Mortgage free life and freedom.
July 20, 2012 10:16 PM Subscribe
Living a mortgage free life. The dream, is it realistic?
I work in technology. I have for more than a decade. I am tired of it. Now i want freedom to dowhat i want without having to work for others. I have this feeling that i am wasting precious time. I am single and no kids.
Offlate i have somehow gotten the idea that if only i could live a mortgage freee life, i can do whatever i like. I am considering quitting my job, breaking my 401k and buying a little dinky studio someplace in northern CA (oakland) and start working on something on my own.
I need some advice on whether this is done, or am i being irrational? I am not sure exactly what i want to do but i want to do something. Right now i dont even have the time to think about it. Sort of in the too busy to get gas mode.
I dont see how my 401k is going to help me when i am older. Atleast with the way its been growing so far.
I have worked in big and small companies and neither have been satisfying. I feel unfulfilled. Now at this point, i either shut up and work for the rest of my life to pay bills or reinvent myself or die trying. Will not having to pay rent every month help me. Is this a story i am telling myself? Because obviously there will be property tax and insurance.
I work in technology. I have for more than a decade. I am tired of it. Now i want freedom to dowhat i want without having to work for others. I have this feeling that i am wasting precious time. I am single and no kids.
Offlate i have somehow gotten the idea that if only i could live a mortgage freee life, i can do whatever i like. I am considering quitting my job, breaking my 401k and buying a little dinky studio someplace in northern CA (oakland) and start working on something on my own.
I need some advice on whether this is done, or am i being irrational? I am not sure exactly what i want to do but i want to do something. Right now i dont even have the time to think about it. Sort of in the too busy to get gas mode.
I dont see how my 401k is going to help me when i am older. Atleast with the way its been growing so far.
I have worked in big and small companies and neither have been satisfying. I feel unfulfilled. Now at this point, i either shut up and work for the rest of my life to pay bills or reinvent myself or die trying. Will not having to pay rent every month help me. Is this a story i am telling myself? Because obviously there will be property tax and insurance.
Even without a mortgage, you still have maintenance costs and property taxes to deal with. Owning property costs money. If you buy a "dinky little studio", you'll probably have condo fees.
You'll need to plan for that, and have a significant nest egg put away to pay for taxes, maintenance, and fees.
posted by mr_roboto at 11:04 PM on July 20, 2012
You'll need to plan for that, and have a significant nest egg put away to pay for taxes, maintenance, and fees.
posted by mr_roboto at 11:04 PM on July 20, 2012
I don't know that I'm understanding the question correctly....
Are you saying you want to buy a place outright, instead of renting or taking a mortgage, and this will give you financial freedom? Because unless you're living in a box on the street you will always have housing costs.
As you say you will have insurance and taxes to pay anyway if you bought something, so you would still be making month-to-month payments. And your 401K may not look like much now, but depending on when you're supposed to retire, it might bounce back (I lost a fifth of mine suddenly around 2010, but now it's bounced back and is growing).
I think if you're buying a place, simply trying to avoid a month-to-month payment is not a good reason to cash out your 401K
posted by Lt. Bunny Wigglesworth at 11:09 PM on July 20, 2012 [2 favorites]
Are you saying you want to buy a place outright, instead of renting or taking a mortgage, and this will give you financial freedom? Because unless you're living in a box on the street you will always have housing costs.
As you say you will have insurance and taxes to pay anyway if you bought something, so you would still be making month-to-month payments. And your 401K may not look like much now, but depending on when you're supposed to retire, it might bounce back (I lost a fifth of mine suddenly around 2010, but now it's bounced back and is growing).
I think if you're buying a place, simply trying to avoid a month-to-month payment is not a good reason to cash out your 401K
posted by Lt. Bunny Wigglesworth at 11:09 PM on July 20, 2012 [2 favorites]
Do you understand exactly how much it is going to cost you to cash out your 401K? The tax penalties for early withdrawal are extremely steep. You can't begin to assess this question without a reasonably exact figure of what you will actually have in your bank account at the end of the day.
