Kibanda Part 3: Running the numbers

It is a new dawn and…

…sunrise at Kibanda

After a brutal move (“Well then, we’ll just leave your stuff on the lawn and go”) we have finally taken up residency here at Kibanda. The lake front is as magnificent as we remembered.

Unfortunately, owning a house is also as big a PITA (pain in the ass) as we remembered. This one seems especially eager to return itself into dust. We have been so focused on the big issues – roof, septic, foundation, electrical, plumbing – we had forgotten all the little stuff. And in this neglected little beach shack there is lots of little stuff. The amount of issues that have been patched together and jury-rigged over the decades is nothing short of amazing.

Maybe I should have listened to this guy.

But then I take a break, sit and look out at…

…and remember: Oh, yeah. This is why.

But when it comes to raw dollars, is it better here…

Oh, and don’t forget this…

Running the numbers

Let’s get started, run the numbers and see how this new beach shack stacks up against our high-rise apartment in the city. Of course, I am going to use the same basic formula I shared with you in this post from back when we sold our house and began renting.

But first, before we begin, let me direct your attention to…

Addendum VII: Apples & Oranges

…at the end of that same post.

This addendum grew out of the complaint some had that in running my house to apartment numbers I was comparing, well, the costs of the house to the costs of the apartment. To be fair, they whined, I should be comparing the cost of owning my house to the cost of renting that same house. That, of course, is rubbish.

Were this an academic study, then maybe house to same house would make sense. But out in the real world I want to know how the costs of the actual choices I am considering stack up. So house to apartment was the only meaningful comparison back then.

By the same token, I am not now going to compare the cost of renting my 2-bedroom/2-bath luxury high-rise apartment with the cost of buying a similar 2-bedroom/2-bath luxury high-rise condo. That is not an option I considered.

Rather, I am going to compare it to the actual option I just bought: our beach shack.

Second, let me address the idea that I am anti-house. Not sure where that comes from, but this post might have something to do with it. To be sure, everything in that post applies to this little beach shack. And then some. 😉

However, I am very much anti-blindly buying into the real estate industry propaganda that homeownership is always, or even commonly a good investment. It is not. It is most often an expensive indulgence. Nothing wrong with expensive indulgences, as long as you can comfortably afford them. As I say in my Manifesto:

Life choices are not always about the money, but you should always be clear about the money choice you are making.

Sometimes it is, and that’s why we run the numbers.

Opportunity Cost

Opportunity cost, you’ll recall, is simply what our money could have been earning had we not tied it up into the house.

Since we paid cash and the $235,000 came from shares in VTSAX and since those shares paid a dividend of ~2%, our opportunity cost is $235,000 x 2% = $4700.

But, as noted, this is a place with some major needs. To meet those, I am figuring about $50,000 for improvements and repairs. $50,000 x 2% = $1000, bringing our total opportunity costs to $5700.

Now, in truth, this 50 grand has not been pulled from VTSAX all at once. Indeed, so far the costs are rolling in spread out such that I’ve been paying the bills out of cash flow.

Nor will all the expenses come at one time, or even in the first year. For instance, our septic system is on borrowed time and will be a $15,000 bill when the time comes. But the septic guy tells me that shouldn’t be for another 2 years, maybe as much as ten.

So treating the $50,000 as already spent opportunity cost money is not entirely accurate. But it is the easier and more conservative way to account for it.

So, 235k + 50k = $285,000 for the house = $5700 in total opportunity cost (285 x 2%)

Why not use VGSLX?

Astute readers will notice last time I used our REIT fund, VGSLX, and its ~3.5% dividend for this calculation. That’s because when we sold that house that’s where the money went. But, since we no longer hold VGSLX, it doesn’t make sense to use it as our proxy. Again, I am interested in the actual options in play, not some academic concept.

Cash Expenses

  • Bank closing fees and interest. Since we paid cash, we don’t have any of these. Had we taken a mortgage, these would be an addtional expense, but then the amount of capital tied up and the associated opportunity costs would be lower.
  • Utilities in the apartment ran ~$100 per month. While the house isn’t much bigger in square feet (1250 vs. 1000) the apartment does have the energy saving advantage of shared walls, floor and ceiling. I’m figuring the house will run twice as much, or an extra $1200 for the year — $2400 total.
  • Maintenance & Repair. Because this shack has so many needs right from the start, figuring an ongoing annual M&R figure is tricky. For instance, as I type, we have a plumber doing about $1500 in needed repairs and updates. As did an electrician a couple of weeks back. These could be seen as on going expenses for the M&R category. But since there are so many happening all at once, and since they include work needed beyond ordinary M&R, it really isn’t reflective of ongoing annual expenses. For this reason, I am choosing to treat all repairs in these first couple of years as capital expenses covered with the $50,000 budget.

