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Retirement Redux

January 3rd, 2013 at 02:10 pm

With the New Year upon us, I've been reflecting on my life in retirement. Before retirement I worked for almost 30 years in education in positions ranging from classroom teacher to program specialist, and culminating for the final 15 years as school principal. On a daily basis there were problems to solve, challenges to face, and goals to meet. My life was fast-paced and intense but I loved my work.

On a personal level, preparing for retirement was an important goal and a challenge I undertook with enthusiasm. Although I once thought I'd retire at 55, I worked until I was 58, still ahead of many who have to work to age 66 or beyond. Planning for eventual retirement took a fair amount of time but setting goals helped keep my eyes on the prize... retirement.

Thanks to long-term planning, we retired with enough resources and income to fund a comfortable standard of living. But in some ways, I miss the challenges that made the days go by quickly and that gave me great satisfaction. So in retirement, I've had to find new challenges and create new goals.

Fast forward to January, 2013... I've been retired for 4 1/2 years. How is it going? In many ways retirement is everything I thought it would be and more. I enjoy mostly stress-free days and manage to keep busy. From spring to fall, gardening keeps me busy. I've joined a gardening club and have a membership at the Botanical Garden that gives me access to classes, events, and volunteer opportunities. We continue to volunteer with a national organization that provides disaster relief to individuals and families.

Dh and I have joined local bird-watching groups and he has taken several short trips out of state for birding festivals. Although I'm always "invited" to go, I prefer to stay home and enjoy some alone time. Bird watching has been a great hobby for dh to get into and he has given several presentations to various groups. An added bonus: it gets him out of the house and gives him a hobby he can do anywhere in the world.

And we travel a lot. Our 121 days of travel in 2012 took us to new and old places around the world: Cayman Islands, Belize, Curacao, Aruba, Mexico, Guatemala, Honduras, and Puerto Rico. We explored more of the USA with trips to Wyoming, Montana, South Dakota, Arizona, California, Florida, Oregon, Utah, and Nevada. Most of our travel was great fun, except for a 2 week cruise where hundreds of passengers contracted the norovirus. Let’s just say we are putting cruising on hold until we’re (much) older. Add visits to family and bird watching trips for dh, and we were out and about over 5 months total. Whew!

On the financial front... how did we do in 2012?
Life continues to be simpler and less complicated, especially financially. We sold our house in CA in 2011 so now we just have one home to maintain. In 2012 we sold one of our rentals to DS and his wife, so we also have one less investment property to deal with. Two rentals were refinanced, a smart money move resulting in a good cash flow.

Our income is fixed (defined benefit pensions) and direct deposited to the bank, and most bills are on auto-pay. A property manager handles the three remaining rentals. I track our expenses in four basic categories. "Living" is all expenses excluding travel, giving, or saving (i.e., medical, property taxes, food, entertainment, clothes, auto, etc.).

Our net worth grew 8%, excluding real estate. This figure represents the average growth of taxable accounts, tax-deferred accounts (to be tapped at 70 ½), and stocks/mutual funds. The 8% includes a stock portfolio that grew by 24%, mostly due to Apple's strong performance in 2012, so this skews the totals a bit.

We spent our 2012 net income as follows:
~ Living 30%
~ Giving 15%
~ Savings 32%
~ Travel 23%


And that's the recap of 2012 in the life of a very happy retiree. Although I rarely blog anymore, I continue to enjoy visiting SA and keeping up with the lives of my online friends.

The following picture is from our trip to Mt. Rushmore. As much as we travel around the world, the USA is IMHO the greatest country in the world.

Happy New Year everyone!

Gave Myself a $400+ Raise

September 24th, 2012 at 07:06 pm

Well, the truth is it feels like a raise. Today I signed the papers for refinancing two rentals that are my sole and separate property. I have been thinking about it for several years but dragged my feet, mainly because I didn't want to deal with B of A (the current lender), and home values had dropped dramatically. But values are finally creeping up again.

