Shit has been relatively busy around here. As you may recall, we bought a house in Eagleton (a sparkly bedroom community outside the city we previously lived in), but were waiting for the kids to finish up the school year before we moved. That meant for nearly six months we had two houses, and after years of debt free bliss, we even had a dreaded mortgage again.
Now we’re on the other side of that thing; the old house is sold, we moved in a few weeks ago, and we’re back to being debt free. It’s funny; on paper I figured this whole debacle would likely work out, but I got to say, it was not without a heaping pile of stress.
Obligatory disclaimer-yes, of course we are super lucky to be in the financial position to pull this off. Sure, it involved a fair amount of “sacrifice” or whatever, like living in a 1100 square foot house in a less than nice neighborhood for years while not owning a car and eating rice and beans so I could save shit tons of money. But I chose to do that, while many don’t get that luxury. Believe me you, people under such circumstances were who I mostly interacted with back when I worked full-time. I had a front row seat to that life. Most were not bad people. Shit just happened.
…and we got lucky that while we were saving like crazy, the market was kicking ass. Plus I bought that first ‘hood ass house in ‘09 just after the crash, and even got a $8K tax credit for doing so (thanks Obama?). But enough social justice bullshit-back to life being awesome.
The financial mechanics of this move were somewhat tied to the whims of the market, which meant we were once again betting that shit would be ok. Here’s how that played out:
- We owned a house, which we figured after all transaction costs we’d get $250K for.
- We wanted to move to an area where the inexpensive houses go for more than twice that, but were able to find one for about $450K in late November-house needed some updating/work, and the sellers needed to move for a job during the slower winter market.
- Having planned ahead for this move, we’d already sold $100K of stocks in July ‘23, and then sold another $100k in January just before we closed on the new house. We spread this out to minimize our capital gains, so each sale would be counted on separate tax years.
- In theory we could have sold the amount of stocks needed to buy the new house for cash, but that would have killed us in capital gains, and kept a big chunk of money out of the market while we waited to sell our old house
- So we put down about $200K (not that exact amount, which is a long story in itself), and financed the remaining $250k at 6.5%. Eeek!! I was spoiled by those low interest rates on our first two houses. Looking back, I’m glad we paid them off even though it didn’t make spreadsheet sense. Would have been a much harder decision to make this move had we kept a 3% mortgage on our last house.
- Spent nearly six months having two houses, during which I drove the 80 minute round trip at least once a week to keep the new place running and do a whole bunch of small fixes and improvements. Painting, plumbing, cleaning, carpet, mowing, drainage, etc.
- Listed our old house around 30 days prior to the end of the school year. Did all of the fun showing stuff with a 7 and 3 year old afoot. Accepted a decent offer within 8 days. Their financing fell through days before closing. Listed the house again. Accepted another offer 4 days later. Closed the day before school let out, and moved the weekend prior.
- Netted $268K from our old house’s sale. Paid off the mortgage (yayyyyy), keeping the remainder earmarked for the inevitable shit that’s going to break.
Everything went according to plan. I was also stressed out for much of the time, which I’d also seen coming a million miles away. The success of the above depended on the housing market and the stock market not going fucking crazy for the duration.
Last winter, as we were in the midst of making an offer on this house, I was explaining the above process to an intelligent friend of mine. He aptly observed the housing market might drop out when we went to sell our house. He also said the stock market could tank in January, thus necessitating us to sell stocks for a loss to make our large down payment. Then he told me all about various Youtubers who were predicting such crashes any day now. I’ll admit, that shit got to me a little. I’ve seen the same thumbnails from such doomsday influencers for…well actually I’m pretty sure we’ve all seen some form of them forever.
But we stayed the course.
First off, though those doom and gloom predictions appealed to my lower brain survival mechanism; at least I know that’s why they’re so captivating.
Second, I’d seen other more reasonable (to me) influencers like Paula Pant give a nuanced description of what was probably going on in the market. While this was reassuring, I also admitted I was deliberately listening to people who were telling me what I wanted to hear.
Third, I’ve spent over 12 years now studying the market, and trying to get as much information from as many different sources as possible. You know what I’ve realized? I have no idea what the fuck is going on, let alone what’s gonna happen next. And while I know I’m not the sharpest tool in the shed (but definitely a tool…), it seems like even the few that do sorta get what’s going on still get it wrong on the regular.
Fourth, at some point those doomers will be right. Long before we pulled the trigger on that first stock sale, we’d already figured out our worst case scenario. If things had gone moderately wrong, we’d still be able to maintain our current lifestyle with our current level of part time work-we’d just have to stop saving (BTW..not only did I fail at early retirement, apparently we even failed at Coast FIRE; we’re on track to save around 25% of our income this year. Whoops?). Had things gone really bad because of unknown unknowns, either or both of us could increase our workloads. Worst case, I could even go back to being a cop. In our area the hiring rate of cops is inversely correlated to the economy, so there’s always that. And while I have little desire to go back to that profession, if that ended up being the price for making this move, I was ok with it.
Anytime those doubts crept back in, I thought through all of the above. Which was a lot. Again and again, I settled back on my unifying thought of ‘fuck it, let it ride’. The stressful part was that I went through this thought loop at least 3-4 times a day until we paid off the mortgage.
Where we used to live was ok. There were some good points. But they were outweighed by the bad points. Where we’re at now is surprisingly awesome. While I still think this place would have been worth it even if I’d have to suck it up for a few more years at a soul-sucking job, I’m sure glad I don’t have to. Because once again, it all worked out.