Still, for the purposes of this comparison, it is reasonable to estimate an annual number for year 3 and beyond when things have settled down. Let’s call it $3000.

  • Insurance = $1282. This includes both house insurance and increasing our Umbrella policy coverage as there is more potential liability with owning a house than renting.
  • Real estate taxes = $5700.

Total annual cost of owning and operating the beach shack: $18,082

  • $5700 in opportunity cost
  • $12,382 in annual cash expenses

Total annual cost of renting our high-rise apartment: $22,200

  • $21,000 rent @ $1750 per month
  • $1200 in utilities

= a $4118 annual premium to live in the apartment.

Cash Flow

Running the numbers, this little beach shack is looking pretty good.

Now looking closely you’ll notice, while the house saves us $4118 per year, there is an even better cash flow advantage to owning the house.  It takes $22,200 in annual cash outlay to rent the apartment but only $12,382 cash to operate the house.

This is similar to the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for a business. Cash flow is critical in running a business or your household.  But the ITD&A are all real costs that you need to consider in an accurate fiscal evaluation.  So is opportunity cost.

Overall costs trump cash flow costs, simply because they are more complete. Still, less cash out of pocket is less cash out of pocket. 🙂

But what about all that work?!

Of course, the numbers aren’t all of it. There is no question owning this place has been far more work, worry and aggravation than renting our carefree apartment. At times it has felt like a fun and interesting new hobby. At times like a waste of our remaining life energy and we long for our apartment building’s ace maintenance man, Issac:

“Ah, Issac, our tub is draining a bit slowly can you come up and take care of it for us? Sure, this afternoon is fine.” (We love and miss you, Issac!!)

How about capital appreciation?

Our plan is to hold this house for about a decade and the obvious question is: Will our $285,000 (235k + 50K) prosper more in beach front property or in VTSAX? The truth is, there is no way to know. If there were, I’d have bought a more expensive house, or no house at all.

But we can speculate and since speculating is fun, why not?

Looking back over the last decade, VTSAX has absolutely clobbered beach front property around these parts.

Of course, this amazing bull run is exactly why so many folks are predicting the next ten years will be much tougher for stocks. Could be, and certainly at some point we will have another bear market; maybe a really ugly one. But it also could be that this bull will continue to run, if only to confound the naysayers.

Property values along the lakefront here have had an interesting history of late. Prior to the housing crash of 2007, the market was red-hot and the mantra was “they aren’t making  beach front property anymore!” Buyers couldn’t get their checkbooks out fast enough.

Once the crash hit the market didn’t dive, it just locked up. As our realtor points out, these are mostly second, vacation homes. Buyers don’t have to buy and sellers don’t have to sell.

But, as the years dragged on, some buyers came back into the market and some sellers finally did have to sell. The market unlocked at much lower prices. It has been struggling to recover ever since. While the stock market has rebounded and then some, prices along the lake remain far below their glory days.

Our place might have commanded ~$650,000 before the crash. In the spring of 2016, when the sellers first put it on the market they were asking a very optimistic $469,000. By the time we saw in this past May they had dropped the price to $350,ooo and then to $298,000, before we bought it for $235,000 as described here.

This makes our little place, by quite some margin, the lowest priced one on the “block” even after projected renovations. For the current market, we seem to have bought it “right” and certainly the neighbors are shocked (and a bit dismayed we’re told) at the price.

Another interesting factor is that the lake water levels are up ~4′ from their low in 2013. The net effect of this is less beach and a less attractive beach front.

Maybe going forward water levels will drop, the beach front will expand, our price marks the bottom and sometime in the next decade buyers will again take up the mantra: “Buy now! They’re not making anymore lakefront property!”

Or maybe water levels will continue to rise and prices will continue to fall until we are under water in all senses of the term.

