Part of a divorce is finding out what to to with the family home. We have found a solution for that. And it is not the most financial optimised solution. That is my lessons learned: there are limits to making rational, spreadsheet based decisions. How about following your feelings?
My ex and I owe a family house. It is less house than we could afford when we bought it. We were not neck deep in debt. We also managed to do some extra down payments and refinanced a few times. We then decided to keep the mortgage as it was. The interest is low and investing sounded like a better plan to us.
With the divorce, we needed decide what to do.
The options for the ownership
There are 4 options to consider
1 – I get the house: this means I need to find the money to buy her share of the house. And I can decide to live in the house or rent it out
2- she gets the house: this means I get from her my share of the house and I need to look for a roof above my head
3- we keep the house together: We then need to decide who lives in the house and at what cost. Or maybe rent it out. And we need to agree together on what costs we will make. (This looks too complex for us. We would keep a strong financial connection between us after the divorce. That does not appeal to us. So, this scenario is not an option)
4- we sell the house and we each get our share after the mortgage repayment. It means we both need to look for another place to live.
The bigger context
As divorced parents, we decide to go for co-parenting and put the well being of the children first. (Let us see how that works out – so far so good) We each will have the kids for 1 week. In that context, it is a plus to offer the kids the house they already know and where they were born and spend the first 6/8 years of their lives. This will offer them some stability in an unstable world.
We also agreed that keeping the kids in the house and have us move in and out every week would be a recipe for disaster, disputes and hell on earth (we did not phrase it like that, it is exaggerated to make my point. It would also mean we go for option 3 from above). So, we both need a place of our own.
The conclusion and why it is not a rational decision
I decided to take the house and buy out my wife.
The house will be too big the week that I am here alone. Hell, The house will be too big when it is the three of us.
So, why do that?
As mentioned above, I really like to offer them a stable basis. You read a lot about this in the literature.
And I had no energy/motivation what so ever to move myself. I like it here, I like the neighbours. Moving, even to a rental does not appeal to me. And I need some stability myself. It helps that I do not see the house as “our” place, I do not see this place as a cave of memories to our marriage. That is probably related to the long ongoing journey towards the divorce (It took a good 6 months from first shock to final split.) and my growing immaterialist approach to life.
And it still allows me to choose option 4 in a later stage.
So, it feels good
Is it financially reasonable?
I can afford it. Years of living a FIRE lifestyle enables me to make that call.
It sadly means that my FIRE assets (my house is not part of it) take a big and massive hit. Most of my assets will be in illiquid bricks and some roof tiles. The amberindex will take a nose dive. So be it…
Where there alternatives? Yes, I could get out an extra mortgage loan and keep my assets in the amberindex. Being the sole person in my household, that did not look appealing to me. From a a pure financial spreadsheet point of view, this would probably be the wise thing to do. From a personal point of view, my relation towards debt and a mortgage shifted even more to being debt free…
Some other suggestions/ideas that are available
- Rent out the house the week I have no kids on airBnB.
- Sounds appealing from a EUR point of view. At this stage in my life, I prefer to discover my newly found freedom on my terms without limitations from other people.
- Find someone that has kids as well and is on the opposite schedule from me. We could own one big house and a small studio together. That would mean lower costs. The idea even came to start a website on this to match offer and demand.
- Kinda same as above
So, that means I will soon be the owner of the house I currently live in. There will still be a mortgage on it. It is my intention to pay this off faster than when I was married. The reason is not financial. It is emotional and has to do with options.
The lower I can get my monthly costs, the less I need. And the less I need, the less I need to earn or the more I can use on other things
- Earning less? Seriously? That will kill your FIRE plan…!
Sure, it will. FIRE is not the end goal. It is merely one way of living. Deepening my relation with my kids and friends is a benefit that is worth a delayed FIRE. Call it opportunity rich if you wish. One way to do that is to spend as much time as possible with them. Not only on weekends and evenings. Also on Wednesdays when they have no school or during my half of the 15 weeks of school holidays…! just a thought. It would mean a lot of unpaid holiday
- Spending more? Yes, not the core spending
My core expenses would still remain frugal. I am talking here about experience spending. Agreed, not all experiences costs money. However, showing my kids other countries and cultures is not free.
And taking care of myself is needed as well. I might travel without the kids once and a while. Especially during summer when they might be on holiday for 2 weeks with the ex. And it feels like a midlife is coming… Harely anyone? 🙂
Keep the FIRE burning…!