The Bank of Mom and Dad

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After being shut-out on a 4-unit that has been gutted, but needs to be finished, Mr. PFL and I had a brainstorming session about how to get more cash. It is clearly a seller’s market, and we need to be in a stronger position. We really only need a bridge-type loan to get us over the hump from buying a new place to selling our current home. We need about $325,000 in cash to be able to buy a multi-family property in a neighborhood where we want to live.

Currently, we are the back-up contract for an up/down duplex with a 2.5 car garage for $325,000. We offered $319,900 cash ($10,000 over asking price). I was actually able to show proof of funds from accounts that I have direct access to, including my two retirement accounts, the two HELOCs, the LLC’s checking account, my checking account and two joint checking accounts, and an available balance on my credit card. It obviously isn’t wise to use all of these accounts to buy a house, but it is comforting to know I could. Mr. PFL confirmed that he can easily take a $50,000 401(k) loan and he has around $30,000 in a taxable stock account that he can liquidate. It is still a stretch to get us to $325k, though.

That’s why I called my mom. And then talked to my dad. My mom inherited a good chunk of change when my grandfather passed about a year and a half ago (probably around $150,000). I’ve had enough discussions with my parents over the years to understand that they are very wary of the stock market. So, I wasn’t surprised to learn that they have over $100,000 in CDs making a solid 1% interest. The last time I remember asking my dad for money was more than a decade ago for $150 so I could purchase some Christmas presents. Bringing this idea up was not as difficult as I had expected and both of my parents were incredibly open to the idea of loaning us money for the short-term. We are able to offer a higher interest rate than their CDs. I’ve been honest about having almost $200,000 in HELOC credit available. I believe they are aware of the loan we did with Mr. PFL’s parents (which is similar, but a 10-year term on $30,000). I do NOT recommend this strategy for most people, though; there are so many articles out there about not borrowing/lending with family. But, at the same time, it can work.

Part B of this plan is to get our house ready to sell and to list it. I’ve set a tentative list date of April 21st. If we are in-contract within a week (which is entirely possible in our neighborhood, as long as we price right), that means we’d probably need to move out by the end of May. Ideally, it would be to our new place; otherwise, we are prepared to put things in storage and move to short-term housing. Our debt will be substantially reduced and we should have actual cash available. And we will be making a forward step, finally.

The Challenge of Flight V

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Oh, how I’m tired of flight delays. Nearly every single time I have an issue. I really haven’t flown that much this year (for me, anyway). It has been pretty uneventful. I was stressed out getting through security at the end of September; I made it to the plane with nine minutes to spare before the door was scheduled to close.

I’m currently on my way home from a solo-trip to Minnesota to meet our newest nephew. I was delayed a few minutes on the way here, after the plane had already pushed back from the gate, due to the captain “working on a little problem up [t]here.” Really? Because we had technically “taken off” after pushing back from the gate, we didn’t show up as late, so my sister and nieces circled the airport a couple of times before I made it out.

Today, it is the weather. Snow in Denver and rain everywhere else. While I love the convenience of air travel, being delayed gets old. I just want to get home.

Introducing Old Iron Hip

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Driving back from a family trip to watch baseball on Sunday, we were notified that Mr. PFL’s 89-year-old grandma fell and broke her hip. She had surgery on Monday, leading to her new nickname, and has the goal to return home where she had still been living on her own. Thankfully, Old Iron Hip has a Durable Power of Attorney and a Health Care Power of Attorney. We’ve also previously talked to the local county’s agency on aging and had a meeting with an estate planning attorney. Having all of this information ahead of time has helped keep the stress level down as much as possible in this unfortunate situation. Having these documents signed has also clarified the leader, which has been invaluable.

Every family has issues, including this one. I’m pleasantly surprised that the work we put in over the last few years is paying off. I’m hopeful Old Iron Hip will make a satisfactory recovery and will live a content life, on her terms. I’m also grateful that she was able to pre-plan her funeral for when that time eventually comes.

