Hey Freedom Seekers! First and foremost, it’s Remembrance Day here in Canada, so let’s please take a moment to remember all those who fought for the very freedom’s we all now enjoy. I am grateful everyday to live in this unbelievably beautiful country we call home, and to enjoy the life we are able to live. Much of which is, in large part, because of the sacrifices of those who came before us.
A Quick Note
Last week I had the pleasure of doing an interview with Bob Lai over at Tawcan.com. Bob had a lot of great questions, not only about how we reached our Financial Freedom goals, but also about the transition and impact of retirement on our lives.
Bob is an extremely knowledgable guy, who consistently publishes great content on his blog. Not to mention, he’s going to be a speaker at the upcoming Financial Freedom summit in St. Louis, from May 1-3, 2020.
If you haven’t checked out his site, or read the interview yet, pop on over and have a look. A huge thanks to Bob for having us as guests 🙂
Now – on to this week’s blog post.
The underlying theme to this whole one year Finding Freedom journey is all about a zero sum approach. Re-evaluating everything in our lives to ensure it aligns and supports our ideal lifestyle and family values now that we have reached Financial Freedom.
Shedding what no longer contributes in the desired fashion, and looking for new ways to optimize our life experiences.
So is this week’s post about going green in a big way?
It’s not – despite the title. I still love sustainability, but that’s not the kind of environmental impact I want to talk about.
Rather, I want to talk about the importance of mindfully and intentionally building an environment around us that best suits our personality, desired lifestyle and values, for the phase of life that we are currently in. Because what was good for us in our working years, may not dovetail with our current lifestyle objectives.
One of the aspects we’ve been giving huge contemplation to over the past 6 months or so has been our housing. Does it meet our needs, is it too much, too little, and is there somewhere else we could live that would better suit our desired lifestyle and accommodate the needs of our family?
As we talked about in last week’s post, the environment we both create, and choose to place ourselves in, can have substantial impacts on both our mental and physical well being. Weighing in as a substantial factor in our overall contentment and happiness.
In order to find the optimal answer for our family, we broke things into three key questions.
#1 – Should We Geographically Relocate?
This question is a big one, and has a lot of factors to consider.
Firstly – the financial factor. We currently live in one of the highest cost of living area’s in Canada. There is no doubt that if we elected to move to a smaller community, even within our same province, that we would capture substantial savings in terms of our housing costs.
Because we don’t have mortgage, we wouldn’t feel this in our outgoing monthly costs per se (although property taxes would likely go down to some degree), but we would be able to capture hundred’s of thousands of dollars in equity from our home and buy something comparable (if not substantially nicer) in a different city.
And that’s without even touching on the possibility of moving out of province, or even out of country, where we could pick up similar housing in many desirable areas for quite literally a fraction of the cost of our house. Likely pocketing close to a cool mill to invest elsewhere.
Tempting. Very tempting.
There’s also the fact that we are currently a minimum of 3.5 hours away from any of our parents/siblings. Frankly – that sucks. We love seeing our family, and we go to visit them a lot (and vice versa), which is great. But there’s something about Sunday night dinners, and being able to get together for an impromptu coffee, or have them come and watch the kids basketball practice or take them to a swimming lesson or two, that just isn’t the same when distance is involved.
I won’t lie – I have friends that have all of their immediate family in the Vancouver area, and when they talk about their weekly family dinners, I can feel myself going green with envy. A part of me really wants that – particularly for my boys. I want them to grow up with that sense of being surrounded by family, forging lifelong relationships with their grandparents, aunt’s, uncles and cousins.
Add to that, most of my family lives in the beautiful Okanagan Valley, full of golfing, wineries, lakes and beautiful beaches in the summer, and hidden gems of ski hills in the winter. We could get a VERY nice house, with beautiful lake views, be closer to my family AND pocket about $400,000 all by relocating here.
Meanwhile a good chunk of Mike’s family lives on Vancouver Island, boasting breathtaking views of the ocean, scenic hikes, fresh farm markets, a large “granola” community focused on sustainable living, and best of all, the desirable island laid back lifestyle. We could pick up a lovely family home, close to the ocean and the city of Victoria and still pocket about $300,000 relocating here.
Both of these spots are AWESOME options for places to raise a family, and when looking at those numbers, it seems like a no brainer to move.
Except that our kids love living here.
Our oldest loves his school, his friends, our house. He’s vocalized this to us on more than one occasion, and even slight hints at the possibility of moving have been met with immediate and forceful resistance on his part.
We get it.
