Homeless, and a bit on the strategy of dollar cost averaging


All packed up and ready to go

Drawing by Trisharay

Finally, we are homeless. Well almost.

Closing is actually Monday April 8th. Then, at around 4 pm, we will formally trade the house for a nice fat check that will be wired directly to Vanguard. Our money, formally tied up in home equity, will be productive once again.

Since the market is trading at all time highs you might be interested in how and on what time-table I’ll be deploying the cash:

Immediately, and when the dust settles my allocation will still be precisely what it was:

50% VTSAX (stocks)
25% VFIDX (bonds)

It works this way because I already figured my home equity as part of my real estate allocation.

Since then I have re-thought the idea of holding REITS as described here: Stepping away from REITs. So our current allocation is now:

75% VTSAX (stocks)
25% VFIDX (bonds)

A common recommendation with a newly received chunk of cash is to “dollar cost average” (DCA) it slowly into the market. The idea is that, should the market tank, you will have spared yourself some pain. That’s fine as far as it goes, but there are other things to consider:

1. The market might also continue to rise, in which case you will have spared yourself some gain.

2. When you DCA you are basically saying the market is too high to invest all at once. In other words, you have strayed into the murky world of market timing. Which, as we’ve discussed before, is a loser’s game.

3. DCAing screws with your allocation strategy. In the beginning you will be holding an outsized allocation of cash. That’s OK if that’s your allocation strategy. But if not, you need to understand that you’ve changed your plan in a deep and fundamental way.

While freeing up cash, this process of becoming homeless has entailed an amazing amount of work. Exercise too. I’ve lost 4 pounds!

Beginning about two weeks ago we started packing, moving boxes around and purging stuff. Then this past week we hit high gear.

Monday, April 1st, we signed our new lease and officially became renters again. We packed up the Forester and brought the first load over with us. Happy April Fools!

Tuesday was the final packing push. Boy howdy — for people who don’t collect anything, who regularly purge their belongings and who just now sold, consigned, donated and trashed a boat load — we’ve got a ton of stuff.

The movers were at it from 10am to 7:30 pm Wednesday and then again from 8-11 am Thursday. We chose a small local outfit and their somewhat small truck meant two trips.

We bought a couple of new furniture pieces to better fit this much smaller space and those arrived Thursday afternoon right on schedule.

Wednesday I spent all day working on the move and cleaning the house behind the movers as they finished each room. Mrs. jlcollinsnh took Wednesday afternoon off and met them at the apartment to manage that end and to start getting things organized.

Then we both spent all day Thursday unpacking and setting up. Boy howdy, but we have a lot of stuff. I’m not sure you can ever fully appreciate how much stuff you have until you have to pack it up and move it on out.

“Hauling My Stuff”
Painting by VisualsSpeak


Friday she was back at work and I spent the day hauling stuff to the dump and donations to the Animal Protective League. And house cleaning. Lots and lots of house cleaning. But the empty house sparkles, if I do say so.

Turns out I kinda like this hauling and toting of stuff about. It’s good physical labor and you can see a tangible result of having done it. Plus, for the first time, we are routinely using our little Forester the way all the commercials for this sort of vehicle show rugged type folks doing.

waterworks cafe

Waterworks Cafe

One of our goals with this move is to return to urban living and the walkability that confers. As regular readers know, I’m a fan of cafes and we’ve already found Waterworks, a great little one just a block from here.

We had breakfast there Thursday and Mrs. jlcollinsnh strolled over and picked up sandwiches for lunch. (We were there again this Saturday morning!) For dinner we walked about six blocks to 900 Degrees, an upscale pizza joint, for salads, pizza and beer. Very good end to a very long day.

As I write, the apartment is together enough now that we can make turkey sandwiches for lunch. For dinner, who knows?


Closing yesterday, April 8th, was butter smooth. We are officially home free.

It is striking to me how excited the new owners are to have our house, and how relieved we are to be done with it. Roots v. Wings.

Different stages in life.

We’ve owned houses (2) for the last 28 years. It fit our needs at the time, especially after our daughter was born in ’92. The new owners have two little girls just about the same age ours was when we bought the place in 2000.  Roots.

Now she’s off in college and for us the apartment life beckons again. Wings.

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  1. Shilpan says

    I can feel sheer happiness quadrupling in your life as you abandoned all that clutter behind, my friend! After all, homelessness has its virtues.

    Isn’t it amazing that we unleash our freedom as we let go desire to please others and start living for ourselves?

    Congrats! You are my role model.

    • jlcollinsnh says

      Ha! Hope so. So far we’re working thru the effort and pain to get there! 🙂

      And, while we unload a bunch, we still paid to cart a bunch of clutter over here. Part of the process of unpacking has evolved into “Hmmm. Guess we don’t need this Whiz Bang 9000 after all…”

  2. femmefrugality says

    Congrats on being homeless! And renting the new apartment…. 🙂 Hope all goes well on Monday and you keep discovering great new places to eat! (I eat out so much right around moving time…who has time to unpack a pot when my closet’s still in boxes?)

