Today’s Inaugural Guest Post comes from Deep Ellum Stash, an FI seeking corporate analyst who’s serious enough to pull off bike commuting in Texas (summer included!). She and her husband are nearing their FI goal and debating if it makes sense to stay in a high cost of living area.
An executive at my MegaCorp once told a group to maximize optionality. He was talking about maintaining flexibility in their careers, learning skills that would set themselves up to choose among several desirable paths, and taking advantage of opportunities.
For my husband and I, one of the biggest benefits of seeking financial independence is increasing optionality. Which sounds more impressive than saying we’re good at optimizing our indecisiveness. Creating choice is key to our planning. This translates into us dreaming up options and me building spreadsheets to include multiple scenarios, risk tolerances, and adjustable variables.
Optionality has even bled into how we consider housing. Two years ago, my husband and I purchased a lovely little house in Dallas, TX. It was exactly what we needed and wanted, so we assumed that we’d stay forever.
While we love our house, we realized that we aren’t as in love with the home ownership idea as we thought we’d be. Dallas is a fun city and there are benefits to us being here, but we aren’t permanently tied to it either. The idea of optionality led us to narrow down some locations in other cities, just enough to land the FI plane by seeing how much the various options would cost.
A lack of decisiveness may or may not be one of one of my talents
Do we maximize flexibility and become renters? The most nomadic option, this could be one of the quickest routes to reach FI. The biggest drawbacks will be that we’re rolling the dice on how quiet the area is and how much we like our neighbors. As someone who has lived in apartments most of her adult life, this can be pretty hit or miss.
Do we find a low cost condo? Typically in more walkable areas and lower maintenance than houses, we enjoyed the condo life previously. There are decent condos that are around half the price of our current house in areas we’ve researched. Lower prices mean lower property taxes.
Do we stay homebodies? We occasionally have the urge to stay since the neighborhood is wonderful and the biking is excellent. But it is expensive. Texas lacks state income tax so the property taxes can increase faster than inflation (we saw a 4% increase this year and property tax is already a solid percentage of our annual spend). In addition to having to figure out how to grow something other than poison ivy, we’d have to cover future maintenance and repairs too.
Figuring it out as we go
The nice part is that we don’t have to make any major decisions since our options don’t affect how we accumulate the money, just how much we accumulate. Modeling out how long it would take us to reach the various versions of FI in our current jobs seems to indicate that the majority of renting and condo options fall within a small range of timelines. To avoid creating unnecessary stress, we’re initially targeting the higher end of that range so we can choose among several variations of those options. Once we reach that target, we will evaluate how we feel in our current jobs to see if it’s worth the extra year of saving required to stay in our current house.
Optionality gives us the ability to reach FI in our own way, which lets us avoid settling on a specific plan that might not fit our needs down the road. While our path isn’t for everyone, it’s working for us.