Finally, one of the concerns people have when we tell them we are planning to move to Hawaii is: What are you going to do if/when something happens and you live so far away? The short answer: Fly. The longer answer: If something/someone is a priority, we will be there and we have the resources to make it happen.

Birthday Wishes

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I’d like to wish Mr. PFL a very happy birthday! I hope and wish that it is the last one he has to suffer through with a full-time job. As we continue discussing and planning, I feel more and more confident that, by this time next year, we will be ready to remove the golden handcuffs and live a good life without the need for full-time employment. We’ve both begun to realize that the longer we work, the more money we will have saved, and then, technically, the more we would be able to do in the future (really ground-breaking stuff, I know). But, we also wonder: when is enough, enough? We should have monthly income that covers our expenses; we can always try to get jobs if we need them; we could start a new business; and, we have over $1 million dollars! Why torture ourselves more? Why?

Mr. PFL and I don’t really do formal gift-giving for our birthdays or Christmas anymore; I looked up duplexes that we could buy for cash with the plan to downsize out of our current house. If the weather holds up, there is one I’m planning to look at. I hope Mr. PFL likes my gift of working towards freedom from employment. 😉

Millionaire Christmas

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It is nice to be home. It has already been a productive day. I fixed the furnace, again (don’t get me started - same part went out as last time - part supplier was perplexed, but gave me a replacement without a hassle). I’ve run a couple errands, and updated some items on my computer. Now, I’m trying to process and decompress from the whirlwind that was family-time last week.

On the surface, everything seemed about the same. But, I know I felt different, or at least more aware of certain things. Mr. PFL and I haven’t declared our “status” to our families, although I did send a link to the very first post to my younger brother. I think it is safe to say that neither set of our parents has a net worth over $250,000. And, based on the drama that surrounds any job loss, I think it is safe to say that none of our other family members likely have a net worth in our general vicinity. Many of our family members are set up with long careers at the same companies, so I assume that they will be okay in retirement, but there isn’t anyone I can think of that is even remotely close to quitting full-time employment. But, I don’t really know, since “net worth” isn’t Christmas dinner conversation appropriate.

With all of that in mind, I know people were amazed that we are now planning a trip to the Sugar Bowl to watch The Ohio State University beat Alabama on New Year’s Day and then leaving for Hawaii a week later. I could almost see the math turning in their heads. I do see that this isn’t something an average American could pull off. I’m hoping that the total cost of the Sugar Bowl experience, including all travel, lodging, food, game tickets, and beer, will stay under $2,000 total, and hopefully closer to $1,600. Hawaii, including everything, should stay in the $5,000 neighborhood. But yes, we will be spending about $7,000 on travel before January 20th. That just isn’t something most people, including most of our family members, could ever pull off. So, I felt like I could feel them wondering how we could make this happen. Then I started wondering what they think/say when I’m not around - but, I’m not going to get sucked down that rabbit hole.

When my dad was giving me a ride to the airport yesterday, he made an offhand comment that I probably wouldn’t have even noticed last year. He was trying to tune into the Catholic radio station, but it was all static, so he was telling me about the two radio hosts that he likes to listen to on that station. He summarized a recent message from one of the hosts as something like: “You shouldn’t hate millionaires because they aren’t all bad/greedy/flashy/taking advantage of the little guy.” The way he said it seemed like 1) this was a revelation; 2) a millionaire is something he knew he would never be; and 3) he assumed we had both 1 and 2 in common. I know my mouth starting forming the words: “Dad, we are millionaires!” My brain stepped in before I got it out and I contemplated some of the possible outcomes of this declaration. I know I almost said it twice. I finally gave some noncommittal response and he moved on to another topic. I’ve been stewing on this for more than 24-hours, though.

