[akaivyleaf]

You didn't mention children? I'll assume you don't have any and you just want to expand for the two of you. Therefore I would keep the house that you presently have and rent it out...you still have eqiuity from that property, are realizing a tax benefit by mortgage interest. The equity can be a form of retirement savings. While its just the two of you, consider a ROTH IRA to further save towards retirement. This money is aftertax since I'm not sure if either of your employeers offer 401K plans. In other words I would work on starting, getting in the habit of savings for retirement and other expenses getting older affords. Plan for that eventual future now, while you can.

As far as getting a contractual job with a state entity. .. Thoroughly research this. Most states are having serious budget crisis and their independent contractors are among the first to go, no matter what that contractor is doing. Sure they are saving on not having to pay insurance and other employement benefits but the base amount is just as costly and frankly it looks bad to the citizens of the state to pay these outside intities for things they can just tighten up on and bring in house. If he's getting a true state job, where the check is payable from the "Great state of ____________" Thats different.

Finally I would question why you "need" a bigger house. If you want to do taxidermy, can you not build a structure or buy one of those untility sheds and expand on it in your back yard. Cement isn't that expensive and you can lay it down yourself with the help of friends one Saturday afternoon. You might have a barbeque, invite the friends out and erect a taxidermy shop, which is cheaper than buying a new house.

Again, congrats on the payoff. What a wonderful feeling.