling our home in California: Part 3
September 25, 2017
We left off at having a ratified contract because that’s all the fun I could handle and holding my breath for 30 days was enough distraction.
But I can never resist a “what will you do with that money” question.
I have a spreadsheet gaming out every sale price scenario and therefore decided where any money will go long before we even listed the place. I’ll fiddle with some of the details still but the broad strokes are right.
Note that in the interest of not tempting fate, I started my possible sale price scenarios at the lowest possible price, well below the current comps, and ran it in $25,000 increments until I went over the current comps.
In order of priority, this is how I’m planning to distribute that money:
SALE:
5%, broker and sales fees
28%, pay off the remaining balance of our loan
18%, repay personal loans
18%, repay our savings account
25%, pay down our new loan
4%, invest
1%, long term disability insurance
1%, charity
Repaying loans: The very first thing I’m going to do is pay off all the personal loans. I practically have my pen in my hand to write the check right now, I’m itching to get that crossed off the list.
Taxes: I’m not leaving anything for taxes, you’ll note, because we qualify for the federal capital gains exclusion and our end gain (Amount realized from the sale – the cost basis) won’t be over the $500k limit, more’s the pity, and it should be reasonable to expect that we shouldn’t have CA state taxes, too.
Charity: Our planned giving should be higher but until I’ve safely refilled all our coffers and figured out our new cash flow, that will need to wait. Remember to make sure your own oxygen mask is secured before helping anyone else!
The new mortgage: I have always planned to pay down the new loan, and recast it for lower monthly payments, but a new player stepped onto the stage a couple weeks ago. They offered a refinance with no closing costs and a drop of our current interest rate by .25%. It’s just a matter of when I feel like I can take that extra task on – let’s say two months after we’re moved in, I’ll dig into that.
Either way, my first step is dump cash into the loan once we receive the funding. Option 1 after that is refinancing with the other lender which has been kind of ehhh in the past but a lower rate without fees is attractive. Option 2 is to convince Chase to match the lower rate with no closing fees offer.
Whichever route works out, as long as the rate goes down and I drop that cash in the loan, we could reduce our monthly nut by about $1000. Then we’d only have doubled our housing costs, not tripled them. I AM going to miss some of the amenities we’ll be walking away from.
I’m tempted to peel off a little of that cash to treat ourselves to little things but it’s really not necessary. The real reward will be living at the address of Not Utter Chaos!
Plus, and this wasn’t planned, I have a special little box of a couple adorable things I splurged on at SDCC which includes a surprise for JuggerBaby from zir uncle. Unpacking will be a little less awful when we run into those treats.
Read Part 1 and Part 2
:: Do you treat yourself after finishing massive projects or do you just take satisfaction in a job well done?
Yay for Not Utter Chaos! And good call on the refinance! We managed to do a no-fee refinance last year, dropping our rate 0.625% which saves us a few thousand a year. Easy money.
I don’t remember ever treating myself after a big project. Mostly, after a big thing, I’m so tired that all I want is to sleep.
I’m going to do more legwork on that refi, with any luck, someone else will want to match it.
When we paid of DH’s student loans, we treated ourselves to a steak dinner, which I threw up on the way home because my stomach had lost the ability to digest red meat.
I can’t remember celebrating financial milestones after that. (We were visiting the in-laws over Christmas when our final mortgage payoff cleared, os there really wasn’t any way for us to celebrate other than bragging to DH’s parents.)
Instead I think we’ve done a gradual loosening of circumstances (lifestyle inflation) as our required monthly payments have diminished. Unless you count putting more into the 529 plan as celebration.
Wow if there was one thing that would permanently put me off celebrating, that’s it! Your poor stomach.
But I absolutely count putting more money in a 529 plan as a celebration. That’s probably what we’re going to do too.
Sounds like a terrific plan, Revanche. Congrats on finding the refinance possibility. Always good to ratchet the rate and expenses down if you can.
I think the biggest (only) “upgrade” we did after I paid off a loan was to put Little Bit in daycare for full days twice a week instead of half days. She hated it because then she had to have a nap, so it didn’t last long. For a couple of months, though, it allowed Jon a little more time to work on rentals.
Thanks – I have to work on it a bit more because I’m not a fan of the bank that approached me, but it’s important for us to free up that cash.
Even a temporary break is worthwhile, I’m sure.
Agreed!That’s a MASSIVE reduction in monthly costs. Maybe my orientation is a little twisted coming from a more moderate economy (and definitely a less expensive housing market,) but I’m pretty sure even in California $1k is a lot of money haha.
Way to be!
Congrats! I find buying a house or car so stressful! I think a little celebration is nice!
Thank you! If we get to relax even a little, that may be our little celebration 🙂
Buying and selling houses are giant stressors. I love real estate but it’s wanes everytime I think about it. My husband asked if I was still house crazy and I screamed “nooooooooooo!!!” I’ll just google those pretty house pictures and stalk Zillow!!!
Definitely secure your oxygen masks before helping others!! Charity starts at home!
I bet they wouldn’t be such stressors if we weren’t talking about buying/selling in the Bay Area!
I don’t often treat myself when hitting financial milestones-or any big milestones, really. It’s usually my husband that convinces me we should celebrate. Those things just aren’t that important to me.
It’s hard for me to need more celebration than pointing at my bank account, really 😉
Yayyyy for ticking things off! I probably don’t really celebrate to be honest, when the satisfaction is often inherent.
Great about the capital gains tax. We have so much opposition to that here, it’s insane. (There is one but it’s pretty darn weak.) I’d like to see that change and profits off property be taxed more fairly.
Same. Isn’t FEELING wealthy its own reward?
I do hope I’m right about the cap gains tax. I did a lot of research to confirm but there’s always a little bit of me that worries.
The big celebration we did was after I started my job in northern california, we went to a very expensive famous-in-some-circles restaurant. It was expensive, but I wasn’t exactly thrilled about moving initially and it was sort of the culmination of that. I was also initially very excited about that job, although it is hard to remember that now because I can only remember how much I ended up disliking my time there.
The rest of the milestones are celebrated with high fives, and gradual lifestyle inflation where it makes sense.
Was that meal delicious?
We’re practicing the high five milestone celebration now, too 🙂