Next time…

…we’ll talk about how this house has the potential to be an even bigger financial win and what could go horribly wrong.

But meanwhile, and finally, as promised here is…

The real reason we bought:

As described in Kibanda Part II, we sealed the deal to buy the place while visiting our Chautauqua 2016 friends Kevin and Lish in Southern Ohio. That’s him in the green shirt and her in the middle singing The Ballad of Chautauqua (which they wrote) at the Horseshoe Lounge…

If you notice the wall behind them, you’ll see it is made up of horizontal barnwood planks. Although you can’t see it, some of these planks have interesting sayings burned into them.

Turns out this is Lish’s side business and if you like she can do something cool for you, too:

Rustic Ludlow

On our arrival, she presented to us this one with a lyric we especially like from the Chautauqua song:

Thank you, Lish!

So, of course, we had to buy a house to mount it on. Wouldn’t you?


Since we’ve been traveling for more than half of each of the last two years leaving little time to ride and given the expensive move from NH, my dearly loved… 

 Triumph Scrambler

…got sold on.


With this beach house and the surrounding flat Wisconsin landscape, I’m thinking maybe a return to a bicycle is the ticket. Time was, back in the ’70s and 80s I was quite an avid rider with several long-distance tours under my now considerably expanded belt. I still miss my gorgeous Cannondale SR800. But that would be far too racy for my needs and too low-slung for my abilities now.

Something like this would be nice…

Invincible 8-Speed

My pal Physician on FIRE got one and writes about it in that link. He also modified it into an electric:

You might not want to do that, but if you are interested in a bike from these guys you can use his code –  POFORTIFIED – and get 15% off

There are even MMM editions.

Maybe the good folks at Fortified Bicycle are up for a Simple Path edition?


This Friday, Oct 6th I’m off to…

Directed by Joan @ Meister’s Balogna

Edited by Brian @ Inner Parakeet

Music by Prentice @ Sound Cloud

(if you have trouble seeing the imbedded video, you can also find it here)

Chautauqua Ecuador 2017

In addition to our slate of speakers, Gwen from Fiery Millennials is returning and Chad from Coach Carson is joining us.

Gonna be epic! Gonna also leave the computer behind so I won’t be responding to comments as usual for a couple of weeks.


My pal and Chautauqua alum Anita – The Power of Thrift – just published her first kickass book:Anita’s writing is funny, insightful and spot on. I love it. Maybe you will too.


Kibanda Sunrise, November 3, 2017

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Important Resources

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  1. wendy says

    Cool beach house, you were obviously in need of a challenge
    As the late great Tom Petty and The Traveling Willbury’s said:
    “Well it’s all right, riding around in the breeze
    Well it’s all right, if you live the life you please”
    There’s a lot to be said for the emotional side of those well-considered financial choices… no one wants to be an automaton
    Looking forward to meeting everyone in Ecuador…
    Oooh, those bikes Fortified bikes look awesome, but I already have a (wicked old, but serviceable) bike, so Pete would probably frown at me… you should totally get the version with panniers so it can carry wine, victuals, & song

    • jlcollinsnh says

      Or maybe just more aggravation in my life 🙂

      My bet is Pete would applaud your wicked old but serviceable bike.

      Maybe the Simple Path version should come with a wine cellar and tasting room….

  2. Physician on FIRE says

    I’ve got to get out there sooner than later! Would you believe that I’ve electrified that bicycle of mine you featured at the end of the post? Of course you would. Our mutual friend Carl did something similar and posted his build on our friend Pete’s blog.

    But that’s neither here nor there. I wouldn’t be too terribly concerned about the ROI on your investment. If on the shores of Lake Michigan is where you want to be, then that’s where you are, and that’s where you deserve to be. You’ve earned the right to live wherever you want and it doesn’t matter much to me what the returns of VTSAX or VGSLX will be in the meantime.

    Welcome to the neighborhood!

    • jlcollinsnh says

      You might want to wait until we have some furniture.

      One of my many character flaws is that I am Always focused on ROI 😉

    • Zack says

      Not worrying about the ROI was exactly what I was thinking while reading the post! You have enough money for everything that will truly make you happier. But Mr. Collins makes a good point in his response, so I’m glad you already asked it for me.

      I enjoy calculating the ROI and even do it for hypothetical purchases or friends investments, so I guess I will probably continue doing that even when it serves no real purpose. Just need to make sure I don’t stress out over it if it ends up being a poor return.