    • jlcollinsnh says

      and when boxes are piled on the stove.

      Thanks, FF!

      For all the pain moving entails it does provide a wonderful excuse to eat out. Not that we need much excuse. 😉

  3. Dividend Mantra says

    Sounds like you’re really happy with your new homeless situation!

    Funny how even the word “homeless” shows its bias by the assumption that you must be living on the streets. I am less a home as well, and do quite enjoy it.

    Enjoy your new urban living! Oh, and I’ll pick the wings over the roots any day of the week…but I can see the virtues of both.

    Best wishes!

    • jlcollinsnh says

      Hi DM…

      Good to see you here!

      Yep, that’s why I used the word “homeless.” It has many variations of meaning and in the past several years it has been focused on only one. So I thought I’d give the word a break. 😉

      So far, we are thrilled. Of course, nothing is perfect and I’m sure over time somethings about renting will rub my fur the wrong way. Maybe that’s a future post!

      I, too, prefer wings. Certainly at this point in my life after quite a few years of roots!

  4. supwithyou says

    Congrats on selling the house, and thanks for sharing your allocation. I was wondering if you have an advise for us. We are in process of selling our house and moving to California bay area. We will rent for at least a year or two, and then possibly buy a townhouse or a single family home. How would you allocate the proceeds? I don’t want to risk it all by investing too much into market, but I don’t want to risk inflation or be priced out if real estate increases by 20% in two to three years. Should I be allocating more in REITs?

    • jlcollinsnh says

      Thanks SWY….

      …and welcome!

      For many people who have significant equity in their home, the real estate portion of their total asset allocation is exceptionally high. Often without realizing it. Further, a house is a very concentrated investment in a specific market. It is a bit like having your stock allocation invested all in one company. That can work out exceptionally well (think Apple in the 1st half of 2012) or very badly (think Apple in the 2nd half of 2012).

      So a house in CA could outpace the REIT index fund or not. Still, a REIT is the best proxy for your money while you rent. Just be aware/cautious if this over balances your allocation into real estate.

  5. RW says

    Congrats Jim!
    Seems the “Homeless” tag fits you nicely. Because of the sale of the home are there any capital gains to worry about? How do you deal with the tax issues if any? I have never sold a home and had to deal with the tax man afterwards… thanks for any insight.

    Enjoy your new found wings and the walks to the cafes!

    • jlcollinsnh says

      Thanks RW…

      …it is a comfortable cut!

      As for capital gains taxes, sadly, no. We have no gain to tax.

      If I look at just our purchase price back in 2000 and the sale price today, we have a gain of about 25k (and people say the stock market was tough!)

      That gain wouldn’t be taxable anyway. As a married couple filing jointly we’d enjoy a 500k tax free capital gain exclusion. 250k for you single folks.

      But when I add in the cost of all the improvements we made over the years the “cost basis” (what you’d use to figure your gain or loss for tax purposes) of the house rises about 80k, so actually I have a loss of around 55k. (OK, now I’m starting to get depressed…)

      Unfortunately, loses from the sale of your home (principle residence) are not deductible.

      I’m sure glad I haven’t been “throwing away” my money on rent all these years…. 😉

  6. JK says

    Hi Jim,

    Congrats on selling the house!

    I’m really interested in dollar cost averaging, so I was hoping for some clarification. In this article you argue against it because it reeks of market timing. But in the article you linked to (loser’s game), you state that people lose money bythe buying when the market is soaring!

    So wouldn’t it make sense to wait for the market to not be at an all time high? Or am I just hopelessly confused?

    • jlcollinsnh says

      Thanks JK!

      It is confusing so no worries.

      What I was trying to convey in that other article is that most people invest emotionally, selling when they get scared and buying when they start hearing other people are making money in the market. So they tend to sell at lower levels and buy at higher levels.

      Right now the S&P is trading around 1550, very near it’s all time high. But that’s not a ceiling. It could, and over time definitely will, go much, much higher. In July 1987, for instance, it also hit an all time high: 322.

      The problem is that at any given level there is no way to be sure where the market will go short term. Right now, and anytime really, you can listen to heavily credentialed experts explain why the market is now at a peak and on the verge of falling hard.

      Or, you can listen to equally heavily credentialed experts explain why the market is now at a peak and on the verge of soaring.

      Beats me.

      What I do know is that the odds are extremely good that the market will be much higher 10 years from now. Higher still 20 years out. But as to the highs and lows along the way we are all, experts included, really clueless.

      Now some might say that while this is generally true, there are moments in time when the market is so low or so high as to be obvious. March 2009 with the S&P at around 700 would be a good example. That was the low of the 2007-8 implosion and stocks have soared since.

      But at the time, most experts were predicting it would continue its plunge. Opps.

      Market timing always seems obvious in hindsight, but it never is at the moment. And that’s why I say it is a loser’s game.

      Hope this helps!