I remembered the name of the loan broker I used when I bought the houses. He used to be with Countrywide (now B of A) but is now w/ a small mortgage company. He was able to get a rate of 3.625% locked in with no points. This is an excellent rate for investment property. I also decided to have impounds because it makes life easier for me. I will no longer have to deal with tax bills or annual insurance premiums... only HOA fees.

It will take about 15 months to recover the closing costs but after that I will have about $447 a month net, after paying for property management and reserving funds for HOA fees to be paid twice a year. Wish I'd done it sooner, especially since I've had a negative cash flow of ~$65 a month.

The cash flow will come in handy... we are expecting out first grandchild (a boy) early next year and I will want to start a college savings account. It's never too early!

So what do you do all day?

April 2nd, 2012 at 07:43 pm

Yikes! Has it really been 3 months since I last posted? I am alive and well living happily ever after in retirement. 2012 is the first year we've had only one house to deal with, so our life has gotten simpler (and cheaper). It was a good financial move to sell the CA condo last fall. A question that sometimes comes up from family and friends who work: What do you do all day? Well, we manage to keep busy, and at times busier than when we worked.

My volunteer time with the American Red Cross has been a rewarding experience so far. In between travel, I am on-call as a member of the Disaster Assessment Team. Dh is also a volunteer and sometimes goes with me on calls. In the last month I've had 7 calls, all of them in response to house fires in my city and some neighboring cities. I'm getting to know other volunteers and making new friends, another benefit of belonging to this group.

More and more, we're adapting to the colder climate and enjoying spending more time in this beautiful part of the country. But now when the weather gets TOO cold, since we can no longer escape to CA, we plan getaway trips to warmer areas. We're still not ready to be snowbirds in one particular place so we've been migrating all over the globe. January and February took us to Florida and Caribbean for about a month, an experience that was mostly good.

Our trip included a two-week cruise on the Crown Princess, the ship that made the news because over 500 passengers and crew got sick with norovirus. We thought we'd escaped the epidemic but dh and I both got sick the day we disembarked. We were sick enough to visit the ER and we spent the good part of a week recuperating at our timeshare condo. So the last week was not so good, but the other weeks were wonderful. We've taken many cruises and this was the first bad experience, so we're taking a break from cruising for a while but not for good.

The weather at home has been nice enough that I've worked in the garden a few days. I won't plant my annuals until mid-May, but the perennials are starting to sprout and in need of thinning and pruning. We're having the exterior of our house painted and it will happen this week if the weather cooperates. It's been a fairly mild winter but with some strange weather. One day it's in the 70s... the next day it may snow. If the painting doesn't happen this week, it will have to wait until mid-May when we return from our next trip.

Next week we'll leave for Guatemala, where we'll spend about a month. We'll start with a ten-day http://www.caravan.com/tour/guatemala tour that begins in Guatemala City but we are going a few days in advance. We think Caravan's prices are reasonable and we enjoyed the Costa Rica tour we took with them last year. After the tour we'll be in Antigua with friends and end with a week at a hotel/resort, also in Antigua. We will visit the schools where we used to train our SJSU student teachers and spend time with students we are sponsoring. We have planned a side trip to the Mayan ruins in Copan, Honduras, during the latter part of the trip.

The only thing I can share related to saving money is I got a very good deal on our tickets to Guatemala. We are flying first class for about $100 less than the price of an economy class ticket. I did it by using award miles combined with purchased miles to complete the transaction. Also, we are staying at a lovely resort in Antigua for only $159 a week by booking it through our timeshare exchange program.

I do have one financial goal for 2012 that supports my philosophy of giving. This year I would like to make my contributions through a donor-advised charitable fund. So far, I am leaning toward the Schwab Charitable Fund. My plan is to use appreciated stock to establish the fund and use future contributions to support my non-profits of choice. I want to proceed in the most-cost effective and tax-friendly manner. A charitable fund seems simpler than establishing a foundation that involves lots of paperwork and requires management.

Well, I haven't been blogging much because our financial life is really pretty boring these days. I guess it's better than having drama related to money (or lack of). The years of focused planning and saving have paid off in terms of providing a comfortable and secure retirement, and for that I am grateful. We planned for the future and now we are living it. Life is good.

