They say “Where there’s a will there’s a way”, and that certainly rang true for me when I bought my Cape Cod “retirement” home at age 42 — many years before I ever dreamed it possible. It all began on Christmas Day, 2003. My brother and I were heavily engaged in our traditional holiday argument over politics. My mother was glaring at us with two very hairy eyeballs. A lesser sibling duo would have folded under such intense maternal disapproval, but that’s a story for another day. Eventually we ran out of insults and moved to a topic on which we share far more common ground: financial planning and investing.
Wall Street had hit new lows that year, with the Dow dipping into the 7000’s. A few years before, it was close to 12,000. And while the stock market had taken a beating since 2000, real estate was soaring with wild abandon. My brother said he wished he’d had the foresight to cash out some investments and upgrade to his dream house. I, too, noted that my 401(k) was far off its highs of a few years ago, and at age 42, these were valuable years of growth that were now lost.
This conversation festered in my mind through New Year’s. I began thinking of what else I could be doing with my money that would not only count towards my retirement, but could actually be enjoyed in the meantime. My dream was not for a larger primary residence, but for a home on Cape Cod. I always knew I’d eventually retire here and wondered if there was a way to acquire my retirement home far sooner than originally anticipated.
The idea took on a life of its own and before I knew it, I was driving to the Cape each weekend, looking at homes for sale, and considering ways to pay for one. First I needed a downpayment and quite frankly, without dipping into my retirement savings, I had nothing that resembled one. But I had equity in my primary residence, so I tapped that to cover 20% of the Cape house purchase, essentially transferring the equity from one home to another. (While I’m vehemently opposed to tapping your home’s equity for most purposes, I believe it can be a sage move in other cases, if done responsibly.)
Next was the mortgage, and it’s worth noting that my dear friend and accountant had just reviewed my previous year’s tax information and was visibly irate by how little I had saved and by how much of my income had been spent on “Dining/Entertainment”, according to my American Express annual report. So by simply cutting back on a portion of this so-called “reckless spending” (his words, not mine…), I could cover a large portion of the monthly expenses and at the end of the year, have something worthwhile to show for my income. I would also cut back on my monthly retirement contributions since purchasing the Cape home was, in my opinion, part of my retirement planning strategy. And unlike my 401(k), my new Cape Cod home could actually be enjoyed.
That was over 7 years ago, and while the real estate bubble has since burst wide open, I consider my Cape Cod real estate purchase of 2004 to be one of my best decisions by a long shot. Oh sure, like everyone else, my property’s value has dropped significantly over the past few years. I could buy the same house today for the same price, or heaven forbid, maybe even a little less. And maybe if I’d invested the same money in the stock market, an Excel spreadsheet would tell me that I’d be a little further ahead financially – MAYBE. It would be an interesting exercise, but one I will never undertake because the results would be inherently flawed.
In which column would I list all the wonderful times spent with my nieces and nephew at the beach? They grow up quickly and that window is regrettably small. Where would I factor in the Chatham shopping trips and cocktails at the Wequassett with my mother, who passed away in 2008? Had I waited, I wouldn’t have those memories to cherish. How ’bout the nights with my girlfriends at the Squire, Beachcomber and Woodshed? (OK, bad example…). The golf outings, trips to P-town, four wheeling on Nauset Beach, rollerblading on the bike path, day trips to the Islands, dinners at the Ocean House? How would my spreadsheet properly account for the value of all these experiences and memories? It wouldn’t. It COULDN’T. Because they’re priceless.
So if you’re currently saving to one day buy your retirement home on Cape Cod, consider whether or not the time to do it should be sooner rather than later. Today’s low prices and interest rates won’t last forever. Children grow, loved ones pass, and time marches on. I’m so thankful my time is marching on Cape Cod.