We’ve all probably heard some variation of what Google’s AI just confirmed:
“The stock market has gone up and down every year over the past 94 years, with 27% of those years resulting in negative returns. However, the long-term trend of the stock market is upward, with returns tending to be positive over time. For example, between 1926 and 2024, the stock market was in an “average” band of 8% to 12% returns only eight times. Over the past 94 years, 94% of 10-year periods have been positive” –Skynet
We’ve all seen the charts; most good things are up and to the right over time, most bad are trending down. Lots of volatility though, and it sure sucks if you’re on the downside of a blip. Plus it’s hard not to think that such a complex system has to fail completely at some point. We’re hardwired to think so, and we may eventually be right.
What keeps me willing to bet on stuff being mostly ok-ish is two things:
- As I look back on my life, there’s been a lot of bad, dark shit that has happened. But overall, most things kinda worked out, and my life surprisingly keeps getting better. This convinces even my pessimistic ass that most stuff I try to do will probably work out as well.
- Coupled with that, when shit went bad I’ve eventually gotten through it. So if and when I’m wrong about something, I’ll take it as it comes, and know that I’ll probably get through that too. Or I’ll be dead, and then whatever.
Yeah. Pretty happy it all worked out. The stress was worth it. We even sorta timed the housing market to our benefit. If anything, this confirms my belief that I am not Nostrodomus. And I for sure do not want to invest in real estate. Blerg!
How about you? Do you think the end times are upon us and I just barely scraped my way out? Or is every day from now until forever going to be sunshine and fucking rainbows? Once again, those are the only two choices; no room for gray. Discuss below!
I always believe end times could happen at any time, so I try to live life as though they’re not going to happen (though we all know they probably are). Living life in constant terror is draining and unproductive. But, once I’ve done enough, I could have a lot of fun being the crazy ‘end is nigh’ guy in retirement!
Glad everything worked out on the move!
Thanks Chris! Knowing you, I bet you could have a lot of fun doing the ‘street corner end times guy’ thing as a hobby. Maybe get a sign and a megaphone? You should totally play your favorite Kipling poem between rants, lol 🙂 “There’s no discharge in the war!”
Very glad it all worked out for you. Personally I’m extremely risk averse and would have had trouble getting myself to do what you did. However, as risk averse as I am, I don’t put any stock in YouTubers or permabears, etc, who are just after clicks or trying to sell you something. As you say, no one really knows what’s going to happen.
I do appreciate the first couple of paragraphs. I think the FI culture bends too hard towards the Horatio Alger, “anybody can do it” side of the spectrum. For sure I know people who had the same advantages and opportunities I had and just blew their income, and when they complain that life is rigged against them I don’t have much sympathy. But there are an awful lot of people without the luck I’ve had, who were born with the deck stacked badly against them, and who, frankly, Life was just never going to cut them a break of any kind. I don’t feel bad about what I have, but I do feel bad about what they don’t have, and why they don’t have it.
Thanks! I had forgotten the term ‘permabear’, thank you for adding that back into my lexicon. I feel that I was being risk averse just stressing about the situation, especially when I thought through the downside and realized it wasn’t that bad.
Glad you appreciated the first few paragraphs. To me they almost seemed pointless to write, as my brain defaulted to false consensus bias. I assumed everyone realizes how fortunate I am to be in my position, and how little of that had to do with agency. But then I pulled my head out of the sand and peaked around, and once again realized I was wrong. In my limited understanding, this “anybody can do it” trend is probably less due to people’s willful ignorance, and more likely a hard wired tendency of human thinking. I suppose it’s more adaptive to attribute results to agency instead of randomness.
Even when wrong, this point of view makes the world seem less terrifying.
It’s all about discipline and staying the course. You’ve done that and now reap the rewards of making smart decisions from a position of strength. It would have taken a series of extremely rare events to make both markets crash while you were exposed to the risk. You could also get hit by a bus crossing the street. A crash is gonna happen. So is a recession. The thing is we don’t know when, and life has to be lived.
I’ve been thinking about risk and diversification a lot more lately. Especially as I’m nearing FI and still 100% equities (though I’m diversified w/both internation and domestic). I used to have a super high risk tolerance, riding out crashes like a champ since 2008. But now I’ve been thinking more and more about glide pathing into bonds earlier than planned. Maybe its getting older with more at stake that makes risk more unpallatable? Anyway, for me, studying the history of the market and successful economies, like you’ve done too, helps understand that it’s healthy for crashes and bear markets to occur. Diversifcation also helps.
Congrats on the house and successful moves.
Thanks Noel. So right-life has to be lived.
The diversification thing can be weird, as it’s hard to change course after so long on one course. I like what the guy over at ESI Money says about this; specifically the whole “If You’ve Won the Game, Stop Playing” thing. The linked article is ok, but more interesting to me is what the other contributors to his various interviews have said about the topic. A lot of them are 10 or 20 years ahead of us, and the move away from 100% stocks is a frequent pain point which most realize they need to do. Those that have made the change do seem less stressed on the other side.
Right now we’re at 80/20 stocks/bonds, which we’ve been at since we started. This was the compromise which allowed my risk averse brain to take action. We’ll probably go to 60/40 a few years before we both completely stop working, and follow what ERN talks about in regards to glidepathing out of bonds to hedge against sequence of returns risk. It’d be sweet if by then Vanguard offered a reverse target date fund to make that less complex. Especially since my cognitive ability is likely to nosedive eventually.