The question of the impact of losing these savings on your old age is obviously a hugely speculative one. I don't know how the market will fare over the next however many years (your age is a greatly significant variable in this question) and certainly my faith in it is a lot less than it was 10 years ago. On the other hand my dad died recently and thinking about how my mom would be faring if she had only social security to live one rather than the very modest (he was a rural minister his whole life) retirement investments they had put by is pretty sobering. The market definitely strikes me as a bet worth hedging.
Do you have a realistic estimate of what your housing costs will be like under this scenario? This is certainly a story you are telling yourself and not a plan until you do. Obviously you will still have housing and living expenses and you will have to make money somehow, eventually, even if you have considerable savings to start. "I won't have to bother with rent so I'll have time to figure out how to figure it out" is not really a plan.
One thing I would worry about and consider the cost of before all else if I were considering a scenario like this would be health insurance.
If don't have this information in hand or if you aren't ready or able to put the time into the research and calculation behind it then you aren't really ready to consider a really major personal decision like this.
Right now i dont even have the time to think about it. Sort of in the too busy to get gas mode.
This is your real problem and there are lots of different ways to address it.
Now at this point, i either shut up and work for the rest of my life to pay bills or reinvent myself or die trying.
This is a false dichotomy.
Personally I have come to recognize that feelings that life is meaningless and that only the radical transformation of my existence could lead me to feelings of fulfillment are very fundamental components of my (clinically diagnosed) depression. I'm not telling you to throw this idea out the window but you need to do the math and consider the alternatives.
posted by nanojath at 11:25 PM on July 20, 2012 [8 favorites]
The question of the impact of losing these savings on your old age is obviously a hugely speculative one. I don't know how the market will fare over the next however many years (your age is a greatly significant variable in this question) and certainly my faith in it is a lot less than it was 10 years ago. On the other hand my dad died recently and thinking about how my mom would be faring if she had only social security to live one rather than the very modest (he was a rural minister his whole life) retirement investments they had put by is pretty sobering. The market definitely strikes me as a bet worth hedging.
Do you have a realistic estimate of what your housing costs will be like under this scenario? This is certainly a story you are telling yourself and not a plan until you do. Obviously you will still have housing and living expenses and you will have to make money somehow, eventually, even if you have considerable savings to start. "I won't have to bother with rent so I'll have time to figure out how to figure it out" is not really a plan.
One thing I would worry about and consider the cost of before all else if I were considering a scenario like this would be health insurance.
If don't have this information in hand or if you aren't ready or able to put the time into the research and calculation behind it then you aren't really ready to consider a really major personal decision like this.
Right now i dont even have the time to think about it. Sort of in the too busy to get gas mode.
This is your real problem and there are lots of different ways to address it.
Now at this point, i either shut up and work for the rest of my life to pay bills or reinvent myself or die trying.
This is a false dichotomy.
Personally I have come to recognize that feelings that life is meaningless and that only the radical transformation of my existence could lead me to feelings of fulfillment are very fundamental components of my (clinically diagnosed) depression. I'm not telling you to throw this idea out the window but you need to do the math and consider the alternatives.
posted by nanojath at 11:25 PM on July 20, 2012 [8 favorites]
About the quitting your job part, I can't tell if you intend for this to be long term or short term.
How close are you to retirement age? How will you pay for your other recurring expenses like food, health insurance, transportation, utilities, and entertainment? Rent is just one expense of the many in your life. Also consider your condo will have association fees, so you're not necessarily going to be escaping a monthly payment.
posted by smalls at 12:53 AM on July 21, 2012 [1 favorite]
How close are you to retirement age? How will you pay for your other recurring expenses like food, health insurance, transportation, utilities, and entertainment? Rent is just one expense of the many in your life. Also consider your condo will have association fees, so you're not necessarily going to be escaping a monthly payment.
posted by smalls at 12:53 AM on July 21, 2012 [1 favorite]
To paraphrase what Dan Savage says about relationships: all jobs fail, until one doesn't. So, if I were you, I'd update my resume and start looking for another job. Just the change might get you realigned.