  3. firecrackerrev says

    “So, of course, we had to buy a house to mount it on. Wouldn’t you?”

    Does someone need to have their ass dead-lifted and tossed off a bridge?

    If you tell me at Chautauqua you just bought a convention oven to put inside said house….bad things will happen. Seriously.

    *flexes angry hulk muscles*

      • jlcollinsnh says


        “ConVECTion oven”

        We’ll get one, maybe two, of those as well.

        Looks like we’ll have to gut and remodel the kitchen and maybe put on an addition to accommodate all these ovens…

        All you get to do is hang out with tortoises, iguanas and seals in the Galapagos. 😉

    • jlcollinsnh says

      If you can dead lift MY ass and toss it off a bridge, I’ll be truly impressed!!

      Ok, I’m off to google “convention oven” Definitely sounds like something I now need! 🙂

  4. Kalergie says

    Very cool beach house. I’m jealous. 🙂
    So you use dividend income of VTSAX as the marker for opportunity cost and not the 4% of the 4% rule?

    • jlcollinsnh says

      Come deal with the issues for a couple of weeks and that jealousy will dissipate. 🙂

      I considered using the 4% as the proxy, and there is no reason not to. Or anything else that is a reasonable proxy for your given situation.

      I chose not to simply because half of that 4% comes from anticipated capital gains. I discuss potential capital gains house vs. VTSAX separately.

      Rather than take part of those potential gains for the proxy, I just used the ~2% dividend which is more reliable source of income I’m giving up.

      After all, some years there won’t be any capital gains (and maybe capital losses) at all. Short of a really major collapse, the 2% dividends should just keep rolling in.

  5. Vicki@MakeSmarterDecisions says

    Great update on your new place! And it would be great if those lake levels backed off a bit. We used to go to a great beach pub on Lake Ontario – and there is no beach left at all this year 🙁 We totally get the aggravation piece you’re dealing with (in the middle of a total gut job on a lake house we’re moving into too!) Sometimes we think we should have just sold it – but the view wins (at least for now!) We got to see Pete & Carl’s bikes and all the other bikes people showed up on in Longmont at his HQ a few weeks back. It is a much more bike friendly area than we live in. And they even got Alan out on Bike Night in Longmont! Enjoy the Chautauqua!

    • jlcollinsnh says

      Here’s what we do:

      Build a water pipeline to the drought plagued south west and sell them the extra water until we get our beach back. 😉

      Where is your lake house-in-progress?

      • Vicki@MakeSmarterDecisions says

        It’s at the “it can’t get much worse” stage. Totally gutted. Yard all tore up from running underground utilities and fixing drainage because the house flooded this spring. Work should start in the next two weeks – and we’ll be living in a camper onsite! (Our house sale closes next week!) Interesting times…

  6. Mr. Tako says

    Ahh….nice views. I feel calmer and more long-lived already!

    Seriously, the tranquility of living near the beach and the extra four grand in your pocket probably more than make up for any additional aggravation from having to deal with “house issues”.

    Enjoy the new place!

    • jlcollinsnh says

      Thanks Mr. T!

      So far the aggravation is shortening my life span faster that the tranquilly of the lake is expanding it.

      But I’m hoping to see the balence swing the other way. 😉

  7. Adam says

    That bicycle photo terrifies me. The fork is on backwards (consider the disc brake caliper in FRONT of axle, and how the hub angles backwards from the head tube). If you know who snapped it, please advise that person to have a competent bicycle shop address the issue as soon as possible; the fender will need to be remounted properly as well. Handling and safety will be much improved!

    Whew, now that that’s off my ex-bike-shop-guy chest — kudos for considering an eminently practical ride, and thanks for sharing some of your rationale behind the lake house purchase! It’s been great following along. I hope it provides over and above the quality of life you seek.

    • jlcollinsnh says

      That’s Physician on FIRE’s bike right there, so maybe he can explain himself!

      Properly set up, it looks like a great bike though.

      Thanks for the kind wishes!

    • Physician on FIRE says

      That was right after I put it together — fixed it shortly thereafter. Good catch! You should see it now. In fact you can!

      I didn’t visit the bike shop to turn the fork around (I’m not sure what the fork I was thinking when I assembled it), but I did take it in to have the bottom bracket removed so I could install a 750W electric motor. It’s a commuting beast now.