Happy Easter to all! I took this picture of lilies at our hotel last time we were in Guatemala.

A Year of Splendid Retirement

January 1st, 2012 at 10:20 am

Yesterday dh and I were discussing how quickly 2011 flew by. After all, we are retired... shouldn't life seem a little slower? So where did the year go? And how are we doing financially... where did our money go?

January - Our "National Geographic Experience"
We started the year on an Amazon River cruise where we spent 4 weeks visiting everything from remote villages to the industrial city of Manaus. Our trip back to the USA took us to Devil's Island and several Caribbean countries. It was amazing and we learned so much about the flora, fauna, people and cultures of the Amazon Basin!

February - Family Time
Spring in Idaho was quiet and restful. We took a road trip to our condo in Silicon Valley, stopping to see family in Oregon along the way.

March - Time for Family and Friends
Went to Newport and Gleneden on the Oregon Coast for a week with dh to enjoy bird watching and the ocean. Later I took a "girls only" trip to Las Vegas to celebrate a friend's 70th birthday. Dh and I ended the month with a week in Cabo San Lucas for our niece's renewal of vows.

April - From NYC to the Rain Forest
The first week was spent with my sister from CA in NYC visiting my grandnephew (her grandson). Later that month, we were in El Salvador to see family for a week, followed by 10 days in Costa Rica on a http://www.caravan.com/tour/costa-rica?gclid=CLb9rfrXr60CFQk... tour, one of the best travel bargains around.

May - R & R
Had thyroid surgery... prognosis is good despite some unexpected news. Appreciated being home to rest and recuperate, and my daughters and dh were wonderful during this time. Prepared my garden for planting.

June - Home Sweet Home in ID
The garden is starting to bloom, I volunteered for the Red Cross, and took a four-day trip with dh to beautiful Yellowstone. We decided to sell CA condo... we just don't use it enough to justify expense of keeping it.

July - Cutting Ties to CA
The best part was that my sister and BIL from CA came to visit us in ID for a week of fun. We got an offer on the condo... drove back to CA. It was wonderful to spend time with CA family, including dh's family reunion in Soledad. Cleared out CA condo in expectation of closing escrow in August. Rented a storage locker in ID and hired movers to help us with items we are keeping.

August - Summer in the City of Trees
So happy with our beautiful flower garden in ID... annuals and perennials galore! Volunteered some more and enjoyed a relaxing summer in this beautiful city of trees (that is the meaning of Boise), biking on the greenbelt, and going to the fair, museums, parks and the zoo.

September - European Adventure Begins
We FINALLY closed escrow on our CA condo! Left on September 25 to celebrate with newly retired friends in for Barcelona, Spain, the gateway for our next adventure.

October - Wow... what a month!
We were in Europe most of October, exploring 8 different countries... an amazing experience. The best part: four days with my favorite cousin and his delightful family in Switzerland. Did some volunteer work for the Red Cross when we returned to ID.

November - So Much to be Thankful For
My DSS came home from Iraq, safe and sound after one year working as a medic with his National Guard unit in a particularly dangerous area. Thanksgiving in Idaho was lovely, hosted by DD1. After Thanksgiving, dh and I left for Cabo San Lucas, one of our favorite SUNNY and WARM places.

December - Escaping the Cold
Went to Cabo San Lucas for three weeks. Came home in time to celebrate happy holidays with 3 of our 4 adult children. DSS want to relocate to ID. We decorated the house and put up our tree. It was wonderful! I especially love the ornaments we've collected from our world travels.

On the Financial Front... where did our money go?
I spend less time on things financial now that we're retired. It's not that I care any less about personal finance... it's more that we are on autopilot. We have a property manager handling the rentals, so I do not get involved much. The financial planner I've used for 25+ years does a good job with the tax-deferred investments, so I don't worry about those. Our income is fixed and direct deposited to the bank, and most bills are on auto-pay. Life is simpler now.