I also love our neighbourhood. It’s incredibly walkable, something that I value highly. AND the climate is such that there isn’t a month in the year where I can’t regularly get our and walk with our youngest in order to do all my errands. Both Mike and I do love a lot of what the West Coast has to offer, and as our youngest grows a little older, we will be able to get back to some of the amazing hiking that is right in our back yard.
We’ve also started building a network of friends as well. We’ve lived in this community for 7 years now, and it’s taken some time, but we’ve slowly and steadily grown some roots.
It’s also convenient that we are located almost right in the middle of our families. This means that we regularly see both sides, and it’s not too difficult for either of them to visit us.
After hashing it all out, we’ve decided that, for now, despite the substantial financial advantages of moving, the right move for our WHOLE family, is to stay in the community we are in.
#2 – Should We Downsize to a new home?
Once we’d settled on the fact that we would be staying in our community, the next question became whether or not we should downsize our house. Particularly downsize to a newer home, where we wouldn’t have to deal with as many maintenance issues for the next decade or so.
*We very briefly considered the possibility of a bigger house with both a guest house and basement suite as rentals, but quickly dismissed that idea. A bigger house with a bigger property doesn’t AT ALL align with our lifestyle goals in retirement.
We currently live in a 3600 sq ft home, located in a suburb of Vancouver. Of that, 1200 sq ft is dedicated to a 2 bedroom basement suite, leaving us with an ample 2400 sq ft of living space for our family.
We do absolutely enjoy our current home, but it does often feel like there is a fair amount of space that we rarely use. And there is something about the idea of the lock and leave capability of a townhouse, row home, or detached strata home that is incredibly appealing to us.
Our home is also 13 years old, so it’s getting within the range where bigger ticket items are starting to have to be replaced. While we’ve budgeted for those requirements and have a healthy annual maintenance plan, it would be nice to free up that cash for alternative purposes.
To make downsizing an even more realistic option, we have the advantage that our oldest is in his last year of elementary school, and will be making a move to middle school next year. This means that we are no longer limited to a house in our VERY TINY catchment area, but that would could pick something within a much wider range of the 5 or so catchments that feed into the middle school we want him to attend.
So this summer we started going to open houses and checking out show homes at various developments in our area (of which there are a ridiculous amount).
Nothing we saw made sense to us.
While undoubtedly a bit older, our house happens to be located at the end of quiet cul-de-sac, on a decent sized lot, and we’ve spent the last 7 years that we’ve lived here slowly and frugally DIY’ing space by space to personalize the house to our family tastes.
Everything we looked at was located on busy narrow streets, jammed onto the smallest postage size lots possible, with limited possibility for a rental income, and just ok finishings.
We started to wonder if we should really give up the rental income? It would certainly be easier not to have to manage tenants. But with no mortgage, having our house perform as a true income producing asset, covering all of the housing expenses and STILL producing a net profit at the end of the year, is pretty hard to give up.
Even if we were able to capture a couple hundred thousand dollars of equity by downsizing within our neighbourhood, we’d need to make an estimated return of 10% annually within the market to offset the lost income (and the tax benefits of the rental suite).
Given that we really don’t mind having the tenants (and we currently have very good ones), it became obvious pretty quickly that giving up the rental suite didn’t make much sense.
The more we looked at, the more it became clear that if we wanted to downsize to something newer, we were going to have to sacrifice a lot of the features of our older home that we really like and value. So yet again, we decided the best decision for our family right now, is to stay put.
#3 – How Can We Optimize How We Use Our House
Once we’d reached the firm decision that we are staying in this house for the foreseeable future, we asked the next obvious question of what could we do to our current home to make the spaces more functional, and optimize their use? How could we best tailor our environment to meet our values/lifestyle goals, and be a source of enjoyment for our whole family.
Immediately two area’s of our home jumped out at me.
The Guest Room
We currently have our second largest bedroom set up as our guest room. Because family has to travel to see us, I like to ensure that they have a nice comfortable space to stay in when they are here.
But with a quick review of our calendars over the past couple years, I would say that the guest room only gets used about 20% of the time.
And while that’s pretty decent in terms of a guest room, it’s not so great to dedicate roughly 10% of our families living space to a room that only gets used 20% of the time.
We also don’t currently have a play room for our boys. Because the basement is a suite, they can’t go down there to play, and I have an aversion to overloading their rooms with toys, lest it not be a restful place designed for sleep.