      • Adam says

        Whew — glad it’s squared away, and it’s good to see you’re enjoying it. Way to inspire other FIRE’d folks!

  8. Jenny says

    Welcome to Wisconsin, my lovely home state! I’m at the airport heading to Milwaukee as I type this. And thanks for another great post! The beach house is charming 🙂

      • Jenny says

        I’m originally from Mukwonago, Waukesha County. Right now a girlfriend and I are spending a few nights in Baileys Harbor, Door County. I wish I could attach a pic of this mornings sunrise over the water! Just beautiful. Coffee on the lakefront sounds fabulous!

    • jlcollinsnh says

      Agreed, Andrew!

      Most of the places we looked at would have been more expensive than the apartment, but had we found one we loved we still would have done it. Then it just falls into the catagory of being an expensive indulgence.

      Nothing wrong with that, as long as you can easily afford it.

      Still, as per the ROI discussion in the early comments here, I am more psychologically comfortable having the numbers work out as they do.

  9. Pam R says

    From the other side of the lake in Traverse City, MI, and Chautauqua 2015, congratulations! You will love it, if you don’t already, after you get through the renovations. Looks like a good investment with high quality of life benefits. We’ve generally found Midwest building tradespeople reliable, fair and reasonably priced for things you can’t or don’t want to do yourself. Enjoy.

    • jlcollinsnh says

      Hi Pam…

      Great to hear from you!

      You are right about the small town midwest trades. So far we’ve found them exactly as you say. Makes this project a lot more pleasant and a lot less stressful. 🙂

  10. Dwayne says

    Congrats!…gorgeous place and totally get the the concept of getting to FIRE and spending some of it to gain enjoyment, satisfaction, peace….whatever.

    We’ve recently retired after achieving FI and in the process of renovating a home (not nearly as big a job as yours) we bought in FL after we sold in MA.

    However, maybe I missed something along the way, but wouldn’t there be quite a tax bite on cashing in all that VTSAX at one time?
    And if so, shouldn’t that be considered as part of the expense?

    • jlcollinsnh says

      Thanks Dwayne…

      …and good luck with your place in FL.

      Good point on the capital gains tax due on selling the VTSAX to raise the money. Ordinarily, that would be a key factor and maybe even a reason to look for a mortgage.

      In our case, we have enough tax loss carry forward from stupid investment in the years past to cover it. So in this case, it is a non issue and it never even crossed my mind. But in most cases it should be considered and accounted for.

  11. Chad Carson says

    Those pictures are beautiful. I look forward to looking out over that water some day.

    I like running ROI on everything as well. It’s also a flaw of mine, and it’s probably the same flaw that has us putting our investment lives up on the internet for everyone else to see:)

    I think your work making people be less stupid about housing choices has been a great service. But you’ve also been a proponent of making informed choices. This is not the same as putting yourself into a straight jacket of “owning houses = always bad”. You’ve obviously thought through this one, weighed the negatives (which do keep coming:), and found enough value in the positives. That’s a lesson in and of itself.

    See you soon in Ecuador! Can’t wait.

    • jlcollinsnh says

      We can sit on the deck with coffee or beer and discuss the world of home repair. 🙂

      “But you’ve also been a proponent of making informed choices. This is not the same as putting yourself into a straight jacket of “owning houses = always bad”.”

      Yes. And thank you!

      See you in Ecuador!

  12. Michelle (future ex smoker) says

    Jim, are you putting in an on-demand hot water system? I did put in a split AC in my sun room of my beach shack. Amazing system to fight off the Florida sun!

    • jlcollinsnh says

      Just arrived at the hotel.

      Looking forward to meeting you too.

      Be sure to introduce yourself as Mrs. WOW 🙂

  13. Trish Rempen says

    Jim, how did I miss the part about you actually moving to the “beach shack”? As in getting rid of the apartment – main residence for the near future? I understood about the buying – investment – good or bad idea – part, and the attractions of that amazing view. But – I didn’t think you and all your worldly goods (few that they may be) would be residing out there. Hm. Interesting.

    That presents an entirely new take on the subject. I’ll definitely have to check it out in person. I want to see the “before” part! Just warning you.