I track our retirement income in four basic categories. "Living" is everything we spend that is not travel, giving, or saving: medical, property taxes, food, entertainment, clothes, auto, etc. I was surprised our net worth grew 4.87%, excluding real estate (I expected less). This represents the growth (averaged) of taxable accounts, tax-deferred accounts (to be tapped at 70 1/2), and stocks/mutual funds. I adjusted figures to exclude cash generated from the sale of the CA condo.

Distribution of our 2011 net income is as follows:
~ Living 32%
~ Giving 12%
~ Savings 31%
~ Travel 25%

We spend a lot on travel, made possible by diligent pre-retirement planning and saving. Our expenses are low, our income is fixed (~30% goes to taxes), we save almost one-third of our net income, and we are in relatively good health. This is the "go-go" stage of our retirement. The "slow-go" and the "no-go" stages will follow, but for now we are actively crossing items off our bucket list. 2011 was a good year!

Happy New Year to All at SA!

We finally closed escrow...

September 6th, 2011 at 05:36 pm

on our California condo... three weeks late, but at least it's done. We had to be patient due to buyer's loan issues that necessitated signing FIVE extensions to the contract. It's a good thing we knew and liked the buyer otherwise we would have gone with the backup offer and would have had a speedier close.

It's been over a month since we moved our belongings from the condo. Although we really loved our home, we decided to sell because we just didn't use it enough to justify the expense of keeping it. It will be nice to save the money we've been shelling out each month for expenses plus the substantial equity from the sale. Moving and consolidating two homes into one was a project I do not want to repeat anytime soon.

We hired a nationally known company because we thought they would be more reliable. Wrong. The movers showed up 12 hours late. We had to stay in a hotel an extra night because they started the job at 9:30 p.m. and worked until 12:30 a.m. Then they started at 8:00 a.m. the next day and finished at 1:30 p.m. We spent the next night in Nevada because we left CA too late in the day to make it all the way home. Of course, the final cost was MUCH more than the estimate, and even though the movers were respectful and friendly, they were not as careful with our furniture as some of the local movers we've used.

All in all, we survived the move and the furniture survived, although with a few more scratches than before. The task of blending two households into one involved sorting items for donation, giving away loads of extra furniture, household items, and clothes, putting some furniture into storage for my stepson, and shredding old financial records and personal papers. Whew! Glad that is behind us but it has given me renewed motivation to streamline financial record keeping and to think twice before buying anything new for the house.

Lessons from Financial Fiascos

December 2nd, 2010 at 05:56 pm

Most of us have made poor financial decisions at some point in our lives, and I am no exception. I was reflecting about some of my worst financial decisions over the years and thought maybe someone else can learn from my mistakes:

1975 - After the death of my mother and father within a few months of each other, my sister and I sold my parents' home in SF to a relative of our estate attorney. We were young and naive and did not know the sales price was extremely under market value. We essentially gave away a home that was worth much more, especially because of its prime location. Selling the house wasn't the issue, it was making an uninformed decision... we sold it without consulting anyone else (e.g., an appraiser) and trusting our attorney 100%. Of course, we were young, vulnerable, grieving the loss of our parents and inexperienced in real estate matters. Lesson learned: Just because you have known someone for years and they seem kind and fatherly, it doesn't mean they won't take advantage. Think twice, wait a while, talk to others.

1983 - Newly divorced, I entrusted $22,000 to a family friend, a stockbroker, who talked me into the same investments he recommended for his parents. Big mistake. Today, I have approximately $1583 to show for that investment, and a K-1 that won't go away. It was a lot of money back then (and still is!). Lesson learned: Don't let someone talk you into an investment by using an emotional or personal rationale like "I had my parents invest in this." Do your research.

But did I learn my lesson? Nooooo... keep reading and you will see why. First, some background to explain my stock market experience:

1995 – I was a late bloomer getting into the stock market and started buying stocks after researching some major companies, some of which were blue chip. Since I was a beginner, I had a fellow teacher who shared copies of Value Line to help with my research. I focused on companies whose products or services I liked or used, and bought individual stocks in lots of 100-500 shares for several years. My portfolio was doing moderately well until...

