Posted by: johnhourihan | December 31, 2013

Retirement 101: Chapter 2


Hail Caesar, those of us who are about to retire salute you.
It’s like being a gladiator.
Housing is one of the biggest problems facing those who are about to retire. It is sort of like the lion in the center of the arena. Before you go on with life you have to deal with him.
We have spent our lives accumulating stuff and things, and suddenly we realize, or sadly we don’t realize, we don’t need all this shit.
And we don’t need a seven-room house with a play room, a pool, a four-car garage, and three TVs.
We need a place to eat, a place to sleep, a place to watch TV, and maybe a shed for some of the stuff we just can’t get ourselves to throw away.
Rent or a mortgage payment is as much a budget-buster for a retired couple as Medicare an Social Security are for the federal government.
The first thing you have to deal with is that. It isn’t true that we can’t retire any more – it is true that we can’t retire and live the way we lived while we were working.
Where the average mortgage payment is $718, and the average rent is $684, and if you want to rent in a new  building the rent is about $1,049, think of this next number.
Living in a manufactured mobile home costs about $410 per month.
OK, many of us have this aversion to mobile homes, and it seems that hurricanes and tornadoes seem to love them, and there are sometimes prohibitive lot fees that make this a bad decision, so there is an alternative.
This was my plan.
Rent an industrial-sized dumpster. They drop it off in you yard. Fill it with all the things that have been in your attic and your cellar that you haven’t looked at or touched for five years. Let them take it away.
Or, rent a truck and fill it with the same stuff and take it to the charity of your choice. You will be able to deduct it from whatever taxes you are going to have to pay this year. Lin and I took rooms of furniture and clothes and everything you can imagine to the Boys and Girls Club. There were three TVs, dining rooms, bedrooms, kitchen stuff,- we figured it was about $10,000 worth at least.
Next, sell you house.
You don’t need it.
Selling your house is like the old fisherman and the sea. If you try to hold on to that big fish it is going to kill you before you get to shore. Cut it loose and you have a chance.
Buy a small house – cash.
Which means you have to put together as much money as you can and look in areas that sell houses cheap because there is no employment opportunities in the area.
You don’t need employment opportunities – you will be retired.
I bought a 300-square-foot house for the price of a good car.
But don’t buy just any house. Buy one that has a well, a septic system, propane heat and stove, a tankless water heater and a generator if possible. Make sure it doesn’t have a lot of land attached to it since you aren’t going to want to pay property taxes on land you aren’t going to use anyways.
Stop thinking like a working person. Stop thinking “with the equity in this house I will be able to make money on it in 20 years.
Chances are… well, you know.
What you have just accomplished is you have done away with your mortgage payment ($600 to $1,000), your water and sewer bill ($102) you have cut your heating bill (since propane is the cheapest for a small house – one gas log stove heats our whole house -and propane is the only one to actually go down in price in the past few years) Your electricity bill will dive since you only have one or two rooms to light, to heat etc.
This will cut your monthly bills by $1,500 on the low end to about $2,100 on the high end.
Just buying the right house brings you into range that can be covered by the average $2,500 a month on Social Security.
Lin and I have been living in our tiny house for a couple years now. It is fine, probably because we like each other… of course if you don’t like each other all that much I have to ask, what the hell are you doing together anyway?
Next: Transportation.

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