I know that worked for me. I had wanted to escape into the woods and never see anyone (including my husband) ever again based on my daily life at a previous job. My current job is completely 180 and I enjoy and am motivated to do the work. It completely changed how I view myself and my position in the world.
posted by chiefthe at 1:27 AM on July 21, 2012 [2 favorites]
I know that worked for me. I had wanted to escape into the woods and never see anyone (including my husband) ever again based on my daily life at a previous job. My current job is completely 180 and I enjoy and am motivated to do the work. It completely changed how I view myself and my position in the world.
posted by chiefthe at 1:27 AM on July 21, 2012 [2 favorites]
The benefit of the 401k plan is not the growth of the assets by appreciation, but by accretion - the regular additional contribution, bolstered by employer contributions, over a long period of time.
I am confused by the entire question. You say you want to change your career direction. This may be an excellent move. Single and no kids simplifies this issue immensely. But you also say you want a "mortgage-free" life. This suggests living simply and inexpensively. That is inconsistent with the idea of wanting to live in Oakland, California.
Another person said "you will always have housing costs". Sure, you can have a mortgage-free life if you rent. But rent or buy, the cost will be high in that area of the country.
posted by yclipse at 2:50 AM on July 21, 2012 [1 favorite]
I am confused by the entire question. You say you want to change your career direction. This may be an excellent move. Single and no kids simplifies this issue immensely. But you also say you want a "mortgage-free" life. This suggests living simply and inexpensively. That is inconsistent with the idea of wanting to live in Oakland, California.
Another person said "you will always have housing costs". Sure, you can have a mortgage-free life if you rent. But rent or buy, the cost will be high in that area of the country.
posted by yclipse at 2:50 AM on July 21, 2012 [1 favorite]
"Mortgage-free" means one of two things: you rent or you own your house outright.
Lots of people do either of these things, for various reasons.
However, if you own, you still have a large number of ancillary costs that you need to consider: taxes, insurance, maintenance, opportunity costs, etc.
posted by dfriedman at 5:43 AM on July 21, 2012
Lots of people do either of these things, for various reasons.
However, if you own, you still have a large number of ancillary costs that you need to consider: taxes, insurance, maintenance, opportunity costs, etc.
posted by dfriedman at 5:43 AM on July 21, 2012
Many of us who are working hard (and continue to put up with all that that entails) certainly have felt similar feelings.
But to echo what others have said, your age is the biggest variable. You haven't given us any numbers other than 10 years in the tech industry, what your savings, income, 401k or other assets are. But for most of us with savings, income, 401k and other assets, it comes down to some realistic choices around opportunity costs.
One can sell their current place, cash out all the 401k / IRA's (at a heavy penalty), fire-sale most of all the accumulated possessions and downsize like crazy, and then move to the cheapest and smallest place in existence in the immediate area. But the opportunity costs prohibit most of us from doing this, as there are consequences to such financial choices.
As an example, you work in the tech industry, and want a change. Instead of changing your career trajectory (learning new skills and moving into a new area of technology for example), you cash out and buy that tiny studio and do something completely different. Two years later, you find out that your prior life was something you really want to get back to, but now with a two year hiatus from your field, you are at a real disadvantage, and your technical skills from 2012 are no longer as valuable / useful in 2014, and it becomes very hard to get back to where you were in 2012. Of course in 2014 you might be so fulfilled and happy with what you are doing, but that's the risk.
And then when you think about the costs of this choice, without any retirement funds, you will live on what exactly? Even with a tiny studio there will be expenses. In the older version of yourself 30 years from now, you may well fit in where many Americans will find themselves, at the mercy of an imperfect Social Security system with no other means.