    • Paul says

      Funny you should mention this. I did not pick up on this either until Jim posted the update above. I thought this was to be a vacation home, not a primary residence. I agree this puts a different spin on the “experiment”. Honestly, I was somewhat shocked Jim would “invest” in this type of vacation home, which seems to me to have all the negative aspects of home ownership with only part time use and enjoyment. Actually living there makes a bit more sense……

    • jlcollinsnh says

      Hi Trish & Paul…

      I’ll be addressing this more in my next Kibanda post, but it is not surprising it is a bit confusing now.

      Truth is, we are not entirely sure how this will all shake out.

      The original, and current, plan is that this will just be a vacation house we enjoy in spring and fall while we travel winter and summer.

      Even without it, and before we bought it, we had determined we were not spending enough time in the apartment to make it worth keeping. Too much of the time it was no more than expensive storage for our meager stuff.

      Nothing about this beach shack is simple. 😉

      Stay tuned!

  14. Kevin says

    I never took your advice to be “Houses = BAD, rent = GOOD”. I took it more as run the numbers to see what is a better option. Don’t blindly assume that buying a house is automatically in your best interest just because that’s the way we were taught by our parents and society.
    Secondly, if you can afford it and it does not mess with your financial goals, do what you like! Its your money. That is the point of reaching F.I. It allows you to have options and freedom to do as you wish. Congratulations! The views are well worth the price of admission. I am glad that Lysh and I were able to see some of the ‘behind the scenes’ decision making. Have a great time in Ecuador!

  15. workin'man says

    Excellent choice- buy a house for your new wall hanging 🙂 My first shop I built because my 2 year old “needed” room for a Fisher Price basketball hoop birthday gift. Second property we owned I poured a concrete basketball court because a friend gave us a “free” hoop. Current home will probably end up with a new kitchen this winter because our stove doesn’t fit the existing layout. Freebies ain’t always cheap…

  16. Brent says

    Hey Jim!

    I’ve been excited about this last post. Maybe I can come up one weekend and trade manual labor for a place to stay and maybe some of Jane’s amazing cooking!

    Glad you guys are doing so well! I know being on the lake was always what your heart desired.


  17. Jeff says

    Tiny “opportunity costs” note… since you were taking 2% return into account for VTSAX on the 235K on house, you need to also include it in the 21K apartment rent (which I assume you pulled at the beginning of each year). Roughly $400 in yearly opportunity costs should be added to your renter calculations.

    I enjoy your posts, and I love running numbers like this. We live in a world that where most people don’t run numbers on anything. I feel like an alien sometimes.

    • jlcollinsnh says

      Since the rent came monthly out of cash flow, there was really no opportunity cost incurred.

      However, if I had found a landlord willing to discount the rent for an annual upfront payment, I would have added it.

      Surprisingly, I have suggested this very thing to each of our landlords and neither were interested. Go figure! 🙂

      Us “number runners” are clearly the odd ones out!

  18. Rafi says

    Hi, Jim,

    When calculating the opportunity cost of buying the beach house, you used the 2% dividend yield of VTSAX. But why did you ignore the capital gains of holding $235K worth of VTSAX shares for a year? Shouldn’t that be another $23,500 in opportunity cost foregone?

    • jlcollinsnh says

      Hi Rafi…

      I should have explained that better in the post.

      Since both the house and VTSAX have the potential to appreciate, and since there is no way to know which will do better, I view this as a “wash”

      Plus, since capital appreciation for VTSAX is not guaranteed (we could be about to go into a multi year decline) it would dangerous to include it as an opportunity cost.

      All that said, I was tempted to use 4%, as in the 4% rule. If you like, you can run the numbers with that and it would not be unreasonable.

      • Rafi says

        Makes sense. Thanks, Jim! Looking forward to hearing more about the house. And thanks for all the great advice; I learned a lot from the Stock Series!

  19. Julie at Nest Egg Chick says

    Congratulations! Those views are amazing. It sounds like you got a great deal, as long as you can continue to (at least mostly) see the work as a fun adventure. Good luck!

    Also, as someone down in the Boston area, my jaw dropped at the rent you paid for that gorgeous apartment. Sometimes (like whenever I look at housing costs) moving to NH or RI seems like a good idea!

