The trip to the property with Tom and Celia over the 4th of July weekend has been a success! For those of you who don’t know, we call this place The Harn. Danny created this lexicon for our House-built-inside-a-Pole-Barn… House-Barn… Harn. We were worried about our city-girl, Celia. What with peeing in the woods and such… But everyone survived just fine.
So back to a bit more on how we got to this place in our lives.
Last time I wrote about Reducing Consumption. Dan and I believe reading Your Money or Your Life was a major turning point in our lives; it gave us much needed insights and tools. We were able to evaluate our practices on spending and determine whether the things we were buying were worth the life force we were spending on them. For example, if I made $20 an hour, then each time we bought $15 worth of pizza, it cost us about an hour of my work week. (This vaguely factors for taxes and such for the sake of simplicity.) We realized that much of what we bought were fleeting things and not worth our time in this way. We had too many t-shirts already. We didn’t need to see the movie at the theater, we could wait until it was at Redbox or on Netflix. And if we waited for a while, that brand new phone would be free with contract or that latest TV would be half the price. There is something to be said for delayed gratification. We were well on our way to thinking about what was truly important in terms of dollars and STUFF.
- We eliminated debt so we don’t have to keep working for more and more money.
Though we’d quit spending so much, we had been a part of the consumer society for so long that we’d accumulated a lot of debt over the years. We knew a key to being able to Retire at 45 was to prevent debt accumulation going forward. But we also needed to focus on debt elimination. We had almost $50K in student loan debts from Danny’s college years that was trickling down slowly and we had a large house payment every month. What we didn’t have was a lot of credit card debt as we’d always worked to pay off these debts every month. This put us well ahead of the typical American.
For a while we were both working and were able to make double house payments. This is one of the best things you can do to reduce how much you end up paying for your home. Even if you can only make an extra payment a year, it adds up. See more on “mortgage” below… When the rates dropped, we refinanced the house and rolled the student loan debt into that loan making the interest tax deductible. We tracked every penny we spent in MS Money (today we use Quicken) to have a handle on where we were creating debt so we could eliminate the debt that wasn’t worthwhile. We determined that car maintenance was a lot cheaper than buying a new car every couple years. We purchased a 2005 Toyota in 2006, with only 24,500 miles. That car now belongs to our son Tom and it’s got 225K miles and a few more dents. We knew fixing these dents would not affect the usability of the car so didn’t waste money doing that. A few years back, we bought a Smart car to reduce our gas expenses on my 72-mile daily commute. We also bought this car used with only 8900 miles. We let other buyers pay the depreciation and we got good cars cheap.
In my first post, I mentioned the 5-Year Plan that Danny and I formulated back just after the turn of the century.
Side Story: One of the first things we did was tell my financial planner about this 5-Year Plan. And we heard laughter. So, I realized I needed another financial planner. And this gets to a crucial part of how life works. I kept my eyes and ears open and… the Universe provided!! I was on a Southwest Airlines flight for work (yes, I LOVE SWA so have to plug them even though I don’t fly anymore) and my seatmate was a gal from NY. We started talking and I eventually mentioned this 5-Year Plan to her. Lo and behold, she was a financial planner! And she didn’t laugh. She asked more about what we wanted to do and she listened to why, she told me a story of one of her clients she helped to get what the CLIENT wanted (she amazingly saw this as important to her business!) and she gave me her card. And now we have a pretty amazing plan for meeting some financial goals for our future with our 401k and Roth IRA funds. Here’s a link to Marg: http://www.nuccifinancial.com/
When we began our implementation of the 5-Year Plan, we knew it had to be done debt-free. One of the people who influenced us is Rob Roy (http://cordwoodmasonry.com/) and one of the most important things we learned from him is the definition of “mortgage”. It literally means Death Pledge. Rob always encourages people to build as they can afford it, to not incur debt on the road to progress. We decided to follow this advice.
