I LOVE my house. I know, it’s a not a person and it seems silly to love a thing. But I do.
This house is the second home we have owned and the only one we have poured our hearts and souls into. It is the first house we bought with our children in mind. Our first house was a “checking off” of the things to do when you are a grown up. This house is the “beach house” of my dreams, even though we are still 30 minutes away from the beach and can only see it, and then just a silver, from the top of the hill
That’s why the decision to sell our house – our home – comes with a lot of sadness and loss, even though it is what we have come to decide is right.
We always knew we would sell it at some point and that the improvements we have made would contribute in big ways to our financial plans, but that was always sometime in the future. Now, here we are, and it’s about to happen. What comes next, I imagine, will also be full of roller-coaster emotions as well. Can we pull it off?
DINING WITH GIANTS
Last October, we attended the Greece FI Chautauqua (FI = Financial Independence) and it’s really hard to put into words what an impact it has had on our lives. Imagine getting the opportunity to dine and live for a week with your Heroes. Not only
That would be enough, right? Certainly – it was enough. But it was also so much more. What we gained at Chautauqua was more than knowledge or inspiration, we gained friendships, deep meaningful friendships built upon a common foundation of financial independence.
One of the perks of attending is that you have one-on-one private sessions with some of the speakers. JL Collins was our first choice, not because we didn’t also adore all of the others but Jim’s book, The Simple Path to Wealth, was just that life-changing for us.
We spilled the beans on our debt situation (that was hard, telling one of your heroes the HUGE-NESS of your mistakes) – but also shared our pretty audacious plans for our future. I had some fear that he would hear them and smack us in the faces about how ridiculous we were. He was so gracious. He may be the Godfather of FI, but he is also a Gentle Giant. To our utter surprise and excitement – we got a fairly positive stamp of approval on our plan to FIRE and confirmation that if we follow the plan, we should hit FIRE by 55. That’s only seven years away.
How freakin’ cool is that???
There were two things, really, that had the potential to both accelerate our financial plans and/or alter our quality of life. Because our kids are the driving factor behind every decision – not all decisions we make fall into the “best” financial decision but land squarely on what is best for their well-being.
The Two Decisions
One option we had been contemplating was selling our home (and just about everything else) and moving abroad where we could live on much less, still earn income and, if we were able to obtain an international teaching position for Curt, also save drastically for retirement. The added benefit would be that we would expose the boys to different cultures and see the world – something we never thought would be possible. We now know different.
The second thought was that we could still sell our house, rent instead and use the proceeds to pay off the remaining consumer debt, leaving only our student loans and save anywhere between $2200.00-$3500.00 depending on where we chose to rent, what we paid off and whether or not we used some of the funds to purchase real estate and create passive income.
There were, of course, downsides to both.
The benefit of being able to share these ideas with Jim was that we had the opportunity to get feedback, perspectives and questions we had not considered. He also helped us with some of the financial projections to weigh each of the options. Once we knew the numbers we could then consider them against what was best for our children.
The downside of moving abroad was that Curt would be walking away from a lifetime pension he will receive once he turns 55. The perks of living in California, among many, are that he is paid well as a teacher and has great retirement benefits. Jim helped us sort out those numbers and come up with the expected value of that benefit. Any benefit we would receive by moving abroad would have to surpass the benefit of the expected life-time pension.
The downside of selling our home was, well, it was OUR HOME.
We have poured so much of ourselves into this house. We have made it ours. Curt has learned how to do woodworking in this house and in every room, there is something he has created – for us. When I come downstairs and sit in front of the fireplace I still admire the pallet-wood wall that brings such warmth to the room and sets the perfect mood to read a book under my treasured quilt by the fire. It is my happy place.
When I let the dogs out to do their business each morning, I see the art wall he made for me that was meant to be a place we could sit and enjoy watching our kids and dogs play enjoying the almost year-round sunshine, a perk of living in San Diego.
My kitchen is probably the most amazing transformation. To me, it is picture perfect, and a dream kitchen. I am reminded every time I walk into it that the blue glass backsplash was put in by our own hands. The white cabinets were one of our best budget friendly renovations – but you’d never know it. It brings me a lot of pride and satisfaction.
And most important of all, it is the perfect house to raise our family in. Great schools. Wonderful neighbors. A park outside our front door where our boys spend hours with friends.
So, yeah…I LOVE my house. It brings me a lot of joy.
It was good to have Jim’s counsel. He reminded us that some of life’s financial decision are not based upon finances alone.
We left the Chautauqua on Cloud Nine. The experience alone was satisfaction. The friendships gained were immeasurable and the advice, priceless.
We were now fully armored to come home and execute.
Except the actual execution of the decision is sometimes harder than how you envision it.
So, we stalled. We just didn’t make a decision at all. Well, that’s not entirely true. We nixed the decision to live abroad, at least for now. It just did not make sense to leave Curt’s pension on the table. It’s still an option after Curt’s official retirement, but not before.
But as far as the house was concerned – it was too hard. It was too hard to decide what to do and so we avoided deciding, gripped with indecision.
We sat on it for months.
Since we began our FIRE journey we have been able to increase our net worth (decrease our negative net worth), by last tally, to just under $90,000.00 and decrease our monthly expenses by over $6,000.00. By all accounts we are doing really well on our progress. We still have a LONG way to go though and any progress we make gets us to the finish line faster.
After coming home from Greece, I retired my law practice which resulted in a significant drop in income. We would still be able to meet our budget, but in order to meet our goals, I would have a short amount of time to fill the income gap.
That was scary and I suppose I should probably write more on that elsewhere. I am about six-months into “retirement” and I am not where I thought I would be and that has brought up all.the.feelings.
BUT because of this uncertainty and the ever-present desire to keep on track to make our dream of FIRE become a reality, we couldn’t stall on the decision anymore.
Selling the house made the most sense. Not without some angst. But “adulting” is hard sometimes. We came to the conclusion that the four walls we live in, no matter how much we love it, is not what makes our house a home. “WE” are what makes any house we live in a home. So, we will sell.
We will sell and rent for at least a year, then maybe we buy again when we see an opportunity to renovate and make a profit.
With the proceeds, we will pay off all of the remaining consumer debt we have left, except our student loans. We will put $10,000 towards an out of state investment property that is expected to cash flow (after expenses) $300-$500 and, lastly, create a fully funded emergency fund.
Depending on how much we are able to rent for, we will experience drastic savings in our monthly expenses as well.
The breakdown of the expected savings and addition of cash flow is shown below:
EXPENSE/INVESTMENT PROP: MONTHLY SAVINGS/CASH FLOW:
CONSUMER DEBT $1596.00
RENTING/VS. MORTGAGE $608.00 – $1358.00
INVESTMENT PROPERTY $300.00 – $500.00
TOTAL: $2504.00- $3454.00
Seeing these numbers on paper really seems like a no brainer, right? I am sure in financial terms – that is quite obvious.
It took us some time to get our hearts on board.
Now, that we are there, I am beyond excited. These numbers, if they hold, will allow us to do so many more things with our finances. It will allow us to live 100% on Curt’s income and all of my income will be GRAVY. It can be used to increase our retirement, it can be used to save for another investment property, it can be used to kill our multiple six-figure student loan debt. All good things that get us closer to our dream of Financial Independence.
I look forward to being able to update all of you after we actually execute this plan. Keep your fingers and toes crossed for us.
Love and Prosperity,