November Payoff Update! And Downsizing?

We made pretty good progress this month. We were able to add an additional $5k to the HELOC payoff. It’s been fixed with a payoff schedule of 5 years at $938/month so it moves down pretty quickly on it’s own. In less than a year, we will have it paid off and an extra $938/month going into the next mortgage. So satisfying.

I don’t expect to have an extra $5k every month to throw at it, though. This month included a real estate commission (Don’t worry. I first put 20% of it into my SEP and then put 50% of the remaining 80% in savings for my quarterlies.) and money earned from my salon. But most excitingly (is that a word?),  our new duplexes first month of full rents came in! Woot! The money machine is working! But considering that we also had to pay almost $4k in property taxes on ONE of our rental houses this month (the rest get paid out of escrow), I think we did pretty well.

Because we’ve owned that house in Portland longer than any other property in our portfolio, it’s balance can actually be seen to move down a bit in the chart just by paying the monthly minimum. It’ll lose it’s place in the debt snowball in only a couple months. But I’m not bothering to change my chart yet because our plan is to sell it soon. The tenant’s lease is up in August so we’ll let them switch to month to month until January. Then we’ll kick them out, fix it up and sell it just in time for the peak selling months. We have a ton of equity in it and it’s in a very desirable part of town but it’s a 4 bedroom, which is not ideal for a rental. Then we will 1031 exchange that into something that makes a bit more sense for our goals, like a multi family. I’ve participated as a realtor in 1031 exchanges but never as the seller and buyer so I’m excited to get that experience under my belt. It’ll probably be a blog post. Or two.

New Topic.

I made a terrible mistake. I took Mr. Bona FIde Money to The Tiny House Expo in Portland last weekend. He’s already been very frustrated at the maintenance expenses we’ve had to dump into our larger than necessary home this year. The list includes major foundation repair, rebuild of rotting front porch/deck, painting exterior, bathroom remodel (necessary because we had to tear out a wall to access non functioning shower hardware), and two large trees removed. That all adds up to about $18k. Ugh. Luckily, because of our financial savvy, we were able to pay all this in cash as issues arose but, dude. I can think of WAY more fun ways to spend $18k. My house exterior looks pretty kick ass though. We went with a super dark navy body and shiny black for trim and garage doors with a bright, mustard yellow for house numbers and front door. We went from “ew, gross” to  “OOooo, bold.”

Before
After
After Again

But I’m getting distracted. My mistake was taking my home-disgruntled husband to see how beautiful and affordable tiny homes can be. His mind was blown. He’s a man obsessed. He is now an expert on local tiny home zoning laws and building codes and the various tax hacks for RV registration vs. ADU status. He also has memorized the entire local inventory of real estate for homes under 1500 sq ft. If he finds something agreeable in our school district, he’s gonna push hard for the big downsize. We wouldn’t actually go TINY with two kids, that would be MAYBE when we are empty nesters. But he’s very inspired to downsize and enjoy all the expense minimizing, lifestyle streamlining, lack of home-maintenance-time-sucking that a much smaller home would bring. Our current home is only 2200 sq ft but it’s by far, the largest home either of us have ever lived in (without a million roommates). I grew up in 900 sq ft with a family of 4 so I know it’s totally doable. But-but- I almost finally have my house the way I want it! Waaaa!

He’s not wrong, though. Sigh. We’ve decided we’re just going to keep our eyes peeled for potential smaller homes that would work for our needs and see what happens. No promises.

The tiny homes that impressed us the most were built by local companies. One was Tru Form Tiny and the other was Covo. Really pretty and clever and the style was beautiful. Check them out and see if you find inspiration!

F.I. Everyday

Sweet little in home salon.

There are so very many reasons to want to be financially independent. Without a daily grind you have more time to spend with family, to pursue hobbies and interests, take afternoon, weekday naps… the list goes on and on. But it’s not just the destination of being FI that has so many benefits. Along the way, we have discovered that just learning the principals and optimization strategies to attain FI has completely changed our perspectives on life and how we make decisions for ourselves and our family. Confidently managing our finances creates decision making power for now and for the future.

A few years ago, (before we were exposed to the FI concept) I worked full time as a hairstylist in a busy salon in Downtown Portland. I had built a very successful career and was making lots of money. But after 16+ years of 12 hour days without breaks, on my feet with my arms up (and no naps), I had some significant chronic pain issues that I just could not get on top of. I was also burnt out. I had fantastic clients and felt proud of what I’d built but I it was just becoming drudgery. I felt guilty for wanting to quit something I worked so hard to build and was SO scared of not making enough money if I did something else that I put it off for a couple more years of pain-filled boredom. Mr. Bona Fide Money was also concerned about a significant income loss but was very aware of my discomfort so he finally convinced me to quit. Or he was tired of my whining. Either way works.

A couple months before I made my announcement to leave, I built a little salon in the spare bedroom in my home. My plan was to bring my client base from around 200 people down to around 40, only working a day or two a week. I had also gotten my real estate license since we had been buying, selling and managing our own rentals. I had helped a couple hair clients with their real estate issues so I felt I could transition my existing hair client base into a boutique real estate business. I didn’t know if people would actually be willing to give up the urban salon experience to come to my spare bedroom in the suburbs and there was no way to know how many houses I could expect to sell. It was terrifying.

It was also the best decision we ever made. Being home and able to manage more of what the kids and home needed gave Mr. Bona Fide Money some much needed support, I was able to focus on the physical therapy, exercise and rest that I needed to heal and manage my pain.

And guess what? I’m making more money than I ever have! My long term clients are like family and they love coming to my home (free parking doesn’t hurt). My real estate business is thriving with zero marketing effort on my part. In fact, it’s thriving a little too well. I’m now looking for ways to pull back a bit to preserve more of that hard won free time that is so important. I actually just TURNED DOWN a 1.2 million dollar listing! I had already helped the client purchase a condo and I was honored that she trusted me to help her sell her very expensive home. However, they were in the middle of a divorce and homes at that price range really need a team of people to manage the transaction and marketing and I don’t have a team. It just sounded like way more stress than I wanted to deal with, even after I calculated my commission (ouch). The old me would have made a decision based on fear of missing out on money and disappointing a client. The new me said “No thank you” and felt nothing but relief.

In hindsight, I had the tools and a good plan to pivot my career but fear kept me from doing it for years. All that miserable stress was not necessary.

Being able to turn down thousands (and thousands) of dollars in exchange for peace of mind and free time IS what financial independence is all about. Eliminating fear from our decision making process is key. I may not be ready to quit my day job entirely, but with the financial skills we learn through this community, we can confidently create the lives we want to live now and in the future. Now if you’ll excuse me, it’s 2:30 on Wednesday so it’s time for my nap.