Browse Category by Planning

Financial independence – FI

You know it’s time to move when you look through pictures of your home after you remodeled it and realize you’ve changed out most pieces of furniture.

My brother Phillip was in town visiting for the holidays recently and as usual we got into talks of our hopes and dreams. He showed us this amazing video of a man named Slomo in San Diego who rollerblades all day and night and is living his best, and happiest life.

The conversation then shifted to financial independence. Phillip asked if we had heard of the FI movement, and the answer was yes. Back when we lived in Colorado I remember reading Mr. Money Mustache’s blog a few times, as he was located just 15 min from where we lived, and I’ve always been fascinated by personal finance. I had also just read this NY Times article on the FIRE movement (Financial Independence, Retire Early). During this conversation Zach and I became acutely aware that we have gotten too comfortable.

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Business planning, Buying houses, Debt Free Living, Fixer Upper, Investments, Move forward, Planning, Small living, Smart money, Uncategorized

We bought a duplex.

Back in 2016 we bought a duplex in Vancouver, WA. We went in on the purchase of this investment with my parents, and my brother and his wife. We started making a video of the process, but it was difficult to do because this property was already rented out on both sides and we didn’t want to invade anyones privacy.

This home is not the most beautiful, and it needs a lot of updating. We plan to make exterior improvements (I’m thinking some shutters, fresh door color, and removal of the awning would be a great start) as well as many interior improvements (The washing machine and dryer are in the kitchen so those need to be enclosed, replace carpet on lower levels with laminate, and fresh paint -goodbye cream!- would be the first items on our list) when the time comes for our renters to relocate. But we like our current residents, so there is no rush!

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Business planning, Buying houses, Fixer Upper, Investments, Planning

Treat your tenants like customers.

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We’ve all heard the horror stories of tenants ruining properties by putting holes in walls, staining the carpets, refusing to leave a property at the end of their lease etc. This concern is what I would assume is the leading cause of people not being interested in owning rental properties.  Sometimes there’s nothing you can do to prevent this kind of behavior, but you can put the odds in your favor by treating your tenants like customers. Having rentals is a business, and with any good business comes great customer service.

Every single time we’ve met with a prospective tenant, we do our best to ensure that we want them to call us if something stops working or if they notice anything that needs attention. We do this for a couple reasons. 1. We want them to live in a place they love (the more they love it, the longer they will stay), and in order to do that they need to feel like they are being taken care of. And 2. These houses are investments for us! We want them to stay in good condition and don’t want something small to not get taken care of and turn into something huge.

We’ve looked at rental properties to purchase where the seller says “the tenants are amazing, they never call about anything, very low maintenance” and honestly, that’s a red flag for us. We’ve gone into several properties like this where it becomes evident that the tenants didn’t call because they just didn’t care about the house or they were getting low rent and were worried if they did call their rent would go up. Again, we want our tenants to call us, and you should want that too.

We’ve been extremely fortunate and have never had bad tenants. That being said, as with any business, you need to plan for unexpected things to take place. We always had money set aside in case something did happen to one of our homes and honestly, we planned for something bad to happen. We did this because we rental properties is our plan for retirement, we are in this for the long haul… so we planned for things to go bad so that if and/or when they did, we would be prepared and wouldn’t let it get us down. Luckily that never happened, and we like to think that a lot of that has to do with the fact that we treat our tenants with respect and are prompt to respond to their needs. Of course, there’s a lot that goes into finding the right tenants as well, but we’ll save that post for another day.

Business planning, Buying houses, Investments, Planning

Easiest way to save money.

Zach has been out of college and in the workforce for 8 years now. For the past 8 years he can count on one hand how many times he has paid to go out for lunch, impressive! Going out to eat for lunch is such the norm and most people don’t think twice about how much money they are spending. Based on the idea of paying $10 a day (which I wouldn’t be surprised if this number was actually higher) 5 days a week… you are looking at $200 a month. Now, what if you are a double income family, and both of you are eating out every day? That’s $400 a month!! Four. Hundred. Dollars!

So, if you can afford eating out for lunch every day, you can afford a house. If you and your partner were to pack a lunch every day for the next 22.5 months, less than 2 years, you would have enough money for a 3% downpayment on a $300,000 house. That’s right. Less than two years from now, rather than having nothing to show for your $400 a month… you could have $9,000 saved and be moving into your first home. Start packing!

 

Buying houses, Move forward, Planning, Small living, Smart money

New Airbnb in Louisville, CO

This last week I made a trip back to Colorado to visit our good friends (and our family Photographer) Ashleigh and Ian. I made the trip because they decided they wanted to rent out their spare bedroom on Airbnb. This was extra special because they purchased their house from us!  It was a lot of fun to be back in Louisville (although it was all of 36 hours) and get them squared away.

Have you ever considered renting your house out on Airbnb? Or, rent out a spare bedroom? Tell us about it!