What, exactly, have I been stewing about? I don’t actually know. I guess it all boils down to our relationship with money and our expectations. On the one hand, no one will ever be able to say that Mr. PFL and I didn’t “earn it.” Clearly, I’m still paying off a hefty student loan bill; Mr. PFL paid for the strong majority of his college as well, including five figures in student loans. Neither one of us has received an inheritance, loans from our parents, nor had someone else pay our cell phone bills. I can think of about $10,000 that I have received as cash in my whole life, including high school graduation presents, $625 from my aunt in Denver that she’d saved up for about 20 years, $5,000+ for our wedding/honeymoon, and about $4,000 that I received right before college that I “earned” because I turned 18 in November of my senior year and the Social Security death benefit that my dad had been receiving (since my biological mother died when I was 5) switched to my name until my graduation in June (then it stopped). While this is much more than many, many, many people ever receive, there is no way this can explain our success, and for that I am grateful, I think, because Americans appreciate a self-made man more than one that didn’t “earn it,” as do I, I think. Although, I really don’t begrudge anyone their success, or their family’s success. And maybe that is the “eureka” moment I’ve been waiting for! In a nutshell, because I recognize that my relationship with money/success/jealousy is different than the average American’s, and more like Will Smith’s (real or fake) response to Occupy Wall Street, I don’t want to accidentally ostracize myself from my family because of my values. This is what I’ve been most worried about, but didn’t realize it. I don’t feel that different, but I know they will see me differently, and maybe not so kindly, based on their own values and stereotypes about money. Things would change.

I’m relieved I kept my mouth shut…

Live, From Denver

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Good Morning from the Mile High City! I arrived yesterday to visit my Aunt. She invited me to a meeting at 7:00 a.m. this morning (yes, on a Saturday), and I accepted. The sunrise was worth the early wake-up call.

I’ve been very lucky to have the freedom and financial resources to visit with family this year. I’m also grateful that Mr. PFL is supportive of these trips, even though he stays home for some of them. At least he has Norman to keep him company.

(As an aside, I’d never bought a cat bed until about two months ago - Norman LOVES it. Who knew?)

I’ve felt more “aware” of my trips to visit with family this year than I have in the recent past. Realizing that we are so close to having the ability to do anything or go anywhere we want has made me focus on being present in these visits. I’m savoring the time we have together, because I am anticipating a time when we might go several months or years without having face-to-face interaction. This year has also been laced with loss, including my grandfather (who I was lucky enough to visit with the week before he passed), and Norman’s “brother,” our other cat (who was also Mr. PFL’s best friend). These losses have caused us to grieve, but also to be committed to what is important. Speaking of which, the theme of the meeting from this morning was “Re-Dedication.” Therefore, I hereby re-dedicate myself to the goals of financial independence, paycheck-free living, and enjoying all of the experiences life brings my way. I also re-dedicate myself to my family, especially Mr. PFL, and will do my best to enjoy the time I am able to spend with them through this holiday season.

Happy Holidays?

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Hard to believe it is December 1st already. This year is quickly winding down. I think I’ve finally managed to provide enough Christmas present ideas to both of our mothers, too. We don’t need anymore stuff, and are planning a big clean-out during the last two weeks of the year, so coming up with ideas was more difficult than usual. I wish they would accept my suggestion that we just spend time together, and maybe give us some money towards plane tickets so we can visit, but it just doesn’t work. Maybe next year…

There should be plenty of articles out right now about how to “not break your budget” when shopping for presents and how to “cut down on the stress” of the holidays. For what it’s worth, I try to get presents for the fewest people possible; they don’t want to buy me a present anymore than I want to buy them a present. Next, I maximize the amount of gift cards I can get with my credit card rewards. I used up over a hundred dollars in gift cards already this year as wedding presents, so I’m actually going to need to use some real money. Mr. PFL and I haven’t been presents-for-each-other people in many years. Every once in a while one or the other of us will buy a gift, but it is not expected. We generally view our travels as present enough. Finally, I try to ignore all commercials starting after Halloween - when I watch too many, I daydream about a Lexus will show up in the garage and that I’ll get a diamond pendant necklace while sitting in front of a roaring fire. This is the same reason I avoid the mall - I can always find something to buy. It is easier to not want it in the first place.

