cute fuzzy bunny
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
We're about to go through a major change of our lifestyle and relative financial independence, and its been an interesting experience to change my point of view on this matter several times over the last 5 years since ERing.
For those not keeping up, five years ago I voluntarily took a years severance pay from my megacorp and my profits from a good diversified investment plan fed by both the tech stock craze of the late 90's and profits from california real estate.
Not long after that, I found I liked this "not working" stuff and decided to keep it up.
Well before I found this site, or ever heard of an "SWR", I decided to scuttle the high flying lifestyle I had become accustomed to, sell my mcmansion by the lake and move to a cheaper, albeit less nice area where real estate was half the cost. And 1/10th the distance to my girlfriends house!
The smaller, lower maintenance home with lower costs worked out for me as a single man. The increase in crime and the loss of a lot of quality of life benefits was an annoying trade-off, but it was workable. With a conservatively invested pool of dough I pretty much had it made for life. I became well accustomed to the LBYM strategy and thought my old way of life was really a huge caricature of who I really wanted to be.
Then...we got married, had a baby, and moved in together. My wife being dedicated to her career planned to keep working, provided health care and an income stream. I converted my ER time to fixing up her old house and we sold it for a nice profit.
I changed our whole financial strategy to a far riskier, high long term return one that factored in the great benefits of fixed health care costs, an income stream and zero debt. A bond and REIT heavy portfolio became a high equity portfolio with a 2 year cash buffer.
My strategy went from hanging in there indefinitely to shooting for full lifetime financial independence. I defined that as having enough money that no reasonable situation could derail us financially. Education, illness, early retirement for my wife (who still doesnt want to!), long term care, etc.
After the big run up the last few years, we crept closer to the objective.
Some things started to gnaw on me. In no particular order: one was that things in the equities market had done too well for two long and I was having more and more trouble finding assets I wanted to buy at prices that seemed reasonable. The second was that the small house that served me well as a single man was a little tight for a married couple with a baby, three dogs and three cats. The third was concern about my sons education and my family's well being in what was becoming an increasingly crime ridden area that wasnt improving. Lastly, real estate prices in my old mcmansion neighborhood were plunging while holding relatively steady in our current neighborhood.
After a lot of discussion, spreadsheet action and serious consideration, we decided to trade our destination goal of bulletproof financial independence for a quality of life improvement for our son and ourselves.
We're moving back to mcmansionland.
A smaller one on a smaller property - but twice what we have now,virtually no violent crime, far better schools, tons of excellent recreation, retail and restaurants. Improvement in experiential affluence vs a degrading of financial independence.
There are some plausible financial benefits. We've taken some money off the equity table - in fact I've reduced our equity exposure to 25% - and put it into a relatively valuable home in a great area that should continue to appreciate in value. Going back to the "home as a bond" diatribe discussion this is a tappable asset that we can sell in 20 years when Gabe is off on his own and its time for us to cut back a little as we cruise into our 60's. We've got a lot less on the equity table, so our sleep at night factor improves. Should equities go through a little correction, which I am anticipating (dirty market timer!!!) I can step back in with some of our cash and feel good about what i'm buying. The public schools where we're moving to are some of the best in the state/country, so we dont necessarily have to pay for private schools for Gabe.
That having been said, its a quarter million out of our portfolio to get into the place although we'll own it outright) and an extra 8-10k a year in increased utilities, maintenance, and other expenses. A chunk of the initial outlay is for all new furniture to replace our 10-15 year old stuff. The house is also a much higher maintenance property than the one we're living in now and needs a bit of updating before we move in and a bunch as we go along.
At the end of the whole thing, we decided its best for our son, and that we should enjoy our lives more now while we're young and worry about being 100% financially bulletproof a little less.
Which also means that I'll be fixing up our new place, moving us into it, and then preparing our old home for sale. And then catching up with a lot of old friends we havent seen much of in the last four years.
So in a short while I may sink back into the forums earth foundation for a time.
Quite an adventure, this is...
Many thanks to the helpful and supportive people who shared their thoughts with me via PM's on this move. When everyone was totally behind it, it helped me get past the teeth grinding and ceiling staring until 2am stuff. My "team of experts" are the best around, anywhere.