Airbnb, Business planning, Debt Free Living, Planning, Small living, Smart money

Could we live here forever?

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Zach and I bought our first house during the big housing crash of 08′. During 08′ a lot of people were not buying homes in fear of housing prices continuing to plummet and with major lack of trust in the housing industry. Because we came out of college at one of the worst economic downturns our country has ever seen, when we bought our first house, and subsequent houses, we had this question in mind “Could we live here forever?”

History has shown time and time again that after a housing crash, with enough time, the housing market will recover. This gave us confidence that buying would be ok. But of course, like others, we were concerned that we hadn’t seen the worst of it. So, each time we purchased a house, even though we weren’t planning on any of these houses being our “forever home” we wanted to make sure that if Zach lost his job or the market worsened, we would be able to stay in the house as long as needed.

I honestly believe that to this day we could make each of our houses work, even with a family of 6. The smallest house we’ve had was just under 1200sf which is larger than the average home in Hong Kong, China, UK, Japan and Spain. Every time we purchased, I would walk through the rooms and picture what it would look like if we stayed long term. What if I have another baby, and it’s not one, but two, or three! Twins, Triplets? Yep, I still felt confident I could pull it off. Just doing this exercise helped me feel at ease that we weren’t making a mistake. Or that we wouldn’t wish later on that we had held out for a larger home.

When buying a home, even if you plan to only live there for a year or two, try this exercise and ask yourself “Can I live here forever?”. It can help ease the home buying anxiety, and leave you feeling confident that you can make anything work. Because let’s face it, in hard times, I think each and every one of us would just be grateful to have a home.

Be decisive, Buying houses, First time homebuyer, Planning, Small living

My inner JLO vs granola.

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This concept is one I learned from one of my best friends, who also happens to be my sister in law, Emily. She once told me how she had this inner struggle of her JLO vs granola and I couldn’t believe how much it resonated with me, and I adopted it as my own. So here it is.

There is a part of me that wants all things glamorous, and this is my JLO. I want a big house with a spa like master bathroom, gourmet kitchen, my own office, beautiful decks overlooking amazing views and a large open living area. I want a brand new van that smells new and rides like a dream. I want cute clothes that make me feel like a babe, and lots of them. I want eyelash extensions. I want a manicure, pedicure and massage every week.

I also have a part of me that wants all things granola. I want to live in a tiny house with my family that sits on a farm where we live off the land. I want to drive a Westfalia camper (why do these only seat 5 people!?) and go on road trips and camping with the kids. I want to live completely debt free. I don’t want to wear makeup. I don’t want a cell phone. I want to travel around the world as a family and have few worldly possessions.

This battle is real.  And this battle inside of me wants two completely different things. I think a lot of us are like this but until now, had no way to describe this inner struggle. I tend not to live on the extreme with either of these… but I do fall more naturally towards the granola category, thanks to Zach who was born to be a minimalist. While I want the fancier things in life, I also have a realistic view on how my life can go. I can either work really hard for a really long time to get all the material things I want. Or, we can buy less, save more and retire sooner. No matter how tempting it is to get weekly massages (or even monthly!) I choose to work towards a place in life where Zach can leave his day job and we can spend more time as a family. JLO, I’m sorry, I can’t be faithful to you.

Debt Free Living, Planning, Small living, Smart money

How to control your pre-approval process, and come out ahead.

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When you are a part of a gift exchange at work, or with your extended family, and there is a max budget for the amount to be spent on the gift, what happens? Most people feel like the max budget is how much they have to spend. If the budget is $30, most likely everyone spent the full $30. Even if that budget is simply to make sure people don’t over spend, it somehow becomes the minimum budget for most people.

This is what can happen when you get pre-approved for a home loan. You fill out your application, give all the information and documents needed to get pre-approved and you are told the maximum amount you can borrow for your home purchase. I can tell you from first hand experience that a lot of the time, this amount becomes the homebuyer’s budget. But, when getting pre-approved, does the bank take into account how much you want to save towards retirement or  how much you need to save to go on the awesome trip you’ve been planning to Brazil? Nope, they only look at your debt to income ratio, and your credit score (of course there’s more to it, but these are the big ones).

So, should you spend the full amount you can get approved for? Not exactly.

How to get pre-approved safely:

  • Sit down and go over your finances and budgets for each month (if you are purchasing a home with someone, a partner, spouse, friend etc. make sure they are there for this)
  • If you don’t have a budget, make one! Look at your spending from previous months and get an idea of how much you need to get by.
  • Make sure you leave room in your budget for retirement, travel, emergencies, and fun. You don’t want to be “house poor”.
  • Once you have a full understanding of your current finances, figure out how much you feel comfortable spending on a monthly payment for your mortgage.
  • Go into your lender, share with them that you would like to get pre-approved but that you don’t want to know how much you qualify for, but would rather know how much house you can afford with your set monthly payment.

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Be decisive, Buying houses, First time homebuyer, Investments, Planning, Smart money