We had some savings when we started our land search. Once we found our property in 2007, we placed 6% down and then financed the remainder on a 6% contract loan with the owner. We paid off the land in less than a year. Then we paid a contractor to put in a culvert to allow access in mid-2008. Until then, our land was only accessible if we drove onto it from the neighbor’s property (there was a logging road that crossed both properties) or by braving the ditch, which usually had a few inches of water running through it. In July 2009, we cleared a large space where we could build a pole barn. This involved cutting about 200 saplings and small trees, which we accomplished with the help of our son Tom and my mother, Ruth Obert. We worked hard! Bruce Lindgren could now put in a driveway and clear a pad for the pole barn. In late 2009, the barn was purchased and installed. Everything was done as we had funds. No financing. No mortgage. And we continued this way as we built the interior living quarters and then expanded the living quarters later (when we decided to NOT build a separate cabin on site). Though we sometimes took advantage of 6 months same-as-cash financing to spread out payments, we never purchased more than we had funds for at the time of purchase.
Once we knew we were ready to make the plunge and move to Minnesota, we were able to sell the house ~ the biggest debt we owed. Since we’d diligently paid extra payments, we’d winnowed down the loan considerably and were able to walk away with a nice nest egg to help us make the transition to life “retired in the woods”. We had plenty of funds to live for a few years, even without any income. When we finally closed on the house last November, it was like a huge weight off my shoulders. No more house payments! No more big taxes & insurance! No more mortgage! It was another piece in the puzzle to freedom and it felt really good. Our Harn does have costs; taxes, insurance and electricity ~ but no mortgage. And the taxes on it are about 10% of the taxes on our previous home. Insurance is about half. It gives us a real sense of peace to know our future homestead has been paid for as we’ve progressed and will remain affordable going forward.
We moved the majority of our STUFF to the Harn and we now live more minimally. We have a bed, some chests with clothes, a file cabinet, my sewing machines and some craft supply storage. We have been very fortunate in having family help to manage this transition. When Dan began looking for work in Minnesota, there were almost no jobs near our property. We looked in other areas and found Detroit Lakes and Grand Rapids had some opportunities but the jobs seemed to be most potential in Alexandria. This just happens to be where my Mom and her husband Tom are living and they were willing to put us up in their home. They had two guest rooms and their basement guest room became our new bedroom. We have our own bathroom and TV area and I was able to create a craft space making this a smoother transition. But it is different living in space that is not “yours”. As Tom notes, the kitchen is over-crowded with more than one person, so we have to coordinate a bit!
While we don’t formally pay rent, Mom & Tom seem happy with our contributions which consist mainly of maintenance and housekeeping that help reduce their workload in this large 4000 square foot home, along with occasional tech support. Their help has been a huge influence in our ability to make this transition to Retire at 45 more easily.
And the up side is that we really enjoy spending time together. I know that there are so many people who never really get time with their parents once they move away for college or that first job. It had been almost 30 years since Mom and I even lived in the same state. But now we spend loads of time together and it’s great. We had an amazing evening for 4th of July. Nothing spectacular, just enjoying a home-cooked meal on the back patio overlooking the lake, talking about life and enjoying the breeze and happenings on the lake. We headed over to Bug-a-boo Bay for a quick drink and a listen to the band and then dropped off the grandson & his girlfriend at Arrowwood for fireworks. Simple and wonderful.
I feel very blessed to have this time to enjoy doing yard work with my mom, transplanting some of her overcrowded plants up to my property, creating a connection with her there. And there is a tremendous local music scene here in Alex. With Danny off work of late he too has had a chance to spend time out hearing the local and not so local musicians at Arrowwood Deck, Sixth Avenue Wine & Ale, the Maritime Museum Garden and Carlos Creek Winery. There are people playing music all over this town!
And there are great events at the High School with musicians from far away. There are Community Ed classes we’ve enjoyed together and I love having the time in my schedule to be able to teach some of these classes as well as taking time to learn something new. And most of this stuff is free or darn near it so doesn’t incur a big amount of debt.
What we’re finding is that by working hard to reduce our possessions and our expenses, we’re now seeing an abundance of happiness in return. Life is simpler and more enjoyable. I’ll share more about how we figured out what makes us happy in the next post.