1998 – I broke away from my strategy and bought some technology stocks based solely on my dh's raving about how these were the "up and coming" companies, and how his stocks had quadrupled in value, blah, blah, blah. So I bought (VRSN, XICO, XLNX)... and, about two years later, all of these stocks tanked with the dot.com implosion. Why I listened to my dh who had even less knowledge than I did, I don't know.

Then, to make matters worse, I kept those duds for years, despite the fact they could not possibly recover in my lifetime. I eventually sold these dogs, despite my "buy and hold" strategy. Most of my original stocks have been a solid investment, despite taking a beating in the most recent meltdown. Thankfully, I did not take dh's advice to sell my AAPL stock! But the experience gave me cold feet for buying more stocks and I lost my interest in the market for quite a while.

Nowadays, I am ultra conservative when it comes to new investments in the stock market. When I allowed myself to be influenced by my dh's enthusiasm and confident attitude... any maybe even a little by greed, I paid the price. Since retiring, I'm reluctant to buy more stocks, but for the younger folks, there are some bargains to be had.

Stocks I'm glad I bought and held: AAPL, ABT, AMZN, MSFT, WMT, PG, GE, SBUX, HPQ. Slow and steady, my original stocks have grown by an average of ~9.5% a year, excluding APPL which has had phenomenal growth. But then there were duds like WAMU, which became worthless. Lesson learned: Do your homework and think for yourself, then you have no one else to blame for your decisions.

"Self-trust is the first secret of success."
Ralph Waldo Emerson

Making the Decision to Retire

August 18th, 2010 at 11:09 pm

How much money will I need to retire comfortably? This was the burning question I pondered for several years before retiring. My retirement planning involved some specific steps to answer this question and it helped me feel confident in my decision to retire. Even though I retired two years ago when the economy was imploding, I have not regretted it for a moment.

Here is what I did to come up with my answer:

1. I determined the annual income I would need in today's dollars. This involved creating a budget that allows for unexpected expenses and also a healthy amount for travel. My basic budget categories are:

Housing (includes expenses for second home)
Utilities (includes phone)
Food/Misc.
Auto (gas, maintenance, insurance, registration)
Medical
Charitable Donations/Gifts
Personal Allowance (includes clothing)
Insurance
Entertainment
Travel Savings
Regular Savings
Taxes

2. I chose my planned retirement date: August 19, 2008.

3. With input from my accountant and financial planner, I analyzed the market value of my investments. These included both taxable (cash, stocks, real estate) and tax sheltered accounts (IRAs, 457 and 403b). Taking into account a conservative rate of return on these investments (2%), we projected values at 70 1/2, when Required Minimum Distribution (RMD) kicks in.

4. I requested a benefit estimate from my state teacher's pension plan. In my case, I knew the exact amount of my pension and that it is supposed to have a guaranteed 2% annual COLA.

5. I calculated the withholding on my pensions at approximately 25%.

6. I determined my pension WOULD NOT keep pace with inflation (using a 4% lifetime average inflation rate). In the future it would mean saving less and/or drawing from my retirement accounts to supplement my pension income (definitely will need to do so by age 70 1/2).

I put all this data on a spreadsheet and saw that I could afford to retire on my chosen date, even though waiting three more years would have provided a significantly higher income. In my case, the additional money was not worth the stress generated by my work. My job as an elementary school principal was taking a toll on my health (e.g., high BP) and I wanted to retire on a high note, rather than after I'd burned out.

These are the steps I took to "crunch the numbers." There are plenty of calculators available online, some of them very useful. However, I just used a simple Excel spreadsheet. I did this exercise at least once a year for about 4-5 years before retiring. I knew it was time to retire when I began to review my retirement spreadsheet every month!

My husband retired in 2009 so we are now both able to enjoy a completely different life. People sometimes ask what we do to keep busy now that we're retired. The reality is that we are always busy, but what we do to keep busy is our choice. It's wonderful to have so much control over our lives. We love to travel and have documented some of our adventures on our travel http://www.sagetravelers.com/.

In addition to retirement income planning, we downsized in 2006 to a condo in Silicon Valley. This was a good move because we sold our big house when prices were high and we were able to move to the condo that we had bought in 2003 but had rented out. We used profits from the downsize to buy our Idaho home for cash, so there is no mortgage. So now here we are in beautiful Boise where we have relocated. We still have the CA condo, but it is now our second home.

