Porter Alexander | Being Intentional with Money
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Being Intentional with Money

Being Intentional with Money

A retired client recently approached me with a concern. Now that they are empty nesters, there home is too large and difficult to maintain. Their family home for the last decade was now keeping them from what they wanted to do most. During this new season of life, they want to travel, to learn new things and to relax. We discussed the possibility of selling their home, downsizing, and ending the longstanding love hate relationship with their lawnmower.

What could be the next move for them?

After all, buying a house is a big decision that is expensive and potentially difficult to reverse. Not only are there obvious closing and moving expenses, but there are also the costs no one expects. The reality is that making a new house a home takes time and money. Finding furniture that fits, redecorating rooms to match your style, adding fences for privacy and pets usually culminates in significant additional expenses in the first six months to a year in a new home.

What did the next phase look like for them?  

They came to the realization that they have about “20 summers left” to do everything they had put on hold for so long. They asked themselves, “What is keeping us from just picking up and going? Why are we not spending more time doing the things we are interested in? Why aren’t we seeing our children more? Why aren’t we spending more time with old and new friends?” When they really began to think about what was holding them back, it was the responsibilities of the life they had been living. The family cat with few good years left, whom they loved dearly, would often be the detterent to a spontaneous weekend getaway. The yard and the pool that they had enjoyed were their children were younger now required significant time and money to maintain. The large house with many of its sparingly used rooms required constant effort to keep clean and tidy. They began looking for a solution.

Ultimately, the solution was not what they had imagined – It was a luxury apartment for the next season of life. They wondered how they could move to an apartment after 30 years of home ownership. With only one extra bedroom, how would they manage? Seldom did they have more than two overnight guests at the same time. In reality, a nice hotel nearby was available around holidays when the guest list swelled. The cost for several hotel rooms 8 nights a year was much less than the additional ongoing cost of a larger home.

What about space to relax and recreate? The apartment amenities included a gym, a pool, and a large furnished gathering space with a galley kitchen that could be used when entertaining. The nicest touch was a complementary concierge service on call to water the plants, feed the cat, and hold the mail. They are able to come and go as they please. Best of all, by simply picking up the phone most of the issues involving their home can be solved giving them the freedom they have always craved. Downsizing from 5000 square feet to 900 square feet is a monumental task with a life time of accumulation. They let go of the things that were holding them back.

A great lesson in finance is understanding that all things owned of value represent capital, and capital is very simply “financial resources available for use.” Taking what you have to get what you want will work more often than not, if there is a clear vision and the resolve to pursue it. For them, selling their house and reinvesting the proceeds in an investment account and a portfolio of commercial rental real estate gave them the income they needed to create their vision. Best of all, when the next season of life comes, much of their capital should be easy to convert to its next best use.

Should everyone sell their home and possessions and move to an apartment?

No. The point is – identify your vision, set goals, be intentional, and be willing to give up the things that don’t help you achieve your vision. Ben Franklin said “Lost time is never found again,” so what are you waiting for?