We briefly toyed with the idea of converting our homes attic space into a usable play room for the kids, but the cost of doing so was going to be tens of thousand of dollars. We also didn’t believe that our kids would actually go up there all that often, so on the surface the ROI just wasn’t there.
So instead, we decided that we would convert the guest room into a play room, while simultaneously retaining it’s functionality as a guest room when family visited.
I am diametrically opposed to putting our family members on a pull out couch of any kind, so that was out of the question. So I started pricing out wall beds. I got a quote from a local company, who came in at just over $10K to install a wall storage unit complete with a Murphy bed.
Yah, I took a hard pass on that one. After much shopping and research, I opted for a unit purchased via Costco for a much more reasonable $2500. While still a higher end unit comparative to other products on the market, it appears to hit all the targets when it comes to comfort, functionality, and durability. And I’m okay with assembling/installing it to save myself the other 7500 bux.
We’ll invest roughly another $1500 into additional furnishings, paint, new trim, shelving, electronics etc for the room, for an all in cost of $4000.
The room will house a TV and all of the gaming units our family has acquired over the years (including a classic Nintendo & Super Nintendo! I’m very excited about those!), along with some fun bean bag chairs, and the majority of our kids toys. It will provide a fun space for our kids to hang out together, with their friends, and for some family video game fun too.
And when family does some to visit, the bean bag chairs can go in the closet, the toys into the toy box, and guests will still have a lovely place to stay.
The added bonus – the completion of the room is going to be our Christmas present to our boys this year, so this room is already working a lot harder than usual.
I suspect the play room will become a new favourite hang out, garnering daily usage.
The Back Yard
I’ve talked about our back yard before, and how it’s a space we don’t get a ton of use out of. We recently decided that we are going to invest some money redesigning it, but this analysis motivated me to really follow through on those plans, and to not skimp on the over all plan.
Turning our back yard into a space that we not only use, but lessens the current maintenance that we have to invest, now seems like a no brainer.
I’ve already been working hard over the past several years to create a garden space where I can grow a lot of fun vegetables with my kiddo’s, so that part is complete. We also invested in a stamped concrete pad for our kids trampoline to sit on (to avoid the forever moving and dragging of the trampoline to facilitate weekly mowing that usually happens), so we have made steps towards making our yard more functional and lower maintenance.
But now, we are going to up the ante big time. Currently we don’t use our back yard from about October – April. It rains, and there’s no covered area.
Then from about June – September, we don’t use our backyard for the majority of the day, because it’s South facing and there isn’t a speck of shade to be found.
Leaving us with a paltry two months, or roughly 16.5% of the year where we occasionally enjoy our backyard.
But even though we get minimal enjoyment from the space, we still have to maintain it. And it takes a surprising amount of maintenance!
So for this one, we are going big. We’ve come up with a design plan that will include the installation of a large covered deck, complete with fireplace, BBQ area, dining and loungers. We are also going to convert all of the remaining grass to turf (including a mini putting green for the kiddos) to negate the need to mow, or water. (We never water anyway, so it would be nice for once to have a lawn that looks green in the summer!!)
And maybe, just maybe, I’ll convince Mike that a hot tub is also a good idea (although I’m still not quite sure on that one myself! Please people – weigh in on this one!)
We’re aiming to have all of this done in the early spring next year, ready for the summer months, so we should be creating a space where we can up our use and enjoyment of the entire backyard to a daily basis as well.
The Bottom Line
Overall I’m pretty excited about the changes we have planned for our home. By delving into this analysis, and firmly committing to staying here over the long term it’s inspired us to really evaluate how we use each space, and ensure we are maximizing the use and enjoyment we get from our home.
I think these investments into our house will return dividends in terms of our contentment with the space, and an overall sense of home.
Ironically, while prepping this article for publishing, I stumbled across an interesting app that is under development and close to launch that I definitely would have utilized as we were running the numbers on our various options. The app is called What If I?
Created here in Vancouver, the platform is designed to allow the user to input a variety of financial scenarios/life choices, and then calculates the relative financial impact of those choices for you over the desired timeline, presenting the information in a visual manner that is easy to assess and weigh.
This tool would be perfect for situations such as ours when trying to hammer down the relevant financial numbers and appropriately weigh their impact in the overall decision making process. I’m super excited to explore this platform when it launches, and will write more about it when I do! But if you want to help be an early product tester and check out what they have to offer, head on over to their site and sign up.
What option do you think you would choose in retirement? Would you relocate, upsize, downsize, stay put (or some other variation?) Oh – and don’t forget to weigh in on the whole hot tub thing.