Stretching for Short Term - First World Problems

[Anonymous]

This is absolutely a first world UMC/HENRY whine post.

We have the opportunity to buy a duplex investment property(Dh/DW late 30s). Close with down payment and seller financing, 0% interest. We’d cash flow payments, would be paid off in less than a year. For about 8 months things would be tight…not reducing retirement savings tight but reducing brokerage contributions, no eating out, no vacations, no new clothes, still organic groceries but Trader Joe’s not Whole Foods.

Property is in a solid rental market, feels like a good opportunity. Has one set of existing tenants. Owner has been living in the other unit and is retiring and moving out.

I’m feeling resentful and guilty for feeling resentful. It feels like absolutely the right choice to buy and I’m grateful to be in a position to even consider it.

I know this is completely ridiculous but we were just getting to the place of being able to afford “nice” things after climbing out of a debt hole and the childcare(DC5) years.

Our personal home needs some work, but it’s paid for. We don’t drive fancy expensive cars and will drive them into the ground. We don’t have expensive hobbies. We don’t buy designer anything.

It feels like we work so hard allllllll the time, make more than our parents ever made, yet the quality of life for what we make…just isn’t what it “should” be.

Passive income, investments, healthy retirement funds…all necessary and future self will thank past self, but right now it feels HARD.

We have friends who seem to be having a lot more fun with their money…and there definitely isn’t family money…are people just living beyond their means? Massive debt? Skipping retirement saving?

I need some perspective - and not the “some people only have top ramen to eat” because both DH/DW grew up poor - but this jump into financial stability and the discipline it takes to ignore the desire for nice clothing and trips while avoiding consumer debt and investing in our future…anyone else first generation UMC/HENRY? How’d you manage to go from that to wealth? Any tips? Tricks?

I want a Chanel bag that I can’t afford, won’t use, and don’t live a life where it would make sense to even own…I want expensive shoes that I would never wear and would just live in my closet…I wear the same variation of inexpensive flats in rotation. It’s this bizarre emotional feeling of restriction about stuff that isn’t really my style anyway.

[Anonymous]

I had to look up HENRY. I don't understand the problem. Will you not amass enough wealth over time if you don't buy this duplex?

[Anonymous]

Do you want to be a landlord??

[Anonymous]

I mean it sounds like an incredible deal where a relative is giving you the property at zero percent financing. My concern would be around whether I want the hassle of being a landlord or and whether I would choose to invest there instead of the market. Otherwise, just not living large for 8 months is not a big sacrifice for a good deal that will bring you passive income.

I'm sort of like you in that I can afford the purses and shoes and don't want them. Do you really want to waste money on things that sit in your closet? Or do you just want to be able to feel like you don't have to watch your spending? There is a risk of being so focused on earning and spending that you don't enjoy it. This year a gave myself a fun money zero guilt budget but I have spent very little of it.

What you need to do is separate those psychological feelings from this particular deal. Analyze this deal on its own merits and if it's a good deal, take it but discuss with Dh a bigger budget for luxuries next year.

And yes, a lot of your friends are in massively debt.

[Anonymous]

Anonymous wrote:Do you want to be a landlord??

This. Even though it sounds like a great financial deal, I personally would decline because I don't want to be a landlord.

You mention feeling resentful because you don't spend on yourself, which you can clearly afford to do (much more so than I) so maybe look at that instead of buying a rental. Your personal home needs work ... so do that work. Travel. Get a hobby. Keep some aside for private school, which we started unexpectedly after being public school boosters for years. It's not hard to spend money in fun ways.

[Anonymous]

We don't earn as much as you but I absolutely have anxiety/stress around money and feeling restricted. (Comes from growing up poor where everything was counted and stretched). I'm a work in progress but one thing that helps me is developing the habit of noticing when I'm feeling restricted and saying something to myself like "it only costs $X. you can afford $X." For me grocery shopping is the most common anxiety inducing activity, so really any groceries I buy I can afford. We live in a neighborhood of MC/UMC/older couples so there is a range of incomes, which helps.

Give yourself permission to adjust retirement savings if at any point in the next 8 months you are feeling too stretched. Sometimes just knowing I have that as an option is what I need to move forward. Reduced savings for just a few months won't significantly alter your long term trajectory, and next year you can rebalance so you make up for any lower contributions at the beginning of 2024.

But most of all consider if you want to be a landlord. You're already feeling stretched. Being a landlord sounds busy and stressful, unless you pay for a manager.

[Anonymous]

Thanks everyone for the thoughtful and genuinely kind replies.