  7. Mad Fientist says

    Good luck with the closing tomorrow, Jim. I remember when we sold our last house that we didn’t relax until after we handed over the keys so hopefully tomorrow night you’ll get to kick back and enjoy a nice, stress-free glass of wine with Mrs. JLCNH.

    We’re looking forward to coming down and checking out your new digs once you get settled!

    • jlcollinsnh says

      Thanks, MF…

      as they say, “it ain’t over till it’s over.”

      And, it’s over. Closing went smoothly and we are home free.

      We had a celebratory drink with our realtor and then dinner and a glass of wine for just the two of us.


  8. Jeremy says

    Congratulations on the big move! That has to take a load off

    It is still amazing to me how much stuff we can all end up owning after a length of time in one location. Even with a focus on not accumulating material possessions, every time we moved apartments over the years I was still surprised by how much stuff we had

    Even now when everything we own fits in our backpacks, every time we move on to the next place I still find stuff we didn’t use and forgot we had. I guess we didn’t really need it afterall

    • jlcollinsnh says

      Thanks Jeremy! It does.

      And now I have a new theory of gravity.

      Houses have gravity. The bigger the house, the more objects it pulls into itself.

      Apartments have gravity. The bigger the apartment, the more objects it pulls into itself.

      And now you’ve confirmed it: Even backpacks have gravity!!

  9. CashRebel says

    Congrats on downsizing into a more urban space! So does that mean that you’re investing everything in just three moves? I know market timing is a fools game, but it just feels like it should be wrong to put it all in at once. But I guess it’s all random anyway, so you might as well get those dollars working for you.

    • jlcollinsnh says

      Thank CR…

      and yep, once the cash its my account I’ll allocate it all the moment I get a chance and as described in the post.

      I really do eat my own cooking!

  10. Mrs EconoWiser says

    Congratulations! I still haven’t figured out the precise numbers on investing with Vanguard here in Holland. The thing is that you guys seem to have laws which forces brokers to state the exact TER and here we don’t…so one needs to figure things out on one’s own. Every time we think we calculated TERs ourselves we find out about other hidden costs. Argh! Well, we don’t have a gazillion amount of cash ready to invest right now. We first want to pay off the interest-only part of our mortgage. That’s about €19.000 more to go. We will have paid this off by the end of this year, for sure…hopefully sooner. Then we can start throwing more dough into Vanguard…just don’t know through which broker yet. I will send you an email with the options as soon as we have figured out the true TERs.

    The cafe looks great, definitely something we would enjoy as well!

    • jlcollinsnh says

      Thanks Mrs. EW…

      BTW, I just read your post about the financial advisor who hadn’t heard of Vanguard. Yikes. 🙂

    • jlcollinsnh says

      Different stages in life. We’ve owned houses (2) for the last 28 years. It fit our needs at the time, especially after our daughter was born in ’92. Roots.

      Now she’s off in college and the apartment life beckons again. Wings.

      at the closing yesterday it was striking how excited the new owners are to have our house, and how relieved we are to be done with it. Roots v. Wings. 🙂

  11. Mr. Risky Startup says

    For a few years we lived in a house in suburbs with very little in terms of services and restaurants within 5 miles. I could not wait to move back to my European ways of living – condo in the urban area. There is this great feeling when I walk (or bike) right by my car and keep on walking – to the bank, grocery store, restaurants…

    If my company did not move out of the downtown and into the industrial area 15 miles away (reachable only by highway/car), my car would not move very much from April to November.

    Wait until you discover your town services – usually sparsely used swimming pools, parks etc. And, if you don’t mind a glass of beer or wine (yes I drink beer out of the glass, sue me), being able to enjoy the evening meal with beer and then walk home is awesome.

    Congratulations on your newly re-acquired wings. As long as your landlord is a good guy or gal, everything else is easy.

    • jlcollinsnh says

      Thanks Mr. RS!

      Great points.

      It is starting to occur to me that one of the thinks that appeals to me about Ecuador has been that we’ve stayed in urban areas, like where we live now. So, with this move we’ve accomplished half the plan!

      Our landlord is a corporation. I’m hoping that means smooth, professional and attentive. We’ll see.

    • jlcollinsnh says

      Thank you, Ms. Rants!

      So far, we are thrilled. But one of the beauties of renting is that, should unexpected issues crop up or should we just want to try something different, change is easy.

    • jlcollinsnh says


      Actually, my ideal choice would be completely home (and apartment) free, living in upscale hotels in a slow meander around the globe.

      But that, unfortunately, is beyond my financial reach… 🙂

  12. Petey says

    Congrats on selling! My wife and I just sold our acreage, with very little long term direction.

    A little disillusioned with where to go from here, however you have us well interested in Index Tracking Funds. The shaky “investor” in me says “keep it in cash”, but deep down I know that is not achieving anything, especially with global bail-in’s a real risk to depositors.

    Thanks for this excellent blog.

    • jlcollinsnh says

      Thanks Petey…

      It feels great!

      As for cash, it is always nice to have some on hand. But never lose sight of the fact that over time it loses value to inflation, making it one of the riskiest investments of all.

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