Best comment out of all of it was "Too many people on this board are collecting rainwater and sifting broken glass out of the expired peanut butter. Forget that."
For those not keeping up, five years ago I voluntarily took a years severance pay from my megacorp and my profits from a good diversified investment plan fed by both the tech stock craze of the late 90's and profits from california real estate.
Not long after that, I found I liked this "not working" stuff and decided to keep it up.
Well before I found this site, or ever heard of an "SWR", I decided to scuttle the high flying lifestyle I had become accustomed to, sell my mcmansion by the lake and move to a cheaper, albeit less nice area where real estate was half the cost. And 1/10th the distance to my girlfriends house!
The smaller, lower maintenance home with lower costs worked out for me as a single man. The increase in crime and the loss of a lot of quality of life benefits was an annoying trade-off, but it was workable. With a conservatively invested pool of dough I pretty much had it made for life. I became well accustomed to the LBYM strategy and thought my old way of life was really a huge caricature of who I really wanted to be.
Then...we got married, had a baby, and moved in together. My wife being dedicated to her career planned to keep working, provided health care and an income stream. I converted my ER time to fixing up her old house and we sold it for a nice profit.
I changed our whole financial strategy to a far riskier, high long term return one that factored in the great benefits of fixed health care costs, an income stream and zero debt. A bond and REIT heavy portfolio became a high equity portfolio with a 2 year cash buffer.
My strategy went from hanging in there indefinitely to shooting for full lifetime financial independence. I defined that as having enough money that no reasonable situation could derail us financially. Education, illness, early retirement for my wife (who still doesnt want to!), long term care, etc.
After the big run up the last few years, we crept closer to the objective.
Some things started to gnaw on me. In no particular order: one was that things in the equities market had done too well for two long and I was having more and more trouble finding assets I wanted to buy at prices that seemed reasonable. The second was that the small house that served me well as a single man was a little tight for a married couple with a baby, three dogs and three cats. The third was concern about my sons education and my family's well being in what was becoming an increasingly crime ridden area that wasnt improving. Lastly, real estate prices in my old mcmansion neighborhood were plunging while holding relatively steady in our current neighborhood.
After a lot of discussion, spreadsheet action and serious consideration, we decided to trade our destination goal of bulletproof financial independence for a quality of life improvement for our son and ourselves.
We're moving back to mcmansionland.
A smaller one on a smaller property - but twice what we have now,virtually no violent crime, far better schools, tons of excellent recreation, retail and restaurants. Improvement in experiential affluence vs a degrading of financial independence.
There are some plausible financial benefits. We've taken some money off the equity table - in fact I've reduced our equity exposure to 25% - and put it into a relatively valuable home in a great area that should continue to appreciate in value. Going back to the "home as a bond" diatribe discussion this is a tappable asset that we can sell in 20 years when Gabe is off on his own and its time for us to cut back a little as we cruise into our 60's. We've got a lot less on the equity table, so our sleep at night factor improves. Should equities go through a little correction, which I am anticipating (dirty market timer!!!) I can step back in with some of our cash and feel good about what i'm buying. The public schools where we're moving to are some of the best in the state/country, so we dont necessarily have to pay for private schools for Gabe.
That having been said, its a quarter million out of our portfolio to get into the place although we'll own it outright) and an extra 8-10k a year in increased utilities, maintenance, and other expenses. A chunk of the initial outlay is for all new furniture to replace our 10-15 year old stuff. The house is also a much higher maintenance property than the one we're living in now and needs a bit of updating before we move in and a bunch as we go along.
At the end of the whole thing, we decided its best for our son, and that we should enjoy our lives more now while we're young and worry about being 100% financially bulletproof a little less.
Which also means that I'll be fixing up our new place, moving us into it, and then preparing our old home for sale. And then catching up with a lot of old friends we havent seen much of in the last four years.
So in a short while I may sink back into the forums earth foundation for a time.
Quite an adventure, this is...
Many thanks to the helpful and supportive people who shared their thoughts with me via PM's on this move. When everyone was totally behind it, it helped me get past the teeth grinding and ceiling staring until 2am stuff. My "team of experts" are the best around, anywhere.
Best comment out of all of it was "Too many people on this board are collecting rainwater and sifting broken glass out of the expired peanut butter. Forget that."