I know that the holidays are a time for family, but that seems to be directly related to the stress. I assume most families get stressed when they get together, which makes me wonder why we do this to ourselves. But if we didn’t get together for the holidays, it might be years and years before we see some of our family members. So, I guess that is why we do it? Mr. PFL and I spent Thanksgiving with just the two of us for the second time ever. I spent all day cooking, which I love to do, and we watched movies and football. It was a really nice day. I wasn’t stressed. We talked to everyone on the phone or texted with them. We did get invited on the Saturday before Thanksgiving to a dinner about an hour and a half away, but declined. Thanksgiving alone was just what our family needed. Especially since we are hosting Mr. PFL’s family for Christmas on the 20th.

My holiday wishes for everyone: remember what is important, spend accordingly, and don’t forget to take care of yourself.

Money Management Partnership

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Jack Johnson, a hockey player for our local NHL team, made national news this week by declaring bankruptcy. Long story short, it seems he trusted his parents to manage his money and they took advantage of him. Although making around $20 million in his career, at age 27, he has about $15 million in debt and less than $50,000 in assets. Hopefully Jack will have learned one of the most important lessons of life: Money Management is a Partnership.

One of the best “eureka moments” I ever had was when I realized that nobody cares as much about my stuff as I do. It doesn’t matter how much I pay them; without an ownership interest, they just don’t. That is why I believe, and thousands of articles have been written suggesting (for example: this one and this one), that you must be involved in your own money management. I would go one step further, and say that managing your money must be a partnership.

Obviously, if you are in a coupled relationship, your partner should be your money management partner. But what if, like Jack (above), you are single? Or, what if you are a couple, but have never managed money before? You must seek out an experienced partner - but it must be a partner, not someone that simply takes over. Your money management partner could be a professional, or, as Mr. PFL and I did, your own independent research can be your partner. There is a wealth of information available, but you must be committed to finding it and understanding it. If you have an adviser, they cannot simply be the leader; they must be a partner. You must take responsibility for your own money. It is yours.

I’m not suggesting that each person needs to know everything down to the last penny; delegating some money management responsibilities can make a lot of sense. In our own situation, for example, Mr. PFL pays for the recurring household bills from his paychecks (mortgage, gas, electric) and I’m responsible for keeping us fed, clothed and traveling. I honestly don’t know how much we pay for electric, but I do know that Mr. PFL always has plenty of money in his checking account (I have access to his bank accounts if I want to check); we’ve never received disconnect or foreclosure notices; and I don’t have to worry about it. Mr. PFL also downloads all of our accounts into personal financial management software so I can get an overview any time.

We do discuss major financial decisions. We are both willing and able to do research before making a major financial decision. We decide on major financial decisions together. We both have an equal voice, a partnership. This partnership has allowed us to take risks, but also to avoid any major trouble. The sum of whole is greater than the parts. Neither of us, individually, would be where we are today without the other. While we have reached out to experts for information, we have the final say. Because no one else cares as much about our money as we do.

Family Time

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My sister and her family blew into town this weekend. I helped my niece carve her first pumpkin. She picked out the design and stabbed the pumpkin a few times, but refused to touch the insides.

Mr. PFL seemed to have a good time, too. Who knew it could be so much fun to watch traffic and people through the front window?

I was relieved that the girls warmed up to us both right away, even giving us hugs on the way into the house. It used to take a couple hours for them to feel comfortable simply because we don’t see them very often (Mr. PFL usually twice a year; me at least three times). I don’t expect that our relationship with them will change much even if we move away. I hope that when we are able to get together in the future that we will be able to spend more days with them each time.

I also learned this weekend that my new, comfortable, post-marathon walking pace is that of a 1 1/2 year old. And that I needed a nap on Sunday afternoon, too.