Rent or Sell?

June 9th, 2010 at 11:07 am

Now that we're retired and free to move about the world without the encumbrance of jobs, we've been contemplating what to do with our condo in CA. Here is what we have discussed so far:

*****************************************
Sell It

Pros:
No more PITI, HOA fees, and utilities;

We could invest the equity or use it for something else, TBD.

Cons:
The real estate market's just starting to improve here, so it might be prudent to wait;

We might owe taxes since we would not be buying a replacement property.


*****************************************
Rent It

Pros:
The rent would cover all or almost all expenses (PITI/HOA/Management);

We could save or invest what we now pay in PITI/HOA;

We know a good property manager.

Cons:
Renting can be a disaster with the wrong tenants;

Renting won't help us tax-wise due to income limits.


*****************************************

So, back to the question: rent or sell? After much thought and discussion, we've decided to do neither. We're going to keep the condo and look at things again in a year or so. This way, we will have a place to stay whenever we're in CA, and we will be spending about 4 months here in 2010. Dh, as an Emeritus Professor, still has access to the campus library and other resources and he wants to do some research/writing (with no stress or deadlines, just for enjoyment). We'll keep the Prius parked in the garage for wheels and thankfully, not have to deal with packing and moving dh's office just yet.

Taking Stock

March 30th, 2010 at 11:55 am

Today I decided to analyze my stock portfolio, something I haven't done in over a year. Here is the lowdown:

1. The portfolio has now surpassed the high of October 2007;

2. It's gained 95% since the low of February 2009;

3. Overall gain since inception has averaged ~7% a year;

4. I have not bought or sold any stocks or mutual funds in years;

5. My portfolio consists of 90% individual stocks and 10% mutual funds;

6. My best performing stocks in terms of gain over purchase price are: AAPL, SBUX, PG, WMT, ABT, HPQ, AMZN;

7. I buy stocks based on liking/using a company's product, not on a high-level analysis. (Note: I DO NOT recommend this approach!) For example, I bought AAPL at $6 a share in 1996, because I'd used Mac computers since they first came out in 1985. I was lucky... AAPL has split twice and has had outstanding gain;

8. Most (but not all) stocks I bought outperformed mutual funds I bought (VFINX, SNXFX, SWPPX);

9. When I decide to buy a stock, I will buy between 100-500 shares;

10. As much as I'm interested in personal finance, I just haven't gotten into educating myself about the stock market, but maybe this is an area to explore. I still feel like a rookie.

I've always thought of my stocks as an asset I'd probably leave to my children or a charity and had not counted on these funds for retirement, but it's a good backup option. On the other hand, my retirement accounts (403b, IRAs, 457), some of which are invested in mutual funds, are entrusted to a professional financial manager.

------------------------

In other news, dh and I have been in ID for the last two weeks, enjoying some special time with my daughters and SILs. The weather's been colder than CA, but nothing unbearable. Dh has a new interest: photographing birds and wildlife, so we've spent hours at local parks and wildlife preserves. Idaho has abundant wildlife and beautiful landscapes, so there are endless photo ops. Dh just spent a small fortune upgrading to a better camera (Canon EOS 7D) but saved money on taxes (ID is 6% vs. CA @ 9.25%).

At the end of the week, we'll drive back to CA (with TC the cat) to spend Easter with family and friends. I'm looking forward to seeing my sister, niece, grandniece, and grandnephew. I love how the kids get excited about their Easter egg hunt and we'll all have a wonderful brunch with close friends and family.

Then in mid-April, dh and I are off to Mexico for a few weeks to explore some major archeological ruins in the states of Tabasco and Yucatan. From our base in Villahermosa, we will go to http://en.wikipedia.org/wiki/La_Venta and http://en.wikipedia.org/wiki/Palenque. Then we'll fly to Merida, and will go to http://en.wikipedia.org/wiki/Uxmal and http://en.wikipedia.org/wiki/Chichen_Itza from there.