As for this person working in a stressful technology field and who also lives in a (relatively) very expensive part of the country, the opportunity costs of such a move are just too high.
posted by scooterdog at 5:46 AM on July 21, 2012 [1 favorite]
But to echo what others have said, your age is the biggest variable. You haven't given us any numbers other than 10 years in the tech industry, what your savings, income, 401k or other assets are. But for most of us with savings, income, 401k and other assets, it comes down to some realistic choices around opportunity costs.
One can sell their current place, cash out all the 401k / IRA's (at a heavy penalty), fire-sale most of all the accumulated possessions and downsize like crazy, and then move to the cheapest and smallest place in existence in the immediate area. But the opportunity costs prohibit most of us from doing this, as there are consequences to such financial choices.
As an example, you work in the tech industry, and want a change. Instead of changing your career trajectory (learning new skills and moving into a new area of technology for example), you cash out and buy that tiny studio and do something completely different. Two years later, you find out that your prior life was something you really want to get back to, but now with a two year hiatus from your field, you are at a real disadvantage, and your technical skills from 2012 are no longer as valuable / useful in 2014, and it becomes very hard to get back to where you were in 2012. Of course in 2014 you might be so fulfilled and happy with what you are doing, but that's the risk.
And then when you think about the costs of this choice, without any retirement funds, you will live on what exactly? Even with a tiny studio there will be expenses. In the older version of yourself 30 years from now, you may well fit in where many Americans will find themselves, at the mercy of an imperfect Social Security system with no other means.
As for this person working in a stressful technology field and who also lives in a (relatively) very expensive part of the country, the opportunity costs of such a move are just too high.
posted by scooterdog at 5:46 AM on July 21, 2012 [1 favorite]
One way to a mortgage-free life is to build your own house, if you can afford the time and materials. I've done it and it saved my ass when time came to liquidate stuff and retire, since I didn't have a pension lined up. Over a lifetime, this one trick probably saved me hundreds of thousands of dollars. And I learned some skills, including perseverance, and got some big satisfaction from the accomplishment.
P.S. Of course, it's easier if you've got a life partner to share the burden/rewards.
posted by fivesavagepalms at 6:04 AM on July 21, 2012 [2 favorites]
P.S. Of course, it's easier if you've got a life partner to share the burden/rewards.
posted by fivesavagepalms at 6:04 AM on July 21, 2012 [2 favorites]
Of late i have somehow gotten the idea that if only i could live a mortgage free life, i can do whatever i like.
Utilities. Groceries. Fire insurance, because every asset you have is now in this apartment. Health insurance. Replacement appliances, because cooking and refrigerating food are not optional for the rest of your life. The occasional plumber or handy-person. Monthly building management and/or maintenance fees. Monthly property tax, which can be significant.
Note you've not bought a plane ticket, a new pair of underpants, a movie ticket, a latte or a gift for any other human being even after paying for all of these completely non-optional expenses.
In an idealised budget, your mortgage payment is 25% of your budget. For a lot of households in prime locations, it's 50%. Paying off the mortgage eliminates, at best, 50% of your outgoings. The rest are as above. How are you planning to fund those?
posted by DarlingBri at 6:09 AM on July 21, 2012 [3 favorites]
Utilities. Groceries. Fire insurance, because every asset you have is now in this apartment. Health insurance. Replacement appliances, because cooking and refrigerating food are not optional for the rest of your life. The occasional plumber or handy-person. Monthly building management and/or maintenance fees. Monthly property tax, which can be significant.
Note you've not bought a plane ticket, a new pair of underpants, a movie ticket, a latte or a gift for any other human being even after paying for all of these completely non-optional expenses.
In an idealised budget, your mortgage payment is 25% of your budget. For a lot of households in prime locations, it's 50%. Paying off the mortgage eliminates, at best, 50% of your outgoings. The rest are as above. How are you planning to fund those?
posted by DarlingBri at 6:09 AM on July 21, 2012 [3 favorites]
I'm assuming that part of "reinventing" yourself will involve activities that generate income, and along with them, the obligation to pay taxes.