No; I don’t want to be a landlord. We work high stress high visibility jobs and while it seems like a good deal, it doesn’t feel like the right deal for us. We’re also not planning on staying in this area more than 5 years and being a remote landlord sounds like it would be more trouble than it’s worth.

The feeling of restriction is absolutely psychological. We don’t have anything that we need that we can’t afford to buy, which means we’re in better shape than 90% of the word.

I don’t actually want a expensive purse, I want to not feel restricted.

I know that comparison is the thief of joy. I have a friend, who travels a bunch and lives like a free spirit, recently confide in being in heavy debt. I though oh, $50k or so…nope $300k of consumer debt….doesn’t own a house. And I was shocked.

Because while I was feeling like “oh wouldn’t it be nice to go on great trips…” they have a stress I can’t imagine. I guess it just goes to show all that glitters.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Do you want to be a landlord??

This. Even though it sounds like a great financial deal, I personally would decline because I don't want to be a landlord.

You mention feeling resentful because you don't spend on yourself, which you can clearly afford to do (much more so than I) so maybe look at that instead of buying a rental. Your personal home needs work ... so do that work. Travel. Get a hobby. Keep some aside for private school, which we started unexpectedly after being public school boosters for years. It's not hard to spend money in fun ways.

+1

Plenty of other ways to invest that do not involve being a landlord.
Most of those are much less risky and less stressful. They would also allow you to not tighten the belt 100% for the next 8 months

[Anonymous]

Anonymous wrote:We don't earn as much as you but I absolutely have anxiety/stress around money and feeling restricted. (Comes from growing up poor where everything was counted and stretched). I'm a work in progress but one thing that helps me is developing the habit of noticing when I'm feeling restricted and saying something to myself like "it only costs $X. you can afford $X." For me grocery shopping is the most common anxiety inducing activity, so really any groceries I buy I can afford. We live in a neighborhood of MC/UMC/older couples so there is a range of incomes, which helps.

Give yourself permission to adjust retirement savings if at any point in the next 8 months you are feeling too stretched. Sometimes just knowing I have that as an option is what I need to move forward. Reduced savings for just a few months won't significantly alter your long term trajectory, and next year you can rebalance so you make up for any lower contributions at the beginning of 2024.

But most of all consider if you want to be a landlord. You're already feeling stretched. Being a landlord sounds busy and stressful, unless you pay for a manager.

Even if you pay for a manager, it means you have to pay for things to be fixed---unless it's a brand new home (which it is not), you could easily have $5-10K in issues in a year, or a new roof, new HVAC system, sewer backup, pipes leaking, etc....and you have to respond in a timely manner and pay for it

[Anonymous]

Anonymous wrote:Thanks everyone for the thoughtful and genuinely kind replies.

No; I don’t want to be a landlord. We work high stress high visibility jobs and while it seems like a good deal, it doesn’t feel like the right deal for us. We’re also not planning on staying in this area more than 5 years and being a remote landlord sounds like it would be more trouble than it’s worth.

The feeling of restriction is absolutely psychological. We don’t have anything that we need that we can’t afford to buy, which means we’re in better shape than 90% of the word.

I don’t actually want a expensive purse, I want to not feel restricted.

I know that comparison is the thief of joy. I have a friend, who travels a bunch and lives like a free spirit, recently confide in being in heavy debt. I though oh, $50k or so…nope $300k of consumer debt….doesn’t own a house. And I was shocked.

Because while I was feeling like “oh wouldn’t it be nice to go on great trips…” they have a stress I can’t imagine. I guess it just goes to show all that glitters.

Remeber---they created that stress for themselves and it DID NOT have to happen that way. $300K of consumer debt is foolishness

[Anonymous]

For me, I look at how much we make (a lot) and feel like we're really not getting much out of it. Sure we'll be happy we saved for college and retirement, and the expensive dyslexia school that taught my kid to read is worth every penny, but I really thought we would be living large if we ever made this much! Instead, I'm very hesitant to spend money on "fun" things. We also have high medical expenses so that doesn't feel fun. We're really lucky to be able to afford everything we do, but it feels like a real grind.

Becoming a landlord when you don't want to sounds miserable. Can you increase your contributions to your brokerage account instead? Your stocks aren't going to call you in the middle of the night because the toilet is flooding the house.

[Anonymous]

8 months is nothing. Seriously you already have a paid off house and would have a paid off duplex on top inside of a year? Buckle down. Tell your spouse you want to do something stupid spendy in late 2024/2025 when the duplex is paid off and just keep your eyes on the prize until then.

If you don't want to be a long distance landlord sell when you move. By then I bet you'll have a taste for the cash flow (and tax advantages).