  20. Cline Hall says

    Homeownership is the one area I have disagreed with you on. Not that homeownership is an asset, to me it follows FU money. Nobody can kick me out. I can work at Burger King if I have to to pay for it, I like working on stuff. Peeing in the bathroom that I tiled gives me great joy, due to the tile-not the peeing. Sitting on my patio under the Pergola I built ( a truly useless structure that gives no shade but a since of comfort for some reason) listening to the swamp creatures on the other side of the golf course (my “beach house” is living on a golf hole that Ben Hogan personally said was the best hole on the golf course in 1967) . Having all my kids and family home to grill out and drink adult beverages is better than any vacation I could ever hope for. All this comes from owning my little piece of heaven. Yes it has a price, but so do all things that have value.

    And when I can no longer take care of it or if the zombie apocalypse causes me not to afford it, I’ll move to a shack in the mountains or rent a one bedroom apartment for less than the property taxes and buy a recliner and tv and watch westerns all day.

    All that said, congrats on the house. My kids live in Wisconsin and I wonder if I may someday live up there. In that one bedroom apartment.

    • jlcollinsnh says


      Any man who can say…

      “Peeing in the bathroom that I tiled gives me great joy…”

      ..definitely needs to own a house. 🙂 🙂

  21. chermysl says

    Looking out my window in Milwaukee, it doesn’t seem like Winter has quite given up the ghost but all the same, how’d your first Winter shape up?

    • jlcollinsnh says

      Well, until this past weekend, it has been a sometime cold but mostly mild winter.

      But, beginning with the hail storm Friday, the weather and the lake just got wilder. This morning there is a foot of new sand up on our beach, burying the fire pit, the sitting stumps around the pit and the chairs. Not to mention the firewood pile. But we also have lots of new firewood that washed up. 🙂

      Great fun watching it all unfold!

  22. Steve says

    This was a great read. I recently picked up a copy of JL Collins’ book and devoured it overnight – awesome stuff! That’s what has brought me now to this site and blog post (first time here).

    I am hoping to get some guidance or at least an opinion from someone much more experienced than myself.

    The big question I’m asking; should my wife and I buy, or not buy, the home we are currently renting.

    The details…

    My wife and I currently rent a house from my father-in-law. He was given the house after his parents passed away and we pay my father-in-law $1,400/month for rent.

    The house recently appraised for $475k. My father-in-law is asking us to purchase the house for $490k and is unwilling to sell the house for less. He says that the house appraised for $430k several years back and has invested $60k since he took ownership of the house. Therefore he is insisting on $490k.

    My wife pushed back on the price, and my father-in-law said that he [now] wants to sell the house regardless and if we don’t wish to purchase it, for us to move out and pay higher rent somewhere else. The man does not joke around.

    My father-in-law’s response was, “I don’t have a clue what your reasoning is nor do I even want to get into this let’s just rent for a while I’ll put it up for sale or you go get a bank loan and let’s forget everything I said in the past”.

    This is putting significant stress on my wife that is noticeable, though when I ask her, she said that she doesn’t feel pressured by him. I learned not to push it.

    Some background. I’m 47. My wife and I have three sons (two from my first marriage and one from my wife’s first marriage.) Two are in college, and one is in high school. My parents invested money early on in separate 529 accounts for the boys (including my step-son.) I’ve contributed to the 529s over the years. Fortunately, the kids are good on college tuition.

    My wife and I have been maxing out our 401(k) contributions. We both receive employer matching. For several years, my wife and I have both been investing about 50% of our paychecks into brokerage (invested in VTSAX.) I also transfer money each paycheck into the kids’ brokerage accounts (when I invest the cash, it’s also invested in VTSAX.) We have two vehicles, and both are paid off. We have credit cards, but pay them off monthly so that there’s no carryover balance.

    My wife insists that purchasing the house is a great investment. I don’t necessarily agree. The total cost of the house (initial cost + interest + taxes + insurance) concerns me. Whatever we would get back on property taxes each year doesn’t do much to sway me. Then there are the lost opportunity costs. The thought makes me shudder.

    My father-in-law wants us to take a mortgage out through the bank and won’t consider a no-interest, or low-interest, loan to us.

    The property is in California (Santa Cruz County).

    Reeling things back in; what are any of your thoughts? Every part of me says, “NO – DON’T BUY!” However, there might be things I do not see, and I would really appreciate any advice and guidance that anyone can provide!

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