As people pointed out upthread, paying interest is an excellent way to reduce your tax liability. And the kicker to this is, interest rates are fantastically low right now.
Do you have a credit score in the 700s? If you do, you might be able to apply for a mortgage at 4% or less with no points. The modest interest you pay will likely be tax deductible, and you'll hold onto your 401K. Both the 401K and the house you buy will appreciate eventually. It may require decades, but appreciation is almost a given.
posted by Gordion Knott at 7:17 AM on July 21, 2012
As people pointed out upthread, paying interest is an excellent way to reduce your tax liability. And the kicker to this is, interest rates are fantastically low right now.
Do you have a credit score in the 700s? If you do, you might be able to apply for a mortgage at 4% or less with no points. The modest interest you pay will likely be tax deductible, and you'll hold onto your 401K. Both the 401K and the house you buy will appreciate eventually. It may require decades, but appreciation is almost a given.
posted by Gordion Knott at 7:17 AM on July 21, 2012
I think your plan has some merit, but it plan will work better if you move to middle America. Everyone has very valid points about there being additional expenses to owning a home. However, the expenses are drastically different depending where you own that home. In the northeast, where I live currently, property taxes on a modest home range from $10k-$20k or more a year. In a large southern city, where I hope to relocate, property taxes are about $800 to $3000 a year. And the general cost of living is about 50% cheaper. The downside is that the salaries are also much lower than the coasts.
posted by kimdog at 7:21 AM on July 21, 2012
posted by kimdog at 7:21 AM on July 21, 2012
How mortgages work: Few people have the cash for buying a house. So the bank gives you a long term loan, based on the idea that houses hold and /or increase in value. The US Gov't. allows you to not pay income tax on the portion of your income that goes to interest. If you sell your house, and buy another, you can roll any profit forward, and you can make a certain amount of profit on a home without paying tax on that profit. There is a great deal of detail left out.
How 401K works: You and your employer put money away for your retirement. The US Gov't. allows you to not pay income tax on the portion of your income that goes to your 401K. You pay the income tax when you withdraw the money. To discourage you from taking the money out early, there is a 10% penalty if you take it out early, plus you pay the income tax.
How I became mortgage-free:
I owned a small business, worked my tail off, made money most years, learned a lot, had fun, lived very frugally because all I did was work, then sold it. I had a lump of cash because of the equity in the business.
I used the equity to buy a 2-family house. Lived frugally, raised my son, got divorced. The 2-family house made the difference between no shoes for my son, and shoes. The rental income didn't cover the mortgage(taxes, maintenance, repair), but made a substantial dent in it.
When mortgage rates crept from 9% to 7%, I re-financed. I didn't take out equity. Lower payment, phew. I continued, and still continue, to live frugally.
When mortgage rates crept from 7% to 5%, I re-financed to a 15-year term. I didn't take out equity. The rental now covered most of the mortgage and taxes.
My son finished high school, and I decided to sell the house (just as prices were sliding, yikes). There are taxes on the rental portion of the equity.
I bought my current house outright. I pay taxes, maintenance, repair, insurance, etc.
Along the way, I had some bonuses - a small inheritance, sale of an asset, etc. That always went to savings or to pay down the mortgage.
You need a goal and a plan. Your goal might be Look for a Big Idea, and Run With It. The plan includes keeping expenses low, and building a cash reserve, so that you're ready to run with it.
Budget. Reduce your costs wherever you can. Live in a 3 bedroom place, and have roommates. Buy wayyyyy less stuff. Don't give up things you truly love, but don't buy ski gear & clothes for 1 weekend trip. Go on the trip; rent the equipment. Reduce your cable to basic, and rediscover books, walking, and all the other stuff you don't do because it's so easy to start watching a movie. When you go out with friends, spend a little less. I have a hobby that helps me stay in shape, and those friends have been my 2nd family for the last 25+ years. It's not very expensive, and it's fun.
Don't buy a new car; keep your car in good condition and drive it 200,000 miles, or until the maintenance costs and unreliability become too expensive. Then buy a reliable used car.