Hoping for the Best, Preparing for the Worst

February 16th, 2010 at 09:05 am


Maybe somewhere deep down I'm a pessimist, but most of the time I'm a woman who thinks the glass is half-full. But when it came to financial planning and retirement, I covered all the bases.

I am one of the lucky ones who retired with a state teacher's pension. This is touted as "safe" and provides an annual 2% COLA. Participants in this pension system are not eligible for Social Security, however.

But being ever so wary of what could go wrong, and always wanting to be prepared for left curves life throws at us, I also did the following:

1) Contributed annually to my 403b accounts and also to Roth IRAs when I was eligible. So far, I have not had to touch this money;

2) Invested in the stock market. The "star" of my portfolio is AAPL which I bought at ~$6 a share in 1996. I stopped investing in stocks years ago, but I have fun tracking this asset. I don't know if I will ever sell any of it, but it's there if I need it;

3) I also have a stash of cash... some in CDs, some in ING, and some barely earning any interest elsewhere. It would help me survive for several years if my pension dried up.

4) I have avoided debt like the plague, except for a small mortgage.

So, why I am writing about this? Well, yesterday a good friend...also an educator... called and lamented she may have to work until she's 64 or 65. You see, her teacher's pension just won't be enough for living in retirement if she retires any sooner. And even when she does retire, she'll have to make "drastic cuts" to her lifestyle (like no more travel).

Don't feel too sorry for her. Most Americans have to work until 66 or 67, but many teachers we know like to retire around 60 or 62. My friend, though, never saved for retirement because she figured her pension would be enough. And in reality, it should/could be. And it is "safe." But what if...


Rental Nightmare Update

January 5th, 2010 at 11:19 am


In June, we hired a property manager who promptly evicted the tenants at one of our rentals. Back in August I http://financiallyfree2bme.savingadvice.com/2009/08/09/renta... about how the evicted tenants had trashed the house. I am happy to report that the property is FINALLY back to normal and it has been rented effective January 1. It was expensive to renovate and if it were not for the sad state of the real estate market in ID, we would sell it in a heartbeat. We are finding that rentals require far more work than we have the energy for.

One of the mistakes we made was hiring a property manager who wanted to do all the work himself. In the long run, he cost us more money because he has a full-time job apart from his rental management business, and he did the work when he had time. He is a hard-working, honest man, but it took him way too long to complete the repairs. And since we were in CA most of the time, it was "out of sight, out of mind." But we are grateful he was able to evict the tenants who had stopped paying rent.

So, more than $15,000 later, here is where the money went:

~ Six PITI payments @ $835 each
~ New linoleum and carpets
~ Two coats of KILZ on the subfloor
~ New paint throughout
~ New blinds on all windows
~ New backyard landscaping (top soil, lawn, sprinkler system)
~ New DW and micro-vent
~ Electrical outlet repairs
~ Trash hauling and cleaning (it was utterly unbelievable)
~ Utilities, including the $329 water bill of former tenants

As it was, the house would not have been ready to rent by January 1 if it had not been for my DDs and SILs who spent the day after Christmas helping us finish up the cleaning and repairing the front and back doors. The property manager was out of town on a family visit and dh and I were determined to get it ready.

You may be wondering if the evicted tenants vandalized the house. They did not! This was the result of four years of living in a house without ever cleaning it. We made the mistake of not having a property manager for several years and not bothering to do an annual inspection. So, most of this is our own fault for being lax about an investment and "assuming" all was well. We paid dearly for our mistakes and learned something about human nature through this experience.

There are people who are simply not clean... they think nothing of fouling their own nest, worse than animals. I have a hard time understanding what would compel a human being to live with animals and their feces... how do they present a semblance of normalcy outside the home? In my career as a school principal, I saw youngsters removed for "neglect" from filthy homes that were cleaner than this one.

And, no, we will not try to recover anything from the former tenants. It would be like trying to get blood out of a turnip. They apparently lost their jobs and like many people living on the edge, were only a heartbeat from being homeless. I feel sorry for these people, especially the children in this family.

New paint, carpets, and blinds:


Sparkling clean kitchen with new micro-vent: