Career Advice

[BeTheChange]

Starting with a new company in March of 2016. Gave my notice yesterday.

It's a good role in an area of finance that I am trying to break into. The only problem is due to the competitiveness of the industry I wasn't able to secure a role outside of my current city. It's a 1 and half to 2 hour commute, meaning 3 to 4 hours a day all in. Also because it doesn't have the "metropolitan, busy city" weighting it also means taking a pay cut. So I am living in a high cost area and being paid as if I were living in a low cost area (relatively).

I'm not really willing to move because I ultimately see myself staying in my current city for the next 5 years at least - from a long term career point of view I definitely need to be here - but I know such a long commute could be taxing after a few months.

So what should I do?

Do I join this company, roll my sleeves up, get a year's worth of experience in this industry and try the job market again in 2017 or

Keep on looking for work in my current city into 2016, knowing it will probably effect my performance and motivation in my new role?

 

[Tenacity]

Would you take advice from a Piker lol? But no seriously, over here in the States they have this problem out in New York City which has 2.5 times the cost of living as I do where I'm at in a suburb of Michigan.

Do you own a house or are you renting? If you are just renting, you could look at just moving closer to the new job upon the lease expiration? Or you could look at breaking the lease altogether and moving if the cancellation fee to break the lease isn't that high.

If you own a house, the decision becomes a tricky one. That's one of the reasons why I'm not buying a house, I want to be able to move anywhere in the country or outside of it for better opportunities when they pop up. Renting isn't "throwing money away" if you rent efficiently and get a good lease deal.

 

[BeTheChange]

Would you take advice from a Piker lol? But no seriously, over here in the States they have this problem out in New York City which has 2.5 times the cost of living as I do where I'm at in a suburb of Michigan.

Do you own a house or are you renting? If you are just renting, you could look at just moving closer to the new job upon the lease expiration? Or you could look at breaking the lease altogether and moving if the cancellation fee to break the lease isn't that high.

Thanks for the advice but you didn't really answer my question. I already decided to take the job. I'm not going to move but commute (nearly 2 hours) since I don't intend to stay in the role for much longer than 12 months if that. It's a stepping stone.

My question was whether I should get a year's worth of experience in this industry and try the job market again in 2017 or keep on looking for work in my current city into 2016, knowing it will probably effect my performance and motivation in my new role.

If you own a house, the decision becomes a tricky one. That's one of the reasons why I'm not buying a house, I want to be able to move anywhere in the country or outside of it for better opportunities when they pop up. Renting isn't "throwing money away" if you rent efficiently and get a good lease deal.

Spin it how you like but renting is almost always a poor choice to actually buying a property even in a down market, because at least when you pay your mortgage your building equity.

I do agree that renting has its advantages with regards to flexibility and that you should expect to stay somewhere for at least 2 years if you're going to buy.

The issue is that renting is an expense. Rent for 10 years and you have nothing to show for it. Pay your mortgage on time and after ten years you could be halfway to owning the property you're living in.

 

[Tenacity]

It might be different where you are, but to buy here in the US you should expect to be somewhere at least 10 - 20 years, not 2 years.

Also you are going to always have housing expenses, renting is not throwing money away because you will always have housing related expenses. It depends on how you rent and what comes with your rental agreement. My rental agreement includes a full sized gym, payment of gas, water, trash, lakeside patio, a small resort with 3 large swimming pools, washer/dryer inside the unit, etc. You have to break out ALL of these costs that I would pay for if I owned a house and my actual HOUSING RELATED expenses would be HIGHER I owned v.s. rented.

If I owned, I would have the "luxury" of investing in equity, but why do I need to invest in equity? It's illiquid and I can't get the shyt out if I need it, and plus housing appreciation has been horrible in the last couple of decades, I would obtain a much higher return on those monies not putting them into a residence. On top of this, the value of my investment is depended upon how my neighbor keeps his property looking as well as the value of the neighbors in general. So if "Lil Pookie" and "Tyquesha" from the hood move in and tear down the neighborhood, welp....there goes my investment.

But again, this is just MY situation, everybody's situation is different. But for me, at least in the time being, I'm not investing in a house. I want to have the flexibility to move for other opportunities and move if the area I'm staying in goes to hell. This is different for people with a family and children however, I have neither.

 

[PrettyBoyAJ]

Renting is not throwing money away. You pay money for services. Having a place to stay is a service provided for you. When you buy a home and something goes wrong with the home guess who has to cover the costs?? You. Unless you know the market really well I'll advise against owning a home. Your going to lose money.

 

[mrgoodstuff]

Renting is not throwing money away. You pay money for services. Having a place to stay is a service provided for you. When you buy a home and something goes wrong with the home guess who has to cover the costs?? You. Unless you know the market really well I'll advise against owning a home. Your going to lose money.

Not going to lose in a house, if you select an good area you will gain in equity over time or at least get your money back... In an apartment you throw the money away the leasing company uses it to grow their assets and pay their bills.

 

[BeTheChange]

Not going to lose in a house, if you select an good area you will gain in equity over time or at least get your money back... In an apartment you throw the money away the leasing company uses it to grow their assets and pay their bills.

100% mate. Glad someone gets it.

Me and my housemate are combined paying nearly £2,000 in rent alone per month. that's £24k a year down the drain.

If we owned our own place after 20 years of paying £24k you have paid off £480k. Even with mortgage interest you're well on your way to full equity.

Now if we were talking about an investment property there might be a debate. But for a live in home - ownership beats renting any day over the medium to long term.

 

[Tenacity]

Not going to lose in a house, if you select an good area you will gain in equity over time or at least get your money back... In an apartment you throw the money away the leasing company uses it to grow their assets and pay their bills.

It depends on the situation. I know a lot of people who bought a house and are under-water right now. I know others who had to move after buying the house just 2 years ago, and they ended up having to sell at a loss. I know others who bought a house 20 years ago when the area was good, the area went to hell, and over all they ending up losing on their investment.

Neither of those situations are good and they are present day risks when you buy a house.

I don't think you can say one way or another, that one is 100% good or bad, such as Renting is always bad and Buying is always good, it depends on the situation, the deal, the area, if the person's career requires them to be mobile, etc., etc.

For my situation, buying makes no sense financially, personally or professionally, but I can assure you I'm not throwing money away. I can break out all of my housing related expenses right now and compare them with a rent v.s. buy situation for me if you want.

 

[PrettyBoyAJ]

Not going to lose in a house, if you select an good area you will gain in equity over time or at least get your money back... In an apartment you throw the money away the leasing company uses it to grow their assets and pay their bills.

I said unless you know the market it is not a good idea. You must do research.

I've lived in 5-6 different places since I was 18. If I bought a house any of those times I would have been screwed. I needed to move for a variety of different reasons. Because I rented I was able to move every year. It wasn't throwing money away because I paid for a place to sleep. That's one of the best things if not the best thing to spend money on.

 

[BeTheChange]

I said unless you know the market it is not a good idea. You must do research.

I've lived in 5-6 different places since I was 18. If I bought a house any of those times I would have been screwed. I needed to move for a variety of different reasons. Because I rented I was able to move every year. It wasn't throwing money away because I paid for a place to sleep. That's one of the best things if not the best thing to spend money on.

I agree that in your circumstances renting is the best option.

 

[mrgoodstuff]

It depends on the situation. I know a lot of people who bought a house and are under-water right now. I know others who had to move after buying the house just 2 years ago, and they ended up having to sell at a loss. I know others who bought a house 20 years ago when the area was good, the area went to hell, and over all they ending up losing on their investment.

Neither of those situations are good and they are present day risks when you buy a house.

I don't think you can say one way or another, that one is 100% good or bad, such as Renting is always bad and Buying is always good, it depends on the situation, the deal, the area, if the person's career requires them to be mobile, etc., etc.

For my situation, buying makes no sense financially, personally or professionally, but I can assure you I'm not throwing m
oney away. I can break out all of my housing related expenses right now and compare them with a rent v.s. buy situation for me if you want.

Even if you are in a market that decreases slightly, you will still receive a majority of your equity when you sell. Something you will not get in a lease. Many of the upper end apartments cost more than or the same as getting a house...

 

[BeTheChange]

Even if you are in a market that decreases slightly, you will still receive a majority of your equity when you sell. Something you will not get in a lease. Many of the upper end apartments cost more than or the same as getting a house...

So true. I checked out the current valuation of my rental property and the mortgage I would pay is actually less than the rent.

 

[Tenacity]

Even if you are in a market that decreases slightly, you will still receive a majority of your equity when you sell. Something you will not get in a lease. Many of the upper end apartments cost more than or the same as getting a house...

- My apartment (considered a luxury amenities apartments) in this area does not cost more than buying a house in the same area. Buying a house would cost me 2 times more AT LEAST.

- I have no idea what you are talking about with the statement that you would "still receive a majority of your equity when you sell, even if the market decreases". If someone buys a house, in general, they have to stay PUT for at least 10 years to make good on that investment. If they buy a house in 2015 and have to move across the state in 2017, if they decide to sell the house more times than not, they will take a LOSS on the investment. If the area where you bought in goes to hell, you stand a chance of having your house values go down, lower than the point where you bought in, which is a LOSS.

Why you and BeTheChange are speaking in absolutes are beyond me? Just like with most things in personal finance, Buying v.s. Renting depends SOLELY on the individual's personal situation. There's no 100% good or bad with either decision, as renting does not 100% of the time mean you are throwing away money, NEITHER does buying a house 100% of the time mean your investment will come out profitable.

 

[BeTheChange]

- My apartment (considered a luxury amenities apartments) in this area does not cost more than buying a house in the same area. Buying a house would cost me 2 times more AT LEAST.

- I have no idea what you are talking about with the statement that you would "still receive a majority of your equity when you sell, even if the market decreases". If someone buys a house, in general, they have to stay PUT for at least 10 years to make good on that investment. If they buy a house in 2015 and have to move across the state in 2017, if they decide to sell the house more times than not, they will take a LOSS on the investment. If the area where you bought in goes to hell, you stand a chance of having your house values go down, lower than the point where you bought in, which is a LOSS.

Why you and BeTheChange are speaking in absolutes are beyond me? Just like with most things in personal finance, Buying v.s. Renting depends SOLELY on the individual's personal situation. There's no 100% good or bad with either decision, as renting does not 100% of the time mean you are throwing away money, NEITHER does buying a house 100% of the time mean your investment will come out profitable.

Actually everything you say is very unlikely to be the case when you factor in opportunity costs.

Costs of living - rent, mortgages, etc - have to be paid. For the sake of argument let's assume the rent on the property would be equal to the mortgage.

You buy a house for a mortgage of $500,000 and pay back $20,000 per year.

If you lease the property you pay $20,000 a year.

If you decided to sell in two years your property would have to have declined by more than $40,000 (nearly 10%) for renting to have been worth while over that same period.

Now applying this to a more realistic time horizon (5 - 10 years)

Rent for ten years - $200,000

Mortgage paid - $200,000

Now renting is only worth while if your property declines by more than $200,000 over a ten year period. Unless you are very unlucky you are not going to see a 40% drop in the value of your property in the long term.

There is a strong argument that real estate as an investment asset is not the best way to go but as a sole live in property home ownership is almost always the better option to renting.

 

[Tenacity]

I will break out my entire situation in full in just a moment. I'm kind of busy right now, but later on this afternoon or tonight I will break that out for you guys and post it here.

 

[Tenacity]

To do an accurate side by side comparison, I'm only going to include items that are included in my current rental agreement so we can do a proper comparison.

#1.) Rental Setup

- My current rental agreement is for $750 a month with an apartment that's considered to be a "luxury amenities" unit located in a suburb area (thus, I can live in the suburbs). For $750 a month I get the room itself which is 744 square feet, all maintenance and repairs are included with the rental price.

- In terms of amenities, they include a lakeside patio which includes a nice view of the lake, full-size washer/dryer, fully equipped kitchen, carpet, private entry, fitness center, yoga room, a small water resort area with three large swimming pools, a business center, a clubhouse, and utilities included with the price include gas, water, and trash. The value of the maintenance and repairs for my apartment and the surrounding scene uptake should estimate $175 a month. The value of the entire list of amenities might come to let's say $200 a month. So let's say for the actual "unit" I'm paying about $375 a month.


#2.) House Purchase Comparision

- On Zillow, for me to buy a decent looking property in this area, it will start at properties valued at $130,000 give or take. There are some properties under $100,000 but they aren't decent looking properties to match the level of "decency" of my current apartment/surroundings.

- So let's say I buy one for $130,000 which again is where I would have to start, if I put 20% down ($26,000) and go for a 30-year mortgage, the monthly payment would be about $550 due to the rate hike. Estimated property taxes and insurance would be about $200 a month for a total monthly payment of $750 for the unit itself. These estimates come from Zillow. So already right there for the unit itself, I'm paying double in housing costs.

- To bring those same amenities, maintenance, and repairs in for the house purchase, the maintenance/repairs would have to be budgeted at $325 a month ($3,900 a year) due to the bigger size of the property. The remaining same amenities (to include a gym membership and a pool resort membership to match the same value) would be about $250 a month let's say for everything, including the fully equipped kitchen, washer/dryer, the portion of utilities currently paid by the rental price, etc. So that's $575.

So my total amount budgeted would be $1,325 for the house based on these listings, but I honestly would budget $1,500 for this instead just to be on the "safe" side due to the fact that having more space will increase utility costs and increase costs related to furnishing said rooms.

So that's $1,500 set aside a month or spent a month for the housing costs v.s. $750 that's being spent right now for the rental agreement.


#3.) Also

To be clear, the only money one can say I'm throwing away is the $375 a month related to the unit itself for the rental. But to get into a situation to where I'm no longer throwing that amount away, I would have to double my total housing expenses which makes absolutely no sense.

Plus there's a sea of other considerations, such as buying a house locks me to the area for 10 years at least or I will take a LOSS on my investment.

Personal Finance is an individual situation, there's no 100% either or. People should not be saying that renting is always BAD, or that buying is always GOOD, or vice versa, it depends on the situation of the PERSON.

I can tell you that if I had a family with kids, I most likely would NEED to purchase a house. But with it just being myself to take care of, it makes no sense for me to buy a house in my area.