Invest your savings carefully. Keep putting money in your 401K; you'll retire someday, and be happy it's there. Don't raid your 401K for anything other than an idea that consumes you and that you have investigated and researched incredibly well.
Daydream about the Big Idea. Then some day, you'll have a Small- or Medium-Sized Idea, and you'll research it, investigate, and if you're convinced that it can work, and you really want to do it, you'll have some equity.
Read Your Money or Your Life for an interesting perspective.
posted by theora55 at 8:17 AM on July 21, 2012 [2 favorites]
How 401K works: You and your employer put money away for your retirement. The US Gov't. allows you to not pay income tax on the portion of your income that goes to your 401K. You pay the income tax when you withdraw the money. To discourage you from taking the money out early, there is a 10% penalty if you take it out early, plus you pay the income tax.
How I became mortgage-free:
I owned a small business, worked my tail off, made money most years, learned a lot, had fun, lived very frugally because all I did was work, then sold it. I had a lump of cash because of the equity in the business.
I used the equity to buy a 2-family house. Lived frugally, raised my son, got divorced. The 2-family house made the difference between no shoes for my son, and shoes. The rental income didn't cover the mortgage(taxes, maintenance, repair), but made a substantial dent in it.
When mortgage rates crept from 9% to 7%, I re-financed. I didn't take out equity. Lower payment, phew. I continued, and still continue, to live frugally.
When mortgage rates crept from 7% to 5%, I re-financed to a 15-year term. I didn't take out equity. The rental now covered most of the mortgage and taxes.
My son finished high school, and I decided to sell the house (just as prices were sliding, yikes). There are taxes on the rental portion of the equity.
I bought my current house outright. I pay taxes, maintenance, repair, insurance, etc.
Along the way, I had some bonuses - a small inheritance, sale of an asset, etc. That always went to savings or to pay down the mortgage.
You need a goal and a plan. Your goal might be Look for a Big Idea, and Run With It. The plan includes keeping expenses low, and building a cash reserve, so that you're ready to run with it.
Budget. Reduce your costs wherever you can. Live in a 3 bedroom place, and have roommates. Buy wayyyyy less stuff. Don't give up things you truly love, but don't buy ski gear & clothes for 1 weekend trip. Go on the trip; rent the equipment. Reduce your cable to basic, and rediscover books, walking, and all the other stuff you don't do because it's so easy to start watching a movie. When you go out with friends, spend a little less. I have a hobby that helps me stay in shape, and those friends have been my 2nd family for the last 25+ years. It's not very expensive, and it's fun.
Don't buy a new car; keep your car in good condition and drive it 200,000 miles, or until the maintenance costs and unreliability become too expensive. Then buy a reliable used car.
Invest your savings carefully. Keep putting money in your 401K; you'll retire someday, and be happy it's there. Don't raid your 401K for anything other than an idea that consumes you and that you have investigated and researched incredibly well.
Daydream about the Big Idea. Then some day, you'll have a Small- or Medium-Sized Idea, and you'll research it, investigate, and if you're convinced that it can work, and you really want to do it, you'll have some equity.
Read Your Money or Your Life for an interesting perspective.
posted by theora55 at 8:17 AM on July 21, 2012 [2 favorites]
Offlate i have somehow gotten the idea that if only i could live a mortgage freee life, i can do whatever i like. I am considering quitting my job, breaking my 401k and buying a little dinky studio someplace in northern CA (oakland) and start working on something on my own.
Another way to view this is: if I could get my expenditures low enough, I could spend less time (or no time) working and thus do what I want to do.
Step one in that plan, however, is to move out of one of the most expensive places to live in the US which even Oakland is a part (high taxes, high cost of living, etc.). Move somewhere a lot cheaper.
posted by rr at 9:06 AM on July 21, 2012
Another way to view this is: if I could get my expenditures low enough, I could spend less time (or no time) working and thus do what I want to do.
Step one in that plan, however, is to move out of one of the most expensive places to live in the US which even Oakland is a part (high taxes, high cost of living, etc.). Move somewhere a lot cheaper.
posted by rr at 9:06 AM on July 21, 2012
Yeah, really. Why a dinky studio in Oakland? Out in flyover country, that money would buy a whole (possibly palatial) house. But then, you'd have to have a car. Or you could get a one- or two-bedroom in somewhere like Sacramento or Redding for cheap, but like your studio we're really talking about a condo, and they come with condo fees which never go away, even after you've paid off the mortgage. It's all too much for me, which is why I rent my own dinky studio, which means freedom and a mortgage-free life, for me.
posted by Rash at 9:32 AM on July 21, 2012
posted by Rash at 9:32 AM on July 21, 2012
Response by poster: I do already live a very simple life. Now is a great time to make something and sell on the appstore. I am very interested in creating a game. I think i need to live in the bay area as a tech professional. And I have not worked out yet what game, what will it do etc. For this i need time and freedom to really explore. Atleast this is what i am telling myself. Without exaggerating i can say that the weekend and after work is not enough for me to work on my own ideas. I am exhausted after work everyday.
Yes, I will have to think about monthly expenses. Rent/Mortgage being the largest one, I thought if i relieve myself of this, then I will have a huge degree of freedom.I don't have to work for assholes. Even if i do have to work, it can be on my terms. Maybe I am mistaken about this. Sometimes it is my own inhibition of getting into the thick of things that makes me spin stories and come up with excuses. I want to give myself the gift of freedom. No immediate family here. 35 is the age.
posted by gadget_gal at 9:43 AM on July 21, 2012
Yes, I will have to think about monthly expenses. Rent/Mortgage being the largest one, I thought if i relieve myself of this, then I will have a huge degree of freedom.I don't have to work for assholes. Even if i do have to work, it can be on my terms. Maybe I am mistaken about this. Sometimes it is my own inhibition of getting into the thick of things that makes me spin stories and come up with excuses. I want to give myself the gift of freedom. No immediate family here. 35 is the age.
posted by gadget_gal at 9:43 AM on July 21, 2012
Buy an RV or sailboat to live in. You can get something livable for $50k, and you'll have to pay for a place to keep it, but this might only be $300/month. If you ever get really sick of what you're doing, you can drive/sail to Mexico and live for super-cheap.
posted by tylerkaraszewski at 10:15 AM on July 21, 2012
posted by tylerkaraszewski at 10:15 AM on July 21, 2012
The problem with an RV or sailboat is that they will definitely depreciate in value, though. An apartment (probably) won't. Can you buy the apartment and then cut your work down to part time in order to pay the rest of your expenses?
posted by hazyjane at 12:33 PM on July 21, 2012
posted by hazyjane at 12:33 PM on July 21, 2012
Best answer: There is nothing unrealistic about this. If you decide that you want to do it, you can.
This is quite a good time to do it -- housing prices are low, as are returns on 401k-type investments. So you can give up a little and get a lot, relative to other times. What exactly is the point in leaving your money in savings when it's earning 1- 2%? Better to use it to buy your housing, and forgo paying mortgage interest of ~4%. That's not a bad deal. Sure, you still have to pay insurance, property taxes and maintenance, but you'd have those as additional expenses with a mortgage anyway.
I bought a modest home for cash about 15 years ago, and when I think about the amount of money I haven't paid out as mortgage interest all these years, I feel all warm and fuzzy. I'm quite sure it's larger than the amount of interest I would have earned on that money if I had invested it instead -- heck, it probably would be mostly GONE, since as an investor, I'm not particularly clever or lucky. And the feelings of peace of mind, independence and security that come with actually owning your own place (assuming that you like it a lot and want to stay there quite a while) really are, like they say, priceless.
If the idea appeals to you, I think your next step should be to talk to an independent financial adviser, to make sure that your numbers work. If they do, start shopping.
posted by Corvid at 1:14 PM on July 21, 2012
This is quite a good time to do it -- housing prices are low, as are returns on 401k-type investments. So you can give up a little and get a lot, relative to other times. What exactly is the point in leaving your money in savings when it's earning 1- 2%? Better to use it to buy your housing, and forgo paying mortgage interest of ~4%. That's not a bad deal. Sure, you still have to pay insurance, property taxes and maintenance, but you'd have those as additional expenses with a mortgage anyway.
I bought a modest home for cash about 15 years ago, and when I think about the amount of money I haven't paid out as mortgage interest all these years, I feel all warm and fuzzy. I'm quite sure it's larger than the amount of interest I would have earned on that money if I had invested it instead -- heck, it probably would be mostly GONE, since as an investor, I'm not particularly clever or lucky. And the feelings of peace of mind, independence and security that come with actually owning your own place (assuming that you like it a lot and want to stay there quite a while) really are, like they say, priceless.
If the idea appeals to you, I think your next step should be to talk to an independent financial adviser, to make sure that your numbers work. If they do, start shopping.
posted by Corvid at 1:14 PM on July 21, 2012
My husband and I just made the leap and paid cash for a house. We bought a 2 bedroom 1 bath foreclosure on the quiet side of town for $12.9k and spent about $8k in renovations and now for $20k we have a home that was just appraised at $75k, which is great for area we livein (SE United States). We'll pay about $500/year in taxes, $700/year in insurance and various maintenance costs we estimate at $1,000 in a typical year, but we are very handy and do 95% of our repairs ourselves. So yes, it's doable, but It does take work.
posted by julie_of_the_jungle at 2:00 PM on July 21, 2012
posted by julie_of_the_jungle at 2:00 PM on July 21, 2012
Bah, please excuse all the typos, I'm posting from my phone.
posted by julie_of_the_jungle at 2:02 PM on July 21, 2012
posted by julie_of_the_jungle at 2:02 PM on July 21, 2012
There's a very popular Skillshare class in NYC called "How to live in NYC rent-free". The general gist of the class is: buy a condo or home (not a co-op) that has two bedrooms or two units. Live in one and rent out / AirBnb the other one. Do the calculations to find a place where the income pays for a large part or all of the mortgage and fees. This requires a lot of variables to be right and willingness to be a landlord or sorts, but it's a real possibility.
posted by the jam at 2:40 PM on July 21, 2012 [1 favorite]
posted by the jam at 2:40 PM on July 21, 2012 [1 favorite]
A little advice: Buying property is not going to affect your life in the short term, unless you really enjoy owning property.
If you really want to sell apps on the App Store, you should concentrate on that. You will know whether or not you will succeed within a year or two. It has nothing to do with whether you own property or where you live (unless you plan on partnering with someone).
Buying property is harder than it seems, and the process takes months. You can get screwed out of tens of thousands of dollars if you're not careful. This is time you will be distracted from your app-writing ambitions. And even if you pay cash for the property, you will lose it if you fail to pay continuing taxes + HOA/condo fees.
I would either rent something cheap while I worked on my app (maybe not even in CA) *or* buy some property and get a slightly less shitty job (and work on ideas in the evenings).
posted by RobotVoodooPower at 2:44 PM on August 8, 2012
If you really want to sell apps on the App Store, you should concentrate on that. You will know whether or not you will succeed within a year or two. It has nothing to do with whether you own property or where you live (unless you plan on partnering with someone).
Buying property is harder than it seems, and the process takes months. You can get screwed out of tens of thousands of dollars if you're not careful. This is time you will be distracted from your app-writing ambitions. And even if you pay cash for the property, you will lose it if you fail to pay continuing taxes + HOA/condo fees.
I would either rent something cheap while I worked on my app (maybe not even in CA) *or* buy some property and get a slightly less shitty job (and work on ideas in the evenings).
posted by RobotVoodooPower at 2:44 PM on August 8, 2012
This thread is closed to new comments.
posted by ill3 at 10:38 PM on July 20, 2012